Company Overview - Western Midstream (NYSE: WES) has experienced a significant underperformance in the market, lagging by double digits since the last investment recommendation, despite its impressive distribution [2] - The company's market value has rebounded to nearly $15 billion, marking a substantial recovery from the lows experienced during the COVID-19 pandemic [2] Investment Strategy - The Value Portfolio focuses on constructing retirement portfolios through a fact-based research strategy, which includes thorough analysis of 10Ks, analyst commentary, market reports, and investor presentations [2] - The investment approach involves real monetary investments in the stocks that are recommended, emphasizing a commitment to the suggested strategies [2]

Group 1: Company Growth Strategy - Western Midstream Partners, LP (WES) plans to invest at least $1.1 billion in capital expenditures for 2026, focusing on significant growth in the Delaware Basin [1] - The company is executing a $2 billion acquisition of Aris Water Solutions, which is expected to enhance its produced water disposal capacity to over 3.8 million barrels per day and diversify its customer base [2] - A new natural gas processing train at the North Loving facility, sanctioned to process 300 million cubic feet per day, will increase total processing capacity to approximately 2.5 billion cubic feet per day by early Q2 2027 [3] Group 2: Operational Expectations - WES anticipates mid-single-digit year-over-year growth in natural gas and produced water throughput for the remainder of 2025, with low single-digit growth in crude oil and NGLs [4] - Continued growth is expected across all product lines in 2026, even before considering the contributions from the Aris acquisition [4] Group 3: Long-Term Value Creation - The company aims to deliver sustained throughput growth and operational scale in the Delaware Basin through infrastructure expansions, customer diversification, and disciplined balance sheet management [5]

Financial Data and Key Metrics Changes - The second quarter of 2025 marked the highest adjusted EBITDA in the partnership's history, indicating a successful operational performance [2] - Operationally, there was increased throughput across all product lines and large operated basins, contributing to the rise in adjusted EBITDA and adjusted gross margin [2][3] - Operating expenses (OpEx) remained relatively flat compared to Q1, with ongoing internal cost optimization efforts expected to yield further improvements in the latter half of the year [3][4] Business Line Data and Key Metrics Changes - The Delaware Basin achieved record oil, gas, and water throughput, significantly contributing to the overall increase in adjusted EBITDA [3] - Expectations for throughput growth rates for the remainder of the year include mid-single digits for gas, low-single digits for crude oil, and mid-single digits for water [4] Market Data and Key Metrics Changes - The company is experiencing strong support from existing agreements, providing insight into producers' activities and long-term forecasts, which bolstered confidence in sanctioning new projects [5][6] Company Strategy and Development Direction - The company sanctioned a second train at the North Loving plant, expected to come online in 2027, driven by strong existing agreements and successful organic development of the system [5][6] - The capital budget for 2026 is projected to be at least $1.1 billion, with significant spending allocated to new projects like Pathfinder and North Loving 2, which are expected to drive growth [9][10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term delivery of existing contract structures and the organic success seen over the past 12 to 18 months, particularly in gas gathering and processing contracts [6][8] - The company remains focused on executing infrastructure development, with the Pathfinder pipeline project on track to be operational in 2027 [8] Other Important Information - The majority of the capital expenditures for Pathfinder and North Loving 2 will occur in 2026, with ongoing adjustments based on producer forecasts [10][12] Q&A Session Summary Question: Can you talk about the decision to sanction another plant right now? - The decision was based on strong support from existing agreements and confidence in long-term delivery from producers [5][6] Question: Can you provide an update on the Pathfinder pipeline project? - The project is on track for a 2027 launch, with positive discussions with customers regarding long-term solutions [8]

