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

TL;DR

**Western Midstream's Q3 was solid, but they burned through cash paying down debt and distributing to unitholders – watch their liquidity closely!**

AI Summary

Western Midstream Partners, LP reported a net income of $348.87 million for the three months ended September 30, 2025, a significant increase from $295.89 million in the same period of 2024. For the nine months ended September 30, 2025, net income was $1.02 billion, down from $1.27 billion in 2024, primarily due to a substantial gain on divestiture in 2024. Total revenues and other increased to $952.48 million for the three months ended September 30, 2025, up from $883.36 million in 2024, driven by a rise in fee-based service revenues to $868.25 million from $814.32 million. Operating expenses also increased to $525.30 million from $511.94 million in the prior year's quarter, with operation and maintenance costs decreasing to $212.39 million from $231.07 million. The company's cash and cash equivalents decreased significantly to $177.29 million as of September 30, 2025, from $1.09 billion at December 31, 2024, largely due to debt repayments of over $1.00 billion and distributions to unitholders totaling $1.05 billion. Long-term debt remained stable at $6.92 billion, while short-term debt decreased from $1.01 billion to $13.06 million. The company also completed the acquisition of Aris Water Solutions, Inc. on October 15, 2025, a subsequent event not fully reflected in the September 30 financials.

Why It Matters

This filing reveals Western Midstream's strong operational performance in Q3 2025, with increased fee-based revenues indicating stable cash flow generation, which is crucial for investors seeking predictable returns in the midstream sector. However, the significant reduction in cash and cash equivalents, driven by substantial debt repayments and unitholder distributions, signals a strategic deleveraging effort that could impact future liquidity and capital allocation for growth initiatives. The competitive landscape, particularly with the recent acquisition of Aris Water Solutions, suggests a focus on expanding water solutions, potentially diversifying revenue streams and enhancing market position against rivals in the Permian Basin. Employees and customers may see stability and potential expansion in services, but the aggressive cash deployment warrants close monitoring by the broader market.

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 $177.29 million at September 30, 2025. This substantial reduction in liquidity, driven by over $1.00 billion in debt repayments and $1.05 billion in unitholder distributions, could limit financial flexibility for unforeseen operational needs or future strategic investments, despite stable long-term debt levels.

Analyst Insight

Investors should monitor Western Midstream's cash flow generation and future capital allocation strategies closely. While debt reduction is positive, the sharp decline in cash reserves warrants attention; assess if the company can sustain its distribution policy and fund growth without impacting operational stability.

Financial Highlights

revenue

$952.48M

operating Margin

46.4%

total Debt

$6.93B

net Income

$348.87M

eps

$0.87

cash Position

$177.29M

revenue Growth

+7.8%

Revenue Breakdown

Key Numbers

• $348.87M — Net Income (Q3 2025) (Increased from $295.89M in Q3 2024)
• $1.02B — Net Income (YTD Q3 2025) (Decreased from $1.27B in YTD Q3 2024 due to prior year divestiture gain)
• $952.48M — Total Revenues and Other (Q3 2025) (Increased from $883.36M in Q3 2024)
• $868.25M — Service Revenues – Fee Based (Q3 2025) (Increased from $814.32M in Q3 2024)
• $177.29M — Cash and Cash Equivalents (Sept 30, 2025) (Significant decrease from $1.09B at Dec 31, 2024)
• $1.00B — Debt Repayments (YTD Q3 2025) (Major use of cash, contributing to reduced liquidity)
• $1.05B — Distributions to Partnership Unitholders (YTD Q3 2025) (Significant cash outflow)
• $6.92B — Long-Term Debt (Sept 30, 2025) (Remained stable compared to Dec 31, 2024)
• $13.06M — Short-Term Debt (Sept 30, 2025) (Substantial decrease from $1.01B at Dec 31, 2024)
• 407,995,725 — Common Units Outstanding (Oct 31, 2025) (Reflects total common units for Western Midstream Partners, LP)

Key Players & Entities

• Western Midstream Partners, LP (company) — registrant and primary entity
• Western Midstream Operating, LP (company) — consolidated subsidiary with publicly traded debt
• Aris Water Solutions, Inc. (company) — acquired by the Partnership on October 15, 2025
• Occidental Petroleum Corporation (company) — related party
• New York Stock Exchange (regulator) — exchange where common units are registered
• $348,872 (dollar_amount) — Net income for the three months ended September 30, 2025
• $1,016,186 (dollar_amount) — Net income for the nine months ended September 30, 2025
• $177,288 (dollar_amount) — Cash and cash equivalents as of September 30, 2025
• $1,090,464 (dollar_amount) — Cash and cash equivalents as of December 31, 2024
• $1,000,589 (dollar_amount) — Repayments of debt for the nine months ended September 30, 2025

