WES
-

Western Gas Partners Announces Fourth-Quarter and Full-Year 2011 Results

DJ-Basin9-1.jpg

HOUSTON–(BUSINESS WIRE)–Feb. 27, 2012– Western Gas Partners, LP (NYSE: WES) today announced fourth-quarter and full-year financial and operating results for 2011. The announced results include the full-year effect of the Partnership’s acquisition of the Bison assets in 2011. In addition, the Partnership today announced its outlook for 2012.

Net income available to limited partners for 2011, which includes results associated with the Platte Valley assets from March 2011 forward and the Bison assets from July 2011 forward, totaled $131.6 million, or $1.64 per common unit (diluted), with full-year 2011 Adjusted EBITDA (1) of $261.4 millionand full-year Distributable cash flow (1) of $221.7 million.

Net income available to limited partners for the fourth-quarter of 2011 totaled $31.5 million, or $0.35per common unit (diluted). The Partnership’s fourth-quarter 2011 Adjusted EBITDA (1) was $68.4 million and Distributable cash flow (1) was $56.9 million.

The Partnership previously declared a quarterly distribution of $0.44 per unit for the fourth quarter of 2011, paid on February 13, 2012, to unitholders of record at the close of business on February 1, 2012, representing a 5-percent increase over the prior quarter and a 16-percent increase over the fourth-quarter 2010 distribution of $0.38 per unit. The fourth-quarter 2011 Coverage ratio of 1.32 times is based on the $0.44 per unit distribution.

“2011 was an inflection point for Western Gas . We completed our first major third-party acquisition, increased the size of our committed credit facility to $800 million, successfully launched our first public debt offering, and continued to benefit from our sponsor’s tremendous support,” said Western Gas Partners’ President and Chief Executive Officer Don Sinclair. “Furthermore, we’ve sustained our consistent track record of top-tier distribution growth while maintaining conservative coverages.”

Total throughput attributable to the Partnership for the fourth quarter of 2011 averaged 2.0 Bcf/d, 3 percent above the prior quarter and 8 percent above the fourth quarter of 2010. For the full-year 2011, throughput attributable to the Partnership averaged 1.96 Bcf/d, 14 percent above the prior year average.

Capital expenditures attributable to the Partnership totaled approximately $45.8 million during the fourth quarter of 2011. Of this amount, maintenance capital expenditures were approximately$6.9 million, or 10 percent of Adjusted EBITDA.(1) For the full-year 2011, capital expenditures attributable to the Partnership totaled $108.4 million, which includes the full-year capital expenditures associated with the Bison assets acquired in July 2011.

2012 OUTLOOK

Based on current expectations and including the previously announced acquisition of Mountain Gas Resources, LLC effective January 1, 2012, Adjusted EBITDA for 2012 is expected to be between $335 million and $365 million. Total capital expenditures (excluding acquisitions) are expected to be between$410 million and $460 million with maintenance capital expenditures expected to be between 8 percent and 11 percent of Adjusted EBITDA. The 2012 capital expenditure forecast includes one expansion project already underway, the completion of a third train at Chipeta Processing, LLC, and two growth projects: (a) the expansion of the Partnership’s processing capacity by 300 MMcf/d at its Wattenberg system in the DJ Basin, which includes the underlying Niobrara formation, and (b) the construction of a new 200 MMcf/d cryogenic processing plant in the Maverick Basin, serving production from the Eagleford shale. Details surrounding the 2012 capital budget will be provided during the Partnership’s earnings conference call.

CONFERENCE CALL TOMORROW AT 11 A.M. CST

Management will host a conference call on Tuesday, February 28, 2012, at 11 a.m. Central Standard Time (12 p.m. Eastern Standard Time) to discuss fourth-quarter and full-year 2011 results and the outlook for 2012. To participate via telephone, please dial 888.679.8033 and enter participant code 69037045. 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 http://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 master limited partnership formed byAnadarko 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, processing, compressing, treating and transporting natural gas, condensate, natural gas liquids and crude oil for Anadarko and other producers and customers. For more information about Western Gas Partners, please visithttp://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 safely and efficiently operate our 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” section of the Partnership’s most recent Form 10-K filed with theSecurities 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.

