Western Midstream Partners considers investment in Kinetik Holdings
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Nov 10 2024
0mins
Should l Buy WES?
Source: SeekingAlpha
Western Midstream Partners (WES) experienced a decline of 5.66% as it reached a 20-day high amid broader market weakness, with the Nasdaq-100 down 0.19% and the S&P 500 down 0.16%.
The recent news indicates that Western Midstream Partners is considering a takeover bid for Kinetik Holdings, which is backed by Occidental Petroleum. This potential investment reflects a strategic move in the energy sector, aiming to enhance growth opportunities and market positioning.
This development could have significant implications for Western Midstream, as it seeks to expand its portfolio and leverage the growing demand in the energy market.
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Analyst Views on WES
Wall Street analysts forecast WES stock price to fall
4 Analyst Rating
0 Buy
4 Hold
0 Sell
Hold
Current: 43.900
Low
39.00
Averages
40.50
High
42.00
Current: 43.900
Low
39.00
Averages
40.50
High
42.00
About WES
Western Midstream Partners, LP acquires, owns, develops and operates midstream assets. It is engaged in the business of gathering, compressing, treating, processing, and transporting natural gas, gathering, stabilizing, and transporting condensate, natural gas liquids (NGLs), and crude oil, and gathering and disposing of produced water. Its core assets provide services for customers in the Delaware Basin in West Texas and New Mexico, and the DJ Basin in northeastern Colorado, and the Powder River Basin in Northeast Wyoming. Additional assets and investments are in South Texas, Utah, and Southwest Wyoming. In its capacity as a natural gas processor, the Company also buys and sells natural gas, NGLs, and condensate on its behalf and its customers under certain gas processing contracts. Its subsidiaries include Western Midstream Operating GP, LLC, Western Midstream Services, LLC, Western Midstream Services Holdings, LLC, Western Midstream Operating, LP, and Aris Water Solutions, Inc.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
KINETIK STOCK RISES 2.9% AFTER REPORT OF POTENTIAL SALE DUE TO INTEREST FROM WESTERN MIDSTREAM PARTNERS
- Kinetik's Stock Performance: Kinetik shares have increased by 2.9% following reports of a potential sale.
- Interest from Partners: The rise in stock value comes after an approach from Western Midstream Partners regarding a possible acquisition.
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Kinetik Holdings Considers Sale of Pipeline Business
- Positive Market Reaction: Kinetik Holdings (KNTK) saw an 8.6% pre-market increase on Thursday, reflecting investor confidence in the company's potential sale and future growth prospects.
- Sale Process Initiation: According to the Financial Times, Kinetik is preparing a sale process to gauge interest from strategic and infrastructure buyers, which could provide new capital and resource allocation opportunities for the company.
- Significant Growth Potential: Enervus managing director Andrew Gillick highlighted that the Delaware Basin is one of the few remaining growth areas, with increasing demand for natural gas, providing strong support and market outlook for Kinetik's operations.
- Complex Shareholder Structure: Kinetik was formed in 2022 through the merger of Altus Midstream and EagleClaw Midstream, with Blackstone retaining an 18% stake, while Occidental Petroleum (OXY) owns about a third of Western Midstream (WES), indicating its significant position in the industry.
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- Company Overview: Kinetik Holdings has received a stake over interest from Occidental Petroleum-backed Western Midstream Partners.
- Investment Context: This move indicates a strategic partnership or investment opportunity in the energy sector, particularly in petroleum-related ventures.
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- Asset Sale Boosts Cash Flow: Occidental sold its chemicals business, OxyChem, to Berkshire Hathaway for $9.7 billion in early January, with plans to use $6.5 billion of that cash to reduce debt, thereby lowering its debt level below $15 billion and enhancing financial flexibility.
- Contract Structure Optimization: The company amended its Delaware Basin natural gas gathering contract with Western Midstream Partners, transitioning from a cost-of-service agreement to a fixed-fee structure, which is expected to save costs and improve flexibility in developing oil and gas assets while reducing its ownership stake from 42% to 40%.
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KINETIK STOCK RISES 2.9% AFTER REPORT OF POTENTIAL SALE DUE TO INTEREST FROM WESTERN MIDSTREAM PARTNERS
- Kinetik's Stock Performance: Kinetik shares have increased by 2.9% following reports of a potential sale.
- Interest from Partners: The rise in stock value comes after an approach from Western Midstream Partners regarding a possible acquisition.