FAQ

Risk Factors

• Commodity Price Volatility [high — market]: Fluctuations in natural gas, NGLs, and crude oil prices can impact producer activity and, consequently, demand for Western Midstream's services. For example, product-based revenues decreased by 30.9% in Q3 2025 compared to Q3 2024.
• Operational Interruptions [medium — operational]: The company's operations are subject to risks of equipment failure, accidents, and natural disasters, which could lead to service disruptions and revenue loss. Operation and maintenance costs were $212.39M in Q3 2025, a decrease from $231.07M in Q3 2024, but still a significant expense.
• Liquidity and Debt Management [medium — financial]: Significant debt repayments ($1.00B YTD) and distributions ($1.05B YTD) have reduced cash and cash equivalents to $177.29M from $1.09B at year-end 2024. While long-term debt is stable at $6.92B, managing liquidity is crucial.
• Environmental Regulations [medium — regulatory]: Increasingly stringent environmental regulations related to greenhouse gas emissions and other environmental impacts could require significant capital expenditures for compliance and may affect producer operations.
• Contractual Disputes [low — legal]: Disputes arising from contracts with customers or suppliers could lead to litigation and financial liabilities. The company has ongoing related-party transactions which could be subject to scrutiny.

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. Trends include consolidation, increasing focus on ESG initiatives, and the need for efficient, reliable operations to support upstream production.

Regulatory Implications

The midstream sector faces increasing regulatory scrutiny regarding environmental impact, safety, and operational transparency. Compliance with evolving regulations, particularly concerning emissions and infrastructure integrity, requires ongoing investment and can pose operational and financial risks.

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. Evaluate the company's cash flow generation and distribution policy.
4. Assess the impact of commodity price volatility on product-based revenues and producer activity.

Key Dates

• 2025-09-30: End of Q3 2025 — Financial results for the third quarter and nine months ended this date are reported, showing increased quarterly net income but decreased year-to-date net income due to a prior year divestiture gain.
• 2025-10-15: Acquisition of Aris Water Solutions, Inc. — A significant subsequent event that will impact future financial statements and operations, expanding the company's service offerings.
• 2024-09-30: End of Q3 2024 — Comparative period for Q3 2025 results, highlighting a substantial gain on divestiture that boosted prior year net income.
• 2024-12-31: End of Fiscal Year 2024 — Balance sheet comparison point, showing a significant decrease in cash and cash equivalents and short-term debt by Q3 2025.

Glossary

Fee-based service revenues

Revenue generated from providing midstream services (like transportation and storage) under contracts where fees are primarily based on volume or capacity, rather than commodity prices. (This is the largest revenue driver for Western Midstream, showing growth in Q3 2025, indicating stable demand for core services.)

Product sales

Revenue generated from the sale of commodities, such as natural gas, NGLs, or crude oil, that the company may acquire or produce. (This revenue stream is more volatile and sensitive to commodity prices, as seen in its significant increase in Q3 2025.)

Gain (loss) on divestiture and other, net

The profit or loss realized from selling off assets or business units, plus any other non-operating gains or losses. (A significant factor in year-over-year net income comparisons; a large gain in 2024 made the 2025 year-to-date results appear lower.)

Distributions to unitholders

Payments made by the partnership to its limited and general partners, typically from operating cash flow. (A major cash outflow for the company, contributing to the reduction in cash reserves as $1.05 billion was distributed year-to-date.)

Noncontrolling interests

The portion of equity interest in a subsidiary that is not attributable to the parent company. (Represents the share of net income belonging to other owners in consolidated entities, impacting the net income attributable to Western Midstream Partners, LP.)

Year-Over-Year Comparison

Compared to the prior year's period, Western Midstream Operating, LP reported a notable increase in net income for the third quarter of 2025 ($348.87M vs. $295.89M), driven by higher fee-based service revenues ($868.25M vs. $814.32M). However, year-to-date net income declined ($1.02B vs. $1.27B) primarily due to a substantial divestiture gain recorded in the prior year. Operating expenses saw a modest increase, though operation and maintenance costs decreased. Liquidity significantly contracted, with cash and cash equivalents dropping from $1.09B at year-end 2024 to $177.29M, largely due to substantial debt repayments and distributions.

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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