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In a notable transaction, subsidiaries of Occidental Petroleum Corp (NYSE:OXY) have sold a significant stake in Western Midstream Partners, LP (NYSE:NYSE:WES). The sale consisted of 19,500,000 common units representing limited partner interests at a price of $35.75 per unit, totaling approximately $697 million.
The transaction was carried out by WGR Asset Holding Company LLC and Anadarko USH1 Corporation, which are both wholly owned subsidiaries of Occidental Petroleum. The common units were sold in an underwritten public offering on August 14, 2024. Following the sale, Western Gas Resources, Inc., another subsidiary, holds 156,219,520 common units. APC Midstream Holdings, LLC retains 457,849 units, and Anadarko USH1 Corporation has 9,004,209 units remaining.
This move reflects a reshaping of the ownership structure within the entities under Occidental Petroleum's umbrella. The sale has reduced the direct stake of these subsidiaries in Western Midstream Partners, though Occidental, through its network of subsidiaries, still maintains significant holdings in the partnership.
Investors and market watchers often scrutinize such transactions for insights into the strategic priorities and financial maneuvering of involved corporations. The sale of Western Midstream Partners stock by Occidental's subsidiaries is a substantial transaction that could be indicative of Occidental's broader portfolio management strategy.
The shares of Western Midstream Partners, LP, which operates in the natural gas transmission sector, are publicly traded on the New York Stock Exchange under the symbol WES. The partnership is known for its midstream assets, primarily engaged in gathering, processing, compressing, treating, and transporting natural gas, condensate, natural gas liquids, and crude oil.
This transaction was publicly reported in a Form 4 filing with the U.S. Securities and Exchange Commission, dated August 16, 2024, reflecting the sale that took place on August 14, 2024.
In other recent news, Western Midstream Partners, LP has announced the pricing of an $800 million senior notes offering through its subsidiary, Western Midstream Operating, LP, expected to close by August 20, 2024. The proceeds are intended for the repayment of existing debt and general partnership needs. TD Securities (USA) LLC, BofA Securities, Inc., MUFG Securities Americas Inc., and PNC Capital Markets LLC are the joint book-running managers for the offering.
In addition, Western Midstream Partners reported robust Q2 2024 results, with a net income of $370 million and adjusted EBITDA of $578 million. The company has secured several new customer agreements, expected to drive future performance. Analysts have noted the sale of non-core assets, which has allowed the company to meet its net leverage ratio target ahead of schedule.
In terms of future expectations, Western Midstream anticipates record operated throughput, adjusted EBITDA, and free cash flow for the year. The company's focus is on asset acquisitions in current operational areas and operational enhancements. However, there are no major projects planned for the Uinta basin due to sufficient capacity. Lastly, the company plans a decrease in capital expenditure in 2025. These are the latest developments for Western Midstream Partners.
InvestingPro Insights
In light of Occidental Petroleum's recent sale of a significant stake in Western Midstream Partners, LP, investors may find the latest metrics and analyst insights from InvestingPro particularly enlightening. Western Midstream Partners has demonstrated a strong financial performance, with a reported gross profit margin of 71.07% and an operating income margin of 43.2% over the last twelve months as of Q2 2024. These robust margins reflect the efficiency of the company's operations in the natural gas transmission sector.
From an investment perspective, Western Midstream Partners appears to be an attractive option, trading at a low P/E ratio of 10 relative to near-term earnings growth. This could signal that the stock is undervalued compared to its growth potential. Additionally, the company has a history of rewarding its shareholders, maintaining dividend payments for 12 consecutive years with a notable dividend yield of 9.15% as of the last reported date in 2024. This commitment to returning value to investors is further underscored by a significant dividend growth of 75.0% over the last twelve months as of Q2 2024.
For those looking for stability, Western Midstream Partners has a perfect Piotroski Score of 9, which indicates high financial health and suggests that the company is operating effectively. Moreover, InvestingPro Tips reveal that two analysts have revised their earnings upwards for the upcoming period, indicating potential optimism about the company's future performance. For more detailed analysis and additional insights, investors can explore the 15 InvestingPro Tips available for Western Midstream Partners at https://www.investing.com/pro/WES.
With a market capitalization of $14.79 billion and a price close to its 52-week high at 91.12% of the peak, Western Midstream Partners stands as a significant player in its market. The partnership's strategic maneuvers, coupled with its solid financial metrics, make it a company worth watching for those interested in the energy sector and midstream operations.
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