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Western Midstream Announces First-Quarter 2021 Results

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HOUSTON, May 10, 2021 /PRNewswire/ -- Today Western Midstream Partners, LP (NYSE: WES) ("WES" or the "Partnership") announced first-quarter 2021 financial and operating results. Net income (loss) available to limited partners for the first quarter of 2021 totaled $181.8 million, or $0.44 per common unit (diluted), with first-quarter 2021 Adjusted EBITDA(1) totaling $443.1 million, first-quarter 2021 Cash flows provided by operating activities totaling $261.6 million, and first-quarter 2021 Free cash flow(1) totaling $213.8 million.

RECENT HIGHLIGHTS

  • Awarded first place in the division-one category by the GPA Midstream Association for outstanding safety performance in 2020

  • Repaid the 5.375% Senior Notes due 2021 at par value, for total consideration of $431 million

  • Repurchased 1,115,808 common units for aggregate consideration of approximately $16.2 million during the first quarter as part of the recently announced buyback program of up to $250 million of the Partnership's common units through December 31, 2021

___________________________

(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.

On May 14, 2021, WES will pay its first-quarter 2021 per-unit distribution of $0.315, which represents a 1.3-percent increase over the prior quarter's distribution and is consistent with an annualized distribution growth of 5-percent. First-quarter 2021 Free cash flow after distributions totaled $82.5 million.

"Thanks to the dedication of our employees, we ended the first quarter by winning GPA Midstream Association's first-place safety award in the large category for the second consecutive year," said Michael Ure, President, Chief Executive Officer and Chief Financial Officer. "I'm proud of our team's work to strengthen our safety culture and environmental performance while providing continuous, reliable service for our customers."

Mr. Ure continued, "Although our first-quarter results were impacted from Winter Storm Uri, we remain optimistic about current activity levels in the Delaware and DJ basins and expect total throughput and EBITDA to increase through the remainder of 2021 and into 2022. We remain comfortable with our previously-stated full-year guidance targets."

"Since becoming a standalone organization, we have been immensely focused on our financial policy. This shift to free-cash-flow generation has led to a trifecta of results, including the authorization of a unit buyback program, retirement of upcoming debt maturities, and an increase in our distribution. Through the unit buyback program and Anadarko note exchange, we have repurchased 31.34 million units to date, which represents over 7-percent of our outstanding units as of the filing of our second-quarter 2020 10-Q. We believe our ability to generate significant free cash flow will continue to deliver value to our stakeholders for the foreseeable future."

As a result of depressed upstream investment in 2020 and Winter Storm Uri, our first-quarter 2021 volumes declined relative to fourth-quarter 2020. First-quarter 2021 total natural-gas throughput(1) averaged 4.0 Bcf/d, representing a 2-percent sequential-quarter increase. Declining natural-gas volumes were offset by an additional third-party connection to Latham II at the DJ Basin complex beginning January 1, 2021. First-quarter 2021 total throughput for crude-oil and NGLs assets(1) averaged 604 MBbls/d, representing a 2-percent sequential-quarter decrease. First-quarter 2021 total throughput for produced-water assets(1) averaged 595 MBbls/d, representing a 9-percent sequential-quarter decrease.

First-quarter 2021 capital expenditures(2) totaled $58.3 million.

_______________________________

(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.

(2)

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

CONFERENCE CALL TOMORROW AT 2:00 P.M. CDT
WES will host a conference call on Tuesday, May 11, 2021, at 2:00 p.m. Central Daylight Time (3:00 p.m. Eastern Daylight Time) to discuss first-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 7924735. 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.

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 the timeline for a recovery in 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
Vice President, Investor Relations and Communications
Kristen.Shults@westernmidstream.com
832.636.6000

Abby Dempsey
Investor Relations Supervisor
Abby.Dempsey@westernmidstream.com
832.636.6000

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) operating income (loss) (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 operating income (loss) 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


March 31,
2021


December 31,
2020

Reconciliation of Operating income (loss) to Adjusted gross margin





Operating income (loss)


$

292,336



$

372,954


Add:





Distributions from equity investments


61,189



69,231


Operation and maintenance


140,332



144,204


General and administrative


45,116



37,303


Property and other taxes


14,384



11,077


Depreciation and amortization


130,553



106,398


Impairments


14,866



3,314


Less:





