Amid rumors that Occidental (OXY) may divest its company stake, Western Midstream (WES) has sold several non-core assets to buyers including Enterprise Products (EPD).
WES has sold its interests in Saddlehorn Pipeline, Whitethorn Pipeline, Panola Pipeline, a Marcellus gas gathering system, and the Enterprise Fractionators 7 and 8 in Mont Belvieu.
Western announced the transactions ahead of its 4Q23 earnings release last Thursday (February 22). The midstream company is at the center of industry chatter following reports that OXY, WES’ general partner and 49% owner, is exploring a sale of its stake.
East Daley Analytics tracks the financials and performance for the assets sold by WES in Energy Data Studio and in the company Financial Blueprints. Enterprise was the buyer of the Panola, Whitethorn (aka Midland-to-ECHO 1), and Enterprise Fractionators 7 & 8 stakes. EPD was already a joint owner and will own 100% of these assets after the deal with WES.
Enterprise paid $375MM for the Whitethorn and Fractionators 7 & 8 interests, and $25MM for WES’ 15% share of Panola Pipeline. The acquisitions will provide EPD more supply chain integration as Panola feeds NGL volumes to the fractionation assets in Mont Belvieu.
Producer EQT (EQT) identified as the buyer of WES’ interest in the Marcellus gathering system. EQT said it acquired WES’ 34% stake in the system for a reported $205MM, representing a 12x EBITDA multiple based on modeled earnings by East Daley. Given the high EBITDA multiple, EDA most likely underestimated earnings on the system.
The remaining $185MM of proceeds is allocated to WES’ Saddlehorn Pipeline interest. WES did not disclose the acquirer(s) of those assets; we have estimated the sales prices in the table.
WES reported a combined 9.6x multiple on the transactions based on 2023 EBITDA. Data from East Daley’s WES Financial Blueprint shows the company achieving an 8.6x multiple on the sales (see table). The difference could be due to our model overestimating earnings for the Marcellus gathering system and fractionator assets. – James Taylor Tickers: EPD, OXY, WES.
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