WES
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Western Gas Announces First-Quarter 2013 Results

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HOUSTON–(BUSINESS WIRE)–May. 1, 2013– Western Gas Partners, LP (NYSE: WES) (“WES”) andWestern Gas Equity Partners, LP (NYSE: WGP) (“WGP”) today announced first-quarter 2013 financial and operating results.

WESTERN GAS PARTNERS, LP

Net income available to limited partners for the first quarter of 2013, which includes results from the 33.75% interest in certain Anadarko-operated Marcellus gathering assets acquired from a third-party (the “Anadarko-Operated Marcellus Interest”) beginning in March 2013, totaled $32.4 million, or $0.31per common unit (diluted). For the first-quarter of 2013, Adjusted EBITDA (1) was $95.9 million and Distributable cash flow (1) was $79.1 million, resulting in a Coverage ratio (1) of 1.13 times for the period.

Total throughput attributable to WES for the first quarter of 2013 averaged 2.9 Bcf/d, flat with the prior quarter and 7% above the first quarter of 2012. These results include the net throughput attributable to the Mountain Gas Resources (“MGR”) assets and the 33.75% interest in certain third-party operated Marcellus gathering assets acquired from Anadarko (the “Non-Operated Marcellus Interest”) for all periods of comparison, throughput attributable to the additional Chipeta interest beginning in August 2012, and throughput attributable to the Anadarko-Operated Marcellus Interest beginning in March 2013.

Excluding acquisitions, capital expenditures attributable to WES on a cash basis totaled $161.5 million during the first quarter of 2013. Of this amount, maintenance capital expenditures were $6.0 million, or 6% of Adjusted EBITDA (1). Capital expenditures attributable to WES on an accrual basis and excluding acquisitions totaled $159.4 million during the first quarter of 2013.

“Our first quarter operating performance was in line with our expectations,” said President and Chief Executive Officer, Don Sinclair. “We are pleased by the volume trajectory of our recently acquired Marcellus assets, the over 50 first-quarter well connections in our liquids-rich areas that will drive throughput growth, and the projected start-up of our Brasada facility in June. We maintain the full-year 2013 guidance that we released in February.”

WES previously declared a quarterly distribution of $0.54 per unit for the first quarter of 2013, representing a 4% increase over the prior quarter and a 17% increase over the first-quarter 2012 distribution of $0.46 per unit. The distribution will be paid on May 13, 2013, to unitholders of record at the close of business on April 30, 2013. The first-quarter 2013 Coverage ratio (1) of 1.13 times is based on the quarterly distribution of $0.54 per unit.

WESTERN GAS EQUITY PARTNERS, LP

As of March 31, 2013, WGP indirectly owned the 2% general partner interest and 100% of the incentive distribution rights in WES and 49,296,205 WES common units. Net income available to limited partners for the first quarter of 2013, totaled $27.7 million, or $0.13 per common unit (diluted).

WGP previously declared a quarterly distribution of $0.17875 per unit for the first quarter of 2013, representing an 8% increase over the non-prorated distribution from the prior quarter. The distribution will be paid on May 22, 2013, to unitholders of record at the close of business on April 30, 2013. WGP will receive distributions from WES of $40.0 million attributable to the first quarter and will pay out$39.1 million in distributions for the first quarter of 2013.

CONFERENCE CALL TOMORROW AT 11 A.M. CDT

Western Gas Partners and Western Gas Equity Partners will host a joint conference call on Thursday, May 2, 2013, at 11 a.m. Central Daylight Time (12 p.m. Eastern Daylight Time) to discuss first-quarter 2013 results. To participate via telephone, please dial 877.621.4819 and enter participant code 36700946. Please call in 10 minutes prior to the scheduled start time. To access the live audio webcast of the conference call and slide presentation, please visit www.westerngas.com. A replay of the call will also be available on the website for approximately two weeks following the conference call.

Western Gas Partners, LP (“WES”) is a growth-oriented Delaware master limited partnership formed by Anadarko Petroleum Corporation to own, operate, acquire and develop midstream energy assets. With midstream assets in East, West and South Texas, the Rocky Mountains, north-centralPennsylvania and the Mid-Continent, WES is engaged in the business of gathering, processing, compressing, treating and transporting natural gas, condensate, natural gas liquids and crude oil for Anadarko and other producers and customers.

