Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion analyzes our financial condition and results of operations and should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements, wherein WES Operating is fully consolidated, and which are included under Part I, Item 1 of this quarterly report, and the historical consolidated financial statements, and the notes thereto, which are included under Part II, Item 8 of the 2024 Form 10-K as filed with the SEC on February 26, 2025.
The Partnership’s assets include assets owned and ownership interests accounted for by us under the equity method of accounting, through our 98.0% partnership interest in WES Operating, as of September 30, 2025 (see Note 7—Equity Investments in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q ). We also own and control the entire non-economic general partner interest in WES Operating GP, and our general partner is owned by Occidental.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
We have made in this Form 10-Q, and may make in other public filings, press releases, and statements by management, forward - looking statements concerning our operations, economic performance, and financial condition. These forward - looking statements include statements preceded by, followed by, or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “estimates,” “projects,” “target,” “goal,” “plans,” “objective,” “should,” or similar expressions or variations on such expressions. These statements discuss future expectations, contain projections of results of operations or financial condition, or include other “forward - looking” information.
Although we and our general partner believe that the expectations reflected in our forward - looking statements are reasonable, neither we nor our general partner can provide any assurance that such expectations will prove correct. These forward - looking statements involve risks and uncertainties. Important factors that could cause actual results to differ materially from expectations include, but are not limited to, the following:
• our ability to pay distributions to our unitholders and the amount of such distributions;
• our assumptions about the energy market;
• future throughput (including Occidental production) that is gathered or processed by, or transported through, our assets;
• our operating results;
• competitive conditions;
• technology;
• the availability of capital resources to fund acquisitions, capital expenditures, and other contractual obligations, and our ability to access financing through the debt or equity capital markets;
• the supply of, demand for, and price of oil, natural gas, NGLs, and related products or services;
• commodity - price risks inherent in percent - of - proceeds, percent - of - product, keep - whole, and fixed-recovery processing contracts;
• weather and natural disasters;
• inflation;
• the availability of goods and services;
• general economic conditions, internationally, domestically, or in the jurisdictions in which we are doing business;
• federal, state, and local laws and state - approved voter ballot initiatives, including those laws or ballot initiatives that limit producers’ hydraulic - fracturing activities or other oil and natural - gas development or operations;
• environmental liabilities;
• legislative or regulatory changes, including changes affecting our status as a partnership for federal income tax purposes;
• changes in the financial or operational condition of Occidental;
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• the creditworthiness of Occidental or our other counterparties, including financial institutions, operating partners, and other parties;
• changes in Occidental’s capital program, corporate strategy, or other desired areas of focus;
• our commitments to capital projects;
• our ability to access liquidity under the RCF and commercial paper program;
• our ability to repay debt;
• the resolution of litigation or other disputes;
• conflicts of interest among us and our general partner and its related parties, including Occidental, with respect to, among other things, the allocation of capital and operational and administrative costs, and our future business opportunities;
• our ability to maintain and/or obtain rights to operate our assets on land owned by third parties;
• our ability to acquire assets on acceptable terms from third parties;
• non - payment or non - performance of significant customers, including under gathering, processing, transportation, and disposal agreements;
• the timing, amount, and terms of future issuances of equity and debt securities;
• the outcome of pending and future regulatory, legislative, or other proceedings or investigations, and continued or additional disruptions in operations that may occur as we and our customers comply with any regulatory orders or other state or local changes in laws or regulations;
• cyber-attacks or security breaches; and
• other factors discussed below, in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” included in the 2024 Form 10 - K, in our quarterly reports on Form 10 - Q, and in our other public filings and press releases.
Risk factors and other factors noted throughout or incorporated by reference in this Form 10-Q could cause actual results to differ materially from those contained in any forward - looking statement. Except as required by law, we undertake no obligation to publicly update or revise any forward - looking statements, whether as a result of new information, future events, or otherwise.
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EXECUTIVE SUMMARY
We are a midstream energy company organized as a publicly traded partnership, engaged in the business of gathering, compressing, treating, processing, and transporting natural gas; gathering, stabilizing, and transporting condensate, NGLs, and crude oil; and gathering, transporting, recycling, treating, and disposing of produced water. In our capacity as a natural - gas processor, we also buy and sell residue, NGLs, and condensate on behalf of ourselves and our customers under certain contracts. To provide superior midstream service, we focus on ensuring the reliability and performance of our systems, creating sustainable cost efficiencies, enhancing our safety culture, and protecting the environment. We own or have investments in assets located in Texas, New Mexico, and the Rocky Mountains (Colorado, Utah, and Wyoming). As of September 30, 2025, our assets and investments consisted of the following:
Wholly
Owned and
Operated Operated
Interests Equity
Interests
Gathering systems (1)
18 2 1
Treating facilities 43 3 —
Processing plants/trains
27 3 1
NGLs pipelines 3 — 4
Natural - gas pipelines
6 — 1
Crude - oil pipelines
2 1 1
_________________________________________________________________________________________
(1) Includes the DBM water systems.
Significant financial and operational events during the nine months ended September 30, 2025, included the following:
• WES Operating retired the total principal amount outstanding of the 3.100% Senior Notes due 2025 at par value during the first quarter of 2025 and the 3.950% Senior Notes due 2025 at par value during the second quarter of 2025.
• Our third-quarter 2025 per-unit distribution is unchanged from the second-quarter 2025 per-unit distribution of $0.910.
• Completed the start-up of the North Loving plant in late-February 2025, increasing gas processing capacity at the West Texas complex by 250 MMcf/d to a total of 2,190 MMcf/d.
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The following table provides additional information on throughput for the periods presented below:
Three Months Ended Nine Months Ended
September 30, 2025 June 30, 2025 Inc/
(Dec) September 30, 2025 September 30, 2024 Inc/
(Dec)
Throughput for natural-gas assets (MMcf/d)
Delaware Basin 2,113 2,104 — % 2,065 1,836 12 %
DJ Basin 1,497 1,447 3 % 1,449 1,414 2 %
Powder River Basin 424 479 (11) % 455 446 2 %
Equity investments 553 575 (4) % 559 507 10 %
Other 962 828 16 % 897 967 (7) %
Total throughput for natural-gas assets 5,549 5,433 2 % 5,425 5,170 5 %
Throughput for crude-oil and NGLs assets (MBbls/d)
Delaware Basin 245 269 (9) % 257 237 8 %
DJ Basin 105 96 9 % 99 88 13 %
Powder River Basin 27 28 (4) % 27 24 13 %
Equity investments 102 112 (9) % 105 152 (31) %
Other 41 38 8 % 37 39 (5) %
Total throughput for crude-oil and NGLs assets 520 543 (4) % 525 540 (3) %
Throughput for produced-water assets (MBbls/d)
Delaware Basin 1,242 1,242 — % 1,225 1,124 9 %
Total throughput for produced-water assets 1,242 1,242 — % 1,225 1,124 9 %
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OUTLOOK
We expect our business to be affected by the below - described key trends and uncertainties. Our expectations are based on assumptions made by us and information currently available to us. To the extent our underlying assumptions about, or interpretations of, available information prove incorrect, our actual results may vary materially from expected results.
