WES
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Western Midstream Announces Third-Quarter 2021 Results

HOUSTON, Nov. 9, 2021 /PRNewswire/ — Today Western Midstream Partners, LP (NYSE: WES) (“WES” or the “Partnership”) announced third-quarter 2021 financial and operating results. Net income (loss) available to limited partners for the third quarter of 2021 totaled $250.2 million, or $0.61 per common unit (diluted), with third-quarter 2021 Adjusted EBITDA(1) totaling $531.6 million, third-quarter 2021 Cash flows provided by operating activities totaling $391.3 million, and third-quarter 2021 Free cash flow(1) totaling $320.0 million.

RECENT HIGHLIGHTS

  • Executed a debt tender offer and repaid $500.0 million of Senior notes due 2022, 2023, 2025, and 2026 for an aggregate purchase price of approximately $521.9 million, decreasing the Partnership’s annualized borrowing costs by $20.6 million(2).
  • Repurchased 4.5 million common units for aggregate consideration of $88.1 million during the third quarter as part of the previously announced buyback program of up to $250.0 million of the Partnership’s common units through December 31, 2021. Since announcing the buyback program, the Partnership has repurchased approximately 8.0 million common units for aggregate consideration of $136.9 million through September 30, 2021.
  • Received an upgrade for WES Operating’s long-term debt from “BB” to “BB+” from Standard & Poor’s, decreasing the Partnership’s annualized borrowing costs by approximately $7.9 million, and a revised outlook rating from “Stable” to “Positive” from Fitch.
  • Increased Regional Oil Treating Facility capacity by 20-percent, or 36 MBbls/d, for minimal capital to meet expected growth in Delaware Basin oil volumes.

__________________________________________________

(1)

Please see the definitions of the Partnership’s non-GAAP measures at the end of this release and reconciliation of GAAP to non-GAAP measures.

(2) 

Annualized borrowing costs calculated using the effective coupon rates as of September 30, 2021.

On November 12, 2021, WES will pay its third-quarter 2021 per-unit distribution of $0.323, which represents a 1.3-percent increase over the prior quarter’s distribution and is consistent with an annualized distribution growth of 5-percent. Third-quarter 2021 Free cash flow after distributions totaled $185.4 million. Third-quarter 2021 and year-to-date capital expenditures(1) totaled $82.0 million and $224.3 million, respectively. Net income and Adjusted EBITDA for the quarter include a non-cash increase to revenue of $19 million associated with a revenue recognition cumulative adjustment related to reversal of constrained revenues.

“The consistent execution of our strategic priorities has led to our strong third-quarter results and positions us for continued success,” said Michael Ure, President and Chief Executive Officer. “Across the organization, our best-in-class teams continue to pursue cost and capital efficiencies, attract additional volumes on our systems, and maximize our asset value.”

“With our expansive asset footprint and strong producer relationships in the Delaware Basin, we continue to capitalize on robust activity levels in this world-class producing basin. For the third-consecutive quarter, throughput increased across all three products within the Delaware Basin, contributing to our outperformance.”

“Due to our outperformance this quarter, we now expect to finish the year above the high end of our 2021 Adjusted EBITDA range of $1.825 to $1.925 billion. Furthermore, we expect to be below the high end of our 2021 capital expenditure range of $275 million to $375 million. This expectation reflects a slight shift in producer activity into 2022, thus reducing capital requirements in 2021, and our team’s continued focus on reducing costs and enhancing operational efficiencies.”

Mr. Ure continued, “Our operational results have again set the stage for significant free cash flow generation, which provides the resources needed to reduce debt and improve the health of our balance sheet. We’ve been able to reduce our outstanding Senior Notes by more than $930 million year to date, or 12 percent of our year-end 2020 balance, through the retirement of our 2021 maturity and successful execution of our recent tender offer. With third-quarter Debt-to-Trailing Twelve Month Adjusted EBITDA below 3.7x, we are well below our 2021 target of 4.0x and nearing our 2022 target of 3.5x.”

__________________________________________________

(1) 

Accrual-based, includes equity investments, excludes capitalized interest, and excludes capital expenditures associated with the 25% third-party interest in Chipeta.

“We remain committed to returning value to stakeholders through continued distribution growth and opportunistically executing the remaining $113 million available under the unit buyback program.”

Third-quarter 2021 total natural-gas throughput(1) averaged 4.1 Bcf/d, representing a 4-percent sequential-quarter decrease. This decrease primarily relates to (i) decreased volumes at the Bison treating facility, which was sold to a third party during the second quarter of 2021, and (ii) production declines in the DJ Basin and areas around the Marcellus Interest and Springfield gas-gathering systems.

