Western Midstream Partners Q2 Earnings Call Highlights
Sun, August 9, 2026 at 7:03 PM GMT+3 7 min read
Key Points
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Record Q2 performance: Adjusted EBITDA rose 19% year over year to $737 million, driven by higher Delaware Basin natural gas and produced-water volumes, the Brazos Delaware II acquisition and stronger commodity prices.
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Guidance raised: Western Midstream increased its 2026 adjusted EBITDA midpoint by $250 million to $2.85 billion and raised distributable cash flow and free cash flow guidance by $200 million at the midpoint. Brazos is expected to contribute about $100 million of EBITDA in the second half and generate $15 million–$20 million in synergies.
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Growth and financial position: The partnership expects produced-water throughput to grow approximately 85% in 2026 and signed new Powder River Basin agreements covering 270,000 acres. It maintained its $0.93 quarterly distribution, with more than $1.8 billion of liquidity and pro forma net leverage of about 3.15 times.
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Western Midstream Partners (NYSE:WES) reported record second-quarter adjusted EBITDA as Delaware Basin natural gas and produced-water volumes rose, the recently acquired Brazos Delaware II assets began contributing, and higher commodity prices supported results under fixed-recovery processing contracts.
Chief Executive Officer Oscar Brown said adjusted EBITDA reached $737 million, up 8% sequentially and 19% from the prior-year period. The partnership also generated net income attributable to limited partners of $395 million and distributable cash flow of $537 million, according to Chief Financial Officer Kristen Shults.
Guidance Raised Following Brazos Acquisition
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Western Midstream raised the midpoint of its 2026 adjusted EBITDA outlook by $250 million to $2.85 billion, within a new range of $2.75 billion to $2.95 billion. The company also increased its distributable cash flow guidance to $2.05 billion to $2.25 billion and free cash flow guidance to $1.1 billion to $1.3 billion, raising the midpoint of each range by $200 million.
The revised outlook reflects the mid-June closing of the $1.6 billion acquisition of Brazos Delaware II, stronger commodity pricing during the first half, a higher second-half commodity-price forecast, and increased customer activity expected in the Delaware and Powder River basins.
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Western Midstream funded the Brazos transaction with about $800 million in cash and $800 million in common units. Brown said the acquisition is accretive to per-unit metrics and expands the partnership's Delaware Basin gathering and processing position while diversifying its customer base and ownership.
The company expects Brazos to contribute approximately $100 million of adjusted EBITDA during the second half of 2026. It also expects to capture $15 million to $20 million of cost synergies in coming quarters, primarily from reductions in general and administrative costs and supply-chain-related operating efficiencies.
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Brown said the company expects to complete the connection between the legacy Brazos and Western Midstream systems by year-end. The connection is expected to allow more volumes to be directed to Brazos processing plants with available capacity, reducing offloaded volumes and increasing internal processing.
Throughput Trends Across Core Basins
Second-quarter natural gas throughput rose 3% sequentially, supported by roughly two and a half weeks of Brazos contributions and another quarter of record natural gas throughput in the DJ Basin, Chief Operating Officer Danny Holderman said. Crude oil and NGL throughput increased slightly, while produced-water throughput increased about 5% from the prior quarter.
For the full year, Western Midstream now expects portfolio-wide natural gas throughput to increase by mid-single digits year over year. It expects crude oil and NGL throughput to decline by low double digits, while produced-water throughput is projected to increase approximately 85%, compared with the company's prior expectation of roughly 80% growth.
The produced-water outlook reflects contributions from the Aris acquisition as well as performance from the legacy water business. Brown said produced-water handling has been Western Midstream's fastest-growing product line in recent quarters.
In the Delaware Basin, the partnership expects full-year natural gas throughput to rise by low- to mid-teens percentages, while crude oil and NGL volumes are expected to increase by low single digits. Holderman said some customers curtailed Delaware Basin throughput during the second quarter because of negative Waha natural gas pricing, but the company exited the quarter with no curtailments after long-haul pipelines returned from maintenance and the GCX expansion and Hugh Rinson pipeline entered service.
Western Midstream expects Waha pricing to be less volatile for the rest of the year, particularly once the Latcom pipeline enters service later in 2026.
In the Powder River Basin, Western Midstream signed new long-term gathering and processing agreements with two producers. The agreements add approximately 270,000 dedicated acres, more than 1,000 remaining drilling locations, and multiyear minimum volume commitments. The company expects activity from those customers to increase in the back half of 2026 and support volume growth into 2027.
Margins, Capital Spending and Balance Sheet
Second-quarter adjusted gross margin for natural gas assets increased by $0.03 per Mcf sequentially, driven by commodity prices on excess NGL volumes under fixed-recovery contracts and the initial Brazos contribution. The company expects third-quarter natural gas margins to be slightly lower as commodity prices moderate, while maintaining its full-year adjusted gross margin expectation of approximately $1.30 per Mcf.
Crude oil and NGL adjusted gross margin rose $0.14 per barrel sequentially, largely because of higher Delaware Basin deficiency fees. Produced-water adjusted gross margin increased $0.06 per barrel on higher throughput. Western Midstream expects both measures to be slightly lower in the third quarter while maintaining full-year expectations of $3.10 to $3.15 per barrel for crude oil and NGL assets and approximately $0.91 per barrel for produced-water assets.
The partnership maintained its 2026 capital expenditure range of $850 million to $1 billion but now expects spending near the high end. More than half of the capital program remains allocated to the Pathfinder Produced Water Pipeline and the North Loving II natural gas processing train, which are expected to enter service in the first and second quarters of 2027, respectively.
Shults said the company ended the quarter with more than $1.8 billion of total liquidity and pro forma trailing 12-month net leverage of approximately 3.15 times. In June, Western Midstream issued $700 million of 10-year senior notes to refinance commercial paper and revolver borrowings used for the Brazos acquisition.
Water Reuse and Distribution
Western Midstream placed its JIP2 produced-water treatment demonstration facility into service during the second quarter near Red Bluff Reservoir in Reeves County, Texas. The facility is producing approximately 1,000 barrels per day of reclaimed fresh water, about 10 times the output of its JIP1 predecessor.
Brown said JIP2 is intended to help refine operating costs, assess reliability, and demonstrate reclaimed-water recovery for potential uses including industrial cooling, surface discharge and non-consumptive agricultural irrigation. The company views the project as a step toward sanctioning its first commercial-scale beneficial-reuse facility.
Western Midstream declared an unchanged quarterly distribution of $0.93 per unit, payable Aug. 14 to unitholders of record on July 31. The partnership maintained its target of paying at least $3.70 per unit during 2026.
About Western Midstream Partners (NYSE:WES)
Western Midstream Partners, LP (NYSE: WES) is a midstream energy infrastructure company that owns, operates and develops an integrated network of crude oil, natural gas and produced water gathering, processing, transportation and storage assets in the United States. The partnership's primary offerings include pipeline transportation, fractionation services, natural gas liquids (NGL) logistics and produced water handling. Through its fee-based and commodity-based contracts, Western Midstream provides its customers with essential services that support efficient energy production and distribution.
The company's asset portfolio spans key onshore basins, including the Delaware Basin in West Texas and southeastern New Mexico, the San Juan Basin in New Mexico and Colorado, and the Denver-Julesburg Basin in Colorado.
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The article "Western Midstream Partners Q2 Earnings Call Highlights" was originally published by MarketBeat.
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