Impact of producer activity. Our business is primarily driven by the level of production of crude oil and natural gas by producers in our areas of operation. This activity, however, can be impacted negatively by, among other things, commodity-price fluctuations and operational challenges. Fluctuating crude - oil, natural - gas, and NGLs prices can reduce the level of our customers’ activities and change the allocation of capital within their own asset portfolios. Such fluctuations can also impact us directly to the extent we take ownership of and sell certain volumes at the tailgate of our plants for our own account. The New York Mercantile Exchange West Texas Intermediate crude - oil daily settlement prices during 2024, ranged from a low of $65.75 per barrel in September 2024 to a high of $86.91 per barrel in April 2024, and prices during the nine months ended September 30, 2025, ranged from a low of $57.13 per barrel in May 2025 to a high of $80.04 per barrel in January 2025. The Waha Hub natural-gas prices during 2024, ranged from a low of ($6.23) per MMBtu in August 2024 to a high of $8.27 per MMBtu in January 2024, and prices during the nine months ended September 30, 2025, ranged from a low of ($2.77) per MMBtu in September 2025 to a high of $7.50 per MMBtu in January 2025. The extent and duration of commodity - price volatility, and the associated direct and indirect impact on our business, cannot be predicted. To address the risks posed by fluctuating commodity prices, we intend to continue evaluating the relevant price environments and adjust our capital spending plans to reflect our customers’ anticipated activity levels, while maintaining appropriate liquidity and financial flexibility.
Additionally, even in favorable commodity-price environments, our customers face operational challenges such as severe weather disruptions, oil and gas takeaway constraints, produced water recycling and disposal limitations, seismicity concerns, new regulatory requirements, and optimizing large, complex drilling programs. Our producers’ ability to mitigate or manage such challenges can significantly impact the volumes available for us to service in the short term. For this reason, we strive to work proactively with our customers whenever possible to provide high levels of reliability on our systems and help them meet these operational challenges as they arise.
Impact of inflation and tariffs. High inflation in the U.S. has raised our costs for steel products, automation components, power supply, labor, materials, fuel, and services, raising operating costs and capital expenditures. Additionally, the Trump administration has imposed significant import tariffs, including on imports of steel and aluminum, and may impose further tariffs on other U.S. trading partners. These tariffs could substantially increase our operating and capital costs. While future inflation and tariff impacts are uncertain, higher operating and capital costs could materially and negatively affect financial results. To the extent permitted by regulations and escalation provisions in certain of our existing agreements, we have the ability to recover a portion of increased costs in the form of higher fees.
Impact of interest rates. Interest rates can be volatile, affecting our interest expense on RCF and commercial paper borrowings. Future increased interest rates would likely result in additional increases in financing costs. As with other yield-oriented securities, our unit price could be impacted by our implied distribution yield relative to market interest rates. Therefore, changes in interest rates may affect investor yield requirements. A rising interest-rate environment could have an adverse impact on our unit price and ability to issue equity to make acquisitions, to reduce debt, or for other purposes. However, we expect our cost of capital to remain competitive, as our peers face similar interest-rate dynamics.
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ACQUISITIONS AND DIVESTITURES
During the second quarter of 2024, we closed on the sale of our 33.75% interest in the Marcellus Interest systems. During the first quarter of 2024, we closed on the sale of the following equity investments to third parties: (i) the 25.00% interest in Mont Belvieu JV, (ii) the 20.00% interest in Whitethorn LLC, (iii) the 15.00% interest in Panola, and (iv) the 20.00% interest in Saddlehorn. See Note 3—Acquisitions and Divestitures under Part I, Item 1 of this Form 10-Q.
RESULTS OF OPERATIONS
OPERATING RESULTS
The following tables and discussion present a summary of our results of operations:
Three Months Ended Nine Months Ended
thousands September 30, 2025 June 30, 2025 September 30, 2025 September 30, 2024
Total revenues and other (1)
$ 952,484 $ 942,322 $ 2,811,922 $ 2,676,720
Equity income, net – related parties 16,847 27,128 64,410 84,227
Total operating expenses (1)
525,301 524,060 1,572,442 1,515,384
Gain (loss) on divestiture and other, net (2,470) (911) (8,048) 299,426
Operating income (loss) 441,560 444,479 1,295,842 1,544,989
Interest expense (92,353) (95,170) (284,816) (279,177)
Gain (loss) on early extinguishment of debt — — — 5,403
Other income (expense), net 1,754 3,692 12,923 16,124
Income (loss) before income taxes 350,961 353,001 1,023,949 1,287,339
Income tax expense (benefit) 2,089 2,239 7,763 17,667
Net income (loss) 348,872 350,762 1,016,186 1,269,672
Net income (loss) attributable to noncontrolling interests 9,257 9,082 25,884 29,714
Net income (loss) attributable to Western Midstream Partners, LP (2)
$ 339,615 $ 341,680 $ 990,302 $ 1,239,958
_________________________________________________________________________________________
(1) Total revenues and other includes amounts earned from services provided to related parties and from the sale of natural gas, condensate, and NGLs to related parties. Total operating expenses includes amounts charged by related parties for services received. See Note 6—Related-Party Transactions in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.
(2) For reconciliations to comparable consolidated results of WES Operating, see Items Affecting the Comparability of Financial Results with WES Operating within this Item 2.
For purposes of the following discussion, any increases or decreases “for the three months ended September 30, 2025” refer to the comparison of the three months ended September 30, 2025, to the three months ended June 30, 2025; and any increases or decreases “for the nine months ended September 30, 2025” refer to the comparison of the nine months ended September 30, 2025, to the nine months ended September 30, 2024.
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Throughput
Three Months Ended Nine Months Ended
September 30, 2025 June 30, 2025 Inc/(Dec) September 30, 2025 September 30, 2024 Inc/(Dec)
Throughput for natural-gas assets (MMcf/d)
Gathering, treating, and transportation 394 354 11 % 373 477 (22) %
Processing 4,602 4,504 2 % 4,493 4,186 7 %
Equity investments (1)
553 575 (4) % 559 507 10 %
Total throughput 5,549 5,433 2 % 5,425 5,170 5 %
Throughput attributable to noncontrolling interests (2)
191 182 5 % 184 172 7 %
Total throughput attributable to WES for natural - gas assets
5,358 5,251 2 % 5,241 4,998 5 %
Throughput for crude-oil and NGLs assets (MBbls/d)
Gathering, treating, and transportation 418 431 (3) % 420 388 8 %
Equity investments (1)
102 112 (9) % 105 152 (31) %
Total throughput 520 543 (4) % 525 540 (3) %
Throughput attributable to noncontrolling interests (2)
10 11 (9) % 10 11 (9) %
Total throughput attributable to WES for crude - oil and NGLs assets
510 532 (4) % 515 529 (3) %
Throughput for produced-water assets (MBbls/d)
Gathering and disposal 1,242 1,242 — % 1,225 1,124 9 %
Throughput attributable to noncontrolling interests (2)
25 25 — % 24 22 9 %
Total throughput attributable to WES for produced - water assets
1,217 1,217 — % 1,201 1,102 9 %
_________________________________________________________________________________________
(1) Represents our share of average throughput for investments accounted for under the equity method of accounting.
