Western Midstream Partners (WES) finalized a new agreement with Occidental Petroleum that will take effect on January 1, 2026. The deal replaces the legacy cost‑of‑service model with a fixed‑fee structure backed by an acreage dedication, giving WES a predictable revenue stream as the Delaware Basin matures.
Under the terms, WES will receive common units from Occidental worth approximately $610 million. The transaction reduces Occidental’s ownership from about 42% to roughly 40%, realigning the equity structure and boosting adjusted EBITDA per unit for WES shareholders.
The fixed‑fee arrangement is designed to provide revenue certainty and aligns WES’s interests with those of its largest producer. It also complements a concurrent agreement with ConocoPhillips that will become effective on February 1, 2026, diversifying WES’s customer base and cutting counterparty exposure by more than 10%.
Financially, WES expects the change to be value‑neutral over time. Distribution savings are projected to offset any short‑term decline in operating cash flow, while the company maintains a target net leverage of about 3.0× adjusted EBITDA in 2026. The firm is also pursuing a $1.1 billion capital program and the acquisition of Aris Water Solutions, both of which will be supported by the more stable cash flow profile.
President and CEO Oscar K. Brown described the transition as “logical and timely” as the Delaware Basin matures. He highlighted that the new structure strengthens alignment with Occidental, enhances pricing transparency, and reinforces WES’s ability to deliver enduring value to shareholders.
Analysts at RBC Capital and Wells Fargo have raised their price targets for WES, citing the company’s strong Q3 earnings performance and the confidence expressed in the new contract terms and future guidance. The upgrades reflect a positive view of WES’s strategic positioning and financial discipline.
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