Western Midstream Partners Q1 Earnings Miss on Higher Expenses

Western Midstream Partners LP WES reported first-quarter 2025 earnings of 79 cents per common unit, which missed the Zacks Consensus Estimate of 83 cents. The bottom line also declined from the year-ago quarter’s level of $1.47.

Total quarterly revenues of $917 million lagged the Zacks Consensus Estimate of $945 million. However, the top line increased from the prior-year level of $888 million. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

The weak quarterly earnings can be primarily attributed to lower crude oil and NGLs throughput and higher total operating expenses. However, increased contributions from the partnership’s natural gas assets partially offset the negatives. 

Western Midstream Partners, LP Price, Consensus and EPS Surprise

Western Midstream Partners, LP price-consensus-eps-surprise-chart | Western Midstream Partners, LP Quote

Operational Performance of WES

The throughput attributable to the WES’ natural gas assets totaled 5,110 million cubic feet per day (MMcf/d), up 2.4% from the prior-year quarter. The increase can be primarily attributed to volume growth from the DJ-Basin and the Delaware Basin. Increased contributions from the partnership’s other assets, particularly in South Texas and Utah, also aided the segment.

Total throughput for crude oil and NGL assets came in at 503 thousand barrels per day (MBbls/d) compared to 565 MBbls/d in the first quarter of 2024. The decline can be attributed to reduced throughputs from the partnership’s equity investments. However, total operated throughput for crude oil and NGLs assets increased to 411 MBbls/d from 374 MBbls/d in the prior-year quarter, mainly due to increased throughput from the Delaware Basin and DJ Basin assets.

Total throughput attributable to WES for produced-water assets was reported at 1,166 MBbls/d, up from 1,126 MBbls/D in the year-ago quarter.

WES’ Costs and Expenses

Total operating expenses for the quarter stood at $523 million, up 9% from the prior-year reported figure of $481 million. The increase was primarily due to a rise in operation and maintenance expenses, and higher depreciation and amortization costs.

Cash Flow of WES

Net cash provided by operating activities totaled $531 million in the first quarter, up from $400 million reported in the corresponding period of 2024. The partnership’s free cash flow for the quarter totaled $399.4 million.

Distribution Hike by WES

WES announced its first-quarter 2025 distribution of 91 cents per unit ($3.94 on an annualized basis), payable on May 15, 2025, to unitholders of record on May 2, 2025. This represents a 4% increase compared to the prior quarter.

Balance Sheet

As of March 31, 2025, the partnership’s cash and cash equivalents were $448 million. As of the same date, its long-term debt totaled $6.9 billion.

WES’ Outlook

WES forecasts adjusted EBITDA for full-year 2025 in the range of $2,350-$2,550 million. The partnership expects total capital expenditures for the year between $625 and $775 million. The partnership also expects to generate free cash flow in the band of $1,275-$1,475 million in 2025.

WES’ Zacks Rank and Key Picks

WES currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the energy sector are Archrock Inc. AROC, Diversified Energy Company plc DEC and Galp Energia SGPS SA GLPEY. While Archrock currently sports a Zacks Rank #1 (Strong Buy), Diversified Energy and Galp Energia carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Archrock is an energy infrastructure company based in the United States with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues. With natural gas playing an increasingly important role in the energy transition journey, AROC is expected to witness sustained demand for its services.

Diversified Energy Company is an independent oil and natural gas producer in the United States. The company is primarily engaged in the production, transportation, and marketing of natural gas and natural gas liquids. The rising demand for natural gas as a cleaner-burning fuel and an uptick in the commodity’s prices are expected to positively impact the company’s bottom line.

Galp Energia is a Portuguese energy company, engaged in exploration and production activities. The company’s oil exploration efforts have yielded positive results, particularly with the Mopane discovery in the Orange Basin, offshore Namibia. After the initial exploration phase, Galp had estimated that the Mopane prospect could hold nearly 10 billion barrels of oil. This discovery allows Galp to diversify its global presence with the potential to become a significant oil producer in the region.

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This article originally published on Zacks Investment Research (zacks.com).

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