Financial Data and Key Metrics Changes - The second quarter of 2025 marked the highest adjusted EBITDA in the history of the partnership, indicating a successful operational performance [1] - Operational expenditures (OpEx) remained relatively flat compared to Q1 2025, reflecting ongoing cost optimization efforts [2] - Expectations for throughput growth rates remain consistent, with gas projected to grow in the mid-single digits, crude oil in low single digits, and water in mid-single digits [3] Business Line Data and Key Metrics Changes - The Delaware Basin achieved record levels of oil, gas, and water production, significantly contributing to the increase in adjusted EBITDA and adjusted gross margin [2] Market Data and Key Metrics Changes - The company is experiencing increased costs related to higher water volumes and overall throughput, but is managing these through internal cost optimization strategies [2][3] Company Strategy and Development Direction - The company has sanctioned a second train at the North Loving plant, expected to come online in 2027, driven by strong support from existing agreements and successful organic development [4][5] - The Pathfinder pipeline project is on track for development and is expected to enhance long-term flow assurance solutions for customers [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term delivery of existing contract structures and the positive discussions with producers regarding future projects [5][6] - The capital budget for 2026 is projected to be at least $1.1 billion, with significant spending allocated to new projects like Pathfinder and North Loving 2, which are expected to drive growth [7][8][9] Other Important Information - The company plans to adjust its capital plans for 2026 based on updated forecasts from producers in the second half of the year [10] Q&A Session Summary Question: Can you discuss the decision to sanction another plant right now? - The decision was based on strong support from existing agreements and confidence in long-term delivery from producers [4][5] Question: What is the status of the Pathfinder pipeline project? - The project is on track for development and is expected to provide long-term flow assurance solutions [6] Question: What is included in the capital budget for 2026? - The budget includes significant spending on new projects and normal business operations, with expectations of continued growth in throughput [7][8][9]

Core Insights - Western Midstream Partners, LP (WES) will release a post-earnings interview on its website, providing insights into its Q2 2025 results [1] - WES is scheduled to participate in several investor conferences in Q3 and Q4 of 2025 [2] Company Overview - WES is a master limited partnership focused on developing, acquiring, owning, and operating midstream assets across Texas, New Mexico, Colorado, Utah, and Wyoming [2] - The company engages in gathering, compressing, treating, processing, and transporting natural gas, as well as handling condensate, natural-gas liquids, crude oil, and produced water [2] - A significant portion of WES's cash flows is secured through fee-based contracts, minimizing exposure to commodity price volatility [2] Upcoming Events - WES will participate in Citi's 2025 Natural Resources Conference in Las Vegas on August 12-13, 2025 [4] - The company will also take part in the NYSE Energy & Utilities Virtual Investor Access Day on September 18, 2025 [4] - Additionally, WES is scheduled for the Wolfe Utilities, Midstream & Clean Energy Conference in New York on October 1, 2025 [4]

Group 1 - Mr. Mavroudis is a professional portfolio manager with expertise in institutional and private portfolios, focusing on risk management and financial market analysis [1] - He has successfully navigated major crises, including the COVID-19 pandemic and the PSI, demonstrating resilience in investment strategies [1] - Mr. Mavroudis is the CEO of FAST FINANCE Investment Services, a registered Greek company, and holds multiple advanced degrees and certifications in finance and law [1] Group 2 - He engages with the investment community through writing on Seeking Alpha, aiming to share insights and learn from others [1]

Core Insights - Western Midstream Partners, LP (NYSE: WES) is identified as the midstream operator with the highest dividend yield, currently around 9% [1] - Management anticipates continuing to increase the dividend at a mid to low single-digit percentage rate [1] Company Overview - WES operates in the midstream sector, focusing on the transportation and storage of natural gas, natural gas liquids, and crude oil [1] - The company has a diverse operational background, which may contribute to its strategic investment decisions [1] Financial Performance - The current dividend yield of approximately 9% positions WES favorably compared to its peers in the midstream sector [1] - The expectation of dividend growth indicates a positive outlook on the company's financial health and operational performance [1]