Western Gas Equity Partners, LP (“WGP”) is a Delaware master limited partnership formed by Anadarko to own three types of interests in WES: (i) the 2.0% general partner interest, through WGP’s 100% ownership of WES’s general partner; (ii) all of the incentive distribution rights in WES; and (iii) a significant limited partner interest in WES.

For more information about Western Gas Partners, LP and Western Gas Equity Partners, LP, please visit www.westerngas.com.

This news release contains forward-looking statements. Western Gas Partners and Western Gas Equity Partners believe that its expectations are based on reasonable assumptions. No assurance, however, can be given that such expectations will prove to have been correct. A number of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this news release. These factors include the ability to meet financial guidance or distribution growth expectations; the ability to safely and efficiently operate WES’s assets; the ability to obtain new sources of natural gas supplies; the effect of fluctuations in commodity prices and the demand for natural gas and related products; the ability to meet projected in-service dates for capital growth projects; and construction costs or capital expenditures exceeding estimated or budgeted costs or expenditures, as well as other factors described in the “Risk Factors” sections of WES’s and WGP’s most recent Forms 10-K filed with the Securities and Exchange Commission and other public filings and press releases by Western Gas Partners and Western Gas Equity Partners.Western Gas Partners and Western Gas Equity Partners undertake no obligation to publicly update or revise any forward-looking statements.

(1) Please see the tables at the end of this release for a reconciliation of non-GAAP to GAAP measures and calculation of the Coverage ratio.

Western Gas Partners, LP Reconciliation of GAAP to Non-GAAP Measures

Below are reconciliations of the Partnership’s Distributable cash flow (non-GAAP) to net income attributable to Western Gas Partners, LP (GAAP) and Adjusted EBITDA (non-GAAP) to net income attributable to Western Gas Partners, LP (GAAP) and net cash provided by operating activities (GAAP), as required under Regulation G of the Securities Exchange Act of 1934. Management believes that the Partnership’s Distributable cash flow, Adjusted EBITDA and Coverage ratio are widely accepted financial indicators of the Partnership’s financial performance compared to other publicly traded partnerships and are useful in assessing the Partnership’s ability to incur and service debt, fund capital expenditures and make distributions. Distributable cash flow, Adjusted EBITDA and Coverage ratio, as defined by the Partnership, may not be comparable to similarly titled measures used by other companies. Therefore, the Partnership’s Distributable cash flow, Adjusted EBITDA and Coverage ratio should be considered in conjunction with net income and other applicable performance measures, such as operating income or cash flows from operating activities.

Distributable Cash Flow

The Partnership defines Distributable cash flow as Adjusted EBITDA, plus interest income, less net cash paid for interest expense (including amortization of deferred debt issuance costs originally paid in cash, offset by non-cash capitalized interest), maintenance capital expenditures and income taxes.

      Three Months Ended
      March 31,

thousands except Coverage ratio

   

2013

   

2012 (1)

 

   

 

   

 

Reconciliation of Net income attributable to Western Gas Partners, LP            
to Distributable cash flow and calculation of the Coverage ratio            
Net income attributable to                
Western Gas Partners, LP     $ 50,657     $ 53,651  
Add:                
Distributions from equity investees       5,006       4,441  
Non-cash equity-based compensation expense       877       4,066  
Interest expense, net (non-cash settled)      

      81  
Income tax expense       4,236       4,429  
Depreciation, amortization and impairments (2)       31,824       26,412  
Less:                
Equity income, net       3,980       3,613  
Cash paid for maintenance capital expenditures (2)       6,032       6,315  
Capitalized interest       3,181       657  
Cash paid for income taxes      

      72  
Other income (2) (3)       277       62  
Distributable cash flow     $ 79,130     $ 82,361  
                 
Distributions declared (4)                
Limited partners     $ 56,759        
General partner       13,384        
Total     $ 70,143        
Coverage ratio       1.13   x    
 
(1)   Financial information has been recast to include results attributable to the Non-Operated Marcellus Interest.
(2)   Includes the Partnership’s 51% share for the three months ended March 31, 2012, and 75% share for the three months ended March 31, 2013, of depreciation, amortization and impairments; cash paid for maintenance capital expenditures; and other income attributable to Chipeta.
(3)   Excludes income of $0.4 million for each of the three months ended March 31, 2013 and 2012, related to a component of a gas processing agreement accounted for as a capital lease.
(4)   Reflects distributions of $0.54 per unit declared for the three months ended March 31, 2013.
     
