Western Midstream Partners (NYSE:WES) executives used the partnership’s fourth-quarter 2025 earnings call to highlight record full-year financial results, progress integrating the Aris Water Solutions acquisition, and a 2026 outlook that reflects moderating producer activity and continued pressure from weak Waha Hub natural gas pricing.
Record 2025 results driven by Delaware and DJ strength
Chief Executive Officer Oscar Brown said 2025 was “another incredibly successful and strategically meaningful year,” marked by record Adjusted EBITDA and free cash flow. Management attributed performance primarily to throughput growth across products and basins—particularly the Delaware and DJ—along with efficiency gains, cost reductions, and contract renegotiations.
For 2025, the partnership declared distributions totaling $3.64 per unit, including a fourth-quarter distribution of $0.91 per unit. The company also noted a 4% year-over-year increase in the distribution during 2025 and said it maintained net leverage around 3x through the year, including the financing of the Aris acquisition.
Fourth quarter: record Adjusted EBITDA, with non-cash adjustments
In the fourth quarter, Shults said Western Midstream generated net income attributable to limited partners of $187 million and Adjusted EBITDA of $636 million, which Brown described as a quarterly record. Management noted results included approximately $29.5 million of negative, non-cash cumulative revenue recognition adjustments. Excluding those adjustments, the partnership said it would have recorded Adjusted EBITDA of $665 million, about a 5% sequential increase.
Shults said fourth-quarter net income was also negatively impacted by $120 million of transaction costs from the Aris acquisition, which were added back to Adjusted EBITDA due to their one-time nature. Relative to the third quarter, adjusted gross margin increased by $60 million, helped by the incremental contribution from Aris and partially offset by roughly $30 million of unfavorable non-cash revenue recognition adjustments tied to redetermined cost-of-service rates on certain South Texas and DJ Basin oil system contracts.
On expenses, Shults said fourth-quarter operations and maintenance expense increased $40 million, or 19% sequentially, primarily due to including 2.5 months of Aris. Excluding Aris, she said fourth-quarter operations and maintenance expense decreased 12% compared with the year-ago quarter and declined on average 2% year over year for 2025, citing the company’s cost reduction plan launched in the second quarter.
Throughput trends: Waha curtailments and basin mix shift
Chief Operating Officer Danny Holderman said fourth-quarter natural gas throughput decreased 4% sequentially, driven by lower Delaware volumes as some customers curtailed production in response to low Waha Hub pricing, along with lower Powder River Basin volumes. Those declines were partially offset by record DJ Basin throughput. Crude oil and NGL throughput decreased slightly sequentially, as lower DJ volumes were mostly offset by higher Delaware volumes as expected wells came online. Produced water throughput increased 121% sequentially due to 2.5 months of volume from the Aris acquisition.
Brown said Waha Hub pricing remained a persistent industry challenge and contributed to Delaware natural gas curtailments during the quarter, which continued intermittently into the first quarter. He said the partnership expects continued pricing pressure through at least the first half of 2026, likely impacting Delaware natural gas throughput over the next two quarters, but expects new egress coming online in the second half of the year to begin alleviating pressure. Brown added the marketing team is working with producers on near-term pricing diversification and longer-term solutions, including long-haul capacity to the Gulf Coast.
Holderman also provided margin expectations. For 2026, he said the partnership expects average natural gas adjusted gross margin of about $1.22 per Mcf, driven by a change in Delaware contract mix and lower commodity pricing. For crude oil and NGLs, Western Midstream expects 2026 adjusted gross margin of $3.10 to $3.15 per barrel, and for produced water, management said it expects an average of approximately $0.85 per barrel.
Aris integration, synergies, and water growth emphasis
Brown said integration of the Aris acquisition was ahead of schedule and “mostly complete,” and that Western Midstream has achieved $40 million of targeted cost synergies. He said about 85% of the savings should be realized by the end of the first quarter, with the remainder by year-end 2026 as legacy contract and license terms expire. The company cited milestones including consolidation of ERP and purchasing systems, operations and project management systems, vendor contract harmonization, and IT and HR integration.
Brown said the transaction expanded Western Midstream’s produced water footprint in the Delaware Basin and its ability to offer fresh water, recycling, gathering, long-haul transportation, and disposal, as well as a stronger position in “beneficial reuse” treatment technology. In response to analyst questions, Brown said water is expected to grow faster than gas and oil for at least the next several years, while noting that broader natural gas demand growth—particularly power generation and LNG—could change the dynamic for hydrocarbon growth over time.
2026 guidance: moderated growth, lower capital plan, distribution increase planned
Management repeatedly characterized 2026 as a “transition year” due to producer activity reductions, changes in contract mix, and lower commodity prices. Brown said discussions with producing customers indicated many will reduce previously expected activity on acreage Western Midstream services, including portions of the Delaware Basin. He added that Oxy recently reallocated a portion of activity away from Western Midstream-served Delaware acreage, with some activity expected to begin returning starting in 2027, though scenarios are still being evaluated.
Shults said 2026 Adjusted EBITDA guidance is $2.5 billion to $2.7 billion (midpoint $2.6 billion), which management described as approximately 5% year-over-year growth at the midpoint. Guidance includes continued cost reductions and expected first-quarter winter storm impacts of about $10 million to $20 million.
Western Midstream reduced 2026 capital expenditure guidance to $850 million to $1.0 billion (midpoint $925 million), down from a prior estimate of at least $1.1 billion. Shults said roughly half of the 2026 capital program is directed to the Pathfinder Produced Water Pipeline and associated systems and North Loving Train Two, which are expected online in the first and second quarters of 2027, respectively.
The partnership also introduced distributable cash flow guidance for 2026 of $1.85 billion to $2.05 billion (midpoint $1.95 billion), or $4.59 to $5.08 per unit, alongside free cash flow guidance of $900 million to $1.1 billion (midpoint $1.0 billion). On the distribution, Shults said management intends to recommend a $0.02 per unit increase starting with the first-quarter distribution paid in May and guided to a full-year distribution of at least $3.70 per unit for 2026.
In the Q&A, Brown said Western Midstream remains disciplined on M&A, emphasizing a preference for deals with synergy opportunities that fit its assets and geographies. He also said interest in the Pathfinder project has increased and that the company is seeing more demand for integrated water solutions post-Aris, while noting Pathfinder’s costs are “coming down meaningfully,” improving expected returns even with minimum volume commitments already in place.
About Western Midstream Partners (NYSE:WES)
Western Midstream Partners, LP (NYSE: WES) is a midstream energy infrastructure company that owns, operates and develops an integrated network of crude oil, natural gas and produced water gathering, processing, transportation and storage assets in the United States. The partnership’s primary offerings include pipeline transportation, fractionation services, natural gas liquids (NGL) logistics and produced water handling. Through its fee-based and commodity-based contracts, Western Midstream provides its customers with essential services that support efficient energy production and distribution.
The company’s asset portfolio spans key onshore basins, including the Delaware Basin in West Texas and southeastern New Mexico, the San Juan Basin in New Mexico and Colorado, and the Denver-Julesburg Basin in Colorado.
