Western Midstream(US:WES)2025-08-06 21:00Operational Performance - As of June 30, 2025, the company operates 18 wholly owned gathering systems, 43 treating facilities, and 27 processing plants, with total gas processing capacity increased by 250 MMcf/d to 2,190 MMcf/d[113] - Total throughput for natural-gas assets increased by 3% to 5,433 MMcf/d for the three months ended June 30, 2025, compared to 5,291 MMcf/d for the previous quarter[115] - The Delaware Basin's natural gas throughput rose by 7% to 2,104 MMcf/d for the three months ended June 30, 2025, compared to 1,975 MMcf/d for the previous quarter[115] - Crude oil and NGLs throughput increased by 6% to 543 MBbls/d for the three months ended June 30, 2025, compared to 514 MBbls/d for the previous quarter[115] - Total throughput for natural-gas assets increased by 141 MMcf/d for the three months ended June 30, 2025, primarily due to higher volumes at the West Texas, DJ Basin, and Powder River Basin complexes[130] - Total throughput for crude-oil and NGLs assets increased by 29 MBbls/d for the three months ended June 30, 2025, driven by higher volumes at the DBM oil system[133] - Total throughput for produced-water assets increased by 51 MBbls/d for the three months ended June 30, 2025, due to higher production[135] Financial Performance - Total revenues for the three months ended June 30, 2025, were $942,322 thousand, representing an increase of 3% compared to $917,116 thousand for the previous quarter[1] - Net income for the three months ended June 30, 2025, was $350,762 thousand, compared to $316,552 thousand for the previous quarter, marking an increase of 11%[1] - Service revenues – fee based increased by $28.2 million for the three months ended June 30, 2025, primarily due to increased throughput at the West Texas complex[137] - Equity income, net – related parties increased by 33% to $27,128 thousand for the three months ended June 30, 2025, compared to $20,435 thousand for the previous quarter[141] - Total revenues increased by $66.1 million for the six months ended June 30, 2025, contributing to improved financial performance[164] - Net income attributable to WES for the six months ended June 30, 2025, was $650.7 million, down from $951.5 million in 2024[196] Expenses and Costs - Total operating expenses for the three months ended June 30, 2025, were $524,060 thousand, slightly up from $523,081 thousand in the previous quarter[1] - High inflation has raised operating costs, with increased expenses for steel, labor, and materials, potentially affecting financial results[121] - Total cost of product and operation and maintenance expenses for the six months ended June 30, 2025, were $535,316 thousand, a 3% increase compared to $518,347 thousand for the same period last year[142] - Operation and maintenance expense increased by $32.9 million for the six months ended June 30, 2025, driven by higher utility, equipment, and salary costs[147] - Total other operating expenses increased by 6% year-over-year for the six months ended June 30, 2025, totaling $511.8 million[148] - Depreciation and amortization expense rose by $21.2 million for the six months ended June 30, 2025, due to capital projects at the West Texas complex[149] - Interest expense increased by $7.4 million for the six months ended June 30, 2025, primarily due to new Senior Notes issued in 2024[150] Cash Flow and Capital Expenditures - Free Cash Flow is defined as net cash provided by operating activities less total capital expenditures, indicating capital discipline and balance-sheet strength[153] - Net cash provided by operating activities for the six months ended June 30, 2025, was $1,094.8 million, compared to $1,031.1 million for the same period in 2024[161] - Capital expenditures for the six months ended June 30, 2025, were $321.0 million, down from $405.7 million in the same period last year[161] - Free Cash Flow decreased by $11.0 million for the three months ended June 30, 2025, primarily due to a $36.2 million increase in capital expenditures[175] - Net cash used in investing activities for the six months ended June 30, 2025, was $(314.8) million, compared to $381.9 million in the prior year[161] Market and Economic Conditions - The company expects commodity price fluctuations to impact producer activity, with WTI crude oil prices ranging from $57.13 to $80.04 per barrel during the six months ended June 30, 2025[119] - The company anticipates that rising interest rates may increase financing costs and impact unit prices[122] - A 10% increase or decrease in commodity prices would not materially impact operating income, financial condition, or cash flows for the next 12 months[206] - A 10% change in the applicable benchmark interest rate would not materially impact interest expense on outstanding borrowings but would affect the fair value of senior notes[207] Liquidity and Financial Flexibility - The company aims to maintain liquidity and financial flexibility in response to fluctuating commodity prices and operational challenges faced by producers[120] - As of June 30, 2025, the company reported a working capital surplus of $210.2 million and $2.0 billion in effective borrowing capacity under the RCF[182] - The company expects cash flows generated from operations to be sufficient to meet short-term working-capital and long-term capital-expenditure requirements[178] - The Board declared a cash distribution of $0.910 per unit for Q2 2025, totaling $355.3 million, payable on August 14, 2025[179] - A buyback program of up to $250.0 million for common units was authorized through December 31, 2026[180] Debt and Financing - The carrying value of outstanding debt as of June 30, 2025, was $6.9 billion, with no borrowings due within the next year[190] - WES Operating retired $336.8 million of 3.950% Senior Notes and $663.8 million of 3.100% Senior Notes during the six months ended June 30, 2025[191] - The company continues to evaluate credit risk associated with counterparties, particularly Occidental, which significantly impacts revenue[193] - Additional short-term or variable-rate debt may be issued in the future under the RCF or other financing sources[208] Taxation - The company is not a taxable entity for U.S. federal income tax purposes, resulting in a federal statutory rate of zero percent[151]