WES
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Western Gas Partners Announces First-Quarter 2010 Results

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HOUSTON, May 05, 2010 (BUSINESS WIRE) –Western Gas Partners, LP (NYSE:WES) today announced first-quarter 2010 financial and operating results. Net income available to limited partners for the first quarter of 2010 totaled $23.6 million, or $0.37 per limited partner unit (diluted). The Partnership’s first-quarter Adjusted EBITDA(1) was $36.5 million and distributable cash flow(1) was $33.3 million, resulting in a coverage ratio of 1.51 times for the period.

Total throughput attributable to Western Gas Partners, LP for the first quarter of 2010 averaged 1,375 MMcf/d, 5 percent below the prior quarter and approximately 8 percent below the first quarter of 2009. These results include the net throughput attributable to the Granger assets for all periods of comparison. The lower sequential throughput was attributable to higher fourth-quarter Granger volumes from short-term, interruptible contracts. Excluding the Granger assets, throughput attributable to Western Gas Partners, LP was 2 percent below the prior quarter.

Capital expenditures attributable to Western Gas Partners, LP totaled approximately $4.7 million during the first quarter of 2010. Of this amount, maintenance capital expenditures were approximately $3.9 million, or 11 percent of Adjusted EBITDA.

“Our portfolio delivered another strong quarter of operating results,” said Western Gas Partners’ President and Chief Executive Officer Don Sinclair. “In addition to our Granger acquisition, our results also reflect an income stream that is largely fee-based or fixed-priced and an asset base that is improving its capital efficiency and growing in areas where our largest customer is well-positioned.”

The Partnership previously declared a quarterly distribution of $0.34 per unit for the first quarter of 2010, payable on May 14, 2010 to unitholders of record at the close of business on Apr. 30, 2010, representing a 3.0-percent increase over the prior quarter and a 13.3 percent increase over the first-quarter 2009 distribution of $0.30 per unit. The first quarter coverage ratio of 1.51 times is based on the quarterly distribution of $0.34 per unit.

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

CONFERENCE CALL TOMORROW AT 9 A.M. CST

The Partnership will host a conference call on May 6, at 9 a.m. Central Daylight Time (10 a.m. Eastern Daylight Time) to discuss first-quarter results. The dial-in number for the call is 888-680-0860 and the participant code is 56283080. Please call in 10 minutes prior to the scheduled start time. For complete instructions on how to participate in the conference call, or to access the live audio webcast and slide presentation, please visit www.westerngas.com. A replay of the call will also be available on the Web site for approximately two weeks following the conference call.

Western Gas Partners, LP is a growth-oriented Delaware limited partnership formed by Anadarko Petroleum Corporation to own, operate, acquire and develop midstream energy assets. With midstream assets in East and West Texas, the Rocky Mountains and the Mid-Continent, the Partnership is engaged in the business of gathering, compressing, processing, treating and transporting natural gas for Anadarko and other producers and customers. For more information about Western Gas Partners, please visit www.westerngas.com.

This news release contains forward-looking statements. Western Gas Partners believes 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 obtain new sources of natural gas supplies; the effect of fluctuations in commodity prices and the demand for natural gas and related products; and construction costs or capital expenditures exceeding estimated or budgeted costs or expenditures, as well as other factors described in the “Risk Factors” section of the Partnership’s 2009 Annual Report on Form 10-K filed with the Securities and Exchange Commission and other public filings and press releases by Western Gas Partners. Western Gas Partners undertakes no obligation to publicly update or revise any forward-looking statements.

Reconciliation of GAAP to Non-GAAP Measures

Below are reconciliations of Distributable Cash Flow (non-GAAP) and Adjusted EBITDA (non-GAAP) to Net Income (GAAP) as required under Regulation G of the Securities Exchange Act of 1934. Management believes that the presentation of Distributable Cash Flow and Adjusted EBITDA are widely accepted financial indicators of a company’s financial performance compared to other publicly traded partnerships and are useful in assessing our ability to incur and service debt, fund capital expenditures and make distributions. Distributable Cash Flow and Adjusted EBITDA, as defined by the Partnership, may not be comparable to similarly titled measures used by other companies. Therefore, the Partnership’s consolidated Distributable Cash Flow and Adjusted EBITDA should be considered in conjunction with net income and other performance measures, such as operating income or cash flow 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, maintenance capital expenditures and income taxes.

