Western Midstream Partners, LP (NYSE: WES)

Western Midstream Partners, LP (WES) is a Delaware-based master limited partnership operating in the midstream energy sector, with its stock symbol also being WES. The company is involved in the business of gathering, compressing, treating, processing, and transporting natural gas; gathering, stabilizing, and transporting condensate, NGLs, and crude oil; and gathering and disposing of produced water. WES operates in several regions, including Texas, New Mexico, Colorado, Utah, Wyoming, and North-central Pennsylvania.

WES generates revenue primarily through its gathering, processing, and transportation services. The company's primary products include natural gas, condensate, NGLs, crude oil, and produced water. WES serves a diverse customer base, including major oil and gas producers such as Occidental Petroleum Corporation.

The company's business is organized into several segments, including Gathering Systems, Processing and Treating Plants, Transportation, and Produced Water Disposal Systems. The Gathering Systems segment operates gathering systems in several regions, including Texas, New Mexico, Colorado, Utah, and Wyoming. These systems gather raw natural gas, condensate, and crude oil from wells and transport them to processing facilities. The Processing and Treating Plants segment operates processing and treating plants in several regions, including Texas, New Mexico, Colorado, Utah, and Wyoming. These plants process and treat natural gas, condensate, and crude oil to separate the various components and prepare them for transportation. The Transportation segment operates transportation infrastructure, including pipelines, to transport processed and treated natural gas, condensate, and crude oil to markets. The Produced Water Disposal Systems segment operates produced water disposal systems to gather and dispose of produced water from oil and gas wells.

WES is well-positioned in the midstream energy sector, with a strong presence in several key regions. The company's competitive strengths include its substantial presence in basins with historically strong producer economics, its well-positioned and well-maintained assets, its sustainability and safety focus, and its commodity-price and volumetric-risk mitigation strategies. WES has a significant presence in the Delaware Basin, which is one of the most active oil and gas basins in the United States. The company's assets in the Delaware Basin include the West Texas complex, which is one of the largest and most complex midstream systems in the basin. WES also operates assets in the DJ Basin in Colorado and the Powder River Basin in Wyoming.

WES has a strong relationship with Occidental Petroleum Corporation, which is one of the largest independent oil and gas companies in the world. Occidental is WES's largest customer and has a significant presence in the Delaware Basin. WES's relationship with Occidental provides the company with a stable source of revenue and a strong partner in the midstream energy sector.

Regulation of WES's operations is primarily governed by the Pipeline and Hazardous Materials Safety Administration (PHMSA), which is an agency under the U.S. Department of Transportation (DOT). PHMSA regulates the design, installation, testing, construction, operation, replacement, and management of natural gas and hazardous liquid pipelines. WES is also subject to regulation by FERC, which regulates the rates, services, and terms and conditions of service for interstate natural gas and liquids pipelines. Additionally, WES is subject to state regulation, which includes various safety, environmental, and nondiscriminatory take requirements and complaint-based rate regulation.

WES's operations are also subject to various laws and regulations related to environmental protection, including the Clean Air Act, the Clean Water Act, and the Resource Conservation and Recovery Act. The company is also subject to various laws and regulations related to health and safety, including the Occupational Safety and Health Act.

In connection with its operations, WES has acquired certain properties supportive of oil and natural-gas activities from third parties whose actions with respect to the management and disposal or release of hydrocarbons, hazardous substances, or wastes were not under its control. Under environmental laws and regulations, WES could incur strict joint and several liability for remediating hydrocarbons, hazardous substances, or wastes disposed of or released by prior owners or operators. WES also could incur costs related to the clean-up of third-party sites to which it sent regulated substances for disposal or recycling, and for damages to natural resources or other claims related to releases of regulated substances at or from such third-party sites.

The ultimate financial impact arising from environmental laws and regulations is neither clearly known nor determinable, as existing standards are subject to change and new standards continue to evolve. WES has incurred and will continue to incur operating and capital expenditures, some of which may be material, to comply with environmental and occupational health and safety laws and regulations. Historically, WES's environmental compliance costs have not had a material adverse effect on its results of operations; however, there can be no assurance that such costs will not have a material adverse effect on its business, financial condition, results of operations, or cash flows in the future, or that new or more stringently applied existing laws and regulations will not materially increase its costs of doing business.

WES also disposes of produced water generated from oil and natural-gas production operations. The legal standards related to the disposal of produced water into producing or non-producing geologic formations by means of underground injection wells are subject to change based on concerns of the public or governmental authorities, including concerns relating to seismic events near injection wells used for the disposal of produced water. In response to such concerns, regulators in some states have imposed, or are considering imposing, additional requirements in the permitting of produced-water disposal wells or are otherwise investigating the existence of a relationship between seismicity and the use of such wells.