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Western Midstream Partners LP (WES) reported its second-quarter 2025 earnings, surpassing analysts’ expectations with an earnings per share (EPS) of $0.87, compared to the forecasted $0.83. Revenue also exceeded projections, coming in at $942.32 million against the anticipated $934.02 million. The company maintains strong profitability with a 70.9% gross margin and has consistently paid dividends for 13 consecutive years, currently offering a substantial 9.7% yield. Despite these positive results, the stock experienced a 3.37% decline in after-hours trading, closing at $38.44 from a previous $39.78. InvestingPro analysis suggests the stock is currently trading below its Fair Value, with 3 analysts recently revising their earnings estimates upward.
Key Takeaways
- Western Midstream achieved its highest adjusted EBITDA in history during Q2 2025.
- Record throughput in the Delaware Basin contributed significantly to performance.
- Despite positive earnings, the stock fell in after-hours trading by 3.37%.
- Future projects include the North Loving 2 plant and Pathfinder pipeline, both slated for 2027.
Company Performance
Western Midstream’s performance in Q2 2025 was marked by record-breaking adjusted EBITDA figures of $2.28 billion, driven by increased throughput across all product lines in the Delaware Basin. This achievement underscores the company’s strategic focus on cost optimization and operational efficiency, reflected in its strong return on equity of 39% and return on invested capital of 13%. The company maintained flat operational expenses compared to the previous quarter, highlighting effective cost management. For deeper insights into WES’s financial health and growth potential, InvestingPro subscribers can access comprehensive analysis, including 10 additional ProTips and detailed valuation metrics.
Financial Highlights
- Revenue: $942.32 million, surpassing forecasts of $934.02 million.
- Earnings per share: $0.87, exceeding the forecasted $0.83.
- Operational expenses remained stable quarter-over-quarter.
Earnings vs. Forecast
Western Midstream’s actual EPS of $0.87 represented a 4.82% surprise over the forecasted $0.83. Revenue also exceeded expectations, with a surprise of 0.89%. This performance marks a continuation of the company’s trend of surpassing market expectations, though the magnitude of the EPS beat was moderate compared to previous quarters.
Market Reaction
Despite the positive earnings surprise, Western Midstream’s stock declined by 3.37% in after-hours trading, closing at $38.44. This drop comes amid broader market trends and could reflect investor concerns over future growth or external market conditions. The stock remains within its 52-week range, with a high of $43.33 and a low of $33.60.
Outlook & Guidance
Looking ahead, Western Midstream has outlined significant capital investments, with a 2026 capital budget exceeding $1.1 billion. This includes $350-$400 million for the Pathfinder pipeline and substantial investment in the North Loving 2 plant. The company remains committed to flexible capital planning, adapting to producer drilling decisions. With a healthy current ratio of 1.3 and revenue growth of 7.1% over the last twelve months, WES demonstrates solid financial footing for these expansions. InvestingPro subscribers can access detailed financial health scores and growth projections, along with expert analysis in the comprehensive Pro Research Report, available for WES and 1,400+ other US stocks.
Executive Commentary
Kristen Schulz, CFO, highlighted the company’s record performance, stating, "Second quarter was the highest adjusted EBITDA we’ve had in our partnership’s history." John Vandenbrand, SVP Commercial, emphasized confidence in the company’s long-term contract structure, saying, "We’re really inspired and confident in the long-term delivery of what our existing contract structure looks like."
Risks and Challenges
- Market Volatility: Fluctuations in oil and gas prices could impact revenue.
- Regulatory Changes: Potential changes in environmental regulations may affect operations.
- Project Delays: Any delays in the North Loving 2 plant or Pathfinder pipeline could impact future earnings.
- Competition: Increased competition in the Delaware Basin could pressure margins.
- Economic Conditions: Broader economic downturns could affect producer activity and demand.
Q&A
During the earnings call, analysts inquired about the timeline and investment details for the North Loving 2 plant and Pathfinder pipeline. Executives provided insights into the capital budget allocation and emphasized the importance of these projects in the company’s growth strategy.
Full transcript - Western Midstream Partners LP (WES) Q2 2025:
Daniel, Moderator/Host, Western Midstream: Welcome to Western Midstream’s second quarter twenty twenty five post earnings call fireside chat with our chief financial officer, Kristen Schulz, and our senior vice president of commercial, John Vandenbrand. Kristen, I’ll start with you. Can you give us an overview of WES’ record second quarter financial and operational results?
Kristen Schulz, Chief Financial Officer, Western Midstream: Sure, Daniel. So second quarter was the highest adjusted EBITDA we’ve had in our partnership’s history. Really successful quarter for the team. Operationally, we performed really well. We saw increased throughput across all the products lines and across all of our large operated basins.