Financial Data and Key Metrics Changes - The second quarter generated net income attributable to limited partners of $334 million and adjusted EBITDA of $618 million, with an adjusted gross margin increase of $18 million compared to the first quarter, primarily driven by increased throughput and improved gross margin contribution from the Delaware Basin [19][20] - The company maintained a top-tier net leverage ratio of 2.9 times at quarter end, with free cash flow of $388 million [21][23] Business Line Data and Key Metrics Changes - Natural gas throughput increased by 3% sequentially, crude oil and NGLs throughput increased by 6%, and produced water throughput increased by 4%, primarily due to new wells coming online in the Delaware Basin [13][14] - Adjusted gross margin per Mcf for natural gas decreased by $0.02, while per barrel adjusted gross margin for crude oil and NGLs decreased by $0.15, reflecting changes in contract mix and distribution payments [14][15] Market Data and Key Metrics Changes - The Delaware Basin continued to be the primary growth engine, with expectations of modest year-over-year increases in average throughput across all product lines [16][17] - The company anticipates meaningful natural gas throughput growth from other assets, particularly in the Uinta Basin, driven by pipeline expansions [18] Company Strategy and Development Direction - The company announced an agreement to acquire Arris Water Solutions, which is expected to optimize the value of existing assets and enhance service offerings [6][9] - The sanctioning of a second train at the North Loving natural gas processing plant aims to increase capacity and prepare for anticipated growth in natural gas and produced water volumes [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth outlook despite volatile market conditions, with no substantial changes in customers' expected production [26][27] - The company remains committed to generating strong returns for unitholders while sustaining and growing distributions over time [24][27] Other Important Information - The acquisition of Arris is valued at $2 billion, implying approximately 7.5 times 2026 consensus EBITDA, and is expected to be accretive to free cash flow per unit in 2026 [9][10] - The company has identified permanent annual run rate cost savings of approximately $50 million through operational efficiencies [22] Q&A Session Summary Question: Funding for ARRIS acquisition - Management explained the decision to finance the acquisition in a leverage-neutral way to preserve balance sheet capacity and position for future growth opportunities [31][33] Question: Water business percentage of EBITDA - Management indicated no specific target mix for the water business but expressed satisfaction with a range around 15% to 20% [34] Question: Opportunities for consolidation in New Mexico - Management noted that the ARRIS acquisition completes their system in the Delaware Basin and they are comfortable with the regulatory environment in New Mexico [36][38] Question: FID on North Loving II - Management acknowledged a more aggressive approach to FID, supported by strong underlying contracts and producer confidence [40][42] Question: Synergies from the ARRIS acquisition - Management clarified that the $40 million in synergies are primarily G&A savings and that they expect to realize these quickly post-acquisition [46][48] Question: Capital expenditures outlook - Management expects elevated capital expenditures in 2026 due to major projects, normalizing in 2027 [51][52] Question: Opportunities at McNeil Ranch - Management views McNeil Ranch as a long-term upside opportunity for water disposal and surface use [55][57] Question: Regulatory hurdles for ARRIS acquisition - Management does not foresee significant hurdles in the regulatory process and expects to close the transaction in the fourth quarter [60][62]