(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.
       
 

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, Adjusted EBITDA and Coverage ratio 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, 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 consolidated Distributable cash flow, Adjusted EBITDA and Coverage ratio should be considered in conjunction with net income and other 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.

  Quarter Ended       Year Ended
  December 31,       December 31,
thousands except Coverage ratio 2011    

2010 (1)

 

      2011    

2010 (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 $ 34,427       $ 33,636         $ 142,940     $ 122,874  
Add:                                
Distributions from equity investees   2,739         2,316           10,612       5,935  
Non-cash equity-based compensation expense   7,519         2,970           13,754       4,787  
Expenses in excess of omnibus cap           133                 133  
Interest expense, net (non-cash settled)           1,385           1,214       3,157  
Income tax (benefit) expense   446         (719 )         2,161       9,142  
Depreciation, amortization and impairments (2)   22,321         18,398           85,701       70,970  
Other expense (2)                    

3,683

   

 

2,393  
Less:                                
Equity income, net   3,102         2,041           10,091       6,640  
Cash paid for maintenance capital expenditures (2)   6,885         5,564           25,652       22,314  
Capitalized interest   286                   420        
Cash paid for income taxes           507           190       507  
Other income (2)   288         187           2,053       267  

Distributable cash flow

$ 56,891       $ 49,820         $ 221,659     $ 189,663  
Distribution declared for the                                
three months ended December 31, 2011 (3)                                
Limited partners $ 39,941                            
General partner   3,086                            
Total $ 43,027                            
Distribution Coverage ratio   1.32 x                          
 

(1)

    Financial information has been revised to include results attributable to the Bison assets.

(2)

   

Includes the Partnership’s 51% share of depreciation, amortization and impairments; other expense; cash paid for maintenance capital

expenditures; and other income attributable to Chipeta Processing LLC (“Chipeta”).

(3)

    Reflects distribution of $0.44 per unit paid on February 13, 2012.
       
 

Reconciliation of GAAP to Non-GAAP Measures, continued

Adjusted EBITDA attributable to Western Gas Partners, LP (“Adjusted EBITDA”)

The Partnership defines Adjusted EBITDA as Net income (loss) attributable to Western Gas Partners, LP, plus distributions from equity investees, non-cash equity-based compensation expense, general and administrative expense in excess of the omnibus cap (if any), 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.

        Quarter Ended       Year Ended
        December 31,       December 31,
thousands       2011    

2010 (1)

 

      2011    

2010 (1)

 

 
Reconciliation of Net income attributable to Western Gas Partners, LP to Adjusted EBITDA
 
Net income attributable to Western Gas Partners, LP       $ 34,427     $ 33,636         $ 142,940     $ 122,874  
Add:                                    
Distributions from equity investees         2,739       2,316           10,612       5,935  
Non-cash equity-based compensation expense         7,519       2,970           13,754       4,787  
Expenses in excess of omnibus cap               133                 133  
Interest expense         8,607       7,404           31,559       21,951  
Income tax (benefit) expense         446       (719 )         2,161       9,142  
Depreciation, amortization and impairments (2)         22,321       18,398           85,701       70,970  

Other expense (2)

                        3,683       2,393  
Less:                                    
Equity income, net         3,102       2,041           10,091       6,640  
Interest income – affiliates         4,225       4,225           16,900       16,900  

Other income (2)

        288       187           2,053       267  
Adjusted EBITDA       $ 68,444     $ 57,685         $ 261,366     $ 214,378  
 

(1)

    Financial information has been revised to include results attributable to the Bison assets.

(2)

    Includes the Partnership’s 51% share of depreciation, amortization and impairments; other expense; and other income attributable to Chipeta.
       
