Western Midstream Stock Trading at Record Levels
I’m putting WES stock in the Income Investors spotlight today.
With growing concerns about an all-out war in the Middle East, all eyes are on domestic oil and gas producers here in the U.S. The Middle East might be home to the world’s largest oil reserves, but geopolitical issues have put the spotlight back on safer, more reliable domestic sources like Western Midstream Partners LP (NYSE:WES).
Western Midstream is involved in the gathering, compression, treating, processing, and transportation of natural gas. The limited partnership gathers, stabilizes, and transports condensate, natural gas liquids (NGLs), and crude oil and gathers and disposes of produced water. It also buys and sells natural gas, NGLs, and condensate. (Source: “First-Quarter 2025 Review,” Western Midstream Partners LP, May 7, 2025.)
The company’s core assets provide midstream services for customers in some of the most active and productive basins in the U.S.: the Delaware Basin in West Texas and New Mexico; the DJ Basin in northeastern Colorado; and the Powder River Basin in Northeast Wyoming. Additional assets and investments are located in South Texas, Utah, and Southwest Wyoming.
Western Midstream’s infrastructure includes:
- 21 gathering systems
- 69 processing and treating facilities
- 7 natural gas pipelines
- 12 crude oil/NGL pipelines
- 14,373 pipeline miles
While energy prices can be volatile, 95% of the company’s gas contracts and 100% of its liquids contracts are fee-based. This provides it with direct commodity exposure protection.
“Another Successful Quarter”
For the first quarter ended March 31, 2025, Western Midstream reported net income of $301.8 million, or $0.79 per share, generating first-quarter adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $593.6 million. (Source: “WESTERN MIDSTREAM ANNOUNCES FIRST-QUARTER 2025 RESULTS,” Western Midstream Partners LP, May 7, 2025.)
First-quarter cash flows provided by operating activities came in at $530.8 million, with first-quarter cash flow of $399.4 million.
During the quarter, Western Midstream gathered record natural gas throughput in the Delaware Basin of two billion cubic feet per day (Bcf/d). The company also completed the start-up of its North Loving natural gas processing plant in February, increasing its operated, natural gas processing capacity by 250 million cubic feet per day to approximately 2.2 Bcf/d at the West Texas complex in the Delaware Basin.
On the fundamentals front, it retired $664.0 million of senior notes in January 2025 with cash on hand.
Commenting on the results, Oscar Brown, Western Midstream’s president and chief executive officer, said, “I am pleased to report another successful quarter for WES marked by strong financial performance and stability”
“We also successfully commenced operations at the North Loving plant in the Delaware Basin ahead of schedule and under budget in late February. This significant milestone positions WES for continued growth within the basin and demonstrates our commitment to operational excellence.”
WES Stock: Distribution Increased to $0.91/Unit
Dating back to 2008, WES stock has a long history of paying a reliable distribution. More recently, Western Midstream has also been increasing its annual payout, five years and counting.
This steady stream of income is due, in large part, to the company’s 95% fee-based gas contracts and 100% fee-based liquids contracts, which provides it with both direct exposure protection and predictable income.
Most recently, WES stock increased its first-quarter distribution by four percent on an annual basis to $0.91 per unit, or $3.64 on an annual basis, for a forward dividend yield of 9.55%. (Source: “WESTERN MIDSTREAM ANNOUNCES FIRST-QUARTER 2025 DISTRIBUTION AND EARNINGS CONFERENCE CALL,” Western Midstream Partners LP, April 21, 2025.)
WES Stock Closing in on Record High
Strong financial results helped WES stock hit a record high of $41.37 on January 22. The stock continued to trade near that level until early April; that’s when President Donald Trump unveiled his global tariffs.
Fears of a what a global trade war could do to the economy and demand for oil and gas sent WES stock, and the broader market, tumbling. The stock has been clawing its way back since then, currently trading at $38.11 per unit. This puts WES stock up four percent year to date and 10% on an annual basis.
Despite the solid gains, Wall Street thinks WES units will hit fresh highs over the coming quarters, with analysts providing a 12-month share price forecast range of $40.17 to $45.00 per share. This points to potential upside of approximately 5.5% to 18%.
Chart courtesy of StockCharts.com
The Lowdown on WES Stock
Western Midstream Partners LP is a great energy company with a strong balance sheet, reporting solid financial results. WES stock has paid a reliable dividend since 2008 and recently increased its annual payout by four percent. Wall Street remains bullish on WES stock, currently trading near record highs, and expects them to hit record levels over the next 12 months.
That’s good news for common unitholders and the 325 institutions that hold 84% of all outstanding WES shares. Alps Advisors, Inc., Blackstone Inc., and Goldman Sachs Group Inc are three of the biggest holders. (Source: “Western Midstream Partners, LP (WES),” Yahoo! Finance, last accessed June 19, 2025.)