(Idea) Western Midstream Partners
One Of The Most Attractive Total Return Opportunities In Energy Today.
Editor’s Note: Ideas from HFI Research is a separate paid subscription service to HFI Research. Western Midstream Partners is not a holding in the HFI Portfolio.
By: Jon Costello
Western Midstream Partners, LP (WES) is an MLP that offers a 9.2% distribution yield, along with prospects for distribution growth and capital appreciation. The company’s cash flows are protected from inflation. Its status as an MLP allows its equity owners to defer taxes on distributions for years. WES is among the more attractive energy equities if the oil market enters an oversupply in the coming quarters, as we anticipate.
I’ve covered WES in my HFI Research Energy Income service since 2021. As a recap, the company is 44.7% owned by Occidental Petroleum (OXY), its major customer, which accounts for 60% of its revenues, 34% of its natural gas throughput, 91% of its crude oil throughput, and 78% of its produced-water throughput. The remainder is comprised of several other E&P customers.
WES’s ownership structure is shown below.
Source: Western Midstream Partners, LP Q2 2025 Earnings Presentation, Aug. 6, 2025.
The company operates in the Delaware Basin sub-basin of the Permian Basin, the DJ Basin, and the Powder River Basin. The Delaware operation is the company’s largest in terms of volume, revenue, and EBITDA. In the second quarter, Adjusted EBITDA was split by segment as follows.
Source: Western Midstream Partners, LP Q2 2025 Earnings Presentation, Aug. 6, 2025.
I initially bought WES for the HFI Research Energy Income Portfolio on April 5, 2021, at $18.27 per unit. I sold the units on July 11, 2023, for $27.23 to purchase Equitrans Midstream at $8.75, which was later acquired by EQT (EQT) in an all-stock deal at $12.50 on July 22, 2024.