Third-quarter 2021 total throughput for crude-oil and NGLs assets(1) averaged 641 MBbls/d, representing a 7-percent sequential-quarter decrease. This decrease primarily relates to production declines in the DJ Basin and decreased volumes on our equity investments.

Third-quarter 2021 total throughput for produced-water assets(1) averaged 735 MBbls/d, representing a 7-percent sequential-quarter increase.

____________________________________________________

(1) 

Represents total throughput attributable to WES, which excludes (i) the 2.0% Occidental subsidiary-owned limited partner interest in WES Operating and (ii) for
natural-gas throughput, the 25% third-party interest in Chipeta, which collectively represent WES’s noncontrolling interests.


CONFERENCE CALL TOMORROW AT 1:00 P.M. CT
WES will host a conference call on Wednesday, November 10, 2021, at 1:00 p.m. Central Time (2:00 p.m. Eastern Time) to discuss third-quarter 2021 results. To participate, individuals should dial 877-883-0383 (Domestic) or 412-902-6506 (International) 15 minutes before the scheduled conference call time and enter participant access code 9861840. To access the live audio webcast of the conference call, please visit the investor relations section of the Partnership’s website at www.westernmidstream.com. A replay of the conference call also will be available on the website following the call.

For additional details on WES’s financial and operational performance, please refer to the earnings slides and updated investor presentation available at www.westernmidstream.com.

ABOUT WESTERN MIDSTREAM
Western Midstream Partners, LP (“WES”) is a Delaware master limited partnership formed to acquire, own, develop, and operate midstream assets. With midstream assets located in Texas, New Mexico, Colorado, Utah, Wyoming, and Pennsylvania, WES is engaged in the business of gathering, compressing, treating, processing, and transporting natural gas; gathering, stabilizing, and transporting condensate, natural-gas liquids, and crude oil; and gathering and disposing of produced water for its customers. In its capacity as a natural-gas processor, WES also buys and sells natural gas, natural-gas liquids, and condensate on behalf of itself and as an agent for its customers under certain contracts.

For more information about Western Midstream Partners, LP, please visit www.westernmidstream.com.

This news release contains forward-looking statements. WES’s management believes that its expectations are based on reasonable assumptions. No assurance, however, can be given that such expectations will prove 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 our ability to meet financial guidance or distribution expectations; the ultimate impact of efforts to fight COVID-19 on the global economy and any related impact on commodity demand and prices; our ability to safely and efficiently operate WES’s assets; the supply of, demand for, and price of oil, natural gas, NGLs, and related products or services; our ability to meet projected in-service dates for capital-growth projects; construction costs or capital expenditures exceeding estimated or budgeted costs or expenditures; and the other factors described in the “Risk Factors” section of WES’s most-recent Form 10-K and Form 10-Q filed with the Securities and Exchange Commission and other public filings and press releases. WES undertakes no obligation to publicly update or revise any forward-looking statements.

WESTERN MIDSTREAM CONTACTS

Kristen Shults
Senior Vice President, Finance and Communications
[email protected]
832.636.1009

Daniel Jenkins
Director, Investor Relations
[email protected]
832.636.1009

Shelby Keltner
Manager, Investor Relations
[email protected]
832.636.1009

Western Midstream Partners, LP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)




Three Months Ended 

September 30,

Nine Months Ended 

September 30,

thousands except per-unit amounts


2021


2020


2021


2020

Revenues and other









Service revenues – fee based


$

650,482



$

636,522



$

1,841,742



$

1,980,546


Service revenues – product based


28,812



12,316



88,267



35,237


Product sales


84,298



30,106



227,359



108,491


Other


248



100



577



838


Total revenues and other


763,840



679,044



2,157,945



2,125,112


Equity income, net – related parties


48,506



61,026



159,337



176,788


Operating expenses









Cost of product


83,232



31,739



250,245



153,611


Operation and maintenance


140,838



132,293



434,198



436,670


General and administrative


50,409



41,578



139,973



118,466


Property and other taxes


13,641



19,392



45,992



57,263


Depreciation and amortization


139,002



132,564



407,404



384,688


Long-lived asset and other impairments


1,594



34,640



29,198



200,575


Goodwill impairment








441,017


Total operating expenses


428,716



392,206



1,307,010



1,792,290


Gain (loss) on divestiture and other, net


(364)



(768)



278



(3,651)


Operating income (loss)


383,266



347,096



1,010,550



505,959


Interest income – Anadarko note receivable




3,286





11,736


Interest expense


(93,257)



(95,571)



(287,040)



(278,811)


Gain (loss) on early extinguishment of debt


(24,655)



