01—Abstract
Summary
Summary of the 8-K filed January 22, 2026. Cited figures are marked; the original filing is the authoritative source.
Western Midstream Partners, LP (WES) disclosed on January 16, 2026 that its subsidiary Delaware Basin Midstream LLC amended its Delaware Basin gas gathering agreement with a subsidiary of Occidental Petroleum.
The amendment replaces the cost-of-service gathering fee structure with a fixed-fee structure, adds a minimum volume commitment through the end of 2027, and modifies the process for certain dedication-related acreage transfers and releases. Related transactions include a new gathering and processing agreement with a ConocoPhillips subsidiary and a Unit Redemption Agreement under which WES will redeem approximately 15.3 million common units from Occidental on February 3, 2026. The filing states that Occidental's ownership of WES will fall from approximately 42% to approximately 40%, and that the units were valued at approximately $610 milliona.
The Occidental contract liability of approximately $560 millionb, plus the value of the transferred units, will be recognized as revenue averaging approximately $165 million a year through 2032. WES expects the conversion to fixed fees not to reduce Adjusted EBITDA through 2027, and expects the cumulative reduction in operating cash flow to be largely offset by distribution savings. WES also still expects to maintain net leverage at or near 3.0x Adjusted EBITDA in 2026, despite the Aris Water Solutions acquisition and an anticipated 2026 growth capital program of approximately $1.1 billion.
The Special Committee of independent directors reviewed and approved the transactions, and the full Board approved them on the committee's recommendation. The filing states that the new Occidental terms take effect January 1, 2026, and the new ConocoPhillips terms take effect February 1, 2026.
02—Key points
Key Highlights
- Occidental Delaware Basin gas gathering agreement amended to replace cost-of-service fees with a fixed-fee structure, with a new minimum volume commitment through the end of 2027
- WES to redeem approximately 15.3 million common units from Occidental on February 3, 2026, valued at approximately $610 million; Occidental's ownership falls from approximately 42% to approximately 40%
- New ConocoPhillips gathering and processing agreement, fixed-fee with an acreage dedication and a tenor through the early 2030s, reduces related-party revenue by more than 10%
- Approximately $560 million Occidental contract liability plus the transferred units' value to be recognized as revenue, averaging approximately $165 million a year through 2032
- WES expects no reduction to Adjusted EBITDA through 2027 from the fixed-fee conversion, with minimal impact until 2032
- After the amendments, approximately 9% of total revenue remains subject to cost-of-service rates
- WES still expects net leverage at or near 3.0x Adjusted EBITDA in 2026, including the Aris Water Solutions acquisition and a roughly $1.1 billion growth capital program
03—Questions
Frequently Asked Questions
Why is WES redeeming units from Occidental, and what does it cost the partnership?
The redemption is part of the consideration for the Occidental gathering contract amendment and related transactions. The filing states the units are valued at approximately $610 million and that the exchange is structured to be value-neutral against the economic concessions in the agreements and the resulting decrease in operating cash flow over time. WES expects distribution savings from the redemption to largely offset the cumulative reduction in operating cash flows over the remaining contract term.
How will the fixed-fee conversion affect WES's earnings and cash flow?
The filing states the conversion is not expected to reduce Adjusted EBITDA through 2027 and will have a minimal impact on Adjusted EBITDA from then until 2032. Beginning in 2026, operating cash flows reflect only the new fixed-fee rates, while revenues and Adjusted EBITDA include recognition of the contract liability through 2032. WES expects ongoing distribution savings and cost reduction initiatives launched in 2025 to fully offset the reduction in Free Cash Flow after distributions.
What is the new ConocoPhillips agreement?
WES entered into a new natural-gas gathering and processing agreement with ConocoPhillips covering a portion of its Delaware Basin natural-gas production. The contract is fixed-fee, includes an acreage dedication, has a tenor through the early 2030s, and is effective February 1, 2026. The filing states it reduces total related-party revenue by more than 10%.
Does WES still expect to keep leverage under control?
Yes. The filing states that, taking into account the Aris Water Solutions acquisition and an anticipated 2026 growth-oriented capital program of approximately $1.1 billion, WES still expects to maintain net leverage at or near 3.0x Adjusted EBITDA in 2026.
04—Continue