#United States #Houston #Western Midstream #Pathfinder Pipeline #Occidental Petroleum

Western Midstream Partners Unveils Pathfinder Pipeline and 2025 Growth Plans

In an exciting development for the energy sector, Western Midstream Partners, LP (NYSE: WES) has confirmed the construction of the Pathfinder Pipeline, marking a significant step forward in the midstream sector. This new 30-inch long-haul pipeline is designed to transport more than 800 MBbls/d of produced water, facilitating effective disposal in eastern Loving County within the Delaware Basin.

The Pathfinder initiative is not just about new infrastructure; it reflects Western Midstream’s commitment to enhancing operational efficiency and accommodating the growing needs of its customers. By redirecting produced water from high-activity regions with increasing pore pressures, the company plans to maximize its existing disposal capacities, thus ensuring a robust supply chain for its clients.

Strategic Partnerships and Infrastructure Enhancements

The completion of the Pathfinder Pipeline will be bolstered by a newly established long-term agreement with Occidental Petroleum, targeting an impressive capacity of up to 280 MBbls/d for gathering and transportation, alongside a firm disposal capacity of 220 MBbls/d. This partnership is framed by minimum-volume commitments, solidifying the collaborative effort between the two companies amidst ongoing development plans in the basin.

Over the next two years, Western Midstream is committing approximately $400 million to $450 million for the development of its produced-water infrastructure. This includes:

• - The Pathfinder Pipeline: A 42-mile steel pipeline intended to streamline the water transport process.
• - Regional Gathering Facilities: A series of large gathering facilities to enhance logistical capabilities.
• - Disposal Facilities: Nine new saltwater disposal facilities across strategically chosen locations to ensure effective waste management.

Financial Projections and Distribution Plans

In tandem with these developments, Western Midstream has provided an optimistic outlook for 2025, anticipating Adjusted EBITDA between $2.350 billion and $2.550 billion, projecting a 5% increase from the previous year. Investment forecasts include $625 million to $775 million in capital expenditures, alongside an estimated Free Cash Flow range of $1.275 billion to $1.475 billion.

A notable aspect of their financial strategy is the planned increase in Base Distribution by $0.035 per unit, bringing it to $0.910 per unit on an annualized basis. This increase will commence in the first quarter of 2025 and signals a commitment to delivering shareholder value while ensuring sustainable growth. Long-term, the company aims for a conservative annual distribution growth rate in the mid-to-low single digits, potentially enhanced by larger projects or acquisitions in the future.

Navigating Future Challenges and Opportunities

Looking ahead, the Pathfinder Pipeline represents just one component of Western Midstream’s strategic vision. The company’s proactive stance on leveraging existing infrastructure and forming strong partnerships positions it well to tackle the rising challenges of produced-water disposal in the Delaware Basin. Oscar Brown, the President and CEO, articulated the company’s dedication to innovation and efficient operations, emphasizing how these initiatives will not only cater to current demands but also pave the way for future expansion.

In closing, Western Midstream’s recent announcements signify a pivotal moment in its operational narrative, combining strategic infrastructure investments with strong client partnerships to bolster its market presence and deliver sustained growth. With a keen focus on optimizing resources and establishing long-term agreements, the company is setting the stage for enhanced productivity and operational excellence as it navigates into 2025 and beyond.