(2) Includes (i) the 2.0% limited partner interest in WES Operating owned by an Occidental subsidiary and (ii) for natural - gas assets, the 25% third - party interest in Chipeta, which collectively represent WES’s noncontrolling interests.
Natural-gas assets
Total throughput attributable to WES for natural - gas assets increased by 107 MMcf/d for the three months ended September 30, 2025, primarily due to (i) higher volumes at the Brasada complex and Springfield gas-gathering system due to downtime during the second quarter of 2025, (ii) higher volumes at the DJ Basin and Chipeta complexes due to increased production in the areas, (iii) higher volumes at the MIGC system due to certain temporary customer constraints during the second quarter of 2025, and (iv) higher volumes on the Red Bluff Express pipeline. These increases were offset partially by (i) a decrease in previously onloaded volumes at the Powder River Basin complex and (ii) lower volumes at the Mi Vida plant.
Total throughput attributable to WES for natural - gas assets increased by 243 MMcf/d for the nine months ended September 30, 2025, primarily due to (i) higher volumes at the West Texas, DJ Basin, and Chipeta complexes due to increased production in the areas, and (ii) higher volumes on the Red Bluff Express pipeline due to the addition of a new receipt point into the pipeline beginning in November 2024. These increases were offset partially by (i) lower volumes at the Marcellus Interest systems due to the sale of the asset during the second quarter of 2024 and (ii) lower volumes at the Springfield gas-gathering system due to decreased production in the area and downtime during the second quarter of 2025.
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Crude-oil and NGLs assets
Total throughput attributable to WES for crude - oil and NGLs assets decreased by 22 MBbls/d for the three months ended September 30, 2025, primarily due to lower volumes at the DBM oil system due to decreased production in the area.
Total throughput attributable to WES for crude - oil and NGLs assets decreased by 14 MBbls/d for the nine months ended September 30, 2025, primarily due to (i) the divestiture of Whitethorn LLC and Saddlehorn in the first quarter of 2024 and (ii) lower volumes on the TEP pipeline. These decreases were offset partially by higher volumes at the DBM oil system due to increased production in the area.
Produced-water assets
Total throughput attributable to WES for produced - water assets increased by 99 MBbls/d for the nine months ended September 30, 2025, due to higher production.
Revenues
Three Months Ended Nine Months Ended
thousands except percentages and per-unit amounts
September 30, 2025 June 30, 2025 Inc/(Dec) September 30, 2025 September 30, 2024 Inc/(Dec)
Service revenues – fee based $ 868,253 $ 851,419 2 % $ 2,542,869 $ 2,389,366 6 %
Other revenues from customers
Service revenues – product based $ 33,919 $ 50,442 (33) % $ 143,613 $ 177,321 (19) %
Product sales 50,129 40,280 24 % 124,878 109,076 14 %
Total other revenues from customers
$ 84,048 $ 90,722 (7) % $ 268,491 $ 286,397 (6) %
Per - unit gross average sales price:
Natural gas (per Mcf) $ 0.67 $ 1.06 (37) % $ 1.26 $ 0.36 NM
NGLs (per Bbl) 24.18 24.85 (3) % 26.55 28.55 (7) %
_________________________________________________________________________________________
NM — Not meaningful
Service revenues – fee based
Service revenues – fee based increased by $16.8 million for the three months ended September 30, 2025, primarily due to an increase of $8.9 million at the DJ Basin complex due to increased throughput.
Service revenues – fee based increased by $153.5 million for the nine months ended September 30, 2025, primarily due to increases of (i) $94.8 million at the West Texas complex, $12.3 million at the DJ Basin complex, $10.7 million at the Powder River Basin complex, and $7.4 million at the Chipeta complex, all primarily due to increased throughput, (ii) $26.4 million at the DBM oil system due to increased throughput and deficiency fees on certain contracts with increasing throughput minimums, and (iii) $16.7 million at the DBM water systems due to increased throughput, partially offset by a change in contract terms effective January 1, 2025. These increases were offset partially by decreases of (i) $11.0 million at the Marcellus Interest systems due to the sale of the asset during the second quarter of 2024 and (ii) $8.4 million at the Springfield systems primarily due to decreased throughput.
Other revenues from customers
Other revenues from customers decreased by $6.7 million for the three months ended September 30, 2025, primarily due to a decrease of $12.8 million at the West Texas complex due to decreased product recoveries and average prices, partially offset by an increase of $2.9 million at the DJ Basin complex due to increased volumes sold.
Other revenues from customers decreased by $17.9 million for the nine months ended September 30, 2025, primarily due to (i) $31.1 million and $5.4 million at the DJ Basin and Granger complexes, respectively, due to decreased volumes sold and average prices and (ii) $7.0 million at the Chipeta complex due to contract changes effective during the third quarter of 2024. These decreases were offset partially by an increase of $24.9 million at the West Texas complex due to increased average prices and volumes sold.
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Equity Income, Net – Related Parties
Three Months Ended Nine Months Ended
thousands except percentages September 30, 2025 June 30, 2025 Inc/(Dec) September 30, 2025 September 30, 2024 Inc/(Dec)
Equity income, net – related parties $ 16,847 $ 27,128 (38) % $ 64,410 $ 84,227 (24) %
Equity income, net – related parties decreased by $10.3 million for the three months ended September 30, 2025, primarily due to a decrease of $4.1 million at Mi Vida.
Equity income, net – related parties decreased by $19.8 million for the nine months ended September 30, 2025, primarily due to decreases of $6.0 million at TEP and $5.5 million resulting from the sale of several equity investments to third parties in the first quarter of 2024. See Note 3—Acquisitions and Divestitures in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q .
Cost of Product and Operation and Maintenance Expenses
Three Months Ended Nine Months Ended
thousands except percentages September 30, 2025 June 30, 2025 Inc/(Dec) September 30, 2025 September 30, 2024 Inc/(Dec)
Natural-gas purchases
$ 7,210 $ 5,180 39 % $ 26,407 $ 5,594 NM
NGLs purchases 50,846 63,301 (20) % 174,565 194,603 (10) %
Other (6,869) (25,800) 73 % (65,612) (67,261) 2 %
Cost of product 51,187 42,681 20 % 135,360 132,936 2 %
Operation and maintenance 212,385 224,629 (5) % 663,528 649,324 2 %
Total Cost of product and Operation and maintenance expenses $ 263,572 $ 267,310 (1) % $ 798,888 $ 782,260 2 %
Natural-gas purchases
Natural-gas purchases increased by $20.8 million for the nine months ended September 30, 2025, primarily due to higher average prices at the West Texas complex.
