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    WES
    Earnings call· Mar 2026(Q1 FY26)

    Western Midstream Partners Q1 FY26 earnings call WES

    May 12, 2026 Source

    Executive summary

    Western Midstream Q1 FY26 — Strong Performance Driven by Aris Integration and Brazos Acquisition

    This fireside chat highlights Western Midstream's strong Q1 FY26 performance, driven by the successful integration of the Aris acquisition and robust throughput growth across all product lines. The company announced the strategic $1.6 billion acquisition of Brazos Delaware II, expected to be immediately accretive and further solidify its Delaware Basin footprint. Management emphasized financial discipline with maintained leverage targets and a clear distribution growth strategy.

    Highlights

    5

    • Adjusted EBITDA increased by 15% year-over-year to $683 million in Q1 FY26.

    • Record crude oil and NGL throughput of 272,000 barrels per day, up 6% year-over-year.

    • Record produced water throughput of 2.8 million barrels per day, up 4% sequentially.

    • Acquisition of Brazos Delaware II for $1.6 billion, immediately accretive to 2026 DCF per unit.

    • Reduced operation and maintenance expense by 7% year-over-year (excluding Aris acquisition).

    Concerns

    1

    • Natural gas throughput negatively impacted by WAHA-driven curtailments during Q1 FY26.

    Guidance & targets

    8
    CategoryTargetConfidence
    Adjusted EBITDA
    towards the high end of $2.5 billion to $2.7 billion
    high materiality
    High
    Distributable Cash Flow
    towards the high end of $1.85 billion to $2.05 billion
    high materiality
    High
    Capital Budget
    $850 million to $1 billion
    medium materiality
    High
    Distribution
    at least $3.70 or $3.72 on a run rate basis
    high materiality
    High
    Pathfinder Project In-Service Date
    first quarter 2027
    medium materiality
    High
    North Loving II Project In-Service Date
    second quarter 2027
    medium materiality
    High
    Brazos Acquisition Close
    by the end of the second quarter
    high materiality
    High
    Delaware Basin Natural Gas Processing Capacity
    just over 3 billion cubic feet per day
    medium materiality
    High

    Operational metrics

    14
    Adjusted EBITDA
    $683 million15% increase year-over-year
    Q1 FY26

    Reported for the first quarter, representing the strongest quarter in the partnership's history from an adjusted EBITDA perspective.

    Operation and Maintenance Expense Reduction
    7%year-over-year
    Q1 FY26

    Excluding the Aris acquisition, contributing to operating leverage improvement.

    Natural Gas Throughput Growth
    3%
    Q1 FY26

    Achieved despite negative impact from WAHA-driven curtailments.

    Crude Oil and NGL Throughput
    272,000up 4% sequentially and 6% year-over-year
    Q1 FY26

    Achieved record levels.

    Produced Water Throughput
    2.8 millionup 4% sequentially
    Q1 FY26

    Achieved record levels.

    Comanche Complex Utilization
    73%
    current

    Utilization of the Comanche plant, part of the Brazos acquisition, with potential for compression of the acquisition multiple as utilization increases.

    Total Liquidity
    $2.5 billion
    Q1 FY26 end

    Company ended the first quarter with more than $2.5 billion in total liquidity.

    Net Leverage
    3.1x
    Q1 FY26 end

    Trailing 12-month net leverage at the end of the first quarter.

    Pro Forma Net Leverage
    3x
    throughout 2026

    Expected pro forma net leverage after the Brazos close, consistent with long-standing target.

    Distribution per Unit
    $0.93up 2.2% sequentially
    Q1 FY26

    First quarter distribution, contributing to full year guidance.

    Potential Annual Equity Return
    12% to 14%
    annual

    Underpinned by current cash yield and long-term adjusted EBITDA growth rate.

    Current Cash Yield
    almost 9%
    current

    Underpins the potential annual equity return.

    Adjusted EBITDA Annual Growth Rate
    4% to 5%
    annual

    Drives further upside for the investment thesis.

    Brazos Incremental Adjusted EBITDA
    $100 million
    2026

    Expected contribution from Brazos acquisition, assuming a close by the end of Q2.

    Industry KPIs

    1
    MetricValueDetails
    Take or pay contract structureover 9 yearsweighted average remaining life

    Deals & partnerships

    2
    ArisIntegration of previously acquired assets

    Integration is complete and assets are performing well, contributing to Q1 FY26 outperformance. Contracts provide upside from skim oil volumes when crude oil prices are elevated.

    Brazos Delaware IIAcquisition of a privately held gathering and processing platform in the Delaware Basin$1.6 billion

    Acquisition for $1.6 billion, financed 50% cash and 50% WES common units. Adds approximately 470,000 dedicated acres and 460 million cubic feet per day of natural gas processing capacity (Comanche complex). Existing contracts are long-term fixed fee with a weighted average remaining life of over 9 years. Maintains pro forma net leverage of approximately 3x throughout 2026.

