Western Midstream Partners, LP (WES) | Investment Case

1. Company Snapshot

1.a. Company Description

Western Midstream Partners, LP, a midstream energy company, together with its subsidiaries, acquires, owns, develops, and operates primarily in the United States.It is involved in gathering, compressing, treating, processing, and transporting natural gas; gathering, stabilizing, and transporting condensate, natural gas liquids (NGLs), and crude oil; and gathering and disposing produced water.It also buys and sells natural gas, NGLs, and condensate.

The company operates assets located in Texas, New Mexico, the Rocky Mountains, and North-central Pennsylvania.Western Midstream Holdings, LLC operates as the general partner of the company.The company was formerly known as Western Gas Equity Partners, LP and changed its name to Western Midstream Partners, LP in February 2019.

Western Midstream Partners, LP was incorporated in 2007 and is based in The Woodlands, Texas.

Show Full description

1.b. Last Insights on WES

Western Midstream Partners' recent performance was driven by strong dividend yield, with a 9% yield outpacing sector medians, and future growth expected to reach 10.19% by 2027. The company's inflation-protected contracts provide rare downside protection and visible growth in the midstream sector. Additionally, the Pathfinder Pipeline project and other expansions are set to boost WES's capacity and earnings, with significant capital expenditures planned for 2025.

1.c. Company Highlights

Last Price	39.99
Change Percentage	-0.77%
Open	40.3
Previous Close	40.3
Market Cap ( Millions)	15238
Volume	1699672
Year High	43.33
Year Low	33.6
M A 50	38.6
M A 200	38.83

FCF Yield	11.75%
Dividend Yield	9.01%
ROE	40.66%
Debt / Equity	0.39%
Net Debt / EBIDTA	-7.38%
Price To Book	4.58
Price Earnings Ratio	11.59
Price To FCF	8.51
Price To sales	4.07
EV / EBITDA	6.77

2. Western Midstream's Q3 Earnings: A Strong Quarter with Record Throughput

Western Midstream reported a strong third quarter with net income attributable to limited partners of $332 million and adjusted EBITDA of $634 million. The company's EPS came in at $0.87, in line with analyst estimates. Revenue growth was driven by record natural gas throughput, particularly in the Delaware Basin. The company's per Mcf adjusted gross margin for natural gas decreased by $0.05 on a sequential quarter basis due to lower excess natural gas liquids volumes and lower overall pricing in the Delaware Basin.

Publication Date: Nov -08

                                    📋 Highlights
                                    Record Adjusted EBITDA:
                                                Achieved $634 million in Q3, second consecutive quarterly record, with 2025 guidance now expected at the high end of $2.35–$2.55 billion.
Cost Reductions:
                                                Operation and maintenance expenses dropped 5% ($12 million) QoQ, driven by lower maintenance and chemical costs, with 2025 costs projected flat vs. 2024.
Strong Free Cash Flow:
                                                Generated $397 million in free cash flow for Q3, supported by $570 million in operating cash flow.
Aris Acquisition Impact:
                                                Positioned WES as a leader in Delaware Basin produced water midstream, with 2.5 months of Aris contribution in Q4 slightly adjusting 2025 guidance.
Margin and Throughput Growth:
                                                Delivered record natural gas throughput (750 Bcf total), partially offsetting a $0.05/Mcf sequential decline in adjusted gross margin due to lower NGLs volumes and pricing.

                                

Operational Highlights

The company's operational performance was impressive, with total natural gas throughput reaching a record high. The Delaware Basin saw record natural gas throughput, while the DJ Basin also experienced strong sequential natural gas, crude oil, and NGLs throughput. Western Midstream's operation and maintenance expense decreased by 5% or $12 million quarter-over-quarter, primarily due to less asset maintenance and repair expense and chemical expense.

Guidance and Outlook

Western Midstream expects its fourth quarter per Mcf adjusted gross margin to be slightly lower relative to the third quarter. The company now expects approximately 2.5 months of contribution from Aris to its fourth quarter results, which slightly impacts its 2025 guidance ranges. Western Midstream is expected to be towards the high end of its previously announced 2025 adjusted EBITDA guidance range of $2.35 billion to $2.55 billion, with analysts estimating revenue growth of 6.8% next year.

Valuation

Western Midstream's current valuation metrics suggest a relatively attractive price. The company's P/E Ratio is 11.3, EV/EBITDA is 6.61, and Dividend Yield is 9.25%. With a strong track record of delivering results and a solid outlook, Western Midstream appears to be well-positioned for future growth. As Oscar Brown mentioned, "WES continues to be extremely well positioned to capitalize on our compelling growth opportunities and create long-term value for our unitholders."

3. NewsRoom

2 Ultra-High-Yield Pipeline Stocks to Buy With $10,000 and Hold Forever

Dec -02

Source: fool.com

WESTERN MIDSTREAM ANNOUNCES PRICING OF NOTES OFFERING

Dec -02

Source: prnewswire.com

Western Midstream Partners: Buy For The Appreciation Potential

Dec -01

Source: seekingalpha.com

Western Midstream: 9.3% Yield With Room To Grow

Nov -29

Source: seekingalpha.com

3 Brilliant High-Yield Stocks to Buy Now and Hold for the Long Term

Nov -27

Source: fool.com

Western Midstream: Combining Best‑In‑Class 9.3% Yield And Stability

Nov -26

Source: seekingalpha.com

Quality Dividends On Clearance: Secure +7% Yields Today

Nov -25

Source: seekingalpha.com

WESTERN MIDSTREAM ANNOUNCES THIRD-QUARTER POST-EARNINGS INTERVIEW WITH CFO, KRISTEN SHULTS AND PARTICIPATION IN UPCOMING INVESTOR CONFERENCES

Nov -24

Source: prnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.44%)

6. Segments

Service - Fee Based

Expected Growth: 2.5%

Western Midstream Partners, LP's 2.5% growth in Service - Fee Based segment is driven by increasing demand for midstream services, expansion of existing contracts, and strategic acquisitions. Additionally, the partnership's focus on fee-based revenue streams and cost savings initiatives contribute to its steady growth.