 
Western Gas Partners, LP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
                                       
        Quarter Ended         Year Ended
        December 31,         December 31,
thousands except per-unit amounts       2011      

2010 (1)

 

        2011      

2010 (1)

 

                                       
Revenues                                      
Gathering, processing and transportation of                                      
natural gas and natural gas liquids       $ 75,551       $ 60,939           $ 286,969       $ 233,708  
Natural gas, natural gas liquids and                                      
condensate sales         98,541         62,028             361,582         258,820  
Equity income and other, net         5,478         5,264             15,529         12,673  
Total revenues         179,570         128,231             664,080         505,201  
Operating expenses                                      
Cost of product         69,425         39,126             247,302         157,049  
Operation and maintenance         27,126         20,609             101,754         85,407  
General and administrative         13,611         7,705             35,388         25,305  
Property and other taxes         3,063         2,576             15,695         13,454  
Depreciation, amortization and impairments         22,942         19,108             88,454         73,791  
Total operating expenses         136,167         89,124             488,593         355,006  
Operating income         43,403         39,107             175,487         150,195  
Interest income – affiliates         4,225         4,225             16,900         16,900  
Interest expense         (8,607 )       (7,404 )           (31,559 )       (21,951 )
Other income (expense), net         290         188             (1,624 )       (2,123 )
Income before income taxes         39,311         36,116             159,204         143,021  
Income tax (benefit) expense         446         (719 )           2,161         9,142  
Net income         38,865         36,835             157,043         133,879  
Net income attributable to noncontrolling interests         4,438         3,199             14,103         11,005  
Net income attributable to                                      
Western Gas Partners, LP       $ 34,427       $ 33,636           $ 142,940       $ 122,874  
Limited partners’ interest in net income:                                      
Net income attributable to                                      
Western Gas Partners, LP       $ 34,427       $ 33,636           $ 142,940       $ 122,874  
Pre-acquisition net (income) loss allocated to Parent                 1,507             (2,781 )       (8,743 )
General partner interest in net (income) loss         (2,915 )       (1,177 )           (8,599 )       (3,067 )
Limited partners’ interest in net income       $ 31,512       $ 33,966           $ 131,560       $ 111,064  
Net income per unit – basic and diluted                                      
Common units       $ 0.35       $ 0.48           $ 1.64       $ 1.66  

Subordinated units(2)

      $       $ 0.44           $ 1.28       $ 1.61  
Weighted average units outstanding – basic and diluted                                      
Common units         90,141         46,851             67,333         41,287  

Subordinated units(2)

                26,536             16,431         26,536  
 

(1)

   

Financial information has been revised to include results attributable to the Bison assets.

(2)

   

All subordinated units were converted to common units on a one-for-one basis on August 15, 2011. For purposes of calculating net

income per common and subordinated unit, the conversion of the subordinated units is deemed to have occurred on July 1, 2011.

       
 
Western Gas Partners, LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
                     
        December 31,       December 31,
thousands except number of units       2011      

2010 (1)

 

                   
Current assets       $ 255,550       $   43,184  
Note receivable – Anadarko         260,000         260,000  
Net property, plant and equipment         1,770,934         1,446,043  
Other assets         165,136         106,903  
Total assets       $ 2,451,620       $   1,856,130  
                     
Current liabilities       $ 71,094       $   45,864  
Long-term debt         669,178         474,000  
Asset retirement obligations and other         63,642         61,840  
Total liabilities       $ 803,914       $   581,704  
                     
Common units (90,140,999 and 51,036,968 units issued and outstanding at                    
December 31, 2011 and 2010, respectively)       $ 1,495,253       $   810,717  
Subordinated units (zero and 26,536,306 units issued and outstanding at                    
December 31, 2011 and 2010, respectively) (2)                 282,384  
General partner units (1,839,613 and 1,583,128 units issued and outstanding at                    
December 31, 2011 and 2010, respectively)         31,729         21,505  
Parent net investment                 69,358  
Noncontrolling interests         120,724         90,462  
Total liabilities, equity and partners’ capital       $ 2,451,620       $   1,856,130  
 

(1)

  Financial information has been revised to include results attributable to the Bison assets.

(2)

 

All subordinated units were converted to common units on a one-for-one basis on August 15, 2011.

