Core Viewpoint - The midstream master limited partnership (MLP) sector offers attractive income opportunities for investors, particularly through pipeline companies that have stable business models less affected by commodity price fluctuations [1]. Group 1: Western Midstream - Western Midstream Partners has a high yield of 9.2%, supported by a strong balance sheet and well-covered distributions [3]. - The company ended the last quarter with a leverage ratio of 2.8 times and holds an investment-grade credit rating, indicating financial stability [4]. - Western generates strong free cash flow exceeding its distribution, with significant business coming from its parent company, Occidental Petroleum [4]. - The acquisition of Aris Water Solutions will diversify Western's customer base, enhancing its growth potential [4]. - The company is focusing on produced water disposal in the Delaware Basin, with the Pathfinder Pipeline project being a key growth initiative [5]. - Western's enterprise value-to-EBITDA multiple is just over 8 times based on 2026 estimates, making it an attractive option for income-oriented investors [6]. Group 2: MPLX - MPLX offers an 8.1% yield and maintains a strong balance sheet, with a leverage ratio of 3.7 times and a distribution coverage level of 1.3 times based on its distributable cash flow [7][9]. - The company has repositioned its portfolio for growth through a series of acquisitions and divestitures, enhancing its attractiveness in the midstream sector [8].

Core Viewpoint - The midstream master limited partnership (MLP) sector is currently a strong investment opportunity due to high yields and solid financial health of the companies involved [1][2]. Company Summaries Western Midstream - Western Midstream Partners offers a yield of 9.2%, making it one of the most attractive high-yield stocks available [4]. - The company has a market capitalization of $16 billion and a gross margin of 53.34% [5][6]. - It has a leverage ratio of 2.8 and is expanding its operations, including the acquisition of Aris Water Solutions and the development of the Pathfinder Pipeline [6][7]. - The company plans to grow its distribution at a mid-single-digit rate in the coming years [7]. Energy Transfer - Energy Transfer has an 8% yield and is in strong financial shape, with a market cap of $56 billion and a gross margin of 12.85% [8][9]. - Approximately 90% of its business is fee-based, providing stability as it is less exposed to commodity price fluctuations [7][9]. - The company is investing nearly $10 billion in growth capital expenditures over the next two years, with an expected return in the mid-teens [10]. - Energy Transfer aims to grow its distribution by 3% to 5% annually [10]. Enterprise Products Partners - Enterprise Products Partners has a yield of 6.8% and has consistently raised its payout for 27 consecutive years [11]. - The company has a market cap of $69 billion and a gross margin of 12.74% [12]. - It maintains a coverage ratio of 1.5 and a leverage ratio of 3.3, indicating a solid financial position [11][12]. - Enterprise is expected to reduce capital expenditures next year, leading to strong free cash flow and flexibility for capital allocation [13][14].

Financial Performance - Western Midstream achieved a record total natural-gas throughput of 55 billion cubic feet per day[13] - The company reported record Adjusted EBITDA of $634 million in Q3 2025, a 3% quarter-over-quarter increase[13] - Operating cash flow increased to $5702 million in Q3 2025 from $564 million in Q2 2025[34] - Free cash flow increased to $3974 million in Q3 2025 from $3884 million in Q2 2025[34] - The company's net income for Q3 2025 was $332 million[36] Strategic Growth & Capital Allocation - The company is targeting organic capital projects that meet or exceed mid-teens, unlevered rates of return[40] - The company anticipates free cash flow to be in the range of $1275 billion to $1475 billion for 2025[44] - The company is targeting mid-to-low single-digit annual distribution increases[41] - The company's estimated throughput growth rate for produced water is approximately 40% for 2025[47] Assets and Operations - The North Loving II project, a 300 million cubic feet per day cryogenic processing train, is expected to be in service in Q2 2027[18] - The Pathfinder Pipeline, with a capacity of approximately 800 thousand barrels per day, is expected to be in service in Q1 2027[18] - The company's market capitalization is approximately $153 billion[8]