NGLs purchases
NGLs purchases decreased by $12.5 million for the three months ended September 30, 2025, primarily due to a decrease of $11.7 million at the West Texas complex due to decreased product recoveries.
NGLs purchases decreased by $20.0 million for the nine months ended September 30, 2025, primarily due to decreases of (i) $13.6 million at the DJ Basin complex due to lower purchased volumes and average prices, and (ii) $5.9 million at the Chipeta complex due to contract changes effective during the third quarter of 2024.
Other items
Other items increased by $18.9 million for the three months ended September 30, 2025, primarily due to changes in imbalance positions at the West Texas and Chipeta complexes.
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Operation and maintenance expense
Operation and maintenance expense decreased by $12.2 million for the three months ended September 30, 2025, primarily due to decreases of (i) $7.2 million in equipment and maintenance costs and (ii) $5.6 million in chemicals and treating services.
Operation and maintenance expense increased by $14.2 million for the nine months ended September 30, 2025, primarily due to increases of (i) $15.5 million in utility expense, (ii) $5.9 million in land-related costs, (iii) $5.7 million in salaries and wages costs, and (iv) $5.5 million in equipment and maintenance costs. These increases were offset partially by decreases of (i) $7.2 million in contract labor and consulting costs and (ii) $5.7 million in chemicals and treating services.
Other Operating Expenses
Three Months Ended Nine Months Ended
thousands except percentages September 30, 2025 June 30, 2025 Inc/(Dec) September 30, 2025 September 30, 2024 Inc/(Dec)
General and administrative $ 64,119 $ 66,146 (3) % $ 197,051 $ 195,498 1 %
Property and other taxes 15,725 17,805 (12) % 51,356 43,984 17 %
Depreciation and amortization 170,323 172,113 (1) % 512,896 487,438 5 %
Long-lived asset and other impairments 11,562 686 NM 12,251 6,204 97 %
Total other operating expenses $ 261,729 $ 256,750 2 % $ 773,554 $ 733,124 6 %
Depreciation and amortization expense
Depreciation and amortization expense increased by $25.5 million for the nine months ended September 30, 2025, primarily due to capital projects being placed into service at the West Texas complex.
Property and other taxes
Property and other taxes increased by $7.4 million for the nine months ended September 30, 2025, primarily due to a higher ad valorem property tax accrual at the DJ Basin complex and DJ Basin oil system.
Long-lived asset and other impairment expense
Long - lived asset and other impairment expense increased by $10.9 million and $6.0 million for the three and nine months ended September 30, 2025, respectively, primarily due to a $9.9 million impairment at the Granger complex.
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Interest Expense
Three Months Ended Nine Months Ended
thousands except percentages September 30, 2025 June 30, 2025 Inc/(Dec) September 30, 2025 September 30, 2024 Inc/(Dec)
Long-term and short-term debt $ (91,240) $ (93,348) (2) % $ (280,648) $ (278,361) 1 %
Finance lease liabilities (533) (557) (4) % (1,673) (1,964) (15) %
Commitment fees and amortization of debt-related costs (2,917) (3,045) (4) % (9,163) (9,929) (8) %
Capitalized interest 2,337 1,780 31 % 6,668 11,077 (40) %
Interest expense $ (92,353) $ (95,170) (3) % $ (284,816) $ (279,177) 2 %
Interest expense increased by $5.6 million for the nine months ended September 30, 2025, primarily due to increases of (i) $28.2 million of interest incurred on the 5.450% Senior Notes due 2034 that were issued during the third quarter of 2024 and (ii) $4.4 million due to lower capitalized interest. These increases were offset partially by decreases of (i) $19.3 million due to senior note repayments during 2025 and (ii) $5.4 million due to lower outstanding borrowings on the commercial paper program during 2025. See Liquidity and Capital Resources—Debt and credit facilities within this Item 2.
Income Tax Expense (Benefit)
We are not a taxable entity for U.S. federal income tax purposes; therefore, our federal statutory rate is zero percent. However, income apportionable to Texas is subject to Texas margin tax. Income tax expense decreased by $9.9 million for the nine months ended September 30, 2025, primarily due to a revaluation increasing the deferred tax liability balance in 2024 resulting from a state margin rate increase associated with no longer being included in Occidental’s affiliated group tax return beginning in September 2024 following Occidental’s sale of 19.5 million WES common units in August 2024 and the resulting decrease in WES ownership, inclusive of its ownership in WES Operating.
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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Adjusted Gross Margin. We define Adjusted Gross Margin attributable to Western Midstream Partners, LP (“Adjusted Gross Margin”) as total revenues and other (less reimbursements for electricity - related expenses recorded as revenue), less cost of product, plus distributions from equity investments, and excluding the noncontrolling interest owners’ proportionate share of revenues and cost of product. We believe Adjusted Gross Margin is an important performance measure of our operations’ profitability and performance as compared to other companies in the midstream industry. Cost of product expenses include (i) costs associated with the purchase of natural gas and NGLs pursuant to our percent - of - proceeds, percent - of - product, and keep - whole contracts, (ii) costs associated with the valuation of gas and NGLs imbalances, (iii) costs associated with our obligations under certain contracts to redeliver a volume of natural gas to shippers, which is thermally equivalent to condensate retained by us and sold to third parties, and (iv) costs associated with our offload commitments with third parties providing firm-processing capacity. The electricity-related expenses included in our Adjusted Gross Margin definition relate to pass-through expenses that are recorded as Operation and maintenance expense with an offset recorded as revenue for the reimbursement by certain customers.
Adjusted EBITDA. We define Adjusted EBITDA attributable to Western Midstream Partners, LP (“Adjusted EBITDA”) as net income (loss), plus (i) distributions from equity investments, (ii) non - cash equity - based compensation expense, (iii) interest expense, (iv) income tax expense, (v) depreciation and amortization, (vi) impairments, and (vii) other expense (including lower of cost or market inventory adjustments recorded in cost of product), less (i) gain (loss) on divestiture and other, net, (ii) gain (loss) on early extinguishment of debt, (iii) income from equity investments, (iv) income tax benefit, (v) other income, (vi) other items impacting comparability with our core operating performance, and (vii) the noncontrolling interest owners’ proportionate share of revenues and expenses. We believe the presentation of Adjusted EBITDA provides information useful to investors in assessing our financial condition and results of operations and that Adjusted EBITDA is a widely accepted financial indicator of a company’s ability to incur and service debt, fund capital expenditures, and make distributions. Adjusted EBITDA is a supplemental financial measure that management and external users of our consolidated financial statements, such as industry analysts, investors, commercial banks, and rating agencies, use, among other measures, to assess the following:
• our operating performance as compared to other publicly traded partnerships in the midstream industry, without regard to financing methods, capital structure, or historical cost basis;
• the ability of our assets to generate cash flow to make distributions; and
• the viability of acquisitions and capital expenditures and the returns on investment of various investment opportunities.
