Western Midstream Partners (WES) risk factors, FY2025 10-K

Other

1. 01CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
2. 02RISKS INHERENT IN OUR BUSINESS
3. 03Occidental’s ownership of our general partner may result in conflicts of interest
4. 04Any future credit-rating downgrade could negatively impact our cost of and ability to access capital
5. 05Sustained low natural-gas, NGLs, or oil prices and volatility of such prices could adversely affect our business
6. 06Our profitability may be negatively impacted by inflation in the cost of labor, materials, and services41% rewritten
7. 07Certain of our natural-gas processing agreements provide our producer customers with contractually specified NGL recoveries that, under expected operating conditions, may generate commodity price exposure and could, under certain circumstances, generate financial or physical-delivery obligations for us
8. 08We are exposed to the credit risk of third-party customers, and any material non-payment or non-performance by these parties, including with respect to our gathering, processing, transportation, and disposal agreements, could reduce our ability to make distributions to our unitholders
9. 09Changes in laws or regulations regarding hydraulic fracturing could result in increased costs, operating restrictions, or delays in the completion of oil and natural-gas wells, which could decrease the need for our gathering and processing services
10. 10Physical injection constraints and the adoption of new or more stringent legal standards relating to induced seismic activity could affect our produced-water disposal operations
11. 11Adverse developments in our geographic areas of operation could disproportionately impact our business, results of operations, financial condition, and ability to make cash distributions to our unitholders
12. 12Our indebtedness may limit our ability to capitalize on acquisitions and other business opportunities or our flexibility to obtain financing
13. 13Furthermore, our indebtedness and related debt-service costs could impair our ability to obtain additional financing, reduce funds available for operations and business opportunities, make us more vulnerable to competitive pressures or market downturns, and limit our financial and operational flexibility
14. 14We may not be able to obtain funding on acceptable terms or at all. This may hinder or prevent us from meeting our future capital needs
15. 15Our failure to maintain an adequate system of internal control over financial reporting could adversely affect our ability to accurately report our results
16. 16Our business could be negatively affected by security threats, including cyber-threats, and other disruptions38% rewritten
17. 17We typically do not obtain independent evaluations of hydrocarbon reserves connected to our systems. Therefore, in the future, throughput on our systems could be less than we anticipate
18. 18Our results of operations could be adversely affected by asset impairments
19. 19A change in the jurisdictional characterization of some of our assets by federal, state, or local regulatory agencies or a change in policy by those agencies could result in increased regulation of our assets, which could cause our revenues to decline and operating expenses to increase81% rewritten
20. 20We are subject to stringent and comprehensive environmental laws and regulations that may expose us to significant costs and liabilities
21. 21Our construction of new assets is subject to regulatory, environmental, political, legal, and economic risks, which could adversely affect our results of operations and financial condition
22. 22We may fail to successfully combine our business with the assets and business of Aris, which could have an adverse impact on our future resultsNew
23. 23We are subject to increased scrutiny from institutional investors with respect to our governance structure and the social cost of our industry, which may adversely impact our ability to raise capital from such investors
24. 24We do not own all of the land on which our pipelines and facilities are located, which could result in disruptions to our operations
25. 25Our business involves many hazards and operational risks, some of which may not be fully covered by insurance. If a significant accident or event occurs for which we are not fully insured, our operations and financial results could be adversely affected
26. 26Our general partner’s liability regarding our obligations is limited
27. 27Our partnership agreement limits our general partner’s fiduciary duties to holders of our common units and restricts the remedies available to holders of our common units for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty
28. 28The general partner interest in us may be transferred to a third party without unitholder consent
29. 29We may issue additional units without unitholder approval, which would dilute existing ownership interests
30. 30The market price of our common units could be affected adversely by sales of substantial amounts of our common units in the public or private markets, including sales by Occidental or other large holders47% rewritten
31. 31Unitholders may have liability to repay distributions that were wrongfully distributed to them
32. 32Unitholders’ liability may not be limited if a court finds that unitholder action constitutes control of our business
33. 33TAX RISKS TO COMMON UNITHOLDERS
34. 34The tax treatment of publicly traded partnerships or an investment in our common units could be subject to potential legislative, judicial, or administrative changes and differing interpretations, possibly on a retroactive basis
35. 35If the IRS were to contest the federal income tax positions we take, it may impact the market for our common units adversely, and the costs of any such contest would reduce the cash available for distribution to our unitholders73% rewritten
36. 36Our unitholders are required to pay taxes on their share of our income even if they do not receive any cash distributions from us
37. 37Tax gain or loss on the disposition of our common units could be more or less than expected
38. 38Tax-exempt entities face unique tax issues from owning our common units that may result in adverse tax consequences to them
39. 39We have adopted certain valuation methodologies in determining a unitholder’s allocations of income, gain, loss, and deduction. The IRS may challenge these methodologies or the resulting allocations, which could affect the value of our common units adversely
40. 40Our unitholders are subject to state and local taxes and return-filing requirements in jurisdictions where they do not live as a result of investing in our common units