Western Midstream Partners, LP has finalized amendments to its natural gas gathering and processing agreements in the Delaware Basin. The partnership reset fee structures with an Occidental Petroleum subsidiary, agreeing to issue 5 million WES common units in exchange for lower per-unit gathering and processing charges. Concurrently, WES entered a new arrangement with ConocoPhillips to handle approximately 150 million cubic feet per day of natural gas volumes, expanding its system utilization by roughly 12%. These moves streamline the contract portfolio and align fees more closely with current basin economics.

The transactions include a strategic equity component designed to realign WES’s capital structure. By issuing equity to Occidental, WES reduces its leverage ratio by an estimated 0.2x net debt to EBITDA, enhancing balance sheet flexibility. Management expects this realignment to support future organic growth projects in crude oil, natural gas and produced water, while maintaining an investment-grade credit profile. The simplification of contractual terms also reduces administrative costs by an estimated $10 million annually.

These agreements underpin Western Midstream’s ability to sustain its attractive 8.8% dividend yield. By locking in lower gathering fees and securing additional volume commitments, WES projects growth in distributable cash flow of 5% year over year. The diversified customer base—now including two of the basin’s largest producers—reinforces revenue stability. Management highlighted that the streamlined portfolio and strengthened financial metrics position the partnership to deliver enduring value for unitholders.