Western Midstream Partners Renegotiates Gas Contracts with Occidental, Simplifying Fee Structure
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 20 2026
0mins
Should l Buy WES?
Source: PRnewswire
- Contract Renegotiation: Western Midstream has renegotiated natural gas gathering and processing contracts with Occidental in the Delaware Basin, replacing the legacy cost-of-service model with a fixed-fee structure, which is expected to enhance cash flow stability and transparency.
- New Agreement Established: The new agreement with ConocoPhillips incorporates existing gas volumes into a new dedication arrangement, resetting natural gas fees in the Delaware Basin, thereby improving drilling economics and encouraging regional development.
- Equity Structure Optimization: The unit exchange with Occidental allows Western Midstream to realign its equity capital structure, which is anticipated to enhance Adjusted EBITDA per unit, creating value for all unitholders.
- Commitment to Financial Flexibility: Despite undertaking a robust capital program in 2026, Western Midstream aims to maintain net leverage near 3.0x, demonstrating its commitment to disciplined capital allocation and financial flexibility.
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Analyst Views on WES
Wall Street analysts forecast WES stock price to fall
4 Analyst Rating
0 Buy
4 Hold
0 Sell
Hold
Current: 42.350
Low
39.00
Averages
40.50
High
42.00
Current: 42.350
Low
39.00
Averages
40.50
High
42.00
About WES
Western Midstream Partners, LP acquires, owns, develops and operates midstream assets. It is engaged in the business of gathering, compressing, treating, processing, and transporting natural gas, gathering, stabilizing, and transporting condensate, natural gas liquids (NGLs), and crude oil, and gathering and disposing of produced water. Its core assets provide services for customers in the Delaware Basin in West Texas and New Mexico, and the DJ Basin in northeastern Colorado, and the Powder River Basin in Northeast Wyoming. Additional assets and investments are in South Texas, Utah, and Southwest Wyoming. In its capacity as a natural gas processor, the Company also buys and sells natural gas, NGLs, and condensate on its behalf and its customers under certain gas processing contracts. Its subsidiaries include Western Midstream Operating GP, LLC, Western Midstream Services, LLC, Western Midstream Services Holdings, LLC, Western Midstream Operating, LP, and Aris Water Solutions, Inc.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Ares Capital's Stability: Ares Capital currently offers a 10% dividend yield, with its business model of direct loans to middle-market companies generating core earnings that exceed dividend payments, maintaining or increasing dividends for 16 consecutive years, showcasing strong financial stability and growth potential.
- Western Midstream's Growth Potential: Western Midstream Partners yields 8.9%, with stable cash flows and a strong balance sheet allowing it to cover distributions and capital expenditures, while planning to enhance dividends through acquisitions and organic expansion.
- Attracting Risk-Tolerant Investors: With dividend yields significantly higher than the S&P 500, AGNC, Ares Capital, and Western Midstream appeal to income-seeking investors despite potential market volatility risks, making them attractive options for those willing to take on more risk.
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- Asset Sale Boosts Cash Flow: Occidental sold its chemicals business, OxyChem, to Berkshire Hathaway for $9.7 billion in early January, with plans to use $6.5 billion of that cash to reduce debt, thereby lowering its debt level below $15 billion and enhancing financial flexibility.
- Contract Structure Optimization: The company amended its Delaware Basin natural gas gathering contract with Western Midstream Partners, transitioning from a cost-of-service agreement to a fixed-fee structure, which is expected to save costs and improve flexibility in developing oil and gas assets while reducing its ownership stake from 42% to 40%.
- Improved Financial Position: With rising oil prices and reduced debt, Occidental is poised to generate more cash flow in 2026, further strengthening its balance sheet and enhancing long-term investment appeal, even after last month's significant share price rally.
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- Analyst Ratings: Benzinga provides the latest analyst ratings for three high-yielding energy stocks, including Nordic American Tankers Ltd (NYSE:NAT), Kimbell Royalty Partners LP (NYSE:KRP), and Western Midstream Partners LP (NYSE:WES), offering decision-making support for investors.
- Market Trends: As market volatility increases, the appeal of dividend stocks rises, with investors seeking to mitigate investment risks through stable cash flows, potentially driving demand and prices for these stocks higher.
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See More
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- Western Midstream Partners Growth Potential: With a distribution yield of 9%, Western Midstream Partners has rebounded its payout to pre-pandemic levels after a reset during the pandemic, and it plans to further increase distributions through acquisitions and infrastructure investments.
- Attracting Passive Income Investors: Ares Capital, Starwood Property Trust, and Western Midstream Partners all offer yields up to 10.7%, appealing to investors seeking stable passive income and demonstrating strong future distribution potential.
See More
Western Midstream Partners (WES) Declares $0.91 Quarterly Dividend with 8.92% Yield
- Dividend Declaration: Western Midstream Partners has declared a quarterly dividend of $0.91 per share, consistent with previous distributions, indicating the company's stable cash flow and shareholder return strategy.
- Yield Highlight: The forward yield of 8.92% not only attracts income-seeking investors but also reflects the company's competitiveness in the current market environment.
- Payment Schedule: The dividend will be payable on February 13, with a record date of February 2 and an ex-dividend date also set for February 2, ensuring shareholders receive their returns promptly.
- Contract Renegotiation: Western Midstream has reached an agreement with Occidental to renegotiate Delaware Basin contracts, securing $610 million in unit transfers, which further enhances the company's financial flexibility and market position.
See More
