Western Midstream Partners, LP (WES) Bundle
A Brief History of Western Midstream Partners, LP
Company Overview
Western Midstream Partners, LP (WES) was formed in 2019 as a master limited partnership (MLP) and is primarily engaged in providing midstream services to the oil and gas industry. The company operates a diverse portfolio of assets that include natural gas, crude oil, and water services across key regions in the United States.
Recent Financial Performance (2024)
As of September 30, 2024, Western Midstream reported significant financial metrics that reflect its operational performance:
| Metric | Q3 2024 | Q2 2024 | % Change | YTD Q3 2024 | YTD Q3 2023 | % Change |
|---|---|---|---|---|---|---|
| Adjusted Gross Margin | $827,494,000 | $835,850,000 | (1)% | $2,508,396,000 | $2,144,466,000 | 17% |
| Free Cash Flow | $365,111,000 | $424,824,000 | (14)% | $1,014,887,000 | $682,169,000 | 49% |
| Adjusted EBITDA | $566,870,000 | $578,060,000 | (2)% | $1,753,339,000 | $1,497,968,000 | 17% |
| Net Income | $295,892,000 | $387,564,000 | (24)% | $1,271,479,000 | $753,968,000 | 68% |
Capital Structure and Debt Management
As of September 30, 2024, Western Midstream's total liabilities amounted to $9,603,707,000, while total equity was reported at $3,236,827,000. The company has a significant amount of long-term debt, totaling $6,929,212,000. In August 2024, WES issued $800 million in 5.450% Senior Notes due 2034 to refinance certain maturing debts and for general partnership purposes.
Operational Highlights
During the nine months ended September 30, 2024, the company achieved the following throughput metrics:
| Asset Type | Throughput (Q3 2024) | Throughput (YTD Q3 2024) | Change from YTD Q3 2023 |
|---|---|---|---|
| Natural Gas (MMcf/d) | 5,016 | 4,998 | 17% |
| Crude Oil and NGLs (MBbls/d) | 506 | 529 | (17)% |
| Produced Water (MBbls/d) | 1,099 | 1,102 | 11% |
Distributions to Unitholders
In the third quarter of 2024, Western Midstream announced a cash distribution of $0.875 per unit, totaling approximately $340.9 million. This distribution reflects the company's commitment to returning value to its unitholders while maintaining liquidity for operational needs.
Recent Developments
In early 2024, Western Midstream completed the acquisition of Meritage, which significantly increased its throughput capabilities in the Powder River Basin. This strategic move is expected to enhance the company's revenue potential and operational efficiency moving forward.
Outlook
As Western Midstream moves through 2024, the company remains focused on optimizing its asset base and maintaining a solid capital structure. The management's emphasis on capital discipline and strategic growth initiatives positions it well for future opportunities in the evolving energy landscape.
A Who Owns Western Midstream Partners, LP (WES)
Ownership Structure
As of 2024, Western Midstream Partners, LP (WES) has a diverse ownership structure primarily composed of common units and interests held by institutional investors and affiliates of Occidental Petroleum Corporation.
Common Units Outstanding
As of September 30, 2024, there were 380,555,427 common units issued and outstanding, representing a significant portion of the partnership's capital structure. The public holds 214,873,849 common units, which equates to approximately 55.2% of the limited partner interest in the partnership .
General Partner and Noncontrolling Interests
WES has general partner units, with 9,060,641 units issued. The total partners’ capital as of September 30, 2024, was recorded at $3,236,827 thousand . The noncontrolling interests amounted to $140,690 thousand .
| Ownership Type | Units Issued | Percentage of Total | Value (thousands) |
|---|---|---|---|
| Common Units | 380,555,427 | 55.2% | $3,225,855 |
| General Partner Units | 9,060,641 | — | $10,972 |
| Noncontrolling Interests | — | — | $140,690 |
Institutional Ownership
Institutional investors hold a substantial portion of WES's common units. Prominent investors include:
- BlackRock, Inc.
- The Vanguard Group, Inc.
- State Street Corporation
Recent Transactions
In August 2024, affiliates of Occidental sold 19,500,000 of the partnership’s common units through an underwritten offering, which did not yield proceeds to the partnership .
Financial Performance
The financial performance of WES is reflected in its net income attributable to the partnership. For the nine months ended September 30, 2024, the net income was reported at $1,239,958 thousand .
Distribution Policies
WES has a structured distribution policy, providing quarterly distributions to unitholders. For the quarter ended September 30, 2024, the per-unit distribution was $0.875, totaling $340,914 thousand .
