Western Midstream Posts Record EBITDA, Raises Full-Year Guidance
Western Midstream Partners reported record Adjusted EBITDA of $736.5 million in the second quarter, up 19% from a year earlier, as it raised its full-year outlook and closed a $1.6 billion Delaware Basin acquisition.
Western Midstream Partners (WES) reported record Adjusted EBITDA of $736.5 million in the second quarter, up 19% from a year earlier and accelerating from 15% year-over-year growth in the first quarter. The midstream operator, which gathers, processes and transports natural gas, crude oil, NGLs and produced water primarily in the Delaware and DJ basins, raised its full-year guidance across every key metric, citing both organic throughput growth and the recently closed Brazos Delaware acquisition.
The quarter marked the first full reporting period to include a contribution from that deal. Western Midstream closed the $1.6 billion Brazos Delaware acquisition in mid-June, adding roughly 460 million cubic feet a day of natural-gas processing capacity and helping push Delaware Basin natural-gas throughput to a record 2,140 million cubic feet a day, up 5% sequentially. Produced-water throughput in the same basin also set a record at 2,993 thousand barrels a day, up 5% from the first quarter, while DJ Basin natural-gas throughput reached a record 1,547 million cubic feet a day.
Adjusted EBITDA rose 8% sequentially from $683.1 million in the first quarter, and Distributable Cash Flow climbed to $537.2 million from $508.9 million, a 5.6% sequential increase. Net income attributable to limited partners rose 15% sequentially to $394.9 million from $342.4 million. Free Cash Flow increased to $263.6 million from $242.3 million, though Free Cash Flow after distributions stayed negative at $111.0 million, an improvement from negative $137.4 million in the first quarter as growth capital spending continued to outpace distributable cash.
Capital expenditures rose 23% sequentially to $308.3 million from $250.5 million, reflecting integration costs tied to Brazos Delaware. The distribution held flat at $0.930 a unit, a deceleration from the 2.2% sequential increase the partnership delivered in the first quarter.
Per-unit margins expanded across all three of the company's product streams. Produced-water gross margin rose to $0.80 a barrel from $0.73, a 10% increase, while Adjusted Gross Margin for produced water rose to $0.96 a barrel from $0.90. Natural-gas gross margin rose to $1.13 per thousand cubic feet from $1.10, and crude-oil and NGLs gross margin rose to $2.39 a barrel from $2.22, an 8% increase. Operation and maintenance expense, excluding contributions from Aris, fell 2% year-over-year even as natural-gas and produced-water throughput grew 1.5% and 10%, respectively, though that cost reduction was smaller than the 7% decline posted in the first quarter.
Western Midstream raised its full-year Adjusted EBITDA guidance to a range of $2.750 billion to $2.950 billion, a $250 million increase at the midpoint from its original guidance and up from the prior quarter's framing of a high end around $2.50 billion to $2.70 billion. Full-year Distributable Cash Flow guidance rose to $2.050 billion to $2.250 billion, a $200 million increase from the original range and above the prior quarter's $1.85 billion to $2.05 billion range. Full-year Free Cash Flow guidance rose to $1.100 billion to $1.300 billion, a $200 million increase from original guidance.
The partnership also disclosed new growth agreements in the Powder River Basin, adding roughly 270,000 dedicated acres for gathering and processing, a project not mentioned in prior quarterly disclosures. To finance the Brazos Delaware transaction, Western Midstream issued $700 million of senior notes due 2036, refinancing the borrowings used to fund the acquisition, a step that followed the first quarter's retirement of $440.5 million in notes due 2026.