Western Midstream Boosts Q3 Net Income, Cash Drains on Debt Repayments

TL;DR

**WES is prioritizing debt reduction and unitholder payouts, but watch that shrinking cash pile – it could limit future growth.**

AI Summary

Western Midstream Partners, LP (WES) reported a net income attributable to limited partners of $339.6 million for the three months ended September 30, 2025, a significant increase from $288.5 million in the same period of 2024. For the nine months ended September 30, 2025, net income attributable to limited partners was $990.3 million, down from $1.24 billion in 2024, primarily due to a substantial gain on divestiture in 2024. Total revenues and other increased to $952.5 million for the three months ended September 30, 2025, up from $883.4 million in 2024, driven by a rise in fee-based service revenues to $868.3 million from $814.3 million. Operating expenses also increased to $525.3 million for the quarter, compared to $511.9 million in the prior year, with a notable increase in long-lived asset and other impairments to $11.6 million from $4.7 million. The company's cash and cash equivalents decreased significantly to $177.3 million as of September 30, 2025, from $1.09 billion at December 31, 2024, largely due to substantial debt repayments of over $1 billion and distributions to unitholders totaling $1.05 billion during the nine-month period. Strategic outlook includes the acquisition of Aris Water Solutions, Inc. on October 15, 2025, which is expected to enhance their produced-water gathering and disposal systems.

Why It Matters

WES's increased Q3 net income, driven by fee-based revenue growth, signals operational strength in its core midstream services, which is positive for investors seeking stable income. However, the substantial reduction in cash and cash equivalents, primarily due to over $1 billion in debt repayments and $1.05 billion in unitholder distributions, highlights a strategic focus on deleveraging and returning capital, which could impact future growth investments if not managed carefully. The acquisition of Aris Water Solutions post-quarter end indicates a strategic move to expand its water infrastructure, potentially enhancing competitive positioning in the produced-water market against rivals like Select Energy Services. This could create new revenue streams and improve asset utilization, benefiting long-term unitholder value.

Risk Assessment

Risk Level: medium — The risk level is medium due to the significant decrease in cash and cash equivalents from $1.09 billion at December 31, 2024, to $177.3 million at September 30, 2025, representing an 83.7% reduction. While this was largely driven by over $1 billion in debt repayments and $1.05 billion in distributions, a low cash balance could limit financial flexibility for unexpected operational needs or future strategic investments, despite strong operating cash flow of $1.66 billion.

Analyst Insight

Investors should monitor WES's liquidity and future capital allocation strategies closely. While debt reduction is positive, the rapid decline in cash warrants attention; assess if the Aris acquisition and ongoing capital expenditures can be comfortably funded without straining the balance sheet or impacting distribution stability.

Financial Highlights

revenue

$952.5M

operating Margin

46.3%

net Income

$339.6M

eps

$0.87

cash Position

$177.3M

revenue Growth

+7.8%

Revenue Breakdown

Key Numbers

• $339.6M — Net Income (Q3 2025) (Increased from $288.5M in Q3 2024, showing 17.7% growth.)
• $990.3M — Net Income (YTD 2025) (Decreased from $1.24B in YTD 2024, primarily due to a large divestiture gain in 2024.)
• $952.5M — Total Revenues (Q3 2025) (Up from $883.4M in Q3 2024, driven by fee-based services.)
• $868.3M — Fee-based Service Revenues (Q3 2025) (Increased from $814.3M in Q3 2024, indicating stable core business performance.)
• $177.3M — Cash and Cash Equivalents (Sept 30, 2025) (Significantly down from $1.09B at Dec 31, 2024, due to debt repayments and distributions.)
• $1.00B — Debt Repayments (YTD 2025) (Substantial reduction in debt, improving financial leverage.)
• $1.05B — Distributions to Unitholders (YTD 2025) (Consistent return of capital to investors.)
• $11.6M — Long-lived Asset Impairments (Q3 2025) (Increased from $4.7M in Q3 2024, indicating potential asset revaluations.)

