Occidental's Midstream Arm Faces Scrutiny as Short Bets Rise Before Q3 Print

Western Midstream Partners (WES), the gathering and processing partnership majority-owned by Occidental Petroleum, reports its third-quarter results on November 4. Short positions have climbed sharply in the past week, an unusual move for a typically quiet name heading into results.

The week-on-week increase in borrowed shares is running about 1.5 standard deviations above the partnership's typical weekly shift over the past year. Short interest has risen 11.6% in the past week to reach 1.5% of the free float, a level that remains low in absolute terms but marks a meaningful acceleration for a stock whose bearish positioning had actually been contracting over the prior month. The borrow market is not strained: availability is ample at 1,347% of short interest, meaning lenders hold roughly 13.5 million shares available against 6.3 million currently borrowed. Cost to borrow has ticked up 47% over the week to 0.42%, though it remains firmly in low-cost territory. The stock itself is up 3.2% over the past month to $46.39, modestly outpacing its closest peers: TRGP gained 4.2% over the week while EPD rose 2.9%, leaving WES roughly in line with the midstream group. Options positioning is calm, with the put/call ratio at 0.51, fractionally below its 20-day average and showing no sign of defensive hedging.

The analyst picture is one of modest caution from the largest desks. Morgan Stanley trimmed its price target to $52 from $55 on October 21, keeping an Equal-Weight rating. JP Morgan assumed coverage with a Neutral rating and a $50 target the following day. Both sit above the current price, implying some upside, but neither firm is advocating active buying. The consensus mean target is $49.54, below where Truist and Stifel initiated with $55 Buy ratings in September. The forward earnings yield factor ranks in the 62nd percentile across the ORTEX universe, suggesting reasonable value without a compelling discount, while the 12-month forward EPS growth estimate ranks in the 91st percentile, a standout figure that income-focused investors will weigh against the partnership's dividend score, which ranks in the 99th percentile. The EV/EBITDA multiple has drifted down slightly over the past month to around 9x, narrowing the gap with where the Street's more cautious targets are anchored.

The ownership structure shapes the risk profile as much as the operating one. Occidental Petroleum holds 36.4% of WES units and filed a Schedule 13D (an activist-level disclosure) in January 2026, subsequently amended in February. Its stake has edged down from 40.6% to 38.3% as last disclosed, a reduction worth watching given Occidental's own balance sheet priorities. Under SEC rules, a holder who drops below 5% may exit without a further filing, though at 38% Occidental remains the defining presence. A director, Frederick Forthuber, made an open-market purchase of 5,140 units at $48.62 in August, a transaction not covered by a 10b5-1 plan. The CEO, Oscar Brown, exercised options and withheld shares for tax purposes on October 28, which are compensation mechanics rather than a directional signal.

The November 4 print will test whether WES's throughput volumes and distribution coverage can sustain the valuation premium that income investors have bid into the units, particularly given a parent that is visibly trimming its position.