 

Western Gas Partners, LP Reconciliation of GAAP to Non-GAAP Measures, continued

Adjusted EBITDA

The Partnership defines Adjusted EBITDA as net income attributable to Western Gas Partners, LP, plus distributions from equity investees, non-cash equity-based compensation expense, interest expense, income tax expense, depreciation, amortization and impairments, and other expense, less income from equity investments, interest income, income tax benefit, other income and other nonrecurring adjustments that are not settled in cash.

    Three Months Ended
    March 31,
thousands  

2013

 

2012 (1)

Reconciliation of Net income attributable to        
Western Gas Partners, LP to Adjusted EBITDA        
Net income attributable to Western Gas Partners, LP   $ 50,657     $ 53,651  
Add:        
Distributions from equity investees     5,006       4,441  
Non-cash equity-based compensation expense     877       4,066  
Interest expense     11,811       9,581  
Income tax expense     4,236       4,429  
Depreciation, amortization and impairments (2)     31,824       26,412  
Less:        
Equity income, net     3,980       3,613  
Interest income, net – affiliates     4,225       4,225  
Other income (2) (3)     277       62  
Adjusted EBITDA   $ 95,929     $ 94,680  
         
Reconciliation of Adjusted EBITDA to        
Net cash provided by operating activities        
Adjusted EBITDA attributable to Western Gas Partners, LP   $ 95,929     $ 94,680  
Adjusted EBITDA attributable to noncontrolling interests     2,846       4,898  
Interest income (expense), net     (7,586 )     (5,356 )
Non-cash equity based compensation expense     (73 )     (3,152 )
Debt-related amortization and other items, net     560       511  
Current income tax expense     (3,112 )     7,783  
Other income (expense), net (3)     278       62  
Distributions from equity investees less than        
(in excess of) equity income, net     (1,026 )     (828 )
Changes in operating working capital:        
Accounts receivable and natural gas imbalance receivable     20,754       32,827  
Accounts payable, accrued liabilities and natural gas imbalance payable     21,287       (13,665 )
Other     98       960  
Net cash provided by operating activities   $ 129,955     $ 118,720  
         
Cash flow information of Western Gas Partners, LP        
Net cash provided by operating activities   $ 129,955     $ 118,720  
Net cash used in investing activities     (771,888 )     (539,069 )
Net cash provided by financing activities     285,468       233,408  
 
(1)   Financial information has been recast to include results attributable to the Non-Operated Marcellus Interest.
(2)   Includes the Partnership’s 51% share for the three months ended March 31, 2012, and 75% share for the three months ended March 31, 2013, of depreciation, amortization and impairments and other income attributable to Chipeta.
(3)   Excludes income of $0.4 million for each of the three months ended March 31, 2013 and 2012, related to a component of a gas processing agreement accounted for as a capital lease.
 
   
Western Gas Partners, LP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
               
    Three Months Ended
    March 31,
thousands except unit and per-unit amounts   2013    

2012 (1)

