Key insights
- Western Midstream Partners (WES) is acquiring Brazos Delaware II for $1.6 billion in cash and stock. This expands WES's Delaware Basin footprint, increasing dedicated acreage and natural gas processing capacity. The deal is expected to close in late Q2 2026. While positive for WES, the broader market impact is limited, primarily affecting the energy sector.
HOUSTON - Western Midstream Partners LP (NYSE:WES) announced today it has entered into a definitive agreement to acquire all outstanding equity interests of Brazos Delaware II LLC for approximately $1.6 billion, according to a press release statement.
The transaction will be funded through $800 million in cash and $800 million in WES common units. Western Midstream expects to maintain pro forma net leverage of approximately 3.0x throughout 2026.
Brazos operates natural-gas and crude-oil gathering and processing assets in the Texas Delaware Basin, spanning Reeves, Ward, Pecos, Winkler, Culberson, and Loving counties. The company’s assets include approximately 900 miles of pipeline and 460 MMcf/d of nameplate natural-gas processing capacity at the Comanche processing complex.
The acquisition adds approximately 470,000 dedicated acres to Western Midstream’s portfolio, increasing its total Delaware Basin dedicated acres by approximately 49% to more than 1.4 million acres. Natural-gas processing capacity will increase by approximately 20% to approximately 2.750 Bcf/d.
Brazos processed an average of 336 MMcf/d of natural gas and 25 MBbls/d of crude oil in 2025. The business operates under long-term, fixed-fee contracts with a weighted average remaining contract life of more than nine years.
The purchase price represents an approximately 8.0x multiple on 2027 estimated EBITDA, which Western Midstream projects will decline to approximately 7.5x with the commercialization of available processing capacity and identified synergies.
The transaction is subject to customary closing conditions and regulatory approvals and is expected to close late in the second quarter of 2026.
Greenhill, a Mizuho affiliate, served as financial advisor and Troutman Pepper Locke LLP served as legal advisor to Western Midstream. Jefferies LLC served as financial advisor and Vinson & Elkins LLP served as legal advisor to Brazos.
In other recent news, Western Midstream Partners reported its fourth-quarter 2025 earnings, which fell significantly short of expectations. The company posted earnings per share of $0.47, well below the anticipated $0.94, resulting in a 50% negative surprise. Additionally, revenue came in at $1.03 billion, missing the forecasted $1.04 billion. Stifel has also adjusted its outlook for Western Gas Partners, lowering its price target to $42 from $43 due to the weaker-than-expected fourth-quarter results and a modest growth outlook for 2026. Despite the expected growth following the Aris Water acquisition, it is projected to be slower than initially anticipated. RBC Capital has similarly revised its price target for Western Gas Partners to $40 from $42, maintaining a Sector Perform rating. These adjustments reflect the firms’ updated estimates and commodity price forecasts. Western Gas Partners is set to report its first-quarter 2026 earnings on May 6, 2026.
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