WES Targets $1.1B Capex in 2026 to Drive Delaware Basin Growth

Western Midstream Partners (WES) is committing over $1.1 billion in 2026 capital expenditures to drive significant growth in the Delaware Basin. Key strategic moves include the $2 billion acquisition of Aris Water Solutions, expected to close in Q4 2025, which will expand produced water disposal capacity to over 3.8 million barrels per day and diversify its customer base. Concurrently, WES sanctioned a second 300 MMcf/d natural gas processing train at its North Loving plant, projected to boost total West Texas processing capacity to approximately 2.5 Bcf/d by early Q2 2027. These investments are anticipated to fuel mid-single-digit year-over-year throughput growth for natural gas and water in 2025, with continued expansion in 2026, reinforcing WES's operational scale and financial position in the region.

Analysis

Western Midstream Partners (WES) is pursuing an aggressive growth strategy centered on the Delaware Basin, committing to over $1.1 billion in 2026 capital expenditures. This plan is underpinned by two key initiatives: the $2 billion acquisition of Aris Water Solutions, set to close in Q4 2025, and the sanctioning of a new 300 million cubic feet per day gas processing train at its North Loving plant. The Aris acquisition, funded by 28% cash and 72% units, is projected to increase WES's water disposal capacity to over 3.8 million barrels per day while maintaining a net leverage ratio of approximately 3x. Concurrently, the North Loving expansion will elevate the company's total West Texas processing capacity to roughly 2.5 billion cubic feet per day by early Q2 2027. Management anticipates mid-single-digit year-over-year throughput growth for natural gas and water in 2025, with further growth expected in 2026. However, this optimistic corporate outlook is directly contrasted by the article's highlight of a Zacks Rank #4 (Sell) for WES, which points investors toward better-ranked peers like Antero Midstream (AM), Flotek Industries (FTK), and Enbridge (ENB), citing their stable cash flows, strong earnings performance, and favorable growth prospects.

Key Decisions for Investors

• Investors should weigh Western Midstream's long-term growth potential from the Aris acquisition and North Loving expansion against the significant execution risk and the timeline, with full benefits not expected until 2025-2027.
• The explicit Zacks #4 (Sell) rating presents a critical counterpoint to the company's bullish guidance, suggesting potential valuation concerns or near-term headwinds that warrant cautious evaluation.
• Given the cautionary rating on WES, investors seeking midstream energy exposure should consider researching the highlighted alternatives like Antero Midstream (AM) and Enbridge (ENB) for their stable, fee-based models and stronger current analyst ratings.
• Monitor WES's ability to manage its balance sheet, specifically its capacity to maintain the targeted 3x net leverage ratio following the acquisition, which is being funded with a significant 72% equity component that could be dilutive to existing unitholders.