Western Midstream Partners LP (WES) has demonstrated robust financial performance in its latest earnings report, buoyed by strategic asset divestitures and increased throughput across its core operational basins. The company's comprehensive financial results encapsulate organic growth, operational efficiencies, and prudent fiscal management, contributing to significant value returns to unitholders.
Western Midstream Partners LP Earnings Summary
For the year ended December 31, 2024, Western Midstream reported a commendable increase in several key financial metrics. The company recorded a gross margin of $2.8 billion, marking a 19% increase compared to the previous year. This surge was propelled by a 14% increase in natural-gas throughput, which averaged 5,052 MMcf/d, and a 19% decrease in crude-oil and NGLs throughput to 530 MBbls/d, attributed to strategic divestiture activities. Additionally, produced-water throughput saw an 11% increase, amounting to 1,124 MBbls/d.
Western Midstream Partners LP Financial Results
Despite an uptick in expenses, net income increased by $563.2 million year-over-year, reflecting strategic decisions' positive impact. Key financial metrics are presented in the table below:
| Financial Metric | 2024 | Change from 2023 |
|---|---|---|
| Gross Margin | $2.8 billion | +19% |
| Natural Gas Throughput | 5,052 MMcf/d | +14% |
| Crude Oil and NGLs Throughput | 530 MBbls/d | -19% |
| Produced Water Throughput | 1,124 MBbls/d | +11% |
| Net Income Increase | $563.2 million | - |
Revenue Breakdown
The growth in financial performance is also reflected in the segment-wise breakdown of revenues. Service revenues – fee-based increased significantly by $479.5 million due to higher rates and volumes in core operational areas like West Texas and the DJ Basin. The Powder River Basin complex also contributed positively following the acquisition of Meritage. However, the firm strategically divested certain non-core assets, impacting crude oil and NGLs throughput.
| Segment/Complex | Revenue Change |
|---|---|
| West Texas | +$184.0 million |
| Powder River Basin (Meritage) | +$140.2 million |
| DJ Basin | +$89.8 million |
| Marcellus Interest Systems (Divested) | -$23.7 million |
In-Depth Analysis
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Natural Gas Assets : The West Texas complex saw increased throughput, augmented by contracts with favorable rate redeterminations. This demonstrates the company’s strategic focus on optimizing its core assets.
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Crude Oil and NGLs Assets : Despite a contraction due to asset sales, the strategic focus remains on enhancing midstream conduits’ profitability with Occidental contracts driving substantial contributions.
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Produced Water Assets : Continued investment in water-handling infrastructure in core areas supports this upwards trajectory.
Key Developments
A pivotal aspect of WES's 2024 strategy involved capitalizing on core assets while divesting non-core ones. This includes the successful sale of interests in multiple pipeline systems, resulting in substantial cash proceeds and gains. Notably, WES Operating completed the public offering of $800 million in senior notes to repay portions of maturing debts, enhancing its capital structure.
Operationally, the commencement of the Mentone Train III processing plant added 300 MMcf/d of processing capacity, affirming WES's commitment to expanding its operational footprint and efficiencies in the Delaware Basin. Furthermore, the anticipated completion of the North Loving Plant promises additional capacity, reinforcing the long-term strategic growth trajectory.
Executive Insights
In reflecting on these results, CEO Oscar K. Brown emphasized WES’s ongoing commitment to optimizing asset utilization and fiscal prudence. Brown highlighted the company's ability to return $1.246 billion to unitholders in 2024, underscoring the strength of WES's capital return framework.
Dividends and Share Repurchases
Dividend payments for the fourth quarter remained consistent at $0.875 per unit, aligning with prior quarters and underscoring a stable distribution strategy. Moreover, WES announced a unit buyback program through December 2026, allowing for repurchases up to $250 million, further consolidating its capital allocation strategy.
Western Midstream Partners LP Stock Forecast
WES’s financial performance, underpinned by strategic asset management and robust operational efficiencies, bodes well for its stock forecast. Given the favorable trajectory of its core businesses and a disciplined approach to capital returns, the outlook remains positive. Projections suggest a stock price range high of $28.5 and a low of $24.0, reflecting stable growth prospects alongside broader economic conditions.
Conclusion
Western Midstream Partners LP has adeptly navigated 2024's challenges and opportunities, reinforcing its foundation as a leading midstream service provider. Through strategic divestitures, robust operational management, and sound financial practices, WES remains well-positioned to capitalize on future growth opportunities. Its ongoing commitment to enhancing shareholder value through disciplined capital management signals strong potential going into 2025.