      Quarter Ended March 31,
          2010  

2009(1)

 

 

(in thousands)

                       
Reconciliation of Net Income attributable to Western Gas Partners, LP to Distributable Cash Flow
                       
Net income attributable to Western Gas Partners, LP   $ 22,914   $ 20,586  
Add:                      
Distributions from equity investee               1,111     1,111  
Non-cash share-based compensation expense           567     846  

Income tax expense

              957     266  
Depreciation and amortization(2)               12,983     11,711  
Less:                      
Equity income               1,340     1,550  
Cash paid for maintenance capital expenditures(2)     3,891     5,732  
Interest income, net (non-cash settled)         237  
Other income, net (2)               19     6  
                       
Distributable cash flow             $ 33,282   $ 26,995  
 

(1) Financial information for 2009 has been revised to include results attributable to the Granger assets.

(2) Includes the Partnership’s 51% share of depreciation and amortization, cash paid for maintenance capital expenditures and other income, net attributable to Chipeta Processing LLC.

Reconciliation of GAAP to Non-GAAP Measures, continued

Adjusted EBITDA attributable to Western Gas Partners, LP

The Partnership defines Adjusted EBITDA as Net Income (loss) attributable to Western Gas Partners, LP, plus distributions from equity investee, non-cash share-based compensation expense, expenses in excess of the omnibus cap, interest expense, income tax expense and depreciation, amortization and impairment, less income from equity investment, interest income, income tax benefit, other income and other nonrecurring adjustments that are not settled in cash.

      Quarter Ended

March 31,

          2010  

2009(1)

 

 

(in thousands)

                       
Reconciliation of Net Income to Adjusted EBITDA attributable to Western Gas Partners, LP
                       
Net income attributable to Western Gas Partners, LP         $ 22,914   $ 20,586  
Add:                      
Distributions from equity investee               1,111     1,111  
Non-cash share-based compensation expense           567     846  
Interest expense, net               3,528     1,785  
Income tax expense               957     266  
Depreciation and amortization (2)               12,983     11,711  
                       
Less:                      
Equity income               1,340     1,550  
Interest income, net – affiliates               4,225     4,462  
Other income, net (2)               19     6  
                       
Adjusted EBITDA attributable to Western Gas Partners, LP   $ 36,476   $ 30,287  
 

(1) Financial information for 2009 has been revised to include results attributable to the Granger assets.

(2) Includes the Partnership’s 51% share of depreciation and amortization and other income, net attributable to Chipeta Processing LLC.

Western Gas Partners, LP

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

     
    Quarter Ended
    March 31,
    2010  

2009(1)

 

(in thousands except

per-unit amounts)

             
Revenues            
Gathering, processing and transportation of natural gas   $ 43,359     $ 43,334  
Natural gas, natural gas liquids and condensate sales     48,852       43,632  
Equity income and other     2,108       2,194  
Total revenues   $ 94,319     $ 89,160  
             
Operating expenses            
Cost of product   $ 32,578     $ 33,645  
Operation and maintenance     15,167       14,086  
General and administrative     5,074       6,285  
Property and other taxes     2,769       2,821  
Depreciation and amortization     13,683       12,016  
Total operating expenses   $ 69,271     $ 68,853  
             
Operating income   $ 25,048     $ 20,307  
             
Interest income, net     697       2,677  
Other income, net     20       7  
             
Income before income taxes   $ 25,765     $ 22,991  
             
Income tax expense     957       266  
             
Net income   $ 24,808     $ 22,725  
             
Net income attributable to noncontrolling interests     1,894       2,139  
             

Net income attributable to

Western Gas Partners, LP

  $ 22,914     $ 20,586  
             
Limited partner interest in net income:            
             
Net income attributable to Western Gas Partners, LP   $ 22,914     $ 20,586  

Pre-acquisition (income) loss attributable to Parent

    1,218       (3,628 )
General partner interest in net income     (483 )     (339 )
Limited partner interest in net income   $ 23,649     $ 16,619  
             
Net income per common unit – basic and diluted   $ 0.37     $ 0.30  
Net income per subordinated unit – basic and diluted   $ 0.37     $ 0.30  
 

____________________________

(1) Financial information for 2009 has been revised to include results attributable to the Granger assets.