               
Revenues              
Gathering, processing and transportation of              
natural gas and natural gas liquids   $ 102,890       $ 91,589  
Natural gas, natural gas liquids and              
condensate sales     121,729         128,486  
Equity income and other, net     5,128         4,601  
Total revenues     229,747         224,676  
Operating expenses              
Cost of product     83,083         83,156  
Operation and maintenance     36,739         32,121  
General and administrative     7,664         10,274  
Property and other taxes     5,785         4,837  
Depreciation, amortization and impairments     32,440         27,067  
Total operating expenses     165,711         157,455  
Operating income     64,036         67,221  
Interest income, net – affiliates     4,225         4,225  
Interest expense     (11,811 )       (9,581 )
Other income (expense), net     674         458  
Income before income taxes     57,124         62,323  
Income tax expense     4,236         4,429  
Net income     52,888         57,894  
Net income attributable to noncontrolling interests     2,231         4,243  
Net income attributable to              
Western Gas Partners, LP   $ 50,657       $ 53,651  
Limited partners’ interest in net income:              
Net income attributable to              
Western Gas Partners, LP   $ 50,657       $ 53,651  
Pre-acquisition net (income) loss allocated to Anadarko     (5,401 )       (5,488 )
General partner interest in net (income) loss     (12,886 )       (4,339 )
Limited partners’ interest in net income   $ 32,370       $ 43,824  
               
Net income per common unit – basic and diluted   $ 0.31       $ 0.48  
Weighted average common units outstanding – basic and diluted     104,815         90,690  
 
(1)   Financial information has been recast to include results attributable to the Non-Operated Marcellus Interest.
 
   
Western Gas Partners, LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
               
    March 31,     December 31,
thousands except number of units   2013    

2012 (1)

               
Current assets   $ 100,513     $ 477,212
Note receivable – Anadarko     260,000       260,000
Net property, plant and equipment     2,988,213       2,717,956
Other assets     297,680       294,754
Total assets   $ 3,646,406     $ 3,749,922
               
Current liabilities   $ 201,816     $ 185,306
Long-term debt     1,553,319       1,168,278
Asset retirement obligations and other     72,844       115,902
Total liabilities   $ 1,827,979     $ 1,469,486
               
Equity and partners’ capital              
Common units (105,109,682 and 104,660,553 units issued and outstanding at              
March 31, 2013, and December 31, 2012, respectively)   $ 1,692,173     $ 1,957,066
General partner units (2,145,096 and 2,135,930 units issued and outstanding at              
March 31, 2013, and December 31, 2012, respectively)     54,918       52,752
Net investment by Anadarko    

      199,960
Noncontrolling interests     71,336       70,658
Total liabilities, equity and partners’ capital   $ 3,646,406     $ 3,749,922
 
(1)   Financial information has been recast to include results attributable to the Non-Operated Marcellus Interest.
 
     
Western Gas Partners, LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
               
    Three Months Ended
    March 31,
thousands   2013    

2012 (1)

     
Cash flows from operating activities              
Net income   $ 52,888       $ 57,894  
Adjustments to reconcile net income to net cash provided by operating activities:              
Depreciation, amortization and impairments     32,440         27,067  
Change in other items, net     44,627         33,759  
Net cash provided by operating activities   $ 129,955       $ 118,720  
               
Cash flows from investing activities              
Capital expenditures   $ (166,463 )     $ (75,837 )
Acquisitions from affiliates     (465,721 )       (463,232 )
Acquisitions from third parties     (134,869 )      

 
Investments in equity affiliates     (4,835 )      

 
Net cash used in investing activities   $ (771,888 )     $ (539,069 )
               
Cash flows from financing activities              
Borrowings, net of debt issuance costs   $ 384,946       $ 319,000  
Repayments of debt    

        (40,000 )
Increase (decrease) in accounts payable, banks     (2,808 )       4,919  
Proceeds from issuance of common and general partner units,              
net of offering expenses     500        

 
Distributions to unitholders     (65,657 )       (43,027 )
Contributions from noncontrolling interest owners     1,097         9,849  
Distributions to noncontrolling interest owners     (2,650 )       (5,145 )
Net contributions from (distributions to) Anadarko     (29,960 )       (12,188 )
Net cash provided by financing activities   $ 285,468       $ 233,408  
               
Net increase (decrease) in cash and cash equivalents   $ (356,465 )     $ (186,941 )
Cash and cash equivalents at beginning of period     419,981         226,559  
Cash and cash equivalents at end of period   $ 63,516       $ 39,618  
 
(1)   Financial information has been recast to include results attributable to the Non-Operated Marcellus Interest.
 