Key Players & Entities

• Western Midstream Partners, LP (company) — registrant
• Western Midstream Operating, LP (company) — consolidated subsidiary
• Aris Water Solutions, Inc. (company) — acquired by the Partnership on October 15, 2025
• Occidental Petroleum Corporation (company) — related party
• $339.6 million (dollar_amount) — Net income attributable to Western Midstream Partners, LP for Q3 2025
• $288.5 million (dollar_amount) — Net income attributable to Western Midstream Partners, LP for Q3 2024
• $990.3 million (dollar_amount) — Net income attributable to Western Midstream Partners, LP for nine months ended Sept 30, 2025
• $1.24 billion (dollar_amount) — Net income attributable to Western Midstream Partners, LP for nine months ended Sept 30, 2024
• $177.3 million (dollar_amount) — Cash and cash equivalents at September 30, 2025
• $1.09 billion (dollar_amount) — Cash and cash equivalents at December 31, 2024

FAQ

Risk Factors

• Commodity Price Volatility [high — market]: Revenues are sensitive to fluctuations in natural gas, NGLs, and crude oil prices. Product-based revenues and product sales are directly impacted, as seen in the 30.9% decrease in product-based service revenues and a 155.3% increase in product sales in Q3 2025 compared to Q3 2024.
• Asset Impairments [medium — operational]: The company recorded $11.6 million in long-lived asset and other impairments in Q3 2025, up from $4.7 million in Q3 2024. This indicates potential overvaluation or underperformance of certain assets, requiring write-downs.
• Liquidity and Debt Management [medium — financial]: Cash and cash equivalents decreased significantly from $1.09 billion at year-end 2024 to $177.3 million by September 30, 2025, due to over $1 billion in debt repayments and $1.05 billion in distributions. While debt reduction is positive, the reduced cash buffer could pose a risk if unexpected expenses arise.
• Environmental Regulations [medium — regulatory]: Midstream operations are subject to stringent environmental laws and regulations. Non-compliance can lead to significant fines, operational disruptions, and reputational damage. Changes in regulations could increase compliance costs.
• System Integrity and Maintenance [high — operational]: The company relies on the integrity of its extensive pipeline and processing infrastructure. Failures, leaks, or operational disruptions can lead to environmental damage, safety incidents, and significant financial losses.
• Customer Concentration and Demand [medium — market]: A significant portion of WES's revenue is derived from a limited number of customers. A downturn in their production or a loss of a major customer could materially impact revenues.
• Interest Rate Risk [medium — financial]: The company has substantial debt, and changes in interest rates can affect its interest expense. For the three months ended September 30, 2025, interest expense was $92.4 million, compared to $94.1 million in the prior year, showing some sensitivity.
• Contractual Obligations [low — legal]: WES is subject to various contractual obligations related to transportation, processing, and gathering services. Disputes or breaches of these contracts could lead to litigation and financial penalties.

Industry Context

The midstream energy sector is characterized by its essential role in transporting, storing, and processing oil and gas. Western Midstream operates in a competitive landscape with established players and evolving infrastructure needs, particularly in water management. Industry trends include consolidation, a focus on fee-based infrastructure, and increasing importance of environmental, social, and governance (ESG) factors, including water handling.

Regulatory Implications

Midstream companies like WES face significant regulatory oversight concerning environmental protection, safety, and operational standards. Compliance with federal, state, and local regulations is critical to avoid penalties and operational disruptions. Evolving regulations around emissions and water disposal could increase compliance costs and operational complexity.

What Investors Should Do

1. Monitor the integration and performance of Aris Water Solutions, Inc.
2. Analyze the sustainability of fee-based revenue growth.
3. Assess the impact of increased asset impairments.
4. Evaluate the company's liquidity and debt management strategy.
5. Observe commodity price trends and their impact on product-based revenues.

Key Dates

• 2025-09-30: End of Q3 2025 — Reporting period for the current financial results, showing increased net income and revenues but a reduced cash position.
• 2025-10-15: Acquisition of Aris Water Solutions, Inc. — Strategic move to enhance produced-water gathering and disposal systems, expected to impact future operations and financials.
• 2025-12-31: End of Fiscal Year 2024 — Reference point for the significant decrease in cash and cash equivalents from $1.09 billion to $177.3 million by Q3 2025.
• 2024-09-30: End of Q3 2024 — Prior year comparative period, showing lower net income ($288.5M) and revenues ($883.4M) but a higher cash position.

Glossary

Net income (loss) attributable to Western Midstream Partners, LP

The portion of the company's net income that belongs to the limited partners, after accounting for noncontrolling interests and general partner interests. (Key profitability metric for unitholders, showing a strong Q3 2025 but a year-to-date decline due to a prior year divestiture gain.)

Fee-based service revenues

Revenue generated from providing services such as transportation, processing, and storage, typically on a fixed fee per unit basis, less sensitive to commodity price fluctuations. (Represents the stable, core business of WES, which showed growth in Q3 2025, contributing to overall revenue increase.)

Long-lived asset and other impairments

A charge taken when the carrying value of a long-term asset (like property, plant, or equipment) is reduced because its fair value or future economic benefit is less than its book value. (An increase in these impairments to $11.6 million in Q3 2025 from $4.7 million in Q3 2024 suggests potential asset underperformance or revaluation.)