Gain (loss) on divestiture and other, net


(583)



12,285


Equity income, net – related parties


52,165



49,962


Reimbursed electricity-related charges recorded as revenues


17,312



18,161


Adjusted gross margin attributable to noncontrolling interests (1)


15,258



15,669


Adjusted gross margin


$

614,624



$

648,404


Adjusted gross margin for natural-gas assets


$

432,389



$

436,294


Adjusted gross margin for crude-oil and NGLs assets


133,145



152,909


Adjusted gross margin for produced-water assets


49,090



59,201




(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


March 31,
2021


December 31,
2020

Reconciliation of Net income (loss) to Adjusted EBITDA





Net income (loss)


$

191,235



$

270,776


Add:





Distributions from equity investments


61,189



69,231


Non-cash equity-based compensation expense


6,734



5,935


Interest expense


98,493



101,247


Income tax expense


1,112



2,206


Depreciation and amortization


130,553



106,398


Impairments


14,866



3,314


Other expense


1,218




Less:





Gain (loss) on divestiture and other, net


(583)



12,285


Gain (loss) on early extinguishment of debt


(289)



862


Equity income, net – related parties


52,165



49,962


Other income




412


Adjusted EBITDA attributable to noncontrolling interests (1)


10,997



11,606


Adjusted EBITDA


$

443,110



$

483,980


Reconciliation of Net cash provided by operating activities to Adjusted EBITDA





Net cash provided by operating activities


$

261,550



$

505,525


Interest (income) expense, net


98,493



101,247


Accretion and amortization of long-term obligations, net


(2,088)



(2,172)


Current income tax expense (benefit)


555



1,303


Other (income) expense, net


1,207



(413)


Cash paid to settle interest-rate swaps




6,440


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


12,141



10,410


Changes in assets and liabilities:





Accounts receivable, net


30,182



1,350


Accounts and imbalance payables and accrued liabilities, net


16,467



(106,623)


Other items, net


35,600



(21,481)


Adjusted EBITDA attributable to noncontrolling interests (1)


(10,997)



(11,606)


Adjusted EBITDA


$

443,110



$

483,980


Cash flow information





Net cash provided by operating activities


$

261,550




Net cash used in investing activities


(46,472)




Net cash provided by (used in) financing activities


(603,624)






(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


March 31,
2021


December 31,
2020

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





Net cash provided by operating activities


$

261,550



$

505,525


Less:





Capital expenditures


59,783



50,829


Contributions to equity investments – related parties


86



371


Add:





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


12,141



10,410


Free cash flow


$

213,822



$

464,735


Cash flow information





Net cash provided by operating activities


$

261,550




Net cash used in investing activities


(46,472)




Net cash provided by (used in) financing activities


(603,624)




Western Midstream Partners, LP

OPERATING STATISTICS

(Unaudited)




Three Months Ended



March 31,
2021


December 31,
2020

Throughput for natural-gas assets (MMcf/d)





Gathering, treating, and transportation


519



521


Processing


3,237



3,170


Equity investments (1)


439



429


Total throughput


4,195



4,120


Throughput attributable to noncontrolling interests (2)


150



149


Total throughput attributable to WES for natural-gas assets


4,045



3,971


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





Gathering, treating, and transportation


279



292


Equity investments (3)


337



339


Total throughput


616



631


Throughput attributable to noncontrolling interests (2)


12



12


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


604



619


Throughput for produced-water assets (MBbls/d)





Gathering and disposal


607



670


Throughput attributable to noncontrolling interests (2)


12



13


Total throughput attributable to WES for produced-water assets


595



657


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


$

1.19



$

1.19


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


2.45



2.69


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


0.92



0.98











(1)

Represents the 14.81% share of average Fort Union throughput (until divested in October 2020), 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


March 31,
2021


December 31,
2020

Throughput for natural-gas assets (MMcf/d)

Delaware Basin

1,133



1,196


DJ Basin

1,344



1,197


Equity investments

439



429


Other

1,279



1,298


Total throughput for natural-gas assets

4,195



4,120


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






Delaware Basin

162



178


DJ Basin

82



78


Equity investments

337



339


Other

35



36


Total throughput for crude-oil and NGLs assets

616



631


Throughput for produced-water assets (MBbls/d)