Delaware Basin really was the winner this quarter, had record oil, gas, and water in the Delaware Basin. So that really contributed to the increase that we saw in adjusted EBITDA, specifically in adjusted gross margin. OpEx was relatively flat compared to q one. We’ve been doing a lot of work internally around cost optimization and just really taking a deep look into how we’re operating on the operation side, in particular, trying to reduce costs. And so I think you’re starting to see some of that come out as we’re moving through this year, and we’ll see even more of that coming out in the third and fourth quarter.
It’s really helping us from a total OpEx perspective as we see increased costs related to increased water volumes or just increased costs in general as we’re pushing through more throughput. Expectations for the rest of the year, we are still looking at similar throughput growth rates as we mentioned at the beginning of the year. So gas, mid single digits growth, crude oil, low single digits growth, and water, mid single digits growth as well.
Daniel, Moderator/Host, Western Midstream: John, we sanctioned a second train at the North Loving plant that is expected to come online in the 2027. Can you talk to Wes’ slight change in strategy and decision to sanction another plant right now?
John Vandenbrand, Senior Vice President of Commercial, Western Midstream: Thanks, Daniel. Absolutely. I think there are two main things to keep in mind as we’ve approached the sanctioning of North Loving 2. The first is that it’s backed by the strong support of our existing agreements where we’ve got a tremendous amount of insight to our producers’ activity. Through the discussions as we’ve gotten into budgeting for next year and as we’ve received long term forecast, we’re really inspired and confident in the long term delivery of what our existing contract structure looks like with a vast variety of producers all across the basin.
The second thing that’s also been really encouraging is that over the last twelve to eighteen months, we’ve seen a tremendous amount of success on the organic development of our system with new contracts for gas gathering and processing contracts with customers around basin. Those together gave us the confidence to pull the trigger and sanction North Loving 2 today. As always, we’ve had a tremendous amount of connectivity with other processors in the basin via offloads, we continue to use those today to make sure that we provide ultimate flow assurance and reliability throughout the system. We expect that when we do bring in North Loving II in the ’27 that it will be very full day one as we’ve continued to manage the flow into the startup of that via the offloads.
Daniel, Moderator/Host, Western Midstream: Can you also give us an update on the Pathfinder pipeline project?
John Vandenbrand, Senior Vice President of Commercial, Western Midstream: Absolutely. First of all, we remain focused on executing the development of that infrastructure and bringing it online in the 2027. To date, everything is on track, and we’re very excited about the start of the infrastructure and what it’ll do for existing business. As we continue to build on the organic success that we’ve seen over the last twelve to eighteen months on both the gas and the water side of our business, we’re very encouraged by the discussions we’re having with customers on long term solutions that will utilize Pathfinder as well as the rest of our assets and infrastructure to provide long term flow assurance solutions.
Daniel, Moderator/Host, Western Midstream: Okay, Kristen, turning back to you. In our second quarter results, Wes announced that we expect the capital budget in 2026 to be at least $1,100,000,000. Can you tell us a bit about what is included in that number? How will this drive growth in the coming years?
Kristen Schulz, Chief Financial Officer, Western Midstream: Sure. On the earnings call, we wanted to give a little bit of color around what we might think 2026 from a capital perspective would look like. We’ve announced a lot of new projects this year, really exciting growth projects. So we’ve got Pathfinder and North Loving two. The vast majority of that spend will be in 2026.
We previously talked about Pathfinder, the midpoint of the CapEx associated with that being about 04/2025. We spent some of that this year in 2025. We’ll spend a little bit more in the second half of this year, but vast majority, I’d say anywhere from three fifty to four hundred is gonna be spent in 2026. Same thing for North Living too. As you know, that’s gonna be a 300 a day plant, so that’ll be quite a big chunky project for us.
We’ll spend a little bit this year as it relates to long lead equipment, but the vast majority would be spent in 2026 too. Then if you think about what gets layered on top of that, we have just the normal run rate of the business itself, and we are seeing continued growth in the portfolio. So in the past, we’ve talked about that being around, let’s call it, 500,000,000, maybe 600,000,000 of when you see increased throughput growth coming from the portfolio and we still have expansion capital, new compression needs, new SWD needs that we kinda run around that range. So if you just take those numbers and start laying them onto each other, that’s where we’re coming up with in excess of 1,100,000,000.0. We will obviously get updated forecast from our producers second half of this year and then into even January and February.
We still look at those and adjust our capital plans for 2026. And because we are a GMP midstream provider, where they decide to ultimately drill on that acreage we’re serving can make a pretty material influence on how we put our capital budget together.
Daniel, Moderator/Host, Western Midstream: Kristen, John, thank you both for joining us today. For our listeners, if you have any additional questions, please feel free to reach out to us. Our contact information is located in the Investor Relations section of our corporate website at westernmidstream.com.
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