Free Cash Flow. We define “Free Cash Flow” as net cash provided by operating activities less total capital expenditures and contributions to equity investments, plus distributions from equity investments in excess of cumulative earnings. Management considers Free Cash Flow an appropriate metric for assessing capital discipline, cost efficiency, and balance - sheet strength. Although Free Cash Flow is the metric used to assess our ability to make distributions to unitholders, this measure should not be viewed as indicative of the actual amount of cash that is available for distributions or planned for distributions for a given period. Instead, Free Cash Flow represents the amount of cash that is available in aggregate for distributions, debt repayments, and other general partnership purposes.
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Adjusted Gross Margin, Adjusted EBITDA, and Free Cash Flow are not defined in GAAP. The GAAP measure that is most directly comparable to Adjusted Gross Margin is gross margin. Net income (loss) and net cash provided by operating activities are the GAAP measures that are most directly comparable to Adjusted EBITDA. The GAAP measure that is most directly comparable to Free Cash Flow is net cash provided by operating activities. Our non - GAAP financial measures (i) should not be considered as alternatives to the comparable GAAP measures or any other measure of financial performance presented in accordance with GAAP, (ii) have important limitations as analytical tools because they exclude some, but not all, items that affect the comparable GAAP measures, (iii) should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP, and (iv) may not be comparable to similarly titled measures of other companies in our industry, thereby diminishing their utility as comparative measures.
Management compensates for the limitations of our non-GAAP measures as analytical tools by reviewing the comparable GAAP measures, understanding the differences, and incorporating this knowledge into its decision - making processes. We believe that investors benefit from having access to the same financial measures that our management considers in evaluating our operating results.
The following tables present reconciliations of the GAAP measure to our non-GAAP measures:
Three Months Ended Nine Months Ended
thousands September 30, 2025 June 30, 2025 September 30, 2025 September 30, 2024
Reconciliation of Gross margin to Adjusted Gross Margin
Total revenues and other $ 952,484 $ 942,322 $ 2,811,922 $ 2,676,720
Less:
Cost of product 51,187 42,681 135,360 132,936
Depreciation and amortization 170,323 172,113 512,896 487,438
Gross margin 730,974 727,528 2,163,666 2,056,346
Add:
Distributions from equity investments 29,751 31,122 95,217 110,651
Depreciation and amortization 170,323 172,113 512,896 487,438
Less:
Reimbursed electricity-related charges recorded as revenues 34,803 30,256 94,063 86,072
Adjusted Gross Margin attributable to noncontrolling interests (1)
21,342 21,439 62,962 59,967
Adjusted Gross Margin
$ 874,903 $ 879,068 $ 2,614,754 $ 2,508,396
_________________________________________________________________________________________
(1) Includes (i) the 25% third - party interest in Chipeta and (ii) the 2.0% limited partner interest in WES Operating owned by an Occidental subsidiary, which collectively represent WES’s noncontrolling interests.
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To facilitate investor and industry analysis, we also disclose per-Mcf Adjusted Gross Margin for natural-gas assets, per-Bbl Adjusted Gross Margin for crude-oil and NGLs assets, and per-Bbl Adjusted Gross Margin for produced-water assets .
Three Months Ended Nine Months Ended
thousands except per-unit amounts September 30, 2025 June 30, 2025 September 30, 2025 September 30, 2024
Gross margin
Gross margin for natural - gas assets (1)
$ 540,393 $ 539,462 $ 1,606,999 $ 1,539,081
Gross margin for crude - oil and NGLs assets (1)
107,877 106,839 315,991 287,627
Gross margin for produced - water assets (1)
90,837 89,341 264,754 250,565
Per - Mcf Gross margin for natural - gas assets (2)
1.06 1.09 1.09 1.09
Per - Bbl Gross margin for crude - oil and NGLs assets (2)
2.25 2.16 2.20 1.95
Per - Bbl Gross margin for produced - water assets (2)
0.80 0.79 0.79 0.81
Adjusted Gross Margin
Adjusted Gross Margin for natural - gas assets
$ 623,691 $ 629,093 $ 1,871,236 $ 1,795,065
Adjusted Gross Margin for crude - oil and NGLs assets
145,463 146,128 435,066 423,416
Adjusted Gross Margin for produced - water assets
105,749 103,847 308,452 289,915
Per - Mcf Adjusted Gross Margin for natural - gas assets (3)
1.27 1.32 1.31 1.31
Per - Bbl Adjusted Gross Margin for crude - oil and NGLs assets (3)
3.10 3.02 3.09 2.92
Per - Bbl Adjusted Gross Margin for produced - water assets (3)
0.94 0.94 0.94 0.96
_________________________________________________________________________________________
(1) Excludes corporate-level depreciation and amortization.
(2) Average for period. Calculated as Gross margin for natural - gas assets, crude - oil and NGLs assets, or produced - water assets, divided by the respective total throughput (MMcf or MBbls) for natural - gas assets, crude - oil and NGLs assets, or produced - water assets.
(3) Average for period. Calculated as Adjusted Gross Margin for natural - gas assets, crude - oil and NGLs assets, or produced - water assets, divided by the respective total throughput (MMcf or MBbls) attributable to WES for natural - gas assets, crude - oil and NGLs assets, or produced - water assets.
