Western Midstream Restructures Contracts, Secures 8.8% Cash Distribution
Written by Emily J. Thompson, Senior Investment Analyst
Source: Fool
- Contract Restructuring: Western Midstream has restructured its natural gas gathering and processing contracts with Occidental Petroleum in the Delaware Basin, reducing Occidental's near-term costs through a simplified fixed-fee structure, thereby enhancing its production capacity in the region.
- Unit Transfer: Occidental will transfer 15.3 million common units of Western Midstream (valued at $610 million), making the restructured agreement value-neutral for Western Midstream, while Occidental's stake in the MLP will decrease from 42% to 40%.
- New Agreement Signed: Western Midstream has entered into a new gas gathering and processing agreement with ConocoPhillips, which will last through the early 2030s, supporting ConocoPhillips' production growth while reducing related party revenue from Occidental by over 10%.
- Stable Cash Flow: The restructured contracts will not impact Western Midstream's free cash flow, as the company expects to offset reduced near-term cash flows with savings from the common units received from Occidental and cost-saving initiatives launched last year, ensuring the sustainability of its 8.8% cash distribution.
Analyst Views on COP
Wall Street analysts forecast COP stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for COP is 113.39 USD with a low forecast of 98.00 USD and a high forecast of 132.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
18 Analyst Rating
15 Buy
3 Hold
0 Sell
Strong Buy
Current: 98.190
Low
98.00
Averages
113.39
High
132.00
Current: 98.190
Low
98.00
Averages
113.39
High
132.00
About COP
ConocoPhillips is an exploration and production company. Its Alaska segment primarily explores for, produces, transports and markets crude oil, natural gas and NGLs. The Lower 48 segment consists of operations located in the 48 contiguous states in the United States and the Gulf of Mexico. Canadian operations consist of the Surmont oil sands development in Alberta, the liquids-rich Montney unconventional play in British Columbia and commercial operations. The Europe, Middle East and North Africa segment consists of operations principally located in the Norwegian sector of the North Sea, the Norwegian Sea, Qatar, Libya, Equatorial Guinea and commercial and terminalling operations in the United Kingdom. Asia Pacific segment has exploration and production operations in China, Malaysia, Australia and commercial operations in China, Singapore and Japan. Other International segment includes interests in Colombia as well as contingencies associated with prior operations in other countries.
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.
