WES Q2 Earnings Beat Estimates on Record Throughput & Pricing

Western Midstream Partners WES reported second-quarter 2026 earnings of 99 cents per unit, up 13.8% from 87 cents a year ago. The bottom line beat the Zacks Consensus Estimate of 90 cents by 10%.

Quarterly revenues of $1.22 billion increased 30% year over year and topped the Zacks Consensus Estimate of $1.13 billion by 8.3%. Results benefited from impressive Delaware Basin natural gas and produced-water throughput, the Brazos acquisition contribution and higher commodity pricing.

Other players in the midstream space that have already reported results are Enterprise Products Partners EPD and Kinder Morgan KMI. EPD and KMI beat the Zacks Consensus Estimate for earnings in the June quarter of this year. Both EPD and KMI have a strong presence in the midstream business, which is relatively more stable than upstream activities.

Western Midstream Posts Strong Throughput Gains

Natural-gas throughput attributable to WES averaged 5,343 million cubic feet per day (MMcf/D), up 3% sequentially. Delaware Basin natural-gas throughput reached a record 2,140 MMcf/D, increasing 5% from the first quarter, thanks to the contribution from the Brazos Delaware acquisition.

Produced-water throughput rose 5% sequentially to 2,939 MBbls/D, while crude-oil and NGL throughput edged up to 523 MBbls/D. DJ Basin natural-gas throughput also reached a record 1,547 MMcf/D, signifying a 2% sequential increase.

WES Records Margin Expansion Across Three Streams

Adjusted gross margin per Mcf for natural-gas assets increased to $1.35 from $1.32 in the first quarter. Higher commodity pricing on excess NGL volumes under fixed-recovery contracts and the partial-quarter Brazos contribution supported the increase.

Adjusted gross margin per barrel for crude oil and NGL assets rose to $3.21 from $3.07, mainly due to higher Delaware Basin deficiency fees. Produced-water adjusted gross margin improved to 96 cents per barrel from 90 cents, primarily reflecting higher throughput.

Western Midstream Faces Higher Operating Costs

Total operating expenses increased to $714.95 million from $524.06 million in the prior-year quarter. Operation and maintenance expenses climbed to $285.35 million from $224.63 million, while general and administrative expenses increased to $85.93 million from $66.15 million.

The cost of the product surged to $117.44 million from $42.68 million. Depreciation and amortization increased to $205.95 million from $172.11 million. Despite the higher expense base, operating income advanced to $526.7 million from $444.48 million a year earlier.

WES Generates Record Adjusted EBITDA

Adjusted EBITDA reached a quarterly record of $736.5 million, increasing 19% year over year and roughly 8% sequentially. Distributable cash flow totaled $537.2 million.

Operating cash flow was $534.7 million, while free cash flow totaled $263.6 million. Free cash flow after distributions was negative $111 million, reflecting organic growth capital spending. Second-quarter capital expenditures totaled $308.3 million.

Western Midstream Raises 2026 Outlook

Western Midstream raised its 2026 adjusted EBITDA guidance to $2.75 to $2.95 billion, with the $2.85 billion midpoint up $250 million from its original outlook. Distributable cash flow guidance increased to $2.05-$2.25 billion, while free cash flow expectations rose to $1.1-$1.3 billion.

The partnership maintained its $850 million-$1 billion capital expenditure range but now expects spending near the high end. WES also reiterated its target of at least $3.70 per unit in distributions paid during 2026. Currently, WES carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks' Research Chief Names "Stock Most Likely to Double"

Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.

This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research