Ownership Summary
| Owner | Type | Units Held | Percentage |
|---|---|---|---|
| Public Investors | Common Units | 214,873,849 | 55.2% |
| Occidental Petroleum | Noncontrolling Interest | — | 2.0% in WES Operating |
| Institutional Investors | Common Units | — | Varies by institution |
Conclusion on Ownership and Control
WES's ownership is characterized by a combination of public and institutional investors, with significant control retained by Occidental Petroleum through its general partner and noncontrolling interests. The ongoing transactions and financial performance indicate a robust structure aimed at maximizing returns for its unitholders.
Western Midstream Partners, LP (WES) Mission Statement
Mission Statement
Western Midstream Partners, LP is committed to providing safe, reliable, and efficient midstream services to its customers in the oil and gas industry. The company aims to maximize value for its unitholders through the provision of high-quality infrastructure and services while maintaining a strong focus on sustainability and environmental stewardship.
Financial Performance Overview
As of September 30, 2024, Western Midstream Partners reported a net income of $295.9 million for the third quarter, representing an increase from $284.4 million in the previous year. In the nine months ended September 30, 2024, the net income was $1.27 billion, compared to $752.3 million in the same period in 2023.
Key Financial Metrics
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Net Income | $295.9 million | $284.4 million | $1.27 billion | $752.3 million |
| Total Revenues | $883.4 million | $776.0 million | $2.68 billion | $2.25 billion |
| Operating Income | $395.9 million | $360.8 million | $1.54 billion | $987.6 million |
| Distributions Paid | $340.9 million | $223.4 million | $905.2 million | $755.0 million |
Operational Highlights
Western Midstream Partners reported total throughput for natural-gas assets of 5,016 MMcf/d in Q3 2024, which is a 1% increase from Q2 2024 and a 17% increase year-over-year. The throughput for crude-oil and natural gas liquids (NGLs) was 506 MBbls/d, reflecting a 2% decrease from Q2 2024 but a 17% decrease compared to the previous year.
Debt and Financial Obligations
As of September 30, 2024, the total outstanding debt of Western Midstream Partners was $7.94 billion, with a significant portion attributed to various senior notes due in the coming years. The company has a revolving credit facility with an effective borrowing capacity of $2.0 billion.
Partnership Distributions
The regular quarterly distribution for Q3 2024 was maintained at $0.875 per unit, totaling $340.9 million. This reflects the company’s commitment to returning capital to its unitholders while ensuring adequate funding for operational and capital expenditures.
Future Outlook
Western Midstream Partners continues to focus on expanding its infrastructure capabilities and enhancing service offerings while maintaining a robust financial position. The company's strategic initiatives are aimed at sustaining growth and delivering value to its stakeholders in the evolving energy landscape.
How Western Midstream Partners, LP (WES) Works
Overview of Operations
Western Midstream Partners, LP (WES) primarily operates in the midstream sector of the energy industry, focusing on gathering, processing, and transportation of natural gas, crude oil, and produced water. As of 2024, WES has significant infrastructure across various basins, including the Delaware Basin, DJ Basin, and Powder River Basin.
Financial Performance
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Net Income (Loss) | $295,892,000 | $270,843,000 | 9.2% |
| Adjusted EBITDA | $566,870,000 | $578,060,000 | (2.0%) |
| Free Cash Flow | $365,111,000 | $424,824,000 | (14.0%) |
| Gross Margin | $684,500,000 | $676,000,000 | 1.0% |
Throughput Data
WES's throughput for natural gas and crude oil assets shows significant operational metrics:
| Asset Type | Throughput (MMcf/d or MBbls/d) | Q3 2024 | Q2 2024 | Change (%) |
|---|---|---|---|---|
| Natural Gas | Total Throughput | 5,189 MMcf/d | 5,155 MMcf/d | 1.0% |
| Crude Oil and NGLs | Total Throughput | 506 MBbls/d | 517 MBbls/d | (2.0%) |
| Produced Water | Total Throughput | 1,099 MBbls/d | 1,078 MBbls/d | 2.0% |
Capital Expenditures and Investments
For the nine months ended September 30, 2024, WES reported capital expenditures of $595,087,000, primarily focused on expansion and asset-integrity projects across key operational regions.
Debt and Financial Structure
As of September 30, 2024, WES had total liabilities of $9,603,707,000, with long-term debt accounting for $6,929,212,000. The effective interest rates on outstanding senior notes varied, with some due in 2025 and others extending to 2034. The partnership also has an effective borrowing capacity of $2 billion under its revolving credit facility (RCF).
