Operational Performance - As of September 30, 2025, the company operates 18 wholly owned gathering systems, 43 treating facilities, and 27 processing plants, with total gas processing capacity increased to 2,190 MMcf/d after the North Loving plant start-up[120] - Total throughput for natural-gas assets increased by 2% from the previous quarter to 5,549 MMcf/d, with a 12% year-over-year increase from 5,170 MMcf/d[121] - The Delaware Basin's natural gas throughput was 2,113 MMcf/d, showing no significant change from the previous quarter and a 12% increase year-over-year[121] - Total throughput for natural-gas assets increased by 107 MMcf/d for the three months ended September 30, 2025, primarily due to higher volumes at the Brasada complex and Springfield gas-gathering system[135] - Total throughput attributable to WES for crude-oil and NGLs assets decreased by 22 MBbls/d for the three months ended September 30, 2025, primarily due to lower volumes at the DBM oil system[138] - Total throughput attributable to WES for produced-water assets increased by 99 MBbls/d for the nine months ended September 30, 2025, due to higher production[140] - 98% of wellhead natural-gas volume and 100% of crude-oil and produced-water throughput were serviced under fee-based contracts for the nine months ended September 30, 2025[216] Financial Performance - Total revenues for the three months ended September 30, 2025, were $952,484 thousand, a 1.2% increase from $942,322 thousand for the previous quarter, and a 5.0% increase from $2,676,720 thousand for the nine months ended September 30, 2024[132] - Operating income for the three months ended September 30, 2025, was $441,560 thousand, a slight decrease of 0.2% from $444,479 thousand in the previous quarter, and a decrease of 9.4% from $1,544,989 thousand for the nine months ended September 30, 2024[132] - Net income attributable to Western Midstream for the three months ended September 30, 2025, was $339,615 thousand, a decrease from $341,680 thousand in the previous quarter[132] - Net income for the nine months ended September 30, 2025, decreased by $253,500 thousand to $1,016,186 thousand, primarily due to a $307,500 thousand decrease in gain on divestiture[173] - Total revenues and other for the nine months ended September 30, 2025, were $2,811.9 million, an increase from $2,676.7 million in the prior year[166] - Adjusted Gross Margin for the nine months ended September 30, 2025, was $2,614.8 million, compared to $2,508.4 million for the same period in 2024[166] - Adjusted EBITDA for the nine months ended September 30, 2025, was $1,845,200 thousand, up 5% from $1,753,339 thousand in the same period of 2024[176] - Free Cash Flow for the nine months ended September 30, 2025, was $1,185,197 thousand, representing a 17% increase from $1,014,887 thousand in the prior year[176] Expenses and Costs - Total cost of product and operation and maintenance expenses for the three months ended September 30, 2025, was $263,572 thousand, a 1% decrease from $267,310 thousand in the previous quarter[148] - Natural-gas purchases increased by 39% to $7,210 thousand for the three months ended September 30, 2025, compared to $5,180 thousand in the previous quarter[148] - Operation and maintenance expense increased by $14.2 million for the nine months ended September 30, 2025, driven by a $15.5 million increase in utility expenses[154] - Depreciation and amortization expense increased by $25.5 million for the nine months ended September 30, 2025, due to capital projects being placed into service at the West Texas complex[156] - Interest expense increased by $5.6 million for the nine months ended September 30, 2025, primarily due to $28.2 million of interest incurred on the 5.450% Senior Notes issued during the third quarter of 2024[159] - Income tax expense decreased by $9.9 million for the nine months ended September 30, 2025, primarily due to a revaluation increasing the deferred tax liability balance in 2024[160] - Other operating expenses increased by 6% for the nine months ended September 30, 2025, totaling $773.6 million compared to $733.1 million in the prior year[155] Capital and Financing - The company retired the total principal amount of 3.100% and 3.950% Senior Notes due 2025 at par value during the first and second quarters of 2025, respectively[120] - The company retired $1 billion in Senior Notes due 2025 during the nine months ended September 30, 2025[201] - The carrying value of outstanding debt as of September 30, 2025, was $6.9 billion, with $440.5 million classified as long-term debt[200] - As of September 30, 2025, the company had a working capital surplus of $276.6 million and $2.0 billion in effective borrowing capacity under the RCF[192] - WES net cash used in financing activities was $(2,101,864) thousand for the nine months ended September 30, 2025, compared to $(921,617) thousand in 2024, indicating a significant increase in cash outflows[208] Market Conditions and Expectations - The average price of West Texas Intermediate crude oil ranged from a low of $57.13 per barrel to a high of $80.04 per barrel during the nine months ended September 30, 2025[124] - The company expects to adjust capital spending plans in response to fluctuating commodity prices and maintain financial flexibility[124] - High inflation has raised operating costs, impacting steel products, labor, and materials, which could negatively affect financial results[126] - A 10% change in commodity prices is not expected to materially impact operating income or cash flows for the next 12 months[216] - Future increases in the federal funds rate may lead to higher financing costs for WES Operating[217] - A 10% change in the applicable benchmark interest rate would not materially impact interest expense on outstanding borrowings as of September 30, 2025[217] - Additional short-term or variable-rate debt may be issued in the future under the RCF or other financing sources[218] Distributions - The company maintained a per-unit distribution of $0.910 for the third quarter of 2025, unchanged from the second quarter[120] - The Board declared a cash distribution to unitholders for Q3 2025 of $0.910 per unit, totaling $379.5 million[189] - Distributions to WES unitholders amounted to $1,051,503 thousand for the nine months ended September 30, 2025, up from $905,155 thousand in 2024, marking an increase of 16.1%[208]