     
 
Western Gas Partners, LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
                     
          Year Ended
          December 31,
thousands         2011    

2010 (1)

                     
Cash flows from operating activities                    
Net income         $ 157,043       $ 133,879  
Adjustments to reconcile net income to net cash provided by operating activities:                    

Depreciation, amortization and impairments

          88,454         73,791  

Change in other items, net

          24,917         18,747  
Net cash provided by operating activities         $ 270,414       $ 226,417  
                     
Cash flows from investing activities                    
Capital expenditures         $ (135,495 )     $ (130,149 )
Acquisitions from affiliates           (28,837 )       (734,780 )
Acquisitions from third parties           (301,957 )       (18,047 )
Investments in equity affiliates           (93 )       (310 )
Proceeds from sale of assets to affiliates           382         2,805  
Proceeds from sale of assets to third parties           500         2,825  
Net cash used in investing activities         $ (465,500 )     $ (877,656 )
                     

Cash flows from financing activities

                   
Borrowings, net of debt issuance costs         $ 1,055,939       $ 660,000  
Repayments of debt           (869,000 )       (361,000 )
Revolving credit facility issuance costs                   (12 )
Proceeds from issuance of common and general partner units,                    

net of offering expenses

          335,317         345,803  
Distributions to unitholders           (140,118 )       (94,194 )
Contributions from noncontrolling interest owners           33,637         2,053  
Distributions to noncontrolling interest owners           (17,478 )       (13,222 )
Net contributions from (distributions to) Parent           (3,726 )       68,901  
Net cash provided by financing activities         $ 394,571       $ 608,329  
                     
Net increase (decrease) in cash and cash equivalents         $ 199,485       $ (42,910 )
Cash and cash equivalents at beginning of period           27,074         69,984  
Cash and cash equivalents at end of period         $ 226,559       $ 27,074  
 

(1)

    Financial information has been revised to include results attributable to the Bison assets.
       
 
Western Gas Partners, LP
OPERATING STATISTICS
(Unaudited)
                                       
          Quarter Ended       Year Ended
          December 31,       December 31,
          2011    

2010 (1)

      2011    

2010 (1)

                                       
Throughput (MMcf/d except per-unit amounts)                                      

Gathering, treating and transportation (2)

          1,251       1,228           1,265       1,124  
Processing (3)           934       716           863       681  

Equity investment (4)

          76       115           71       116  
Total throughput (5)           2,261       2,059           2,199       1,921  
Throughput attributable to noncontrolling interests           255       204           242       197  
Total throughput attributable to                                      
Western Gas Partners, LP           2,006       1,855           1,957       1,724  
Gross margin per Mcf attributable to                                      
Western Gas Partners, LP (6)         $ 0.56     $ 0.49         $ 0.55     $ 0.52  
 

(1)

    Throughput has been revised to include volumes attributable to the Bison assets.

(2)

    Excludes average NGL pipeline volumes from the Chipeta assets of 26 MBbls/d and 12 MBbls/d for the quarters ended December 31, 2011 and 2010, respectively, and 24 MBbls/d and 14 MBbls/d, for the years ended December 31, 2011 and 2010, respectively.

(3)

    Includes 100% of Chipeta, Granger and Hilight system volumes and 50% of Newcastle system volumes for all periods presented as well as throughput beginning March 2011 attributable to the Platte Valley system.

(4)

    Represents the Partnership’s 14.81% share of Fort Union’s gross volumes and excludes 4 MBbls/d and 3 MBbls/d of oil pipeline volumes for each quarter and year ended December 31, 2011 and 2010, respectively, representing the Partnership’s 10% share of average White Cliffs pipeline volumes.

(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 Western Gas Partners, LP. Calculation includes income attributable to the Partnership’s investments in Fort Union and White Cliffs and volumes attributable to the Partnership’s investment in Fort Union.
       
 

Source: Western Gas Partners, LP

Western Gas Partners, LP

Benjamin Fink, CFA

SVP, Chief Financial Officer & 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.