    Capital programs

    2
    Pathfinderon schedule

    One of two high confidence projects in the core of the Delaware Basin, underpinned by volume commitments. Roughly half of the $850M-$1B 2026 capital budget is directed towards Pathfinder and North Loving II.

    North Loving IIon schedule

    Benefit: processing capacity (adds to just over 3 Bcf/d in the basin)

    One of two high confidence projects in the core of the Delaware Basin, underpinned by volume commitments. Roughly half of the $850M-$1B 2026 capital budget is directed towards Pathfinder and North Loving II. Will bring total Delaware Basin processing capacity to over 3 Bcf/d.

    Risks & headwinds

    1
    WAHA-driven curtailmentsQ1 FY26

    negatively impacted natural gas throughput

    Mitigation: Not explicitly stated, but company achieved 3% natural gas throughput growth despite this, indicating resilience or other offsetting factors.

    What to watch in Q2 FY26

    4

    Updated full-year guidance

    After Brazos close (Q2 FY26 results)
    CurrentHigh end of $2.5B-$2.7B Adj. EBITDA and $1.85B-$2.05B DCF (pre-Brazos)
    TargetFormal updated ranges including Brazos contribution

    Why it matters

    Will provide a clearer picture of the combined entity's financial outlook and the full impact of the Brazos acquisition.

    We plan to provide updated guidance in conjunction with our second quarter results after the Brazos close.

    Q&A highlights

    5

    What drove the 15% YoY increase in adjusted EBITDA and what does it imply for the rest of the year?

    Oscar Brown attributed the outperformance to the full quarter contribution from the Aris acquisition, per day throughput growth across all three product lines, and continued cost reduction efforts. He noted the benefit from increased crude oil prices in March through skim oil recoveries. The Delaware Basin is the primary growth driver, with record crude oil, NGL, and produced water throughputs.

    “It was truly a great quarter for us, and the results reflect the cumulative impact of several strategic decisions we've made over the past 18 months.”

    asked by Daniel Jenkins · answered by Oscar Brown

    2 min read5 chapters

    Detailed Narrative

    01

    Q1 Performance Drivers

    Western Midstream reported a strong Q1 FY26, with adjusted EBITDA increasing 15% year-over-year to $683 million. This outperformance was primarily driven by the full quarter contribution from the Aris acquisition, robust per day throughput growth across all three product lines, and continued cost reduction efforts. The company also benefited from a meaningful increase in crude oil prices in March, capturing incremental value through skim oil recoveries.

    02

    Brazos Acquisition Rationale

    The company announced the acquisition of Brazos Delaware II for $1.6 billion, describing it as a high-quality, contiguous bolt-on asset that amplifies its existing Delaware Basin footprint. The acquisition adds approximately 470,000 dedicated acres and 460 million cubic feet per day of natural gas processing capacity. The asset's 3,500 identified drilling locations are strategically located near existing infrastructure, minimizing future capital requirements.

    03

    Financial Mechanics of Brazos Deal

    The $1.6 billion purchase price for Brazos represents approximately 8x 2027 estimated EBITDA, with an expectation for this multiple to compress to 7.5x through commercialization of available processing capacity and identified synergies. The Comanche complex, part of Brazos, is currently operating at 73% utilization. The transaction is immediately accretive to estimated 2026 DCF per unit and is expected to contribute approximately $100 million of incremental adjusted EBITDA in 2026. The deal is structured as 50% cash and 50% WES common units, allowing the company to maintain pro forma net leverage of approximately 3x throughout 2026.

    04

    Capital Deployment and Distribution Strategy

    Western Midstream emphasized its commitment to financial discipline, ending Q1 with over $2.5 billion in total liquidity and trailing 12-month net leverage of 3.1x. The company expects to maintain pro forma net leverage of approximately 3x post-Brazos. The 2026 capital budget of $850 million to $1 billion is largely allocated to the Pathfinder and North Loving II projects, both on schedule for 2027 in-service dates. The distribution strategy aims to grow distributions slightly below adjusted EBITDA growth to steadily increase coverage over time⏳, with Q1 distribution at $0.93 per unit, up 2.2% sequentially.

    05

    Investment Thesis and Future Outlook

    Management highlighted WES's position of strength, with record Q1 adjusted EBITDA and successful project execution. The Delaware Basin is central to its growth strategy, expected to contribute over 60% of 2026 adjusted EBITDA, with decades of throughput growth visibility. The company projects a compelling return profile for investors, including a potential 12% to 14% annual equity return, underpinned by a nearly 9% current cash yield and a 4% to 5% long-term adjusted EBITDA annual growth rate.

    AI-generated summary of the company’s earnings call. Not investment advice.