Western Midstream(WES) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2025, the company generated record Adjusted EBITDA of $636 million, with a sequential quarter increase of approximately 5% to $665 million when excluding negative adjustments [10][30] - For the full year 2025, the company reported a record Adjusted EBITDA of $2.48 billion, exceeding the midpoint of the guidance range [34] - The net income attributable to limited partners for Q4 was $187 million, impacted by $120 million of transaction costs from the Aris acquisition [28] Business Line Data and Key Metrics Changes - Natural gas throughput decreased by 4% sequentially in Q4 due to lower volumes from the Delaware and Powder River Basins, partially offset by record throughput from the DJ Basin [20] - Produced water throughput increased by 121% sequentially, driven by the Aris acquisition [20] - For the full year 2025, natural gas throughput averaged 5.2 billion cubic feet per day, a 4% year-over-year increase, while crude oil and NGLs throughput averaged 514,000 barrels per day, a 1% increase [23] Market Data and Key Metrics Changes - The Delaware Basin remained the primary growth engine, with throughput records contributing to overall performance [12] - The company expects natural gas throughput to remain flat year-over-year in 2026, with crude oil and NGL throughput declining by low- to mid-single digits [24] - The Powder River Basin is expected to see a decline in throughput by 10%-15% based on producer forecasts [27] Company Strategy and Development Direction - The company’s long-term growth strategy remains unchanged, targeting mid- to low-single-digit Adjusted EBITDA growth [42] - The Aris acquisition is expected to significantly contribute to 2026 results and enhance the company's capabilities in produced water solutions [9][15] - The company plans to reduce capital expenditures for 2026 to a range of $850 million to $1 billion, reflecting a disciplined approach to capital allocation [38] Management's Comments on Operating Environment and Future Outlook - Management noted increased macroeconomic and commodity price-driven volatility affecting producer activity levels, particularly in the Delaware Basin [4] - The company anticipates a transition year in 2026, with stable long-term contract structures supporting financial stability [8] - Management expressed confidence in the long-term development plans of producers, particularly in the Delaware Basin [6] Other Important Information - The company achieved $40 million in targeted cost synergies from the Aris acquisition, with 85% expected to be realized by the end of Q1 2026 [16] - The integration of Aris has progressed well, enhancing the company’s commercial organization and capabilities [14] Q&A Session Summary Question: How is the company thinking about M&A and inorganic growth? - Management reiterated that the strategy for M&A remains unchanged, focusing on opportunities for synergies and disciplined capital deployment [49][50] Question: Can you elaborate on the Waha pricing situation? - Management indicated that new egress solutions expected in the second half of the year should help alleviate pricing volatility, and they are working with customers to find commercial solutions [55][56] Question: What is the outlook for distribution coverage? - Management discussed plans to grow distributions slightly behind EBITDA growth, with a proposed increase of $0.02 per unit for 2026 [80]