Distributions to unitholders

Payments made by the partnership to its limited partners, representing a return of capital or profits. (WES distributed $1.05 billion to unitholders in the first nine months of 2025, a significant use of cash that contributed to the reduced cash balance.)

Gain (loss) on divestiture and other, net

The profit or loss realized from selling off assets or business units, net of related expenses. (A large gain on divestiture in Q3 2024 significantly boosted prior year net income, making the year-over-year comparison for the nine-month period appear lower for 2025.)

Noncontrolling interests

The portion of equity in a subsidiary that is not attributable to the parent company or its limited partners. (This line item affects the calculation of net income attributable to WES, showing $9.3 million in Q3 2025 compared to $7.4 million in Q3 2024.)

Weighted-average common units outstanding

The average number of common units outstanding during a period, used to calculate earnings per unit. (This metric is used to calculate EPS, which was $0.87 basic and diluted for Q3 2025.)

Aris Water Solutions, Inc.

A company specializing in produced-water gathering and disposal systems. (WES's acquisition of this company on October 15, 2025, is a significant subsequent event aimed at expanding its water infrastructure services.)

Year-Over-Year Comparison

Compared to the prior year's third quarter, Western Midstream Partners, LP (WES) reported a notable increase in net income attributable to limited partners, rising 17.7% to $339.6 million from $288.5 million. Total revenues also grew by 7.8% to $952.5 million, primarily driven by a 6.6% increase in fee-based service revenues. However, the nine-month year-to-date comparison shows a decrease in net income from $1.24 billion to $990.3 million, largely due to a substantial gain on divestiture recorded in the prior year. Operating expenses saw a modest increase, with a significant jump in long-lived asset impairments to $11.6 million from $4.7 million.

Key Financial Figures

• $2.0 billion — d gas reservoirs. RCF WES Operating's $2.0 billion senior unsecured revolving credit facil
• $250.0 million — ethorn LLC. 2025 Purchase Program The $250.0 million buyback program ending December 31, 202

Filing Documents

• wes-20250930.htm (10-Q) — 2392KB
• wes2025q3-ex311.htm (EX-31.1) — 10KB
• wes2025q3-ex312.htm (EX-31.2) — 10KB
• wes2025q3-ex313.htm (EX-31.3) — 10KB
• wes2025q3-ex314.htm (EX-31.4) — 10KB
• wes2025q3-ex321.htm (EX-32.1) — 9KB
• wes2025q3-ex322.htm (EX-32.2) — 9KB
• 0001423902-25-000106.txt ( ) — 9634KB
• wes-20250930.xsd (EX-101.SCH) — 50KB
• wes-20250930_cal.xml (EX-101.CAL) — 63KB
• wes-20250930_def.xml (EX-101.DEF) — 396KB
• wes-20250930_lab.xml (EX-101.LAB) — 566KB
• wes-20250930_pre.xml (EX-101.PRE) — 550KB
• wes-20250930_htm.xml (XML) — 1473KB

FINANCIAL INFORMATION (UNAUDITED)

PART I FINANCIAL INFORMATION (UNAUDITED)

Financial Statements

Item 1. Financial Statements Western Midstream Partners, LP Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024 6 Consolidated Balance Sheets as of September 30, 2025, and December 31, 2024 7 Consolidated Statements of Equity and Partners' Capital for the three and nine months ended September 30, 2025 and 2024 8 Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 10 Western Midstream Operating, LP Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024 11 Consolidated Balance Sheets as of September 30, 2025, and December 31, 2024 12 Consolidated Statements of Equity and Partners' Capital for the three and nine months ended September 30, 2025 and 2024 13 Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 14

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 15 Note 1. Description of Business and Basis of Presentation 15 Note 2. Revenue from Contracts with Customers 17 Note 3. Acquisitions and Divestitures 19 Note 4. Partnership Distributions 20 Note 5. Equity and Partners' Capital 21 Note 6. Related-Party Transactions 22 Note 7. Equity Investments 25 Note 8. Selected Components of Working Capital 26 Note 9. Debt 27 Note 10. Commitments and Contingencies 28 Note 11. Reportable Segment 29 Note 12. Subsequent Event 30

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 31 Cautionary Note Regarding Forward-Looking Statements 31 Executive Summary 33 Outlook 35 Acquisitions and Divestitures 36 Results of Operations 36 Operating Results 36 Reconciliation of Non-GAAP Financial Measures 42 Key Performance Metrics 47 Liquidity and Capital Resources 48 Items Affecting the Comparability of Financial Results with WES Operating 51 Critical Accounting Estimates 52 Recent Accounting Developments 52

