Western Midstream Partners LP

Our primary cash uses include equity and debt service, operating expenses, acquisitions, and capital expenditures. Our sources of liquidity, as of December 31, 2024, included cash and cash equivalents, cash flows generated from operations, effective borrowing capacity under the RCF, our commercial paper program, and potential issuances of additional equity or debt securities. We believe that cash flows generated from these sources will be sufficient to satisfy our short-term working-capital requirements and long-term capital-expenditure and debt-service requirements.

The amount of future distributions to unitholders will be determined by the Board on a quarterly basis. Under our partnership agreement, we distribute all of our available cash (beyond proper reserves as defined in our partnership agreement) within 55 days following each quarter’s end. Our cash flow and resulting ability to make cash distributions are dependent on our ability to generate cash flow from operations. Generally, our available cash is our cash on hand at the end of a quarter after the payment of our expenses and the establishment of cash reserves, and cash on hand resulting from working capital borrowings made after the end of the quarter. The general partner establishes cash reserves to provide for the proper conduct of our business, including (i) to fund future capital expenditures, (ii) to comply with applicable laws, debt instruments, or other agreements, or (iii) to provide funds for unitholder distributions for any one or more of the next four quarters. The Board declared a cash distribution to unitholders for the fourth quarter of 2024 of $0.875 per unit, or $341.0 million in the aggregate. The cash distribution was paid on February 14, 2025, to our unitholders of record at the close of business on February 3, 2025.

In February 2025, the Board authorized a buyback program of up to $250.0 million of our common units through December 31, 2026 (the “2025 Purchase Program”). The common units may be purchased from time to time in the open market at prevailing market prices or in privately negotiated transactions. The timing and amount of purchases under the program will be determined based on ongoing assessments of capital needs, our financial performance, the market price of our common units, and other factors, including organic growth and acquisition opportunities and general market conditions. The program does not obligate us to acquire any particular amount of common units and the program may be suspended or discontinued at our discretion without prior notice.

For the year ended December 31, 2025, capital expenditures are expected to range between $625.0 million to $775.0 million (accrual-based, includes equity investments, excludes capitalized interest, and excludes capital expenditures associated with the 25% third-party interest in Chipeta).

Management continuously monitors our leverage position and other financial projections to manage the capital structure according to long-term objectives. We may, from time to time, seek to retire, rearrange, or amend some or all of our outstanding debt or financing agreements through cash purchases, exchanges, open-market repurchases, privately negotiated transactions, tender offers, or otherwise. Such transactions, if any, will depend on prevailing market conditions, our liquidity position and requirements, contractual restrictions, and other factors, and the amounts involved may be material. Our ability to generate cash flows is subject to a number of factors, some of which are beyond our control. Read Risk Factors under Part I, Item 1A of this Form 10-K.

Working capital. Working capital is an indication of liquidity and potential needs for short-term funding. Working capital requirements are driven by changes in accounts receivable and accounts payable and other factors such as credit extended to, and the timing of collections from, our customers, and the level and timing of our spending for acquisitions, maintenance, and other capital activities. As of December 31, 2024, we had a $155.5 million working capital surplus, which we define as the amount by which current assets exceed current liabilities. As of December 31, 2024, there was $2.0 billion in effective borrowing capacity under the RCF. Any outstanding commercial paper borrowings reduce the effective borrowing capacity under the RCF as WES Operating maintains availability under the RCF as support for its commercial paper program. See Note 11—Selected Components of Working Capital and Note 13—Debt and Interest Expense in the Notes to Consolidated Financial Statements under Part II, Item 8 of this Form 10-K.

Capital expenditures. Our business is capital intensive, requiring significant investment to maintain and improve existing facilities or to develop new midstream infrastructure. Capital expenditures include maintenance capital expenditures, which include those expenditures required to maintain existing operating capacity and service capability of our assets, and expansion capital expenditures, which include expenditures to construct new midstream infrastructure and expenditures incurred to reduce costs, increase revenues, or increase system throughput or capacity from current levels.

Capital expenditures in the consolidated statements of cash flows reflect capital expenditures on a cash basis, when payments are made. Capital incurred is presented on an accrual basis. Acquisitions and capital expenditures as presented in the consolidated statements of cash flows and capital incurred were as follows:

(1)The years ended December 31, 2024 and 2023, included $15.2 million and $13.6 million, respectively, of capitalized interest.

