An investor’s must-know introduction to Western Gas Partners

Market Realist

Must-know: Analyzing Western Gas Partners' 1Q14 earnings (Part 1 of 6)

Western Gas Partners

Western Gas Partners LP (WES) is a master limited partnership that operates in the midstream energy space. The company gathers, processes, compresses, treats, and transports natural gas, condensate, NGLs (natural gas liquids), and crude oil. Western Gas Partner’s general partner is Western Gas Holdings LLC which is owned by Western Gas Equity Partners LP. Western Gas Equity Partners is a subsidiary of Anadarko Petroleum Corporation (APC). WES also has equity interests in Fort Union, White Cliffs, Rendezvous, Texas Express Pipeline, Texas Express Gathering, Front Range Pipeline, and the Mont Belvieu joint ventures with Enterprise Products Partners (EPD).

WES assets spread throughout the major oil-rich regions in the United States, such as the Rocky Mountains (Colorado, Utah, and Wyoming), the Mid-Continent (Kansas and Oklahoma), north-central Pennsylvania, and East, South, and West Texas. As of March 31, 2014, WES owned 13 natural gas gathering facilities, eight natural gas treating facilities, eight natural gas processing facilities, three NGL pipelines, and three natural gas pipelines.

In the Rocky Mountains, WES has 7,194 miles of natural gas gathering, processing, and treating pipelines for a processing capacity of 2.78 million cubic feet per day and average throughput of 2.28 million cubic feet per day. The company also has 1,192 miles of transportation pipelines. In the mid-continent, WES had 2,053 miles of gathering pipelines. In the North-central Pennsylvania, WES has 530 miles of gathering pipelines. In East Texas, WES has 594 miles of gathering pipelines, and in South and West Texas, WES has 19 miles of gathering, processing, and treating pipelines.

As of May 20, 2014, WES had a market cap of ~$8.4 billion and an enterprise value of ~$10.3 billion. The company’s adjusted EBITDA for the last 12 months was $502.7 million. WES is currently trading at last-12-months EV–to–EBITDA of ~20.5x. Distribution per unit declared on April 17, 2014, was $0.63 per unit, or $2.50 per unit annualized. This amounts to a distribution yield of ~3.5% for a stock price of $71.38 as of May 20, 2014.

WES is a component of Alerian MLP ETF (AMLP). APC is part of the Energy Select Sector SPDR (XLE) and SPDR S&P Oil & Gas Exploration & Production (XOP) ETFs.

Continue to Part 2

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