1,632



(24,944)



10,372


Other income (expense), net


110



720



(1,013)



612


Income (loss) before income taxes


265,464



257,163



697,553



249,868


Income tax expense (benefit)


1,826



3,028



4,403



3,792


Net income (loss)


263,638



254,135



693,150



246,076


Net income (loss) attributable to noncontrolling interests


7,913



7,524



20,375



(17,045)


Net income (loss) attributable to Western Midstream 
     Partners, LP


$

255,725



$

246,611



$

672,775



$

263,121


Limited partners’ interest in net income (loss):









Net income (loss) attributable to Western Midstream Partners, 
     LP


$

255,725



$

246,611



$

672,775



$

263,121


General partner interest in net (income) loss


(5,527)



(5,132)



(14,484)



(5,462)


Limited partners’ interest in net income (loss)


$

250,198



$

241,479



$

658,291



$

257,659


Net income (loss) per common unit – basic


$

0.61



$

0.55



$

1.60



$

0.58


Net income (loss) per common unit – diluted


$

0.61



$

0.55



$

1.59



$

0.58


Weighted-average common units outstanding – basic


411,909



438,857



412,690



442,255


Weighted-average common units outstanding – diluted


412,714



438,926



413,150



442,275


 

 

Western Midstream Partners, LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)


thousands except number of units


September 30,
2021


December 31,
2020

Total current assets


$

756,710



$

943,064


Net property, plant, and equipment


8,524,081



8,709,945


Other assets


2,138,587



2,177,018


Total assets


$

11,419,378



$

11,830,027


Total current liabilities


$

1,307,342



$

960,935


Long-term debt


6,399,874



7,415,832


Asset retirement obligations


271,022



260,283


Other liabilities


344,694



297,765


Total liabilities


8,322,932



8,934,815


Equity and partners’ capital





Common units (408,610,916 and 413,839,863 units issued and outstanding at September 30,
2021, and December 31, 2020, respectively)


2,965,944



2,778,339


General partner units (9,060,641 units issued and outstanding at September 30, 2021, and
December 31, 2020)


(11,286)



(17,208)


Noncontrolling interests


141,788



134,081


Total liabilities, equity, and partners’ capital


$

11,419,378



$

11,830,027


 

 


Western Midstream Partners, LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)




Nine Months Ended 

September 30,

thousands


2021


2020

Cash flows from operating activities





Net income (loss)


$

693,150



$

246,076


Adjustments to reconcile net income (loss) to net cash provided by operating activities and
changes in assets and liabilities:





Depreciation and amortization


407,404



384,688


Long-lived asset and other impairments


29,198



200,575


Goodwill impairment




441,017


(Gain) loss on divestiture and other, net


(278)



3,651


(Gain) loss on early extinguishment of debt


24,944



(10,372)


Cash paid to settle interest-rate swaps




(19,181)


Change in other items, net


(49,424)



(114,561)


Net cash provided by operating activities


$

1,104,994



$

1,131,893


Cash flows from investing activities





Capital expenditures


$

(217,757)



$

(372,262)


Purchases from related parties


(2,000)




Contributions to equity investments – related parties


(3,683)



(19,017)


Distributions from equity investments in excess of cumulative earnings – related parties


30,075



21,750


Proceeds from the sale of assets to third parties


8,002




(Increase) decrease in materials and supplies inventory and other


(1,924)



(57,141)


Net cash used in investing activities


$

(187,287)



$

(426,670)


Cash flows from financing activities





Borrowings, net of debt issuance costs


$

400,000



$

3,681,173


Repayments of debt


(1,132,966)



(3,780,390)


Increase (decrease) in outstanding checks


(11,757)



691


Distributions to Partnership unitholders


(398,896)



(563,579)


Distributions to Chipeta noncontrolling interest owner


(2,734)



(3,923)


Distributions to noncontrolling interest owner of WES Operating


(9,934)



(11,545)


Net contributions from (distributions to) related parties


6,673



22,674


Finance lease payments


(5,295)



(12,241)


Unit repurchases


(104,366)




Other


(3,492)




Net cash provided by (used in) financing activities


$

(1,262,767)



$

(667,140)


Net increase (decrease) in cash and cash equivalents


$

(345,060)



$

38,083


Cash and cash equivalents at beginning of period


444,922



99,962


Cash and cash equivalents at end of period


$

99,862



$

138,045


 

Western Midstream Partners, LP
RECONCILIATION OF GAAP TO NON-GAAP MEASURES

WES defines Adjusted gross margin attributable to Western Midstream Partners, LP (“Adjusted gross margin”) as total revenues and other (less reimbursements for electricity-related expenses recorded as revenue), less cost of product, plus distributions from equity investments, and excluding the noncontrolling interest owners’ proportionate share of revenues and cost of product.