Acquisitions for the year ended December 31, 2023, included the acquisition of Meritage. See Items Affecting the Comparability of Our Financial Results within this Item 7.

Capital expenditures increased by $98.8 million for the year ended December 31, 2024, primarily due to increases of (i) $88.3 million at the West Texas complex, primarily attributable to engineering, equipment, and construction milestone payments for the North Loving Plant, (ii) $28.2 million at the Powder River Basin complex primarily attributable to the acquisition of Meritage, (iii) $24.2 million at the DBM water systems due to increased construction of certain water-disposal wells, equipment, facilities, and well-connect projects, and (iv) $8.2 million at the Chipeta complex primarily related to expansion projects. These increases were offset partially by a decrease of $58.3 million at the DBM oil system related to a decrease in pipeline, oil treating, and oil pumping projects.

Historical cash flow. The following table and discussion present a summary of our net cash flows provided by (used in) operating, investing, and financing activities:

Operating activities. Net cash provided by operating activities increased for the year ended December 31, 2024, primarily due to higher cash operating income and the impact of changes in assets and liabilities, including cash received on certain contracts for which revenue recognition is deferred (See Note 2—Revenue from Contracts with Customers in the Notes to Consolidated Financial Statements under Part II, Item 8 of this Form 10-K). These increases were offset partially by lower distributions from equity-investment earnings and higher interest expense. Refer to Operating Results within this Item 7 for a discussion of our results of operations as compared to the prior periods.

Investing activities. Net cash used in investing activities for the year ended December 31, 2024, primarily included the following:

•$833.9 million of capital expenditures, primarily related to expansion, construction, and asset-integrity projects at the West Texas complex, DBM water systems, DJ Basin complex, Powder River Basin complex, and DBM oil system;

•$18.3 million of increases to materials and supplies inventory and other;

•$582.7 million of proceeds related to the sale of several equity investments to third parties;

•$206.2 million of proceeds related to the sale of our 33.75% interest in the Marcellus Interest systems to a third party; and

•$30.9 million of distributions received from equity investments in excess of cumulative earnings.

Net cash used in investing activities for the year ended December 31, 2023, primarily included the following:

•$877.7 million of cash paid, net of cash received, for the acquisition of Meritage;

•$735.1 million of capital expenditures, primarily related to expansion, construction, and asset-integrity projects at the West Texas complex, DBM water systems, DJ Basin complex, and DBM oil system;

•$32.3 million of increases to materials and supplies inventory and other; and

•$39.1 million of distributions received from equity investments in excess of cumulative earnings.

Financing activities. Net cash used in financing activities for the year ended December 31, 2024, primarily included the following:

•$1,275.9 million of distributions paid to WES unitholders and noncontrolling interest owners;

•$610.3 million of net repayments under the commercial paper program;

•$143.9 million to purchase and retire portions of certain of WES Operating’s senior notes via open-market repurchases; and

•$790.3 million of net proceeds from the 5.450% Senior Notes due 2034 issued in August 2024, which will be used to repay a portion of the maturing 3.100% Senior Notes due 2025 and 3.950% Senior Notes due 2025 and for general partnership purposes, including the funding of capital expenditures.

Net cash used in financing activities for the year ended December 31, 2023, primarily included the following:

•$1,495.0 million of repayments of outstanding borrowings under the RCF;

•$1,008.9 million of distributions paid to WES unitholders and noncontrolling interest owners;

•$259.8 million to purchase and retire portions of certain of WES Operating’s senior notes via open-market repurchases;

•$213.1 million to redeem the total principal amount outstanding on the Floating-Rate Senior Notes due 2023 at par value;

•$134.6 million of unit repurchases;

•$1,120.0 million of borrowings under the RCF, which were used for general partnership purposes;

•$740.6 million of net proceeds from the 6.150% Senior Notes due 2033 issued in April 2023, which were used to repay borrowings under the RCF and for general partnership purposes;

•$609.9 million of net borrowings under the commercial paper program, which were used for general partnership purposes; and

•$592.8 million of net proceeds from the 6.350% Senior Notes due 2029 issued in September 2023, which were used to fund a portion of the aggregate purchase price for the Meritage acquisition, to pay related costs and expenses, and for general partnership purposes.

