Western Midstream Partners, LP (WES) Stock Analysis

Western Midstream Partners (WES) benefits from several durable competitive advantages in the U.S. midstream sector. Its asset base is concentrated in the Delaware and DJ Basins—two of the most prolific and cost-advantaged hydrocarbon regions—providing reliable access to high-volume, low-cost production. WES is one of the few operators offering integrated “three-stream” services: natural gas, crude oil, and produced water. This breadth increases customer stickiness and cross-selling opportunities, particularly as water management becomes more critical in the Permian.

Contractual protections are robust: as of 2025, 95% of gas and 100% of liquids volumes are under fee-based contracts, insulating cash flows from commodity price swings. Minimum volume commitments and long-term contracts (averaging 9 years for gas, 7+ years for oil, and 8+ years for water) further underpin revenue stability. Occidental Petroleum, WES’s anchor customer and largest unitholder, provides volume security but also concentration risk.

Operationally, WES’s system utilization and reliability are industry-leading, with system operability at 99.6% and record throughput in 2025. Its scale and efficiency are reflected in a 77% gross margin and a 41% return on equity—both above peer averages. Compared to rivals such as MPLX and Energy Transfer, WES offers a higher distribution yield (9.1% vs. 7–8%) and a lower net leverage ratio, supporting both growth and capital returns.