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Three Months Ended Nine Months Ended
thousands September 30, 2025 June 30, 2025 September 30, 2025 September 30, 2024
Reconciliation of Net income (loss) to Adjusted EBITDA
Net income (loss) $ 348,872 $ 350,762 $ 1,016,186 $ 1,269,672
Add:
Distributions from equity investments 29,751 31,122 95,217 110,651
Non-cash equity-based compensation expense 10,456 10,713 29,417 28,573
Interest expense 92,353 95,170 284,816 279,177
Income tax expense 2,089 2,239 7,763 17,667
Depreciation and amortization 170,323 172,113 512,896 487,438
Long-lived asset and other impairments 11,562 686 12,251 6,204
Other expense 53 43 286 239
Less:
Gain (loss) on divestiture and other, net (2,470) (911) (8,048) 299,426
Gain (loss) on early extinguishment of debt — — — 5,403
Equity income, net – related parties 16,847 27,128 64,410 84,227
Other income 1,754 3,692 12,923 16,124
Adjusted EBITDA attributable to noncontrolling interests (1)
15,576 15,063 44,347 41,102
Adjusted EBITDA $ 633,752 $ 617,876 $ 1,845,200 $ 1,753,339
Reconciliation of Net cash provided by operating activities to Adjusted EBITDA
Net cash provided by operating activities $ 570,210 $ 563,977 $ 1,664,980 $ 1,582,414
Interest (income) expense, net 92,353 95,170 284,816 279,177
Accretion and amortization of long-term obligations, net (1,896) (2,032) (6,130) (6,884)
Current income tax expense (benefit) 1,865 1,940 5,527 3,489
Other (income) expense, net (1,754) (3,692) (12,923) (16,124)
Distributions from equity investments in excess of cumulative earnings – related parties 11,953 3,040 26,000 27,560
Changes in assets and liabilities:
Accounts receivable, net (21,956) 31,425 (19,165) 12,595
Accounts and imbalance payables and accrued liabilities, net 40,837 (31,039) 56,482 78,884
Other items, net (42,284) (25,850) (110,040) (166,670)
Adjusted EBITDA attributable to noncontrolling interests (1)
(15,576) (15,063) (44,347) (41,102)
Adjusted EBITDA $ 633,752 $ 617,876 $ 1,845,200 $ 1,753,339
Cash flow information
Net cash provided by operating activities $ 570,210 $ 563,977 $ 1,664,980 $ 1,582,414
Net cash (used in) provided by investing activities (161,528) (173,974) (476,292) 191,153
Net cash used in financing activities (361,126) (708,718) (2,101,864) (921,617)
_________________________________________________________________________________________
(1) Includes (i) the 25% third - party interest in Chipeta and (ii) the 2.0% limited partner interest in WES Operating owned by an Occidental subsidiary, which collectively represent WES’s noncontrolling interests.
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Three Months Ended Nine Months Ended
thousands September 30, 2025 June 30, 2025 September 30, 2025 September 30, 2024
Reconciliation of Net cash provided by operating activities to Free Cash Flow
Net cash provided by operating activities $ 570,210 $ 563,977 $ 1,664,980 $ 1,582,414
Less:
Capital expenditures 184,758 178,623 505,783 595,087
Add:
Distributions from equity investments in excess of cumulative earnings — related parties 11,953 3,040 26,000 27,560
Free Cash Flow $ 397,405 $ 388,394 $ 1,185,197 $ 1,014,887
Cash flow information
Net cash provided by operating activities $ 570,210 $ 563,977 $ 1,664,980 $ 1,582,414
Net cash (used in) provided by investing activities (161,528) (173,974) (476,292) 191,153
Net cash used in financing activities (361,126) (708,718) (2,101,864) (921,617)
Gross margin. Refer to Operating Results within this Item 2 for a discussion of the components of Gross margin as compared to the prior periods, including Revenue s, Cost of Product (Natural-gas purchases, NGLs purchases, and Other items), and Other Operating Expenses (Depreciation and amortization expense).
Gross margin increased by $107.3 million for the nine months ended September 30, 2025, primarily due to a $135.2 million increase in total revenues and other, partially offset by a $25.5 million increase in depreciation and amortization.
Net income (loss). Refer to Operating Results within this Item 2 for a discussion of the primary components of Net income (loss) as compared to the prior periods.
Net income (loss) decreased by $253.5 million for the nine months ended September 30, 2025, primarily due to (i) a $307.5 million decrease in gain (loss) on divestiture and other, net and (ii) a $57.1 million increase in total operating expenses. These amounts were offset partially by a $135.2 million increase in total revenues and other.
Net cash provided by operating activities. Refer to Historical cash flow within this Item 2 for a discussion of the primary components of Net cash provided by operating activities as compared to the prior periods.
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KEY PERFORMANCE METRICS
Three Months Ended Nine Months Ended
thousands except percentages and per-unit amounts September 30, 2025 June 30, 2025 Inc/(Dec) September 30, 2025 September 30, 2024 Inc/(Dec)
Adjusted Gross Margin
$ 874,903 $ 879,068 — % $ 2,614,754 $ 2,508,396 4 %
Per - Mcf Adjusted Gross Margin for natural - gas assets (1)
1.27 1.32 (4) % 1.31 1.31 — %
Per - Bbl Adjusted Gross Margin for crude - oil and NGLs assets (1)
3.10 3.02 3 % 3.09 2.92 6 %
Per - Bbl Adjusted Gross Margin for produced - water assets (1)
0.94 0.94 — % 0.94 0.96 (2) %
Adjusted EBITDA 633,752 617,876 3 % 1,845,200 1,753,339 5 %
Free Cash Flow
397,405 388,394 2 % 1,185,197 1,014,887 17 %
_________________________________________________________________________________________
(1) Average for period. Calculated as Adjusted Gross Margin for natural - gas assets, crude - oil and NGLs assets, or produced - water assets, divided by the respective total throughput (MMcf or MBbls) attributable to WES for natural - gas assets, crude - oil and NGLs assets, or produced - water assets.
Adjusted Gross Margin. Adjusted Gross Margin decreased by $4.2 million for the three months ended September 30, 2025, primarily due to (i) decreased product recoveries and average prices at the West Texas complex and (ii) decreased throughput at the Powder River Basin complex. These decreases were offset partially by increased throughput at the DJ Basin complex.
Adjusted Gross Margin increased by $106.4 million for the nine months ended September 30, 2025, primarily due to (i) increased throughput at the West Texas and Powder River Basin complexes, (ii) increased throughput and deficiency fees on certain contracts with increasing throughput minimums at the DBM oil system, and (iii) increased throughput at the DBM water systems, partially offset by a change in contract terms effective January 1, 2025. These increases were offset partially by (i) the sale of our interests in the Marcellus Interest systems, Saddlehorn, and Mont Belvieu JV during 2024, and (ii) decreased throughput at the Springfield gas-gathering system and Granger complex.
Per - Mcf Adjusted Gross Margin for natural - gas assets decreased by $0.05 for the three months ended September 30, 2025, primarily due to decreased product recoveries and average prices at the West Texas complex. This decrease was offset partially by higher throughput at the DJ Basin complex, which has a higher-than-average per-Mcf margin as compared to our other natural-gas assets.
Per - Bbl Adjusted Gross Margin for crude - oil and NGLs assets increased by $0.08 for the three months ended September 30, 2025, primarily due to increased deficiency fees on certain contracts with increasing throughput minimums at the DBM oil system.
Per - Bbl Adjusted gross margin for crude - oil and NGLs assets increased by $0.17 for the nine months ended September 30, 2025, primarily due to (i) increased throughput at the DBM oil system, which has a higher-than-average per-Bbl margin as compared to our other crude-oil and NGLs assets, (ii) lower throughput at TEP and FRP, which have a lower-than-average per-Bbl margin as compared to our other crude oil and NGLs assets, and (iii) the sale of our interest in Whitethorn LLC which had a lower-than-average per-Bbl margins as compared to our other crude oil and NGLs assets. These increases were offset partially by decreased revenues associated with demand volumes, partially offset by increased throughput and higher average fees resulting from cost-of-service rate redeterminations effective January 1, 2025, at the DJ Basin oil system.