Service - Product Based

Expected Growth: 1.8%

Western Midstream Partners, LP's 1.8% growth in Service-Product Based segment is driven by increasing demand for midstream services, expansion of existing assets, and strategic acquisitions. Additionally, growing production in the Permian Basin and DJ Basin, where the company operates, contributes to the growth. Furthermore, the company's focus on cost savings and operational efficiencies also supports the growth.

Product

Expected Growth: 2.2%

Western Midstream Partners, LP's 2.2% growth is driven by increasing natural gas production in the Permian Basin, supported by strong demand from LNG exports and power generation. Additionally, the partnership's fee-based contracts and diversified customer base provide a stable source of revenue, while ongoing cost savings initiatives and strategic acquisitions further enhance growth prospects.

Other

Expected Growth: 1.5%

Western Midstream Partners, LP's 1.5% growth is driven by increasing natural gas production in the Permian Basin, supported by strong demand from LNG exports and power generation. Additionally, the partnership's diversified customer base, fee-based contracts, and expansion projects contribute to its stable cash flows and growth prospects.

7. Detailed Products

Natural Gas Gathering

Western Midstream Partners, LP provides natural gas gathering services, which involve the collection of natural gas from various wells and transportation to processing facilities or transmission pipelines.

Natural Gas Processing

The company offers natural gas processing services, which involve the separation of natural gas liquids (NGLs) from natural gas, and the extraction of NGLs, such as ethane, propane, and butane.

NGL Transportation

Western Midstream Partners, LP provides NGL transportation services, which involve the transportation of NGLs from processing facilities to fractionation facilities or storage hubs.

NGL Fractionation

The company offers NGL fractionation services, which involve the separation of NGLs into their individual components, such as ethane, propane, and butane.

Crude Oil Gathering

Western Midstream Partners, LP provides crude oil gathering services, which involve the collection of crude oil from various wells and transportation to storage facilities or refineries.

Water Gathering and Disposal

The company offers water gathering and disposal services, which involve the collection and disposal of produced water from oil and gas wells.

8. Western Midstream Partners, LP's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Western Midstream Partners, LP is medium due to the availability of alternative energy sources and the increasing demand for renewable energy.

Bargaining Power Of Customers

The bargaining power of customers for Western Midstream Partners, LP is low due to the company's strong market position and the lack of alternative suppliers.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Western Midstream Partners, LP is medium due to the company's dependence on a few key suppliers and the high switching costs.

Threat Of New Entrants

The threat of new entrants for Western Midstream Partners, LP is low due to the high barriers to entry, including the need for significant capital investment and regulatory approvals.

Intensity Of Rivalry

The intensity of rivalry for Western Midstream Partners, LP is high due to the competitive nature of the energy industry and the presence of several established players.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	73.13%
Debt Cost	4.56%
Equity Weight	26.87%
Equity Cost	17.61%
WACC	8.07%
Leverage	272.10%

11. Quality Control: Western Midstream Partners, LP passed 4 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Western Midstream Partners

A-Score: 7.1/10

Value: 5.1

Growth: 6.6

Quality: 7.2

Yield: 10.0

Momentum: 5.0

Volatility: 9.0

1-Year Total Return ->

International Seaways

A-Score: 6.7/10

Value: 7.2

Growth: 8.2

Quality: 7.4

Yield: 10.0

Momentum: 2.0

Volatility: 5.7

1-Year Total Return ->

DT Midstream

A-Score: 6.6/10

Value: 3.2

Growth: 6.0

Quality: 6.5

Yield: 7.0

Momentum: 8.5

Volatility: 8.3

1-Year Total Return ->

Plains GP Holdings

A-Score: 6.6/10

Value: 8.1

Growth: 3.6

Quality: 3.9

Yield: 10.0

Momentum: 4.5

Volatility: 9.3

1-Year Total Return ->

Plains All American Pipeline

A-Score: 6.5/10

Value: 7.8

Growth: 3.6

Quality: 4.5

Yield: 10.0

Momentum: 4.0

Volatility: 9.0

1-Year Total Return ->

EnLink Midstream

A-Score: 4.6/10

Value: 3.5

Growth: 5.4

Quality: 2.8

Yield: 5.0

Momentum: 4.5

Volatility: 6.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-0.95%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

8.07%

Western Midstream Partners, LP - US9586691035

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on WES

1.c. Company Highlights

Higher Yield

Expensive

Average Quality

Earnings Beats

Less Volatile

Revenues Beats

Strong Momentum

Earnings Miss

Revenues Miss

Fairly Valued

Better Quality

2. Western Midstream's Q3 Earnings: A Strong Quarter with Record Throughput

Operational Highlights

Guidance and Outlook

Valuation

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.44%)

6. Segments

Service - Fee Based

Expected Growth: 2.5%

Service - Product Based

Expected Growth: 1.8%

Product

Expected Growth: 2.2%

Other

Expected Growth: 1.5%

7. Detailed Products

Natural Gas Gathering

Natural Gas Processing

NGL Transportation

NGL Fractionation

Crude Oil Gathering

Water Gathering and Disposal

8. Western Midstream Partners, LP's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Western Midstream Partners, LP passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

39.99$

Current Price

39.99$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA