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Western Gas Announces Fourth-Quarter And Full-Year 2018 Results

REAFFIRMS 2019 OUTLOOK

HOUSTON, Feb. 14, 2019 /PRNewswire/ -- Western Gas Partners, LP (WES) ("WES" or the "Partnership") and Western Gas Equity Partners, LP (WGP) ("WGP") today announced fourth-quarter and full-year 2018 financial and operating results.

WESTERN GAS PARTNERS, LP

Net income (loss) available to limited partners for 2018 totaled $99.2 million, or $0.55 per common unit (diluted), with full-year 2018 Adjusted EBITDA(1) of $1.2 billion and full-year 2018 Distributable cash flow(1) of $958.7 million. Net income (loss) available to limited partners for the fourth quarter of 2018 totaled $18.7 million, or $0.10 per common unit (diluted), with fourth-quarter 2018 Adjusted EBITDA(1) of $347.5 million and fourth-quarter 2018 Distributable cash flow(1) of $257.3 million. These results were primarily impacted by lower than anticipated throughput and margins at our West Texas complex caused by the combined effect of: (i) unplanned weather-related and operational downtime in the field, (ii) operational constraints downstream of the West Texas complex, and (iii) less than optimal recoveries partially associated with the startup of Mentone Train I. Additionally, Adjusted EBITDA(1) includes a non-cash net increase to revenue of $27 million associated with the revenue recognition accounting standard adopted effective January 1, 2018 for certain cost of service contracts, which will be recognized as cash over the life of the applicable contracts.

"The Partnership remains acutely focused on closing the announced simplification transaction and strategic asset acquisition and delivering on our 2019 growth expectations," said Chief Executive Officer, Robin Fielder. "In 2018 we successfully completed the majority of our Delaware basin gathering backbone and placed into service the first train at the Mentone processing facility. With the premier footprint, scalable capacity, and operational leverage of our assets in the Delaware and DJ basins, we remain excited about the future growth and reiterate our full-year 2019 guidance announced in November."

WES paid a quarterly distribution of $0.980 per unit for the fourth quarter of 2018. This distribution represented a 2% increase over the prior quarter's distribution and a 7% increase over the fourth-quarter 2017 distribution. The full-year 2018 distribution of $3.830 per unit represented a 7% increase over the full-year 2017 distribution of $3.590 per unit. The fourth-quarter 2018 Coverage ratio(1) of 1.10 times was based on the quarterly distribution of $0.980 per unit. The Partnership's Coverage ratio(1) for the full-year 2018 was 1.05 times.

Total throughput attributable to WES for natural gas assets for the fourth quarter of 2018 averaged 3.9 Bcf/d, which was 2% higher than the prior quarter and 13% higher than the fourth quarter of 2017. Total throughput for crude oil, NGLs and produced water assets for the fourth quarter of 2018 averaged 434 MBbls/d, which was 3% higher than the prior quarter and 81% higher than the fourth quarter of 2017. For full-year 2018, total throughput attributable to WES for natural gas assets averaged 3.8 Bcf/d, which was 6% higher than the prior-year average. For full-year 2018, total throughput for crude oil, NGLs and produced water assets averaged 365 MBbls/d, which was 82% higher than the prior-year average.

Capital expenditures attributable to WES, including equity investments but excluding acquisitions and capitalized interest, totaled $303.7 million on a cash basis during the fourth quarter of 2018, with maintenance capital expenditures on a cash basis of $29.9 million. For full-year 2018, capital expenditures attributable to WES, including equity investments but excluding acquisitions and capitalized interest, totaled $1,304 million on a cash basis, with maintenance capital expenditures on a cash basis of $91.1 million.

WESTERN GAS EQUITY PARTNERS, LP

WGP indirectly owns the entire general partner interest in WES, 100% of the incentive distribution rights in WES and 50,132,046 WES common units. Net income (loss) available to limited partners for 2018 totaled $369.4 million, or $1.69 per common unit (diluted). Net income (loss) available to limited partners for the fourth quarter of 2018 totaled $93.4 million, or $0.43 per common unit (diluted).

WGP previously declared a quarterly distribution of $0.6025 per unit for the fourth quarter of 2018. This distribution represented a 1% increase over the prior quarter's distribution and a 10% increase over the fourth-quarter 2017 distribution. The full-year 2018 distribution of $2.34875 per unit represented a 12% increase over the full-year 2017 distribution of $2.1050 per unit. WGP received distributions from WES of $134.4 million attributable to the fourth quarter of 2018 and will pay $131.9 million in distributions for the same period.




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

SIMPLIFICATION TRANSACTION AND STRATEGIC ACQUISITION

The special meeting of WES unitholders to vote on the WGP and WES merger transaction will be held on February 27, 2019. WGP and WES expect the merger and strategic asset acquisition transactions to close during the first quarter of 2019, subject to certain closing conditions under the terms of the merger agreement, including receipt of the required approval by WES's unitholders. Upon closing of the transactions, and as part of the merger, WGP will change its name to Western Midstream Partners, LP and its common units will trade on the New York Stock Exchange under the "WES" ticker symbol.

CONFERENCE CALL TOMORROW AT 11 A.M. CST

WES and WGP will host a joint conference call on Friday, February 15, 2019, at 11:00 a.m. Central Standard Time (12:00 p.m. Eastern Standard Time) to discuss fourth-quarter and full-year 2018 results. Individuals who would like to participate should dial 877-883-0383 (Domestic) or 412-902-6506 (International) approximately 15 minutes before the scheduled conference call time, and enter participant access code 8494579. To access the live audio webcast of the conference call, please visit the investor relations section of the Partnership's website at www.westerngas.com. A replay of the conference call will also be available on the website for two weeks following the call.

ABOUT WESTERN GAS

Western Gas Partners, LP ("WES") is a growth-oriented Delaware master limited partnership formed by Anadarko Petroleum Corporation to acquire, own, develop and operate midstream assets. With midstream assets located in the Rocky Mountains, North-central Pennsylvania, Texas and New Mexico, 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 Anadarko, as well as for third-party customers. In addition, in its capacity as a processor of natural gas, WES also buys and sells natural gas, NGLs and condensate on behalf of itself and as agent for its customers under certain of its contracts.

Western Gas Equity Partners, LP ("WGP") is a Delaware master limited partnership formed by Anadarko Petroleum Corporation to own the following types of interests in WES: (i) the general partner interest and all of the incentive distribution rights in WES, both owned through WGP's 100% ownership of WES's general partner, and (ii) a significant limited partner interest in WES.

For more information about Western Gas Partners, LP and Western Gas Equity Partners, LP, please visit www.westerngas.com.

Important Information for Investors and Unitholders

This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.

In connection with the proposed merger agreement and the transactions contemplated thereby (the "Simplification Transaction"), WGP filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-4, which includes a prospectus of WGP and a proxy statement of WES. WES and WGP also plan to file other documents with the Commission regarding the proposed Simplification Transaction. WES mailed a definitive proxy statement/prospectus to the unitholders of WES on January 28, 2019. INVESTORS AND UNITHOLDERS OF WES ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER DOCUMENTS RELATING TO THE PROPOSED SIMPLIFICATION TRANSACTION THAT HAVE BEEN OR WILL BE FILED WITH THE COMMISSION CAREFULLY AND IN THEIR ENTIRETY AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED SIMPLIFICATION TRANSACTION. Investors and unitholders will be able to obtain free copies of the proxy statement/prospectus and other documents containing important information about WES and WGP from the Commission, through the website maintained by the Commission at http://www.sec.gov. Copies of the documents filed with the Commission by WES and WGP will be available free of charge on their internet website at www.westerngas.com or by contacting their Investor Relations Department at 832-636-6000.

Participants in the Solicitation

WES, WGP, their respective general partners and their respective general partners' respective directors and certain of their executive officers may be deemed to be participants in the solicitation of proxies from the unitholders of WES in connection with the proposed Simplification Transaction. Information about the directors and executive officers of WES is set forth in WES's Annual Report on Form 10-K which was filed with the Commission on February 16, 2018. Information about the directors and executive officers of WGP is set forth in WGP's Annual Report on Form 10-K which was filed with the Commission on February 16, 2018. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, are contained in the proxy statement/prospectus and other relevant materials to be filed with the Commission when they become available. Free copies of these documents can be obtained using the contact information above.

Cautionary Statement Regarding Forward-Looking Statements

This news release contains forward-looking statements. For example, statements regarding future financial performance, future competitive positioning and business synergies, future acquisition cost savings, future market demand, future benefits to unitholders, future economic and industry conditions, the proposed Simplification Transaction (including its benefits, results, effects and timing) and whether and when the Simplification Transaction will be consummated, are forward-looking statements within the meaning of federal securities laws. WES, WGP and their respective general partners believe that their 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. Such factors include, but are not limited to:  the failure of the unitholders of WES to approve the proposed Simplification Transaction; the risk that the conditions to the closing of the proposed Simplification Transaction are not satisfied; the risk that regulatory approvals required for the proposed Simplification Transaction are not obtained or are obtained subject to conditions that are not anticipated; potential adverse reactions or changes to business relationships resulting from the announcement or completion of the proposed Simplification Transaction; uncertainties as to the timing of the proposed Simplification Transaction; competitive responses to the proposed Simplification Transaction; the inability to obtain or delay in obtaining cost savings and synergies from the proposed Simplification Transaction; unexpected costs, charges or expenses resulting from the proposed Simplification Transaction; the outcome of pending or potential litigation; the inability to retain key personnel; uncertainty of the expected financial performance of WGP following completion of the proposed Simplification Transaction; and any changes in general economic and/or industry specific conditions.

WES and WGP caution that the foregoing list of factors is not exclusive. Additional information concerning these and other risk factors is contained in WES's and WGP's most recently filed Annual Reports on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other Commission filings, which are available at the Commission's website, http://www.sec.gov. All subsequent written and oral forward-looking statements concerning WES, WGP, the proposed Simplification Transaction or other matters attributable to WES and WGP or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above. Each forward-looking statement speaks only as of the date of the particular statement. Except as required by law, WES, WGP and their respective general partners undertake no obligation to publicly update or revise any forward-looking statements.

WESTERN GAS CONTACT
Jack Spinks
Manager, Investor Relations
jack.spinks@anadarko.com
832.636.6000

Western Gas Partners, LP Reconciliation of GAAP to Non-GAAP Measures

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

Western Gas Partners, LP Reconciliation of GAAP to Non-GAAP Measures, continued

Distributable Cash Flow

WES defines Distributable cash flow as Adjusted EBITDA, plus interest income and the net settlement amounts from the sale and/or purchase of natural gas, condensate and NGLs under WES's commodity price swap agreements to the extent such amounts are not recognized as Adjusted EBITDA, less Service revenues – fee based recognized in Adjusted EBITDA (less than) in excess of customer billings, net cash paid (or to be paid) for interest expense (including amortization of deferred debt issuance costs originally paid in cash, offset by non-cash capitalized interest), maintenance capital expenditures, Series A Preferred unit distributions and income taxes.


Three Months Ended
December 31,


Year Ended
December 31,

thousands except Coverage ratio

2018


2017


2018


2017

Reconciliation of Net income (loss) attributable to Western Gas Partners, LP to Distributable cash flow and calculation of the Coverage ratio








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

$

109,058



$

148,637



$

445,775



$

567,483


Add:








Distributions from equity investments

57,982



29,897



169,906



110,465


Non-cash equity-based compensation expense

1,480



1,468



7,032



4,947


Non-cash settled interest expense, net (1)







71


Income tax (benefit) expense

(355)



(39)



2,946



4,866


Depreciation and amortization (2)

98,637



73,874



334,645



288,087


Impairments (2)

75,629



8,295



226,950



178,374


Above-market component of swap agreements with Anadarko

10,896



11,832



51,618



58,551


Other expense (2)

8,143



5



8,327



145


Less:








Recognized Service revenues – fee based (less than) in excess of customer billings

14,045





14,581




Gain (loss) on divestiture and other, net

961



(2,629)



1,312



132,388


Equity income, net – affiliates

50,272



22,486



153,024



85,194


Cash paid for maintenance capital expenditures (2)

29,892



16,569



91,054



49,684


Capitalized interest

6,489



2,835



23,521



6,826


Cash paid for (reimbursement of) income taxes

2,495



1,005



2,408



1,194


Series A Preferred unit distributions







7,453


Other income (2)



323



2,592



1,283


Distributable cash flow

$

257,316



$

233,380



$

958,707



$

928,967


Distributions declared (3)








Limited partners – common units

$

149,557





$

584,487




General partner

85,230





327,363




Total

$

234,787





$

911,850




Coverage ratio

1.10


x



1.05


x




(1)

Includes amounts related to the Deferred purchase price obligation - Anadarko.

(2)

Includes WES's 75% share of depreciation and amortization; impairments; other expense; cash paid for maintenance capital expenditures; and other income attributable to Chipeta.

(3)

Reflects cash distributions of $0.980 and $3.830 per unit declared for the three months and year ended December 31, 2018, respectively.

Western Gas Partners, LP Reconciliation of GAAP to Non-GAAP Measures, continued

Adjusted EBITDA Attributable to Western Gas Partners, LP

WES defines Adjusted EBITDA as net income (loss) attributable to Western Gas Partners, LP, plus distributions from equity investments, non-cash equity-based compensation expense, interest expense, income tax expense, depreciation and amortization, impairments, and other expense (including lower of cost or market inventory adjustments recorded in cost of product), less gain (loss) on divestiture and other, net, income from equity investments, interest income, income tax benefit, and other income.


Three Months Ended
December 31,


Year Ended
December 31,

thousands

2018


2017


2018


2017

Reconciliation of Net income (loss) attributable to Western Gas Partners, LP to Adjusted EBITDA attributable to Western Gas Partners, LP








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

$

109,058



$

148,637



$

445,775



$

567,483


Add:








Distributions from equity investments

57,982



29,897



169,906



110,465


Non-cash equity-based compensation expense

1,480



1,468



7,032



4,947


Interest expense

52,345



35,592



184,008



142,386


Income tax expense





3,301



4,905


Depreciation and amortization (1)

98,637



73,874



334,645



288,087


Impairments (1)

75,629



8,295



226,950



178,374


Other expense (1)

8,143



5



8,327



145


Less:








Gain (loss) on divestiture and other, net

961



(2,629)



1,312



132,388


Equity income, net – affiliates

50,272



22,486



153,024



85,194


Interest income – affiliates

4,225



4,225



16,900



16,900


Other income (1)



323



2,592



1,283


Income tax benefit

355



39



355



39


Adjusted EBITDA attributable to Western Gas Partners, LP

$

347,461



$

273,324



$

1,205,761



$

1,060,988


Reconciliation of Net cash provided by operating activities to Adjusted EBITDA attributable to Western Gas Partners, LP








Net cash provided by operating activities

$

268,912



$

256,396



$

1,020,634



$

901,495


Interest (income) expense, net

48,120



31,367



167,108



125,486


Uncontributed cash-based compensation awards

(53)



119



879



25


Accretion and amortization of long-term obligations, net

(1,259)



(1,060)



(5,142)



(4,254)


Current income tax (benefit) expense

233



1,385



480



2,408


Other (income) expense, net (2)

(408)



(330)



(3,017)



(1,299)


Distributions from equity investments in excess of cumulative earnings – affiliates

7,510



6,830



25,607



23,085


Changes in assets and liabilities:








Accounts receivable, net

(7,877)



(30,845)



56,667



16,127


Accounts and imbalance payables and accrued liabilities, net

24,632



10,937



(30,722)



6,930


Other items, net

10,176



1,426



(13,873)



4,491


Adjusted EBITDA attributable to noncontrolling interest

(2,525)



(2,901)



(12,860)



(13,506)


Adjusted EBITDA attributable to Western Gas Partners, LP

$

347,461



$

273,324



$

1,205,761



$

1,060,988


Cash flow information of Western Gas Partners, LP








Net cash provided by operating activities





$

1,020,634



$

901,495


Net cash used in investing activities





(1,459,798)



(763,604)


Net cash provided by (used in) financing activities





450,798



(417,002)




(1)

Includes WES's 75% share of depreciation and amortization; impairments; other expense; and other income attributable to Chipeta.

(2)

Excludes the non-cash loss on interest-rate swaps of $8.0 million for the three months and year ended December 31, 2018.

Western Gas Partners, LP Reconciliation of GAAP to Non-GAAP Measures, continued

Adjusted Gross Margin Attributable to Western Gas Partners, LP

WES defines 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 owner's proportionate share of revenue and cost of product.


Three Months Ended
December 31,


Year Ended
December 31,

thousands

2018


2017


2018


2017

Reconciliation of Operating income (loss) to Adjusted gross margin attributable to Western Gas Partners, LP








Operating income (loss)

$

166,210



$

181,815



$

629,393



$

707,271


Add:








Distributions from equity investments

57,982



29,897



169,906



110,465


Operation and maintenance

114,518



86,550



414,784



315,994


General and administrative

17,072



12,394



59,706



47,796


Property and other taxes

7,844



11,385



42,934



46,818


Depreciation and amortization

99,349



74,602



337,536



290,874


Impairments

75,630



8,295



228,338



178,374


Less:








Gain (loss) on divestiture and other, net

961



(2,629)



1,312



132,388


Proceeds from business interruption insurance claims







29,882


Equity income, net – affiliates

50,272



22,486



153,024



85,194


Reimbursed electricity-related charges recorded as revenues

16,441



14,485



66,580



56,823


Adjusted gross margin attributable to noncontrolling interest

3,525



3,638



15,875



16,827


Adjusted gross margin attributable to Western Gas Partners, LP

$

467,406



$

366,958



$

1,645,806



$

1,376,478


Adjusted gross margin attributable to Western Gas Partners, LP for natural gas assets

$

379,892



$

318,012



$

1,398,953



$

1,222,632


Adjusted gross margin for crude oil, NGLs and produced water assets

87,514



48,946



246,853



153,846


 

Western Gas Partners, LP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



Three Months Ended
December 31,


Year Ended
December 31,

thousands except per-unit amounts

2018


2017


2018


2017

Revenues and other








Service revenues – fee based

$

463,146



$

324,513



$

1,609,245



$

1,237,949


Service revenues – product based

18,120





85,553




Product sales

76,254



299,443



293,992



989,933


Other

273



8,062



1,486



20,474


Total revenues and other

557,793



632,018



1,990,276



2,248,356


Equity income, net – affiliates

50,272



22,486



153,024



85,194


Operating expenses








Cost of product

128,403



276,834



431,921



908,693


Operation and maintenance

114,518



86,550



414,784



315,994


General and administrative

17,072



12,394



59,706



47,796


Property and other taxes

7,844



11,385



42,934



46,818


Depreciation and amortization

99,349



74,602



337,536



290,874


Impairments

75,630



8,295



228,338



178,374


Total operating expenses

442,816



470,060



1,515,219



1,788,549


Gain (loss) on divestiture and other, net

961



(2,629)



1,312



132,388


Proceeds from business interruption insurance claims







29,882


Operating income (loss)

166,210



181,815



629,393



707,271


Interest income – affiliates

4,225



4,225



16,900



16,900


Interest expense

(52,345)



(35,592)



(184,008)



(142,386)


Other income (expense), net

(7,564)



330



(4,955)



1,299


Income (loss) before income taxes

110,526



150,778



457,330



583,084


Income tax expense (benefit)

(355)



(39)



2,946



4,866


Net income (loss)

110,881



150,817



454,384



578,218


Net income attributable to noncontrolling interest

1,823



2,180



8,609



10,735


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

$

109,058



$

148,637



$

445,775



$

567,483


Limited partners' interest in net income (loss):








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

$

109,058



$

148,637



$

445,775



$

567,483


Series A Preferred units interest in net (income) loss







(42,373)


General partner interest in net (income) loss

(90,372)



(80,932)



(346,538)



(303,835)


Common and Class C limited partners' interest in net income (loss)

$

18,686



$

67,705



$

99,237



$

221,275


Net income (loss) per common unit – basic and diluted

$

0.10



$

0.39



$

0.55



$

1.30


Weighted-average common units outstanding – basic and diluted

152,609



152,602



152,606



147,194


 

Western Gas Partners, LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


thousands except number of units

December 31,
2018


December 31,
2017

Current assets

$

333,463



$

254,062


Note receivable – Anadarko

260,000



260,000


Net property, plant and equipment

6,612,073



5,730,891


Other assets

2,030,746



1,769,397


Total assets

$

9,236,282



$

8,014,350


Current liabilities

$

507,582



$

424,333


Long-term debt

4,787,381



3,464,712


Asset retirement obligations

259,976



143,394


Other liabilities

149,764



10,900


Total liabilities

5,704,703



4,043,339


Equity and partners' capital




Common units (152,609,285 and 152,602,105 units issued and outstanding at December 31, 2018 and 2017, respectively)

2,475,540



2,950,010


Class C units (14,372,665 and 13,243,883 units issued and outstanding at December 31, 2018 and 2017, respectively)

791,410



780,040


General partner units (2,583,068 units issued and outstanding at December 31, 2018 and 2017)

206,862



179,232


Noncontrolling interest

57,767



61,729


Total liabilities, equity and partners' capital

$

9,236,282



$

8,014,350


 

Western Gas Partners, LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



Year Ended
December 31,

thousands

2018


2017

Cash flows from operating activities




Net income (loss)

$

454,384



$

578,218


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




Depreciation and amortization

337,536



290,874


Impairments

228,338



178,374


(Gain) loss on divestiture and other, net

(1,312)



(132,388)


Change in other items, net

1,688



(13,583)


Net cash provided by operating activities

$

1,020,634



$

901,495


Cash flows from investing activities




Capital expenditures

$

(1,193,896)



$

(675,025)


Contributions in aid of construction costs from affiliates



1,387


Acquisitions from affiliates

(254)



(3,910)


Acquisitions from third parties

(161,858)



(155,298)


Investments in equity affiliates

(133,335)



(384)


Distributions from equity investments in excess of cumulative earnings – affiliates

25,607



23,085


Proceeds from the sale of assets to third parties

3,938



23,564


Proceeds from property insurance claims



22,977


Net cash used in investing activities

$

(1,459,798)



$

(763,604)


Cash flows from financing activities




Borrowings, net of debt issuance costs

$

2,349,564



$

369,989


Repayments of debt

(1,040,000)




Settlement of the Deferred purchase price obligation – Anadarko



(37,346)


Increase (decrease) in outstanding checks

(3,206)



5,593


Proceeds from the issuance of common units, net of offering expenses



(183)


Distributions to unitholders

(893,649)



(801,300)


Distributions to noncontrolling interest owner

(13,529)



(13,569)


Net contributions from (distributions to) Anadarko



1,263


Above-market component of swap agreements with Anadarko

51,618



58,551


Net cash provided by (used in) financing activities

$

450,798



$

(417,002)


Net increase (decrease) in cash and cash equivalents

$

11,634



$

(279,111)


Cash and cash equivalents at beginning of period

78,814



357,925


Cash and cash equivalents at end of period

$

90,448



$

78,814


 

Western Gas Partners, LP

OPERATING STATISTICS

(Unaudited)



Three Months Ended
December 31,


Year Ended
December 31,


2018


2017


2018


2017

Throughput for natural gas assets (MMcf/d)








Gathering, treating and transportation (1)

589



747



546



958


Processing (1)

3,295



2,663



3,205



2,563


Equity investment (2)

132



158



141



159


Total throughput for natural gas assets

4,016



3,568



3,892



3,680


Throughput attributable to noncontrolling interest for natural gas assets

84



98



90



105


Total throughput attributable to Western Gas Partners, LP for natural gas assets

3,932



3,470



3,802



3,575


Throughput for crude oil, NGLs and produced water assets (MBbls/d)








Gathering, treating, transportation and disposal

162



111



146



71


Equity investment (3)

272



129



219



130


Total throughput for crude oil, NGLs and produced water assets

434



240



365



201


Adjusted gross margin per Mcf attributable to Western Gas Partners, LP for natural gas assets (4)

$

1.05



$

1.00



$

1.01



$

0.94


Adjusted gross margin per Bbl for crude oil, NGLs and produced water assets (5)

2.19



2.21



1.85



2.10




(1)

The combination of the DBM complex and DBJV and Haley systems, effective January 1, 2018, into a single complex now referred to as the "West Texas complex" resulted in DBJV and Haley systems throughput previously reported as "Gathering, treating and transportation" now being reported as "Processing."

(2)

Represents WES's 14.81% share of average Fort Union throughput and 22% share of average Rendezvous throughput.

(3)

Represents WES's 10% share of average White Cliffs throughput, WES's 25% share of average Mont Belvieu JV throughput, WES's 20% share of average TEG and TEP throughput, WES's 33.33% share of average FRP throughput and WES's 20% share of average Whitethorn throughput.

(4)

Average for period. Calculated as Adjusted gross margin attributable to Western Gas Partners, LP for natural gas assets (total revenues and other for natural gas assets less reimbursements for electricity-related expenses recorded as revenue, less cost of product for natural gas assets, plus distributions from WES's equity investments in Fort Union and Rendezvous, and excluding the noncontrolling interest owner's proportionate share of revenue and cost of product), divided by total throughput (MMcf/d) attributable to Western Gas Partners, LP for natural gas assets.

(5)

Average for period. Calculated as Adjusted gross margin for crude oil, NGLs and produced water assets (total revenues and other for crude oil, NGLs and produced water assets less reimbursements for electricity-related expenses recorded as revenue, less cost of product for crude oil, NGLs and produced water assets, and plus distributions from WES's equity investments in White Cliffs, the Mont Belvieu JV, TEG, TEP, FRP and Whitethorn), divided by total throughput (MBbls/d) for crude oil, NGLs and produced water assets.

 

Western Gas Equity Partners, LP

CALCULATION OF CASH AVAILABLE FOR DISTRIBUTION

(Unaudited)


thousands except per-unit amount and Coverage ratio


Three Months Ended
December 31, 2018

Distributions declared by Western Gas Partners, LP:



General partner interest


$

3,908


Incentive distribution rights


81,322


Common units held by WGP


49,129


Less:



Public company general and administrative expense


1,810


Interest expense


339


Cash available for distribution


$

132,210


Declared distribution per common unit


$

0.60250


Distributions declared by Western Gas Equity Partners, LP


$

131,910


Coverage ratio


1.00

x

 

Western Gas Equity Partners, LP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



Three Months Ended
December 31,


Year Ended
December 31,

thousands except per-unit amounts

2018


2017


2018


2017

Revenues and other








Service revenues – fee based

$

463,146



$

324,513



$

1,609,245



$

1,237,949


Service revenues – product based

18,120





85,553




Product sales

76,254



299,443



293,992



989,933


Other

273



8,062



1,486



20,474


Total revenues and other

557,793



632,018



1,990,276



2,248,356


Equity income, net – affiliates

50,272



22,486



153,024



85,194


Operating expenses








Cost of product

128,403



276,834



431,921



908,693


Operation and maintenance

114,518



86,550



414,784



315,994


General and administrative

18,882



13,073



63,735



50,668


Property and other taxes

7,844



11,385



42,934



46,818


Depreciation and amortization

99,349



74,602



337,536



290,874


Impairments

75,630



8,295



228,338



178,374


Total operating expenses

444,626



470,739



1,519,248



1,791,421


Gain (loss) on divestiture and other, net

961



(2,629)



1,312



132,388


Proceeds from business interruption insurance claims







29,882


Operating income (loss)