Financial Performance - Net income attributable to limited partners for Q3 2025 was $331.7 million, or $0.87 per common unit (diluted) [3] - Adjusted EBITDA for Q3 2025 reached a record $633.8 million, marking the second consecutive quarter of record performance [4] - Cash flows from operating activities for Q3 2025 totaled $570.2 million, resulting in Free Cash Flow of $397.4 million [5] - Net income for the nine months ended September 30, 2025, was $1,016,186 thousand, down from $1,269,672 thousand for the same period in 2024, a decrease of about 20% [20] - Adjusted Gross Margin for the three months ended September 30, 2025, was $874,903 thousand, compared to $879,068 thousand for the previous quarter, reflecting a slight decrease of 0.2% [26] - Adjusted EBITDA for the three months ended September 30, 2025, was $633,752 thousand, an increase from $617,876 thousand in the prior quarter, showing a growth of approximately 2.8% [27] - Free Cash Flow for the three months ended September 30, 2025, was $397,405 thousand, compared to $388,394 thousand for the previous quarter, indicating an increase of about 2.6% [28] Distribution and Guidance - The partnership announced a distribution of $0.910 per unit for Q3 2025, consistent with the prior quarter, equating to an annualized distribution of $3.64 per unit [5] - WES anticipates being towards the high end of its 2025 Adjusted EBITDA guidance range of $2,350 million to $2,550 million [5] Acquisition and Synergies - The acquisition of Aris Water Solutions, Inc. was completed on October 15, 2025, positioning WES among the largest three-stream midstream providers in the Delaware Basin [5] - The partnership aims to capture $40 million in targeted cost synergies from the Aris acquisition [7] Throughput and Operational Metrics - Natural gas throughput averaged 5.4 Bcf/d in Q3 2025, representing a 2% sequential increase [6] - Crude oil and NGLs throughput averaged 510 MBbls/d in Q3 2025, reflecting a 4% sequential decrease [6] - Total throughput for natural-gas assets increased by 2% to 5,549 MMcf/d compared to 5,433 MMcf/d in the previous quarter [31] - Total throughput for crude-oil and NGLs assets decreased by 4% to 520 MBbls/d from 543 MBbls/d in the prior quarter [31] - Operated throughput for natural-gas assets rose by 3% to 4,996 MMcf/d, with notable increases in the DJ Basin (3%) and Other regions (16%) while the Powder River Basin saw an 11% decline [33] - Total throughput for produced-water assets remained stable at 1,242 MBbls/d, with no change from the previous quarter [33] Asset and Financial Position - Total current assets decreased from $1,847,190 thousand as of December 31, 2024, to $917,051 thousand as of September 30, 2025, representing a decline of approximately 50.4% [19] - Total liabilities decreased from $9,769,615 thousand as of December 31, 2024, to $8,796,716 thousand as of September 30, 2025, a reduction of approximately 9.9% [19] - Cash and cash equivalents at the end of the period were $177,288 thousand, down from $1,124,737 thousand at the end of the previous period, a decline of about 84.2% [20] - Capital expenditures for the nine months ended September 30, 2025, were $505,783 thousand, compared to $595,087 thousand for the same period in 2024, a decrease of approximately 15% [20] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $1,664,980 thousand, an increase from $1,582,414 thousand for the same period in 2024, reflecting a growth of about 5.2% [20] - Long-term debt remained relatively stable, with a slight decrease from $6,926,647 thousand as of December 31, 2024, to $6,924,291 thousand as of September 30, 2025 [19] Margins and Pricing - Per-Mcf gross margin for natural-gas assets decreased by 3% to $1.06, while per-Bbl gross margin for crude-oil and NGLs assets increased by 4% to $2.25 [31] - Adjusted gross margin for natural-gas assets decreased by 4% to $1.27 per Mcf, while adjusted gross margin for crude-oil and NGLs assets increased by 3% to $3.10 per Bbl [31] - Total throughput attributable to WES for natural-gas assets was 5,358 MMcf/d, reflecting a 2% increase from 5,251 MMcf/d [31] - Total operated throughput for crude-oil and NGLs assets decreased by 3% to 418 MBbls/d, with the Delaware Basin experiencing a 9% decline [33] - Non-operated throughput for natural-gas assets decreased by 4% to 553 MMcf/d, down from 575 MMcf/d in the prior quarter [33] - The company reported a total throughput attributable to noncontrolling interests of 191 MMcf/d for natural-gas assets, marking a 5% increase from 182 MMcf/d [31] Operational Efficiency - System operability increased to 99.6% year-over-year, enhancing throughput and profitability across the asset base [7]