Debt and credit facilities. As of December 31, 2024, the carrying value of outstanding debt was $7.9 billion and we have estimated future interest and RCF fee payments totaling $385.1 million in 2025. In addition, we have $1.0 billion senior note borrowings due within the next year and, as of December 31, 2024, have $2.0 billion in effective borrowing capacity under WES Operating’s $2.0 billion RCF. Any outstanding commercial paper borrowings reduce the effective borrowing capacity under the RCF as WES Operating maintains availability under the RCF as support for its commercial paper program.

During the year ended December 31, 2024, WES Operating (i) completed the public offering of $800.0 million in aggregate principal amount of 5.450% Senior Notes due 2034, (ii) purchased and retired $150.0 million of certain of its senior notes via open-market repurchases with cash from operations, and (iii) entered into an amendment to the RCF to exercise an option to extend the maturity date of the RCF from April 2028 to April 2029, for each extending lender. As of December 31, 2024, the 3.100% Senior Notes due 2025 and 3.950% Senior Notes due 2025 were classified as short-term debt on the consolidated balance sheet. Subsequent to December 31, 2024, WES Operating retired the 3.100% Senior Notes due 2025 on the maturity date of February 3, 2025.

For additional information on our senior notes, RCF, and commercial paper program, see Note 13—Debt and Interest Expense in the Notes to Consolidated Financial Statements under Part II, Item 8 of this Form 10-K.

Finance lease liabilities. We have finance leases with third parties for equipment, vehicles, and an NGLs pipeline in Wyoming. As of December 31, 2024, we have future finance-lease payments of $11.5 million in 2025 and a total of $27.4 million in years thereafter.

Asset retirement obligations. When assets are acquired or constructed, the initial estimated asset retirement obligation is recognized in an amount equal to the net present value of the settlement obligation, with an associated increase in property, plant, and equipment. Revisions in estimated asset retirement obligations may result from changes in estimated asset retirement costs, inflation rates, discount rates, and the estimated timing of settlement. As of December 31, 2024, we expect to incur asset retirement costs of $12.8 million in 2025 and a total of $370.2 million in years thereafter. For additional information, see Note 12—Asset Retirement Obligations in the Notes to Consolidated Financial Statements under Part II, Item 8 of this Form 10-K.

Operating leases. We have operating leases for equipment supporting our operations, corporate offices, field offices, and easements, with both Occidental and third parties as lessors. As of December 31, 2024, we have future operating-lease payments of $60.5 million in 2025 and a total of $173.7 million in years thereafter. See Note 14—Leases in the Notes to Consolidated Financial Statements under Part II, Item 8 of this Form 10-K.

Offload commitments. We have offload agreements with third parties providing firm-processing capacity through 2025. As of December 31, 2024, we have future minimum payments under offload agreements totaling $3.4 million for 2025.

Pipeline commitments. We have transportation contracts with volume commitments on multiple pipelines through 2035. As of December 31, 2024, we have estimated future minimum-volume-commitment fees totaling $15.0 million in 2025 and a total of $50.6 million in years thereafter.

Credit risk. We bear credit risk through exposure to non-payment or non-performance by our counterparties, including Occidental, financial institutions, customers, and other parties. Generally, non-payment or non-performance results from a customer’s inability to satisfy payables to us for services rendered, minimum-volume-commitment deficiency payments owed, or volumes owed pursuant to gas- or NGLs-imbalance agreements. We examine and monitor the creditworthiness of customers and may establish credit limits for customers. We are subject to the risk of non-payment or late payment by producers for gathering, processing, transportation, and disposal fees. Additionally, we continue to evaluate counterparty credit risk and, in certain circumstances, are exercising our contractual rights to request adequate assurance of performance.

We expect our exposure to the concentrated risk of non-payment or non-performance to continue for as long as our commercial relationships with Occidental generate a significant portion of our revenues. While Occidental is our contracting counterparty, gathering and processing arrangements with affiliates of Occidental on most of our systems include not just Occidental-produced volumes, but also, in some instances, the volumes of other working-interest owners of Occidental who rely on our facilities and infrastructure to bring their volumes to market. See Note 6—Related-Party Transactions in the Notes to Consolidated Financial Statements under Part II, Item 8 of this Form 10-K.

Our ability to make cash distributions to our unitholders may be adversely impacted if Occidental becomes unable to perform under the terms of gathering, processing, transportation, and disposal agreements.