Why acquisitions are vital to Western Gas Partners’ expansion

Market Realist

Must-know: Analyzing Western Gas Partners' 1Q14 earnings (Part 5 of 6)

(Continued from Part 4)

WES expansion

Western Gas Partners has executed 13 acquisitions, including eight related-party and five third-party acquisitions, for an aggregate value of ~$3.2 billion from its IPO in 2008 until 1Q14. Recently, in March 2013, WES acquired assets worth $360.9 million from its general partner, Anadarko, and from the third parties. In March 2013, WES acquired a 33.75% non-operated interest in the Liberty and Rome gas gathering systems. The system serves production from the Marcellus Shale in north-central Pennsylvania. During the same time, WES acquired a 33.75% interest in each of the Larry’s Creek, Seely, and Warrensville gas gathering systems from a third party. The assets serve production from the Marcellus Shale in north-central Pennsylvania.

In June 2013, WES acquired a 25% interest in the Mont Belvieu joint venture from a third party. The acquired assets design, construct, and own two fractionation trains located in Mont Belvieu, Texas. In September 2013, WES acquired Overland Trail Transmission LLC, which operates an intrastate pipeline that connects Western Gas Partner’s Red Desert and Granger complexes in southwestern Wyoming.

More recently, in March 2014, WES acquired a 20% interest in Texas Express Gathering LLC (TEG) and Texas Express Pipeline LLC (TEP) each, and a 33.33% interest in Front Range Pipeline LLC (FRP), from Anadarko.

In addition to gaining an asset foothold in premier oil producing regions, acquisitions have added stability to WES’s cash flows by providing access to long-term contracts. In connection with the Mountain Gas Resources (or MGR) acquisition in January 2012 from Anadarko (APC), WES entered into a ten-year, fee-based gathering and processing throughput agreement with APC effective December 1, 2011.

Platte Valley acquisition

In February 2011, WES acquired the Platte Valley assets—a natural gas gathering system and cryogenic gas processing facilities—for $800.0 million. In 1Q14, WES combined the Platte Valley system and Wattenberg system into a single complex called the DJ Basin complex in Northeast Colorado. As of the end of 1Q14, the company has initiated construction of the Lancaster processing plant. Please read the following post in this series to get an idea of the significance of the DJ Basin for WES’s future prospects.

Western Gas Partners (WES) is a master limited partnership operating in the midstream energy space. WES’s general partner is owned by Anadarko Petroleum Corporation (APC). WES is a component of the 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 6

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