• Western Midstream Partners (NYSE:WES) has amended key Delaware Basin natural gas contracts with Occidental Petroleum and ConocoPhillips to fixed-fee structures.
• The company has shifted away from legacy cost-of-service contracts in these agreements.
• ConocoPhillips is now a contracted customer in the Delaware Basin, adding a new source of fee-based revenue.
• Occidental is reducing its ownership stake in Western Midstream Partners, altering the company’s shareholder mix.

Western Midstream Partners focuses on gathering, processing, and transporting natural gas and related products in US shale regions, including the Delaware Basin. By moving to fixed-fee contracts with Occidental and ConocoPhillips, the partnership is reshaping how it earns revenue from these long term infrastructure assets.

For you as an investor, the shift in contract structure and customer mix may influence how you assess revenue stability, counterparty exposure, and governance at Western Midstream Partners. Occidental’s lower ownership stake may also affect how independent the partnership appears over time, and how its interests align with a broader set of public unitholders.

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Quick Assessment

• ✅ Price vs Analyst Target: At US$40.52, the unit price is slightly below the US$41.83 analyst consensus target.
• ✅ Simply Wall St Valuation: Simply Wall St currently flags WES as trading about 59.9% below its estimated fair value.
• ✅ Recent Momentum: The 30 day return of roughly 2.5% points to positive short term momentum.

Check out Simply Wall St's in depth valuation analysis for Western Midstream Partners.

Key Considerations

• 📊 The move to fixed fee contracts with Occidental and ConocoPhillips ties more of WES’s cash flows to volumes and contract terms rather than cost recovery.
• 📊 Keep an eye on volumes in the Delaware Basin, contract duration, and how Occidental’s lower ownership affects capital allocation decisions.
• ⚠️ With a dividend yield of 8.98% that is not well covered by earnings or free cash flow and a high level of debt, payout sustainability is an important risk to track.

Dig Deeper

For the full picture including more risks and rewards, check out the complete Western Midstream Partners analysis.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.