With the new year revealing the continuation of the rapid expansion of the US oil and gas sector, Western Midstream, a master limited partnership formed to acquire and operate major midstream assets in North America, has revised several major commercial agreements in the Delaware Basin as 2026 brings a few changes to operations for the company in the US energy market. Revising or renegotiating contracts has become a regular occurrence for the litany of energy companies that litter the international market.
The US energy industry: A case study for rapid expansion and global domination
Under the Biden administration, the US energy industry began with the integration and adoption efforts regarding the global energy transition, placing a higher priority on advancing the renewable energy sector through new and accelerated approval processes.
Under the second term of Donald Trump, however, the US has taken a far different approach to the energy industry, rolling back permits for renewable energy developments and instead focusing all of its substantial energy on increasing oil and gas production to transform the US into the global energy superpower that it has become.
The new revised contracts for midstream developments in the Delaware have come at a pivotal point
The US is currently reaching a pivotal point as the remarkable and unprecedented expansion of its energy output becomes a reality. Along with the Permian, the Delaware Basin has become a major focus for the US domestic oil and gas production sector. Western Midstream has now stated that the company has successfully renegotiated several contracts with a subsidiary of Occidental Petroleum Corporation.
Can the new fixed-fee structure contracts provide a foundation for midstream growth for Western Midstream?
Western Midstream has renegotiated natural gas processing and gathering contracts with Occidental, replacing the older legacy cost-of-service contract structure in the Delaware basin with a new fixed-fee structure, supported by a commitment to acreage dedication.
Moreover, the company has entered into several new agreements with the US major ConocoPhillips that will see Phillips delivering gas volumes to Western Midstream under a revised dedication arrangement.
By developing the new deals with Conoco and Occidental, Western Midstream has reset the natural gas fees for the iconic Delaware Basin. The amended contracts and agreements provide the foundation for significant midstream growth in the Delaware Basin as the US increases its output capacity for essential energy resources that affect the international market.
“These changes represent a significant step in WES’s continuing evolution after becoming a standalone midstream enterprise. The cost-of-service model was instrumental in safeguarding cash flows during our substantial investment in building WES’s Delaware Basin gathering system. As the basin has matured, transitioning to a simplified, fixed-fee structure is both logical and timely. This evolution strengthens alignment with our largest producer, further diversifies our customer base, enhances transparency, and reinforces our ability to deliver enduring value for our stakeholders.” – Oscar K. Brown, President and Chief Executive Officer of Western Midstream Partners
With several US majors expanding international oil and gas developments, the domestic oil and gas sector in the United States is evolving as basins mature and require a more pragmatic and modernized contract deal.
Will Western Midstream develop more renegotiated contracts for the domestic energy sector?
That would be a question that would interest investors and domestic operators alike. US energy companies are set to invest billions in the domestic infrastructure and have positioned the US as the number one gas producer by capacity in the world. Western Midstream has stated that it has posted a fireside chat between Mr. Brown and Kristen Shults, Senior Vice President and Chief Financial Officer, on the company’s website for anyone to peruse at their own discretion.