Core Insights - Western Midstream Partners, LP (WES) reported a strong financial performance for the third quarter of 2025, with net income attributable to limited partners reaching $331.7 million, or $0.87 per common unit (diluted), and Adjusted EBITDA totaling $633.8 million [1][6][7] - The company achieved a Free Cash Flow of $397.4 million for the quarter, with cash flows from operating activities amounting to $570.2 million [1][6][7] - WES announced a third-quarter distribution of $0.910 per unit, consistent with the previous quarter, translating to an annualized distribution of $3.64 per unit [3][6] Financial Performance - Third-quarter 2025 revenues totaled $952.5 million, compared to $883.4 million in the same quarter of 2024, reflecting a year-over-year increase [19] - Operating expenses for the third quarter were $525.3 million, up from $511.9 million in the prior year [19] - The company reported a record operational performance with system operability increasing to 99.6% year-over-year [7] Operational Highlights - Natural gas throughput averaged 5.4 Bcf/d, marking a 2% increase from the previous quarter, while crude oil and NGLs throughput averaged 510 MBbls/d, a 4% decrease [4][7] - The successful acquisition of Aris Water Solutions, Inc. was completed on October 15, 2025, positioning WES as one of the largest three-stream midstream providers in the Delaware Basin [6][7] - WES is targeting $40 million in cost synergies from the Aris acquisition, enhancing its competitive position in produced-water management [5][6] Future Outlook - The company anticipates being at the high end of its 2025 Adjusted EBITDA guidance range of $2.35 billion to $2.55 billion and expects Free Cash Flow to exceed the high end of its guidance range of $1.275 billion to $1.475 billion [6][8] - WES is focused on integrating Aris and executing growth initiatives, including the Pathfinder pipeline project, which is expected to improve project returns [5][8]

Group 1 - The objective of investing is to create a stress-free portfolio that generates cash flow for consumption without reliance on a payroll [1] Group 2 - Roberts Berzins has over a decade of experience in financial management, assisting top-tier corporates in shaping financial strategies and executing large-scale financings [2] - Significant efforts have been made to institutionalize the REIT framework in Latvia to enhance the liquidity of pan-Baltic capital markets [2] - Contributions include the development of national SOE financing guidelines and frameworks for channeling private capital into affordable housing [2] - Roberts is a CFA Charterholder and holds an ESG investing certificate, with experience from an internship at the Chicago Board of Trade [2] - Actively involved in thought-leadership activities to support the development of pan-Baltic capital markets [2]