See More
Kinetik Holdings Considers Sale of Pipeline Business
- Positive Market Reaction: Kinetik Holdings (KNTK) saw an 8.6% pre-market increase on Thursday, reflecting investor confidence in the company's potential sale and future growth prospects.
- Sale Process Initiation: According to the Financial Times, Kinetik is preparing a sale process to gauge interest from strategic and infrastructure buyers, which could provide new capital and resource allocation opportunities for the company.
- Significant Growth Potential: Enervus managing director Andrew Gillick highlighted that the Delaware Basin is one of the few remaining growth areas, with increasing demand for natural gas, providing strong support and market outlook for Kinetik's operations.
- Complex Shareholder Structure: Kinetik was formed in 2022 through the merger of Altus Midstream and EagleClaw Midstream, with Blackstone retaining an 18% stake, while Occidental Petroleum (OXY) owns about a third of Western Midstream (WES), indicating its significant position in the industry.
See More
KINETIK HOLDINGS ATTRACTS TAKEOVER BID FROM WESTERN MIDSTREAM PARTNERS SUPPORTED BY OCCIDENTAL PETROLEUM - FT
- Company Overview: Kinetik Holdings has received a stake over interest from Occidental Petroleum-backed Western Midstream Partners.
- Investment Context: This move indicates a strategic partnership or investment opportunity in the energy sector, particularly in petroleum-related ventures.
See More
AI Turbulence Impacts Market Performance
- Increased Market Volatility: Last week, stocks in software, real estate, financial services, and logistics faced selling pressure due to concerns over AI-related disruptions, with the Nasdaq Composite falling 0.2% and a weekly loss of 2.1%, indicating market sensitivity to AI impacts.
- Consumer Spending Data Focus: This week's highlight will be the Personal Consumption Expenditures (PCE) report on Friday, which will provide insights into consumer spending in December and inflation trends, especially following last week's unexpected slowdown in the Consumer Price Index (CPI).
- Corporate Earnings in Spotlight: Walmart (WMT) is set to release its fourth-quarter earnings on Thursday, marking the first report under new CEO John Furner, making it a key indicator of consumer spending that the market is eagerly anticipating.
- Ongoing AI Impact: As AI tools' potential effects intensify across various sectors, software stocks like Salesforce (CRM) and ServiceNow (NOW) have seen significant declines, reflecting the market's heightened vigilance regarding AI disruptions, necessitating close monitoring of future industry developments.
See More
High-Yield Stocks Attract Investor Attention
- AGNC Investment Advantage: AGNC Investment Corp leads with a 12.5% dividend yield, appealing to passive income investors with its monthly payments, having maintained this rate for over five years post-pandemic, indicating strong profitability in the robust Agency MBS market.
- Ares Capital's Stability: Ares Capital currently offers a 10% dividend yield, with its business model of direct loans to middle-market companies generating core earnings that exceed dividend payments, maintaining or increasing dividends for 16 consecutive years, showcasing strong financial stability and growth potential.
- Western Midstream's Growth Potential: Western Midstream Partners yields 8.9%, with stable cash flows and a strong balance sheet allowing it to cover distributions and capital expenditures, while planning to enhance dividends through acquisitions and organic expansion.
- Attracting Risk-Tolerant Investors: With dividend yields significantly higher than the S&P 500, AGNC, Ares Capital, and Western Midstream appeal to income-seeking investors despite potential market volatility risks, making them attractive options for those willing to take on more risk.
See More
Occidental Petroleum Starts 2026 Strong with 10.4% Share Surge
- Oil Price Rebound: In January 2026, Occidental Petroleum's shares surged 10.4%, significantly outperforming the S&P 500's 1.4% increase, primarily driven by a 16% rise in Brent crude and a 14% increase in WTI, showcasing the company's strong performance amid recovering oil prices.
- Asset Sale Boosts Cash Flow: Occidental sold its chemicals business, OxyChem, to Berkshire Hathaway for $9.7 billion in early January, with plans to use $6.5 billion of that cash to reduce debt, thereby lowering its debt level below $15 billion and enhancing financial flexibility.
- Contract Structure Optimization: The company amended its Delaware Basin natural gas gathering contract with Western Midstream Partners, transitioning from a cost-of-service agreement to a fixed-fee structure, which is expected to save costs and improve flexibility in developing oil and gas assets while reducing its ownership stake from 42% to 40%.
- Improved Financial Position: With rising oil prices and reduced debt, Occidental is poised to generate more cash flow in 2026, further strengthening its balance sheet and enhancing long-term investment appeal, even after last month's significant share price rally.
See More