Financial Data and Key Metrics Changes - The company reported a net income attributable to limited partners of $334 million and adjusted EBITDA of $618 million for Q2 2025, with an increase in adjusted gross margin by $18 million compared to Q1 2025 [20][21] - The adjusted gross margin for natural gas decreased by $0.02 per Mcf, while the adjusted gross margin for crude oil and NGLs decreased by $0.15 per barrel, both in line with prior expectations [15][16] - Free cash flow for Q2 2025 was $388 million, with cash flow from operating activities totaling $564 million [21] Business Line Data and Key Metrics Changes - Natural gas throughput increased by 3%, crude oil and NGLs throughput increased by 6%, and produced water throughput increased by 4% sequentially, primarily driven by new wells in the Delaware Basin [13][14] - The company expects portfolio-wide average throughput growth of mid-single digits for natural gas and produced water, and low-single digits for crude oil and NGLs for the remainder of 2025 [17][24] Market Data and Key Metrics Changes - The Delaware Basin continues to be the primary growth engine, with expectations of modest year-over-year increases in throughput across all product lines [17][18] - The company anticipates meaningful natural gas throughput growth from other assets, particularly in the Uinta Basin, starting in the second half of the year [19] Company Strategy and Development Direction - The company announced the acquisition of Arris Water Solutions, which is expected to enhance its footprint in the Delaware Basin and expand service offerings [6][9] - The sanctioning of a second train at the North Loving natural gas processing plant will increase capacity to 550 million cubic feet per day, supporting anticipated growth in natural gas and produced water volumes [11][12] - The company aims to maintain a disciplined capital allocation framework while focusing on organic growth and potential M&A opportunities [76] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth outlook despite volatile market conditions, citing strong producer activity levels in the Delaware Basin [26][27] - The company remains committed to generating strong returns for unitholders and sustaining distribution growth, with a long-term distribution growth outlook in the mid-single digits [50][25] Other Important Information - The company has implemented initiatives to optimize operational processes, resulting in annual run rate cost savings of approximately $50 million [23] - The expected close date for the ARRIS acquisition is during Q4 2025, pending regulatory review and shareholder approval [22] Q&A Session Summary Question: Funding for ARRIS acquisition - Management explained the decision to finance the acquisition in a leverage-neutral manner to preserve balance sheet capacity and position for future growth opportunities [31][33] Question: Water business percentage of EBITDA - Management indicated that while water currently represents 16% of EBITDA, they are comfortable with a mix around 15-20% as the water business evolves into a clear midstream type of business [34] Question: Regulatory environment in New Mexico - Management expressed confidence in the regulatory environment in New Mexico and highlighted the benefits of moving water across state lines [38] Question: FID on North Loving II - Management noted that the decision to move forward with North Loving II was based on strong underlying contracts and expected volumes from producers [40][42] Question: Synergies from the ARRIS acquisition - Management stated that the $40 million in expected synergies are primarily related to G&A and typical public company consolidation synergies, with no revenue synergies counted yet [46][48] Question: Long-term plans for McNeil Ranch - Management views the McNeil Ranch as a long-term upside opportunity for pore space and surface use, with existing permits for water disposal already in place [56][58] Question: Capital allocation between organic growth and M&A - Management emphasized that organic growth opportunities are prioritized, but they remain open to M&A if it meets their strategic criteria [75][76]

Financial Performance - Western Midstream Partners (WES) achieved a record quarterly Adjusted EBITDA of $618 million, a 4% increase quarter-over-quarter[13] - Operating cash flow was $564 million in the second quarter of 2025[20] - Free cash flow for the second quarter of 2025 was $3884 million[20] - Cash distributions paid in the second quarter of 2025 were $35534 million[20] - Net income for the second quarter of 2025 was $334 million[21] Operational Performance - Total natural gas throughput was 54 Bcf/d, a 3% increase quarter-over-quarter[13] - Total crude oil and NGLs throughput was 543 MBbls/d, a 6% increase quarter-over-quarter[13] - Total produced water throughput was 1242 MBbls/d[13] Strategic Growth - WES sanctioned a new 300 MMcf/d cryogenic processing train at the North Loving plant in the Delaware Basin, expected to be in service by the second quarter of 2027[13, 17] - The company is constructing the Pathfinder Pipeline, an ~800 MBbls/d produced-water transportation pipeline, expected to be in service by the first quarter of 2027, with ~85% of the total project capex to be spent in 2026[17] Ownership Structure - Occidental owns 447% of Western Midstream Partners, LP, while public unitholders own 553%[8] - The market capitalization of Western Midstream Partners, LP is approximately $15 billion[8]