Core Insights - During market turbulence, investors often seek dividend-yielding stocks, which typically have high free cash flows and offer substantial dividends [1] Group 1: High-Yielding Stocks in Energy Sector - Vitesse Energy Inc (NYSE:VTS) has a dividend yield of 10.17%. Analyst Chris Baker from Evercore ISI Group maintained an In-Line rating and reduced the price target from $22 to $20, while analyst John White from Roth MKM maintained a Buy rating and increased the price target from $30.5 to $33 [7] - Delek Logistics Partners LP (NYSE:DKL) has a dividend yield of 9.76%. Analyst Gabriel Moreen from Mizuho maintained a Neutral rating and raised the price target from $44 to $45, while analyst Justin Jenkins from Raymond James maintained an Outperform rating and increased the price target from $44 to $46 [7] - Western Midstream Partners LP (NYSE:WES) has a dividend yield of 9.42%. Analyst Spiro Dounis from Citigroup reinstated a Neutral rating with a price target of $39, while analyst Robert Kad from Morgan Stanley maintained an Underweight rating and lowered the price target from $41 to $39 [7]

Core Insights - Artificial intelligence (AI) is identified as the greatest investment opportunity of the current era, with a strong emphasis on the urgent need for energy to support its growth [1][2][3] - A specific company is highlighted as a key player in the AI energy sector, owning critical energy infrastructure assets that are essential for meeting the increasing energy demands of AI technologies [3][7] Investment Landscape - Wall Street is investing hundreds of billions into AI, but there is a looming question regarding the energy supply needed to sustain this growth [2] - AI data centers consume vast amounts of energy, comparable to that of small cities, leading to concerns about power grid strain and rising electricity prices [2][3] Company Profile - The company in focus is not a chipmaker or cloud platform but is positioned as a crucial player in the energy sector, particularly in nuclear energy infrastructure [7][8] - It is capable of executing large-scale engineering, procurement, and construction (EPC) projects across various energy sectors, including oil, gas, and renewable fuels [7] Financial Position - The company is noted for being completely debt-free and holding a significant cash reserve, amounting to nearly one-third of its market capitalization [8] - It is trading at less than 7 times earnings, indicating a potentially undervalued position in the market [10] Market Trends - The company is poised to benefit from the onshoring trend driven by tariffs, as well as the surge in U.S. LNG exports under the current administration [5][14] - There is a growing recognition on Wall Street of this company's potential, as it quietly capitalizes on multiple favorable market trends without the high valuations seen in other sectors [8][9] Future Outlook - The demand for AI is expected to drive significant growth in energy needs, positioning this company as a vital player in the future energy landscape [3][12] - The influx of talent into the AI sector is anticipated to lead to rapid advancements, further solidifying the importance of energy infrastructure in supporting these developments [12][13]

Core Viewpoint - The energy sector has underperformed since the new bull market began in 2022, with the S&P 500 Energy Index only up about 3% compared to a 14% gain in the overall market [1][2]. Industry Performance - Energy stocks have struggled due to concerns over slowing global demand and a shift in investor preference towards higher-growth sectors like technology and communication services [2][3]. - Oil prices have decreased to approximately $61 per barrel, struggling to surpass the $70 psychological level [3]. - The energy sector is currently trading at significant discounts, presenting a higher risk-reward profile compared to the broader market, which is facing premium valuations [4]. Long-term Outlook - The long-term outlook for the energy sector remains positive, bolstered by a $750 billion trade agreement between the U.S. and the European Union, which mandates the EU to purchase U.S. energy exports over the next three years [5][6]. - Achieving the $750 billion target is ambitious, as current import levels are under $100 billion, requiring the EU to import 67% of its energy needs from the U.S. [6]. Methodology for Stock Selection - The list of the most profitable energy stocks was compiled using Finviz to screen for companies with positive earnings and over $1 billion in trailing twelve-month (TTM) net income, focusing on those with a TTM Operating Margin of at least 15% and popularity among elite hedge funds [8]. - The strategy of selecting stocks that hedge funds favor has historically outperformed the market, with a reported return of 427.7% since May 2014 [9]. Notable Energy Stocks - **Western Midstream Partners, LP (NYSE:WES)**: TTM Operating Margin of 43.29%, TTM Net Income of $1.27 billion, and 5 hedge fund holders. UBS has a 'Neutral' rating with a $40 price target, awaiting the completion of a $1.4 billion acquisition [10][11]. - **MPLX LP (NYSE:MPLX)**: TTM Operating Margin of 39.64%, TTM Net Income of $4.31 billion, and 13 hedge fund holders. UBS has a 'Buy' rating with a $64 price target, citing expected volume growth and an increase in EBITDA estimates [13][14].