WES defines Adjusted EBITDA as net income (loss), plus (i) distributions from equity investments, (ii) non-cash equity-based compensation expense, (iii) interest expense, (iv) income tax expense, (v) depreciation and amortization, (vi) impairments, and (vii) other expense (including lower of cost or market inventory adjustments recorded in cost of product), less (i) gain (loss) on divestiture and other, net, (ii) gain (loss) on early extinguishment of debt, (iii) income from equity investments, (iv) interest income, (v) income tax benefit, (vi) other income, and (vii) the noncontrolling interest owners’ proportionate share of revenues and expenses.

WES defines Free cash flow as net cash provided by operating activities less total capital expenditures and contributions to equity investments, plus distributions from equity investments in excess of cumulative earnings. Management considers Free cash flow an appropriate metric for assessing capital discipline, cost efficiency, and balance-sheet strength. Although Free cash flow is the metric used to assess WES’s ability to make distributions to unitholders, this measure should not be viewed as indicative of the actual amount of cash that is available for distributions or planned for distributions for a given period. Instead, Free cash flow should be considered indicative of the amount of cash that is available for distributions, debt repayments, and other general partnership purposes.

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


Western Midstream Partners, LP

RECONCILIATION OF GAAP TO NON-GAAP MEASURES (CONTINUED)



Adjusted Gross Margin




Three Months Ended

thousands


September 30,
2021


June 30,
2021

Reconciliation of Gross margin to Adjusted gross margin





Total revenues and other


$

763,840



$

719,131


Less:





Cost of product


83,232



78,044


Depreciation and amortization


139,002



137,849


Gross margin


541,606



503,238


Add:





Distributions from equity investments


62,711



70,947


Depreciation and amortization


139,002



137,849


Less:





Reimbursed electricity-related charges recorded as revenues


19,725



17,585


Adjusted gross margin attributable to noncontrolling interests (1)


18,187



17,213


Adjusted gross margin


$

705,407



$

677,236


Adjusted gross margin for natural-gas assets


$

492,708



$

469,409


Adjusted gross margin for crude-oil and NGLs assets


148,939



150,317


Adjusted gross margin for produced-water assets


63,760



57,510






(1) 

For all periods presented, includes (i) the 25% third-party interest in Chipeta and (ii) the 2.0% Occidental subsidiary-owned limited partner
interest in WES Operating, which collectively represent WES’s noncontrolling interests.

 

 

Western Midstream Partners, LP

RECONCILIATION OF GAAP TO NON-GAAP MEASURES (CONTINUED)



Adjusted EBITDA




Three Months Ended

thousands


September 30,
2021


June 30,
2021

Reconciliation of Net income (loss) to Adjusted EBITDA





Net income (loss)


$

263,638



$

238,277


Add:





Distributions from equity investments


62,711



70,947


Non-cash equity-based compensation expense


6,979



7,121


Interest expense


93,257



95,290


Income tax expense


1,826



1,465


Depreciation and amortization


139,002



137,849


Impairments


1,594



12,738


Other expense


4



30


Less:





Gain (loss) on divestiture and other, net


(364)



1,225


Gain (loss) on early extinguishment of debt


(24,655)




Equity income, net – related parties


48,506



58,666


Other income


109



84


Adjusted EBITDA attributable to noncontrolling interests (1)


13,835



12,616


Adjusted EBITDA


$

531,580



$

491,126


Reconciliation of Net cash provided by operating activities to Adjusted EBITDA





Net cash provided by operating activities


$

391,333



$

452,111


Interest (income) expense, net


93,257



95,290


Accretion and amortization of long-term obligations, net


(1,871)



(1,914)


Current income tax expense (benefit)


824



749


Other (income) expense, net


(110)



(84)


Distributions from equity investments in excess of cumulative earnings – related parties


8,702



9,232


Changes in assets and liabilities:





Accounts receivable, net


61,609



38,982


Accounts and imbalance payables and accrued liabilities, net


(17,204)



(55,758)


Other items, net


8,875



(34,866)


Adjusted EBITDA attributable to noncontrolling interests (1)


(13,835)



(12,616)


Adjusted EBITDA


$

531,580



$

491,126


Cash flow information





Net cash provided by operating activities


$

391,333



$

452,111


Net cash used in investing activities


(80,883)



(59,932)


Net cash provided by (used in) financing activities


(516,161)



(142,982)






(1) 

For all periods presented, includes (i) the 25% third-party interest in Chipeta and (ii) the 2.0% Occidental subsidiary-owned limited partner
interest in WES Operating, which collectively represent WES’s noncontrolling interests.

