Western Midstream's Q2 2025 Earnings Call: Key Contradictions in Capital Allocation, M&A Strategy, and Growth Expectations

Capital allocation strategy, producer alignment and FID timing, M&A strategy and consolidation, distribution growth rate expectations, and volume growth moderation explanation are the key contradictions discussed in Western Midstream Partners' latest 2025Q2 earnings call.



Financial Performance and Growth:
- Western Midstream Partners (WES) reported the highest quarterly adjusted EBITDA in its history during Q2 2025, achieving $618 million.
- This was driven by increased throughput across all core operating assets, particularly in the Delaware Basin, and strong activity levels.

Aris Acquisition and Strategic Expansion:
- WES announced an agreement to acquire Aris Water Solutions, valued at $2 billion, including the assumption of Aris's net debt and other liabilities.
- This acquisition aims to strengthen WES's position in the midstream water services sector, expand its service offerings, and deliver enhanced flow assurance to customers.

Organic Growth and Capital Expenditure:
- WES sanctioned an additional train at its North Loving natural gas processing plant, increasing its capacity to 550 million cubic feet per day.
- This move is in response to expected long-term growth in natural gas and produced water volumes in the West Texas complex.

Regulatory Environment and Strategic Advantage:
- The acquisition of Aris was driven by Texas Railroad Commission regulations impacting the permitting of new saltwater disposal wells, enhancing WES's competitive position in the Delaware Basin.
- With increased scale and expanded service offerings, WES is positioned to compete effectively for additional natural gas and crude oil gathering and processing business.