Core Viewpoint - Western Midstream Partners, LP announced a quarterly cash distribution of $0.910 per unit for Q3 2025, maintaining the same level as the previous quarter [1] Group 1: Financial Announcements - The cash distribution is annualized at $3.64 per unit and will be payable on November 14, 2025, to unitholders of record by October 31, 2025 [1] - The Partnership plans to report its Q3 2025 results after market close on November 4, 2025, with a conference call scheduled for November 5, 2025, at 8:00 a.m. Central [2][3] Group 2: Company Overview - Western Midstream Partners, LP is a master limited partnership focused on developing, acquiring, owning, and operating midstream assets across Texas, New Mexico, Colorado, Utah, and Wyoming [4] - The company engages in various activities including gathering, compressing, treating, processing, and transporting natural gas, as well as handling condensate, natural-gas liquids, crude oil, and produced water [4] - A significant portion of WES's cash flows is secured through fee-based contracts, reducing direct exposure to commodity price volatility [4]

Core Insights - Texas has a long history of wealth generated from natural resources, particularly oil and gas, which has led to the establishment of funds that provide financial benefits to its citizens [1][2] - The Texas Royalty Plan allows individuals, even non-residents, to receive payments from oil and gas revenues, with some individuals reporting substantial earnings [6][7] - The state is experiencing a significant boom in oil production, with a notable increase in annual output due to advancements in shale extraction [8][15] Texas Oil and Gas Wealth - Texas has two major funds, the Permanent School Fund and the Permanent University Fund, which are financed by oil royalties and support educational initiatives [2] - The state has seen a 577,990% increase in oil production over the past 17 years, contributing to the financial benefits available to citizens [8] - The Texas Royalty Plan has consistently raised payments for 28 years, indicating a stable income source for participants [7][15] Investment Opportunities - The Texas Royalty Plan is associated with Master Limited Partnerships (MLPs) that are required to distribute 90% of their earnings to shareholders, offering high dividend yields [10][22] - Current yields for these investments range from 6.8% to 9.6%, which is significantly higher than average stock market dividends [11][14] - Companies like Enterprise Products Partners (EPD), Energy Transfer (ET), and Western Midstream Partners (WES) are highlighted as potential investment opportunities within the Texas oil sector [24][26] Market Dynamics - Texas is becoming a hub for data centers due to its cheap and abundant energy, particularly natural gas, which is essential for powering these facilities [19][20] - The state's energy infrastructure is expanding, with a record production of 12.62 trillion cubic feet of natural gas anticipated in 2024, further supporting the growth of the Texas Royalty Plan [20] - Legislative efforts are underway to enhance Texas's digital infrastructure, positioning the state as a leader in the AI data center market [18]

Core Points - Western Midstream Partners, LP has completed the acquisition of Aris Water Solutions, Inc, enhancing its position as a leading midstream flow-assurance provider in the Delaware Basin [2][3] - The merger allows Western Midstream to better address the challenges faced by producer customers in Texas and New Mexico regarding produced-water management [2] Acquisition Details - Each share of Aris Class A common stock and corresponding units was converted into either 0.625 common units of WES, $25.00 in cash, or a combination of 0.450 common units and $7.00 in cash [2][3] - Approximately 28% of the total merger consideration will be in cash, totaling $415.0 million, while about 72% will be in common units, amounting to approximately 26.6 million units [3] Company Overview - Western Midstream operates midstream assets across Texas, New Mexico, Colorado, Utah, and Wyoming, focusing on natural gas and produced water management [4] - The company’s cash flows are largely protected from commodity price volatility through fee-based contracts, providing stability in operations [4]