 


 

Western Midstream Partners, LP

RECONCILIATION OF GAAP TO NON-GAAP MEASURES (CONTINUED)



Free Cash Flow




Three Months Ended

thousands


September 30,
2021


June 30,
2021

Reconciliation of Net cash provided by operating activities to Free cash flow





Net cash provided by operating activities


$

391,333



$

452,111


Less:





Capital expenditures


79,829



78,145


Contributions to equity investments – related parties


175



3,422


Add:





Distributions from equity investments in excess of cumulative earnings – related parties


8,702



9,232


Free cash flow


$

320,031



$

379,776


Cash flow information





Net cash provided by operating activities


$

391,333



$

452,111


Net cash used in investing activities


(80,883)



(59,932)


Net cash provided by (used in) financing activities


(516,161)



(142,982)


 


 

Western Midstream Partners, LP
OPERATING STATISTICS
(Unaudited)



Three Months Ended



September 30,
2021


June 30,
2021

Throughput for natural-gas assets (MMcf/d)





Gathering, treating, and transportation


378



534


Processing


3,416



3,433


Equity investments (1)


443



457


Total throughput


4,237



4,424


Throughput attributable to noncontrolling interests (2)


156



159


Total throughput attributable to WES for natural-gas assets


4,081



4,265


Throughput for crude-oil and NGLs assets (MBbls/d)





Gathering, treating, and transportation


304



315


Equity investments (3)


350



386


Total throughput


654



701


Throughput attributable to noncontrolling interests (2)


13



14


Total throughput attributable to WES for crude-oil and NGLs assets


641



687


Throughput for produced-water assets (MBbls/d)





Gathering and disposal


750



702


Throughput attributable to noncontrolling interests (2)


15



14


Total throughput attributable to WES for produced-water assets


735



688


Per-Mcf Adjusted gross margin for natural-gas assets (4)


$

1.31



$

1.21


Per-Bbl Adjusted gross margin for crude-oil and NGLs assets (5)


2.52



2.40


Per-Bbl Adjusted gross margin for produced-water assets (6)


0.94



0.92













(1) 

Represents the 22% share of average Rendezvous throughput, 50% share of average Mi Vida and Ranch Westex throughput, and 30% share
of average Red Bluff Express throughput.

(2) 

For all periods presented, includes (i) the 2.0% Occidental subsidiary-owned limited partner interest in WES Operating and (ii) for natural-
gas assets, the 25% third-party interest in Chipeta, which collectively represent WES’s noncontrolling interests.

(3) 

Represents the 10% share of average White Cliffs throughput; 25% share of average Mont Belvieu JV throughput; 20% share of average
TEG, TEP, Whitethorn, and Saddlehorn throughput; 33.33% share of average FRP throughput; and 15% share of average Panola and Cactus
II throughput.

(4) 

Average for period. Calculated as Adjusted gross margin for natural-gas assets, divided by total throughput (MMcf/d) attributable to WES
for natural-gas assets.

(5) 

Average for period. Calculated as Adjusted gross margin for crude-oil and NGLs assets, divided by total throughput (MBbls/d) attributable
to WES for crude-oil and NGLs assets.

(6) 

Average for period. Calculated as Adjusted gross margin for produced-water assets, divided by total throughput (MBbls/d) attributable to
WES for produced-water assets.

 

 

Western Midstream Partners, LP
OPERATING STATISTICS (CONTINUED)
(Unaudited)



Three Months Ended


September 30,
2021


June 30,
2021

Throughput for natural-gas assets (MMcf/d)

Delaware Basin

1,274



1,244


DJ Basin

1,368



1,413


Equity investments

443



457


Other

1,152



1,310


Total throughput for natural-gas assets

4,237



4,424


Throughput for crude-oil and NGLs assets (MBbls/d)

Delaware Basin

185



184


DJ Basin

87



98


Equity investments

350



386


Other

32



33


Total throughput for crude-oil and NGLs assets

654



701


Throughput for produced-water assets (MBbls/d)

Delaware Basin

750



702


Total throughput for produced-water assets

750



702


 

 

(PRNewsfoto/Western Midstream Partners, LP)

 

 

SOURCE Western Midstream Partners, LP

Articles

Sustainability Report Released

Western Midstream released its third-annual Sustainability Report focused on environmental, social, and governance (ESG) issues. The report details the Partnership’s continued focus on its three core pillars of its ESG approach – supporting sustainable environments, focusing on people, and operating responsibly.