Western Midstream Partners: Q3 2024 Results and Growth Opportunities

Western Midstream Partners (WES) recently announced its third-quarter 2024 financial and operating results, highlighting increased throughput and strong operational performance. The company reported record natural-gas and crude-oil and NGLs throughput in the Delaware and Powder River Basins, driving revenue growth and Adjusted EBITDA. WES also realigned the commercial structure of the Mi Vida joint venture, securing 100 MMcf/d of dedicated natural-gas processing capacity in the Delaware Basin. Despite a slight decline in profitability due to lower commodity prices and higher operation and maintenance expenses, WES remains well-positioned for future growth, with a strong balance sheet and a robust capital-return framework.

WES's increased throughput in the Delaware and Powder River Basins has translated into higher revenue and Adjusted EBITDA. In the third quarter of 2024, the company reported record natural-gas and crude-oil and NGLs throughput in both basins, with the Delaware Basin seeing a 2-percent sequential-quarter increase to 1.9 Bcf/d and 246 MBbls/d, and the Powder River Basin experiencing a 19-percent and 4-percent increase to 505 MMcf/d and 26 MBbls/d, respectively. This surge in throughput has driven revenue growth, with the company reporting $566.9 million in Adjusted EBITDA for the quarter, a 1-percent increase from the previous quarter. Additionally, WES's increased produced-water throughput in the Delaware Basin, up 2-percent to 1,121 MBbls/d, has further contributed to its overall revenue growth.


The realignment of the Mi Vida joint venture can bring significant long-term operational and financial benefits to WES. By securing 100 MMcf/d of dedicated natural-gas processing capacity in the Delaware Basin beginning in mid-2025, WES enhances its processing capabilities and ensures consistent throughput. This increased capacity allows WES to better serve its customers and potentially attract new ones, leading to higher revenue and Adjusted EBITDA. Moreover, the realignment may also improve WES's negotiating power with customers, enabling better contract terms and further boosting financial performance.

WES's strong operational performance and flow assurance are critical to its competitive advantage in the industry. WES maintained system operability above 98% during the third quarter, despite multiple plant turnarounds, demonstrating exceptional reliability and efficiency. This high operability ensures consistent service to customers, minimizing disruptions and maximizing throughput. Additionally, WES's ability to realign the commercial structure of the Mi Vida joint venture, securing 100 MMcf/d of dedicated natural-gas processing capacity, further enhances its competitive position. This strategic move allows WES to optimize its processing capabilities and better serve its customers, reinforcing its edge in the market.


WES's successful issuance of $800 million in 5.450% senior notes due 2034 has significantly bolstered its balance sheet. This move, coupled with the repayment of a portion of its 2025 senior notes, has comfortably reduced its trailing-twelve-month net leverage ratio to 3.0 times, meeting its year-end 2024 target. This improved financial position allows WES to explore various capital allocation strategies, including organic growth opportunities, accretive M&A, and increasing the base distribution in line with business growth. With a strong operating model and transparent capital-return framework, WES is well-positioned to capitalize on future growth prospects.

In conclusion, WES's Q3 2024 results demonstrate the company's strong operational performance and growth potential. Despite a slight decline in profitability due to lower commodity prices and higher operation and maintenance expenses, WES remains well-positioned for future growth, with a strong balance sheet and a robust capital-return framework. Investors should consider WES as a solid investment opportunity, given its low-risk business model, effective management, and favorable market trends.