164,400



181,136



625,364



704,399


Interest income – affiliates

4,225



4,225



16,900



16,900


Interest expense

(52,684)



(36,168)



(186,043)



(144,615)


Other income (expense), net

(7,512)



355



(4,763)



1,384


Income (loss) before income taxes

108,429



149,548



451,458



578,068


Income tax expense (benefit)

(355)



(39)



2,946



4,866


Net income (loss)

108,784



149,587



448,512



573,202


Net income (loss) attributable to noncontrolling interests

15,414



50,066



79,083



196,595


Net income (loss) attributable to Western Gas Equity Partners, LP

$

93,370



$

99,521



$

369,429



$

376,607


Net income (loss) per common unit – basic and diluted

$

0.43



$

0.45



$

1.69



$

1.72


Weighted-average common units outstanding – basic and diluted

218,938



218,933



218,936



218,931


 

Western Gas Equity Partners, LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


thousands except number of units

December 31,
2018


December 31,
2017

Current assets

$

335,824



$

255,210


Note receivable – Anadarko

260,000



260,000


Net property, plant and equipment

6,612,073



5,730,891


Other assets

2,030,746



1,770,210


Total assets

$

9,238,643



$

8,016,311


Current liabilities

$

536,857



$

424,426


Long-term debt

4,787,381



3,492,712


Asset retirement obligations

259,976



143,394


Other liabilities

149,764



10,900


Total liabilities

5,733,978



4,071,432


Equity and partners' capital




Common units (218,937,797 and 218,933,141 units issued and outstanding at December 31, 2018 and 2017, respectively)

951,888



1,061,125


Noncontrolling interests

2,552,777



2,883,754


Total liabilities, equity and partners' capital

$

9,238,643



$

8,016,311


 

Western Gas Equity Partners, LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



Year Ended
December 31,

thousands

2018


2017

Cash flows from operating activities




Net income (loss)

$

448,512



$

573,202


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




Depreciation and amortization

337,536



290,874


Impairments

228,338



178,374


(Gain) loss on divestiture and other, net

(1,312)



(132,388)


Change in other items, net

3,621



(12,650)


Net cash provided by operating activities

$

1,016,695



$

897,412


Cash flows from investing activities




Capital expenditures

$

(1,193,896)



$

(675,025)


Contributions in aid of construction costs from affiliates



1,387


Acquisitions from affiliates

(254)



(3,910)


Acquisitions from third parties

(161,858)



(155,298)


Investments in equity affiliates

(133,335)



(384)


Distributions from equity investments in excess of cumulative earnings – affiliates

25,607



23,085


Proceeds from the sale of assets to third parties

3,938



23,564


Proceeds from property insurance claims



22,977


Net cash used in investing activities

$

(1,459,798)



$

(763,604)


Cash flows from financing activities




Borrowings, net of debt issuance costs

$

2,349,557



$

369,989


Repayments of debt

(1,040,000)




Settlement of the Deferred purchase price obligation – Anadarko



(37,346)


Increase (decrease) in outstanding checks

(3,206)



5,593


Proceeds from the issuance of WES common units, net of offering expenses



(183)


Distributions to WGP unitholders

(502,457)



(441,967)


Distributions to Chipeta noncontrolling interest owner

(13,529)



(13,569)


Distributions to noncontrolling interest owners of WES

(386,326)



(355,623)


Net contributions from (distributions to) Anadarko



1,263


Above-market component of swap agreements with Anadarko

51,618



58,551


Net cash provided by (used in) financing activities

$

455,657



$

(413,292)


Net increase (decrease) in cash and cash equivalents

$

12,554



$

(279,484)


Cash and cash equivalents at beginning of period

79,588



359,072


Cash and cash equivalents at end of period

$

92,142



$

79,588


 

Western Gas Partners (PRNewsFoto/Western Gas Partners, LP) (PRNewsFoto/Western Gas Partners, LP)

 

Western Gas Equity Partners (PRNewsFoto/Western Gas Partners, LP) (PRNewsFoto/Western Gas Partners, LP)
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