     
Western Gas Partners, LP
OPERATING STATISTICS
(Unaudited)
               
    Three Months Ended
    March 31,
MMcf/d except per-unit amounts   2013    

2012 (1)

               
Throughput              
Gathering, treating and transportation (2)     1,627       1,606
Processing (3)     1,233       1,150
Equity investment (4)     201       236
Total throughput (5)     3,061       2,992
Throughput attributable to noncontrolling interests     155       270
Total throughput attributable to              
Western Gas Partners, LP     2,906       2,722
Gross margin per Mcf attributable to              
Western Gas Partners, LP (6)   $ 0.55     $ 0.55
 
(1)   Throughput has been recast to include volumes attributable to the Non-Operated Marcellus Interest.
(2)   Excludes average NGL pipeline volumes of 20 MBbls/d and 27 MBbls/d for the three months ended March 31, 2013 and 2012, respectively. Includes 100% of Wattenberg system volumes for all periods presented, and throughput beginning March 2013 attributable to the Anadarko-Operated Marcellus Interest.
(3)   Consists of 100% of Chipeta, Hilight and Platte Valley system volumes, 100% of the Granger and Red Desert complex volumes, and 50% of Newcastle volumes.
(4)   Represents our 14.81% share of Fort Union and 22% share of Rendezvous gross volumes, and excludes our 10% share of average White Cliffs pipeline volumes consisting of 7 MBbls/d and 5 MBbls/d for the three months ended March 31, 2013 and 2012, respectively.
(5)   Includes affiliate, third-party and equity-investment volumes.
(6)   Average for period. Calculated as gross margin, excluding the noncontrolling interest owners’ proportionate share of revenues and cost of product, divided by total throughput attributable to the Partnership (excluding throughput measured in barrels). Calculation includes gross margin attributable to our NGL pipelines and income attributable to our investments in Fort Union, White Cliffs and Rendezvous and volumes attributable to our investments in Fort Union and Rendezvous.
     
 
Western Gas Equity Partners, LP
CALCULATION OF CASH AVAILABLE FOR DISTRIBUTION
(Unaudited)
     
    Three Months Ended
thousands except per-unit amount and Coverage ratio   March 31, 2013
Distributions declared by Western Gas Partners, LP:        
General partner interest   $ 1,403  
Incentive distribution rights     11,981  
Common units held by WGP     26,620  
Less:        
Public company general and administrative expense     1,211  
Cash available for distribution   $ 38,793  
         
Declared distribution per common unit   $ 0.17875  
         
Distributions declared by Western Gas Equity Partners, LP   $ 39,128  
         
         
Coverage ratio     0.99 x
 
     
Western Gas Equity Partners, LP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
               
    Three Months Ended
    March 31,
thousands except unit and per-unit amounts   2013    

2012 (1)

               
Revenues              
Gathering, processing and transportation of natural gas and natural gas liquids   $ 102,890       $ 91,589  
Natural gas, natural gas liquids and condensate sales     121,729         128,486  
Equity income and other, net     5,128         4,601  
Total revenues     229,747         224,676  
Operating expenses              
Cost of product     83,083         83,156  
Operation and maintenance     36,739         32,121  
General and administrative     8,929         10,274  
Property and other taxes     5,785         4,837  
Depreciation, amortization and impairments     32,440         27,067  
Total operating expenses     166,976         157,455  
Operating income     62,771         67,221  
Interest income, net – affiliates     4,225         4,225  
Interest expense     (11,811 )       (9,581 )
Other income (expense), net     727         458  
Income before income taxes     55,912         62,323  
Income tax expense     4,236         16,695  
Net income     51,676         45,628  
Net income attributable to noncontrolling interests     19,361         28,574  
Net income attributable to              
Western Gas Equity Partners, LP   $ 32,315       $ 17,054  
Limited partners’ interest in net income: (2)              
Net income attributable to              
Western Gas Equity Partners, LP   $ 32,315          
Pre-acquisition net (income) loss allocated to Anadarko     (4,567 )        
Limited partners’ interest in net income   $ 27,748          
Net income per common unit – basic and diluted (2)   $ 0.13          
Weighted average number of              
common units outstanding – basic and diluted (2)     218,896          
 
(1)   Financial information has been recast to include results attributable to the Non-Operated Marcellus Interest.
(2)   Amounts not applicable prior to WGP’s IPO on December 12, 2012.
 