Western Gas Partners, LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

       
  March 31,

2010

  December 31, 2009

(in thousands, including number of units)

           
Current assets $ 69,813   $ 80,264
Note receivable – Anadarko   260,000     260,000
Net property, plant and equipment   984,725     993,377
Other assets   54,123     54,282
Total assets $ 1,368,661   $ 1,387,923
           
Current liabilities $ 26,879   $ 26,256
Long-term debt   385,000     175,000
Other long-term liabilities   15,772     107,968
Total liabilities $ 427,651   $ 309,224
           
Common unit partner capital (36,996 and 36,375 units issued and outstanding at March 31, 2010 and December 31, 2009, respectively) $ 556,627

 

$ 497,230

Subordinated unit partner capital (26,536 units issued and outstanding at March 31, 2010 and December 31, 2009)

  277,723     276,571
General partner capital (1,297 and 1,284 units issued and outstanding at March 31, 2010 and December 31, 2009, respectively)   14,960     13,726
Parent net investment       200,250
Noncontrolling interests   91,700     90,922
Total liabilities, equity and partners’ capital $ 1,368,661   $ 1,387,923
 

Western Gas Partners, LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

   
  Quarter Ended March 31,
  2010  

2009(1)

  (in thousands)
   
Cash flows from operating activities  
Net income $ 24,808     $ 22,725  

Adjustments to reconcile net income to net cash provided by operating activities:

         
Depreciation and amortization   13,683       12,016  
Change in other items, net   4,420       (15,164 )
Net cash provided by operating activities $ 42,911     $ 19,577  
   
Cash flows from investing activities          
Granger acquisition $ (241,680 )   $  
Capital expenditures   (5,297 )     (24,110 )
Net cash used in investing activities $ (246,977 )   $ (24,110 )
   
Cash flows from financing activities          
Borrowings under revolving credit facility, net of issuance costs $ 209,987     $  
Contributions from noncontrolling interest owners and Parent   1,985       22,327  
Distributions to unitholders   (21,393 )     (17,029 )
Distributions to noncontrolling interest owners   (2,806 )      
Net pre-acquisition contributions from (distributions to) Parent   1,532       (2,729 )
Net cash provided by financing activities $ 189,305     $ 2,569  
   
Net decrease in cash and cash equivalents $ (14,761 )   $ (1,964 )
Cash and cash equivalents at beginning of period   69,984       36,074  
Cash and cash equivalents at end of period $ 55,223     $ 34,110  
 

(1) Financial information for 2009 has been revised to include results attributable to the Granger assets.

Western Gas Partners, LP

OPERATING STATISTICS

(Unaudited)

     
    Quarter Ended

March 31,

    2010  

2009(1)

         
Throughput (MMcf/d)        
Gathering and transportation     809     912  
Processing (2)     636     634  
Equity investment (3)     120     123  
Total throughput     1,565     1,669  
         
Throughput attributable to noncontrolling interest owners     190     175  
Total throughput attributable to Western Gas Partners, LP     1,375     1,494  
         
Gross margin per Mcf attributable to Western Gas Partners, LP (4)   $ 0.47   $ 0.39  
 

____________________________

(1) Information for 2009 has been revised to include amounts attributable to the Granger assets.

(2) Includes 100% of Chipeta system volumes and 50% of Newcastle system volumes.

(3) Represents the Partnership’s proportionate share of volumes attributable to its 14.81% interest in Fort Union.

(4) Average for period. Calculated as gross margin (total revenues less cost of product), excluding the noncontrolling interest owners’ proportionate share of Chipeta’s revenues and cost of product, divided by total throughput attributable to Western Gas Partners, LP.

SOURCE: Western Gas Partners, LP

WESTERN GAS PARTNERS, LP CONTACT

Chris Campbell, CFA, 832-636-6012

[email protected]

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