Per - Bbl Adjusted Gross Margin for produced - water assets decreased by $0.02 for the nine months ended September 30, 2025, primarily due to a change in contract terms effective January 1, 2025.
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Adjusted EBITDA. Adjusted EBITDA increased by $15.9 million for the three months ended September 30, 2025, primarily due to (i) a $12.2 million decrease in operation and maintenance expenses and (ii) a $10.2 million increase in total revenues and other. These amounts were offset partially by an $8.5 million increase in cost of product (net of lower of cost or market inventory adjustments).
Adjusted EBITDA increased by $91.9 million for the nine months ended September 30, 2025, primarily due to a $135.2 million increase in total revenues and other. This amount was offset partially by (i) a $15.4 million decrease in distributions from equity investments, (ii) a $14.2 million increase in operation and maintenance expenses, and (iii) a $7.4 million increase in property taxes.
Free Cash Flow. Free Cash Flow increased by $9.0 million for the three months ended September 30, 2025, primarily due to (i) an $8.9 million increase in distributions from equity investments in excess of cumulative earnings and (ii) a $6.2 million increase in net cash provided by operating activities. These amounts were offset partially by a $6.1 million increase in capital expenditures.
Free Cash Flow increased by $170.3 million for the nine months ended September 30, 2025, primarily due to (i) an $89.3 million decrease in capital expenditures and (ii) an $82.6 million increase in net cash provided by operating activities.
See Capital Expenditures and Historical Cash Flow within this Item 2 for further information.
LIQUIDITY AND CAPITAL RESOURCES
Our primary cash uses include equity and debt service, operating expenses, acquisitions, and capital expenditures. Our sources of liquidity, as of September 30, 2025, included cash and cash equivalents, cash flows generated from operations, effective borrowing capacity under the RCF, our commercial paper program, and potential issuances of additional equity or debt securities. We believe that cash flows generated from these sources will be sufficient to satisfy our short - term working-capital requirements and long - term capital - expenditure and debt-service requirements.
The amount of future distributions to unitholders will be determined by the Board on a quarterly basis. We distribute all our available cash, as defined in our partnership agreement, within 55 days following each quarter’s end. The Board declared a cash distribution to unitholders for the third quarter of 2025 of $0.910 per unit, or $379.5 million in the aggregate. The cash distribution is payable on November 14, 2025, to our unitholders of record at the close of business on October 31, 2025. See Note 12—Subsequent Event under Part I, Item 1 of this Form 10-Q.
In February 2025, the Board authorized a buyback program of up to $250.0 million of our common units through December 31, 2026 (the “2025 Purchase Program”). The common units may be purchased from time to time in the open market at prevailing market prices or in privately negotiated transactions. The timing and amount of purchases under the program will be determined based on ongoing assessments of capital needs, our financial performance, the market price of our common units, and other factors, including organic growth and acquisition opportunities and general market conditions. The program does not obligate us to acquire any common units and the program may be suspended or discontinued at our discretion without prior notice.
Management continuously monitors our leverage position and other financial projections to manage the capital structure according to long-term objectives. We may, from time to time, seek to retire, rearrange, or amend some or all of our outstanding debt or financing agreements through cash purchases, exchanges, open - market repurchases, privately negotiated transactions, tender offers, or otherwise. Such transactions, if any, will depend on prevailing market conditions, our liquidity position and requirements, contractual restrictions, and other factors, and the amounts involved may be material. Our ability to generate cash flows is subject to a number of factors, some of which are beyond our control. Read Risk Factors under Part II, Item 1A of this Form 10-Q.
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Working capital . Working capital is an indication of liquidity and potential needs for short - term funding. Working capital requirements are driven by changes in accounts receivable and accounts payable and other factors such as credit extended to, and the timing of collections from, our customers, and the level and timing of our spending for acquisitions, maintenance, and other capital activities. As of September 30, 2025, we had a $276.6 million working capital surplus, which we define as the amount by which current assets exceed current liabilities. As of September 30, 2025, there was $2.0 billion in effective borrowing capacity under the RCF. Any outstanding commercial paper borrowings reduce the effective borrowing capacity under the RCF as WES Operating maintains availability under the RCF as support for its commercial paper program. See Note 8—Selected Components of Working Capital and Note 9—Debt in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.
Capital expenditures . Capital expenditures in the consolidated statements of cash flows reflect capital expenditures on a cash basis, when payments are made. Capital incurred is presented on an accrual basis. Acquisitions and capital expenditures as presented in the consolidated statements of cash flows and capital incurred were as follows:
Nine Months Ended
September 30,
thousands 2025 2024
Acquisitions $ — $ 443
Capital expenditures (1)
505,783 595,087
Capital incurred (1)
503,817 623,985
_________________________________________________________________________________________
(1) For the nine months ended September 30, 2025 and 2024, included $6.7 million and $11.1 million, respectively, of capitalized interest.
Capital expenditures decreased by $89.3 million for the nine months ended September 30, 2025, primarily due to decreases of (i) $180.5 million at the West Texas complex, primarily attributable to construction costs incurred in 2024 associated with the North Loving plant that was completed in the first quarter of 2025 and (ii) $21.3 million at the DBM water systems due to decreased construction of certain water - disposal wells, equipment, facilities, and well-connect projects. These decreases were offset partially by increases of (i) $64.5 million at the Powder River Basin complex primarily attributable to an increase in construction of facilities and well-connect projects, (ii) $27.1 million at the DBM oil system related to an increase in pipeline, oil pumping, and electrical distribution projects, and (iii) $16.4 million at the Chipeta complex primarily related to facility upgrades and gathering pipeline construction.
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Historical cash flow . The following table and discussion present a summary of our net cash flows provided by (used in) operating, investing, and financing activities:
Nine Months Ended
September 30,
thousands 2025 2024
Net cash provided by (used in):
Operating activities $ 1,664,980 $ 1,582,414
Investing activities (476,292) 191,153
Financing activities (2,101,864) (921,617)
Net increase (decrease) in cash and cash equivalents $ (913,176) $ 851,950
Operating activities . Net cash provided by operating activities increased for the nine months ended September 30, 2025, primarily due to higher cash operating income, partially offset by lower distributions from equity-investment earnings and higher interest expense. Refer to Operating Results within this Item 2 for a discussion of our results of operations as compared to the prior periods.
Investing activities . Net cash used in investing activities for the nine months ended September 30, 2025, primarily included (i) capital expenditures, primarily related to expansion, construction, and asset - integrity projects at the West Texas complex, Powder River Basin complex, DBM water systems, DBM oil system, DJ Basin complex, and Chipeta complex and (ii) distributions received from equity investments in excess of cumulative earnings.
Net cash provided by investing activities for the nine months ended September 30, 2024, primarily included (i) proceeds related to the sale of several equity investments to third parties, (ii) proceeds related to the sale of our 33.75% interest in the Marcellus Interest systems to a third party, (iii) distributions received from equity investments in excess of cumulative earnings, (iv) capital expenditures, primarily related to expansion, construction, and asset - integrity projects at the West Texas complex, DBM oil system, Powder River Basin complex, DBM water systems, DJ Basin complex, and Chipeta complex, and (v) increases to materials and supplies inventory and other.