     
Western Gas Equity Partners, LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
               
    March 31,     December 31,
thousands except number of units   2013    

2012 (1)

               
Current assets   $ 129,038     $ 478,104
Note receivable – Anadarko     260,000       260,000
Net property, plant and equipment     2,988,213       2,717,956
Other assets     297,680       294,754
Total assets   $ 3,674,931     $ 3,750,814
               
Current liabilities   $ 203,290     $ 186,255
Long-term debt     1,553,319       1,168,278
Asset retirement obligations and other     72,844       115,902
Total liabilities   $ 1,829,453     $ 1,470,435
               
Equity and partners’ capital              
Common units (218,895,515 issued and outstanding at              
March 31, 2013, and December 31, 2012)   $ 682,752     $ 912,376
Net investment by Anadarko    

      199,960
Noncontrolling interests     1,162,726       1,168,043
Total liabilities, equity and partners’ capital   $ 3,674,931     $ 3,750,814
 
(1)   Financial information has been recast to include results attributable to the Non-Operated Marcellus Interest.
 
               
Western Gas Equity Partners, LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
               
    Three Months Ended
    March 31,
thousands   2013    

2012 (1)

               
Cash flows from operating activities              
Net income   $ 51,676       $ 45,628  
Adjustments to reconcile net income to net cash provided by operating activities:              
Depreciation, amortization and impairments     32,440         27,067  
Change in other items, net     45,045         21,838  
Net cash provided by operating activities   $ 129,161       $ 94,533  
               
Cash flows from investing activities              
Capital expenditures   $ (166,463 )     $ (75,837 )
Acquisitions from affiliates     (465,721 )       (463,232 )
Acquisitions from third parties     (134,869 )      

 
Investments in equity affiliates     (4,835 )      

 
Net cash used in investing activities   $ (771,888 )     $ (539,069 )
               
Cash flows from financing activities              
Borrowings, net of debt issuance costs   $ 384,946       $ 319,000  
Repayments of debt    

        (40,000 )
Increase (decrease) in accounts payable, banks     (2,808 )       4,919  
Proceeds from issuance of WGP common units, net of offering expenses     (2,367 )      

 
Contributions received from Chipeta noncontrolling interest owners (including Anadarko)     1,097         9,849  
Distributions to Chipeta noncontrolling interest owners (including Anadarko)     (2,650 )       (5,145 )
Distributions to WES noncontrolling interest owners     (28,789 )       (22,155 )
Distributions to WGP unitholders     (7,852 )      

 
Net contributions from (distributions to) Anadarko     (29,942 )       (8,873 )
Net cash provided by financing activities   $ 311,635       $ 257,595  
               
Net increase (decrease) in cash and cash equivalents   $ (331,092 )     $ (186,941 )
Cash and cash equivalents at beginning of period     422,556         226,559  
Cash and cash equivalents at end of period   $ 91,464       $ 39,618  
 
(1)   Financial information has been recast to include results attributable to the Non-Operated Marcellus Interest.
 

Source: Western Gas Partners, LP

Western Gas Partners, LP

Benjamin Fink, CFA

SVP, Chief Financial Officer and Treasurer

832.636.6010

[email protected]

Articles

Western Midstream Announces Participation in UBS Conference

Today Western Midstream Partners, LP (NYSE: WES) (“WES” or the “Partnership”) announced that on January 11 and January 12, 2022, Craig Collins, WES’s Chief Operating Officer, and Kristen Shults, WES’s Senior Vice President, Finance and Communications, will participate in one-on-one sessions at the UBS Winter Infrastructure and Energy Conference.

Western Midstream Announces Board and Officer Changes

Today Western Midstream Partners, LP (NYSE: WES) (“WES” or the “Partnership”) announced changes to the board of directors (the “Board”) of Western Midstream Holdings, LLC, its general partner (the “General Partner”), and to its management team, as well as the repurchase of WES common units from Occidental.