Western Midstream Partners Q4 2024: Navigating Contradictions in Growth Targets, CapEx, and Regulatory Changes

These are the key contradictions discussed in Western Midstream Partners' latest 2024Q4 earnings call, specifically including: Distribution Growth Target, Capital Expenditure, Permian Water Business Focus, and Regulatory Outlook for Oil and Gas under a New Administration:



Operational and Financial Performance:
- Western Midstream Partners reported a 13% increase in annual adjusted EBITDA and a 37% increase in free cash flow for the full year 2024.
- This growth was driven by double-digit throughput increases across natural gas, crude oil, and produced water, as well as successful integration of acquisitions and strategic asset sales.

Pathfinder Pipeline Expansion:
- The company announced sanctioning of a new 30-inch long haul pipeline, the Pathfinder Pipeline, capable of transporting over 800,000 barrels per day of produced water.
- This project is anchored by a new long-term produced water agreement with Occidental Petroleum, supporting sustainable distribution growth and enhancing WES's long-term positioning.

Strategic Partnerships and Contract Extensions:
- WES extended its produced water gathering agreements with Occidental Petroleum, securing a 3.4-year extension and strong support for sustainable distribution growth.
- This extension reflects the strength of their relationship and WES's ability to provide firm flow assurance and long-term customer support.

Capital Allocation and Distribution Growth:
- The company targets a long-term annual distribution percentage growth rate of mid to low single-digits, excluding potential increases from large organic growth projects or acquisitions.
- This is driven by a focus on organic growth projects like Pathfinder, which align with WES's strategy of capital-efficient growth and strong returns for unitholders.