Distribution Policy
WES has a consistent distribution strategy with quarterly distributions to unitholders. For Q3 2024, the distribution was set at $0.875 per unit, amounting to a total cash distribution of $340,914,000.
Recent Acquisitions
In 2024, WES completed strategic acquisitions to enhance its asset base and operational capabilities, including the acquisition of Meritage, which significantly contributed to increased throughput in the Powder River Basin.
Market Position and Strategy
WES continues to position itself as a leading midstream service provider by optimizing its asset utilization and expanding its service offerings across existing and new geographic regions. The partnership aims to leverage increased production from its upstream partners to enhance throughput and revenue.
Key Financial Metrics Summary
| Metric | 2024 (YTD) | 2023 (YTD) |
|---|---|---|
| Net Income (Loss) | $1,269,672,000 | $752,255,000 |
| Adjusted EBITDA | $1,753,339,000 | $1,497,968,000 |
| Total Assets | $12,981,224,000 | $12,471,607,000 |
| Total Partners’ Capital | $3,236,827,000 | $2,897,424,000 |
How Western Midstream Partners, LP (WES) Makes Money
Business Model Overview
Western Midstream Partners, LP operates as a midstream energy company, primarily engaged in the gathering, processing, and transportation of natural gas, crude oil, and natural gas liquids (NGLs). The company earns revenue through a combination of fee-based services and product sales.
Revenue Streams
WES generates revenue from two main categories: service revenues and product sales. Below is a detailed breakdown of these revenue streams as of September 30, 2024.
| Revenue Category | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | YTD 2024 Revenue (in thousands) | YTD 2023 Revenue (in thousands) |
|---|---|---|---|---|
| Service Revenues – Fee Based | $814,319 | $695,547 | $2,389,366 | $2,004,920 |
| Service Revenues – Product Based | $49,115 | $48,446 | $177,321 | $142,212 |
| Product Sales | $19,673 | $31,652 | $109,076 | $100,336 |
| Total Revenue from Customers | $883,107 | $775,645 | $2,675,763 | $2,247,468 |
| Other Revenue | $255 | $368 | $957 | $800 |
| Total Revenues and Other | $883,362 | $776,013 | $2,676,720 | $2,248,268 |
Cost Structure
Operating expenses are critical to understanding WES's profitability. Key components of the cost structure include:
| Expense Category | Q3 2024 Expense (in thousands) | Q3 2023 Expense (in thousands) | YTD 2024 Expense (in thousands) | YTD 2023 Expense (in thousands) |
|---|---|---|---|---|
| Cost of Product | $32,847 | $27,590 | $132,936 | $123,795 |
| Operation and Maintenance | $231,066 | $204,434 | $649,324 | $562,104 |
| General and Administrative | $64,726 | $55,050 | $195,498 | $159,572 |
| Depreciation and Amortization | $166,015 | $147,363 | $487,438 | $435,481 |
| Total Operating Expenses | $511,940 | $449,265 | $1,515,384 | $1,373,793 |
Net Income
Net income is a crucial indicator of WES's profitability. The following figures represent the net income for the specified periods:
| Period | Net Income (in thousands) |
|---|---|
| Q3 2024 | $295,892 |
| Q3 2023 | $284,398 |
| YTD 2024 | $1,269,672 |
| YTD 2023 | $752,255 |
Cash Flow Analysis
Cash flow from operating activities is a vital measure of financial health. The following summarizes cash flow activities:
| Cash Flow Activity | YTD 2024 (in thousands) | YTD 2023 (in thousands) |
|---|---|---|
| Net Cash Provided by Operating Activities | $1,582,414 | $1,188,034 |
| Net Cash Used in Investing Activities | $191,153 | ($538,584) |
| Net Cash Used in Financing Activities | ($921,617) | ($446,612) |
Distribution to Unitholders
WES has a consistent distribution policy to its unitholders. The following table presents the quarterly distributions:
| Quarter | Per-Unit Distribution | Total Distribution (in thousands) |
|---|---|---|
| Q1 2024 | $0.875 | $340,858 |
| Q2 2024 | $0.875 | $340,859 |
| Q3 2024 | $0.875 | $340,914 |
Conclusion
Western Midstream Partners, LP utilizes a robust business model that combines fee-based services and product sales to generate revenue. With a focus on operational efficiency and cost management, the partnership continues to deliver solid financial performance.
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Updated on 16 Nov 2024
Resources:
- Western Midstream Partners, LP (WES) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Western Midstream Partners, LP (WES)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Western Midstream Partners, LP (WES)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.