Financing activities . Net cash used in financing activities for the nine months ended September 30, 2025, primarily included (i) distributions paid to WES unitholders and noncontrolling interest owners and (ii) repayment of the total principal amount outstanding of the 3.950% Senior Notes due 2025 and 3.100% Senior Notes due 2025 at par value.
Net cash used in financing activities for the nine months ended September 30, 2024, primarily included (i) distributions paid to WES unitholders and noncontrolling interest owners, (ii) net repayments under the commercial paper program, (iii) retiring portions of certain of WES Operating’s senior notes via open-market repurchases, and (iv) proceeds from the 5.450% Senior Notes due 2034 issued in August 2024.
Debt and credit facilities. As of September 30, 2025, (i) the carrying value of outstanding debt was $6.9 billion, (ii) we have $440.5 million of borrowings under the 4.650% Senior Notes due 2026 that are classified as long-term debt on the consolidated balance sheet as WES Operating has the ability and intent to refinance these obligations using long-term debt, and (iii) we have $2.0 billion in effective borrowing capacity under WES Operating’s $2.0 billion RCF. Any outstanding commercial paper borrowings reduce the effective borrowing capacity under the RCF as WES Operating maintains availability under the RCF as support for its commercial paper program.
During the nine months ended September 30, 2025, WES Operating (i) retired the 3.950% Senior Notes due 2025 on the maturity date of June 1, 2025, for $336.8 million and (ii) retired the 3.100% Senior Notes due 2025 on the maturity date of February 3, 2025, for $663.8 million. WES Operating repaid the 3.950% Senior Notes due 2025 and 3.100% Senior Notes due 2025 with cash on hand, including proceeds received from the 2024 public offering of $800.0 million in aggregate principal amount of 5.450% Senior Notes due 2034.
For additional information on our senior notes, RCF, and commercial paper program, see Note 9—Debt in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.
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Credit risk . We bear credit risk through exposure to non - payment or non - performance by our counterparties (e.g., Occidental and other customers, financial institutions, and other parties), including risks from a customer’s inability to satisfy payables to us for services rendered, minimum - volume - commitment deficiency payments owed, or volumes owed pursuant to gas- or NGLs-imbalance agreements. We examine and monitor the creditworthiness of customers and may establish credit limits for customers. We are subject to the risk of non - payment or late payment by producers for gathering, processing, transportation, and disposal fees. Additionally, we continue to evaluate counterparty credit risk and, in certain circumstances, are exercising our contractual rights to request adequate assurance of performance.
We expect our exposure to the concentrated risk of non - payment or non - performance to continue for as long as our commercial relationships with Occidental generate a significant portion of our revenues. While Occidental is our contracting counterparty, gathering and processing arrangements with affiliates of Occidental on most of our systems include not just Occidental - produced volumes, but also, in some instances, the volumes of other working - interest owners of Occidental who rely on our facilities and infrastructure to bring their volumes to market. See Note 6—Related-Party Transactions in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.
Our ability to make cash distributions to our unitholders may be adversely impacted if Occidental becomes unable to perform under the terms of gathering, processing, transportation, and disposal agreements.
ITEMS AFFECTING THE COMPARABILITY OF FINANCIAL RESULTS WITH WES OPERATING
Our consolidated financial statements include the consolidated financial results of WES Operating. Our results of operations do not differ materially from the results of operations and cash flows of WES Operating, which are reconciled below.
Reconciliation of net income (loss). The differences between net income (loss) attributable to WES and WES Operating are reconciled as follows:
Three Months Ended Nine Months Ended
thousands September 30, 2025 June 30, 2025 September 30, 2025 September 30, 2024
Net income (loss) attributable to WES $ 339,615 $ 341,680 $ 990,302 $ 1,239,958
Limited partner interest in WES Operating not held by WES (1)
6,941 6,980 20,224 25,350
General and administrative expenses (2)
339 301 452 2,001
Other income (expense), net (47) (49) (142) (194)
Net income (loss) attributable to WES Operating $ 346,848 $ 348,912 $ 1,010,836 $ 1,267,115
_________________________________________________________________________________________
(1) Represents the portion of net income (loss) allocated to the limited partner interest in WES Operating not held by WES. A subsidiary of Occidental held a 2.0% limited partner interest in WES Operating for all periods presented.
(2) Represents general and administrative expenses incurred by WES separate from, and in addition to, those incurred by WES Operating.
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Reconciliation of net cash provided by (used in) operating and financing activities. The differences between net cash provided by (used in) operating and financing activities for WES and WES Operating are reconciled as follows:
Nine Months Ended
September 30,
thousands 2025 2024
WES net cash provided by operating activities $ 1,664,980 $ 1,582,414
General and administrative expenses (1)
452 2,001
Non - cash equity - based compensation expense
(430) (435)
Changes in working capital (21,045) (26,530)
Other income (expense), net (142) (194)
WES Operating net cash provided by operating activities $ 1,643,815 $ 1,557,256
WES net cash provided by (used in) financing activities $ (2,101,864) $ (921,617)
Distributions to WES unitholders (2)
1,051,503 905,155
Distributions to WES from WES Operating (3)
(1,052,451) (906,294)
Increase (decrease) in outstanding checks (66) 37
Other 21,648 23,974
WES Operating net cash provided by (used in) financing activities $ (2,081,230) $ (898,745)
_________________________________________________________________________________________
(1) Represents general and administrative expenses incurred by WES separate from, and in addition to, those incurred by WES Operating.
(2) Represents distributions to WES common unitholders paid under WES’s partnership agreement. See Note 4—Partnership Distributions and Note 5—Equity and Partners’ Capital in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.
(3) Difference attributable to elimination in consolidation of WES Operating’s distributions on partnership interests owned by WES. See Note 4—Partnership Distributions and Note 5—Equity and Partners’ Capital in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.
Noncontrolling interest. WES Operating’s noncontrolling interest consists of the 25% third - party interest in Chipeta.
WES Operating distributions. WES Operating distributes all of its available cash on a quarterly basis to WES Operating unitholders in proportion to their share of limited partner interests in WES Operating. See Note 4—Partnership Distributions in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q .
CRITICAL ACCOUNTING ESTIMATES
The preparation of consolidated financial statements in accordance with GAAP requires management to make informed judgments and estimates that affect the amounts of assets and liabilities as of the date of the financial statements and the amounts of revenues and expenses recognized during the periods reported. There have been no significant changes to our critical accounting estimates from those disclosed in our annual report on Form 10-K for the fiscal year ended December 31, 2024.
RECENT ACCOUNTING DEVELOPMENTS
See Note 1—Description of Business and Basis of Presentation in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.