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 53

Controls and Procedures

Item 4. Controls and Procedures 53

OTHER INFORMATION

PART II OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 54

Risk Factors

Item 1A. Risk Factors 54

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 55

Other Information

Item 5. Other Information 55

Exhibits

Item 6. Exhibits 56 3 COMMONLY USED ABBREVIATIONS AND TERMS References to "we," "us," "our," "WES," "the Partnership," or "Western Midstream Partners, LP" refer to Western Midstream Partners, LP (formerly Western Gas Equity Partners, LP) and its subsidiaries. The following list of abbreviations and terms are used in this document: Defined Term Definition Aris Aris Water Solutions, Inc., which was acquired by the Partnership on October 15, 2025. Barrel, Bbl, Bbls/d, MBbls/d 42 U.S. gallons measured at 60 degrees Fahrenheit, barrels per day, thousand barrels per day. Board The board of directors of WES's general partner. Chipeta Chipeta Processing, LLC, in which we are the managing member and own a 75% interest. Condensate A natural-gas liquid with a low vapor pressure compared to drip condensate, mainly composed of propane, butane, pentane, and heavier hydrocarbon fractions. DBM water systems Produced-water gathering and disposal systems in West Texas. DJ Basin complex The Platte Valley, Fort Lupton, Wattenberg, Lancaster, and Latham processing plants, and the Wattenberg gathering system. EBITDA Earnings before interest, taxes, depreciation, and amortization. For a definition of "Adjusted EBITDA," see Reconciliation of Non-GAAP Financial Measures under Part I, Item 2 of this Form 10-Q. Exchange Act The Securities Exchange Act of 1934, as amended. FRP Front Range Pipeline LLC, in which we own a 33.33% interest. GAAP Generally accepted accounting principles in the United States. General partner Western Midstream Holdings, LLC, the general partner of the Partnership. Imbalance Imbalances result from (i) differences between gas and NGLs volumes nominated by customers and gas and NGLs volumes received from those customers and (ii) differences between gas and NGLs volumes received from customers and gas and NGLs volumes delivered to those customers. Marcellus Interest The 33.75% interest in the Larry's Creek, Seely, and Warrensville gas -

FINANCIAL INFORMATION (UNAUDITED)

PART I. FINANCIAL INFORMATION (UNAUDITED)

Financial Statements

Item 1. Financial Statements WESTERN MIDSTREAM PARTNERS, LP CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended September 30, Nine Months Ended September 30, thousands except per-unit amounts 2025 2024 2025 2024 Revenues and other Service revenues – fee based $ 868,253 $ 814,319 $ 2,542,869 $ 2,389,366 Service revenues – product based 33,919 49,115 143,613 177,321 Product sales 50,129 19,673 124,878 109,076 Other 183 255 562 957 Total revenues and other (1) 952,484 883,362 2,811,922 2,676,720 Equity income, net – related parties 16,847 23,977 64,410 84,227 Operating expenses Cost of product 51,187 32,847 135,360 132,936 Operation and maintenance 212,385 231,066 663,528 649,324 General and administrative 64,119 64,726 197,051 195,498 Property and other taxes 15,725 12,635 51,356 43,984 Depreciation and amortization 170,323 166,015 512,896 487,438 Long - lived asset and other impairments 11,562 4,651 12,251 6,204 Total operating expenses (2) 525,301 511,940 1,572,442 1,515,384 Gain (loss) on divestiture and other, net ( 2,470 ) 467 ( 8,048 ) 299,426 Operating income (loss) 441,560 395,866 1,295,842 1,544,989 Interest expense ( 92,353 ) ( 94,149 ) ( 284,816 ) ( 279,177 ) Gain (loss) on early extinguishment of debt — — — 5,403 Other income (expense), net 1,754 9,565 12,923 16,124 Income (loss) before income taxes 350,961 311,282 1,023,949 1,287,339 Income tax expense (benefit) 2,089 15,390 7,763 17,667 Net income (loss) 348,872 295,892 1,016,186 1,269,672 Net income (loss) attributable to noncontrolling interests 9,257 7,412 25,884 29,714 Net income (loss) attributable to Western Midstream Partners, LP $ 339,615 $ 288,480 $ 990,302 $ 1,239,958 Limited partners' interest in net income (loss): Net income (loss) attributable to Western Midstream Partners, LP $ 339,615 $ 288,480 $ 990,302 $ 1,239,958 General partner interest in net (income) loss ( 7,885 ) ( 6,708 ) ( 22,985 ) ( 28,845 ) Limited partners' interest i

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