Delaware Basin

607



670


Total throughput for produced-water assets

607



670


Western Midstream Partners, LP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)




Three Months Ended

March 31,

thousands except per-unit amounts


2021


2020

Revenues and other





Service revenues – fee based


$

572,275



$

701,396


Service revenues – product based


31,652



15,921


Product sales


70,805



56,649


Other


242



347


Total revenues and other


674,974



774,313


Equity income, net – related parties


52,165



61,347


Operating expenses





Cost of product


88,969



103,270


Operation and maintenance


140,332



159,191


General and administrative


45,116



40,465


Property and other taxes


14,384



18,476


Depreciation and amortization


130,553



132,319


Long-lived asset and other impairments


14,866



155,785


Goodwill impairment




441,017


Total operating expenses


434,220



1,050,523


Gain (loss) on divestiture and other, net


(583)



(40)


Operating income (loss)


292,336



(214,903)


Interest income – Anadarko note receivable




4,225


Interest expense


(98,493)



(88,586)


Gain (loss) on early extinguishment of debt


(289)



7,345


Other income (expense), net (1)


(1,207)



(1,761)


Income (loss) before income taxes


192,347



(293,680)


Income tax expense (benefit)


1,112



(4,280)


Net income (loss)


191,235



(289,400)


Net income (loss) attributable to noncontrolling interests


5,444



(32,873)


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


$

185,791



$

(256,527)


Limited partners' interest in net income (loss):





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


$

185,791



$

(256,527)


General partner interest in net (income) loss


(3,993)



5,131


Limited partners' interest in net income (loss)


$

181,798



$

(251,396)


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


$

0.44



$

(0.57)


Weighted-average common units outstanding – basic and diluted


413,104



443,971


Western Midstream Partners, LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


thousands except number of units


March 31,
2021


December 31,
2020

Total current assets


$

611,160



$

943,064


Net property, plant, and equipment


8,639,538



8,709,945


Other assets


2,184,345



2,177,018


Total assets


$

11,435,043



$

11,830,027


Total current liabilities


$

490,262



$

960,935


Long-term debt


7,416,001



7,415,832


Asset retirement obligations


267,962



260,283


Other liabilities


318,698



297,765


Total liabilities


8,492,923



8,934,815


Equity and partners' capital





Common units (413,062,133 and 413,839,863 units issued and outstanding at March 31, 2021,
and December 31, 2020, respectively)


2,821,455



2,778,339


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


(16,033)



(17,208)


Noncontrolling interests


136,698



134,081


Total liabilities, equity, and partners' capital


$

11,435,043



$

11,830,027


Western Midstream Partners, LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)




Three Months Ended

March 31,

thousands


2021


2020

Cash flows from operating activities





Net income (loss)


$

191,235



$

(289,400)


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





Depreciation and amortization


130,553



132,319


Long-lived asset and other impairments


14,866



155,785


Goodwill impairment




441,017


(Gain) loss on divestiture and other, net


583



40


(Gain) loss on early extinguishment of debt


289



(7,345)


Change in other items, net


(75,976)



(39,105)


Net cash provided by operating activities


$

261,550



$

393,311


Cash flows from investing activities





Capital expenditures


$

(59,783)



$

(172,816)


Acquisitions from related parties


(2,000)




Contributions to equity investments - related parties


(86)



(10,960)


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


12,141



5,052


Decreases to materials and supplies inventory and other


3,256




Net cash used in investing activities


$

(46,472)



$

(178,724)


Cash flows from financing activities





Borrowings, net of debt issuance costs


$

100,000



$

3,586,173


Repayments of debt


(531,085)



(3,470,139)


Increase (decrease) in outstanding checks


(22,017)



(7,308)


Distributions to Partnership unitholders


(131,265)



(281,786)


Distributions to Chipeta noncontrolling interest owner


(276)



(1,738)


Distributions to noncontrolling interest owners of WES Operating


(2,551)



(5,807)


Net contributions from (distributions to) related parties


1,627



20,489


Finance lease payments


(1,816)



(2,151)


Unit repurchases


(16,241)




Net cash provided by (used in) financing activities


$

(603,624)



$

(162,267)


Net increase (decrease) in cash and cash equivalents


$

(388,546)



$

52,320


Cash and cash equivalents at beginning of period


444,922



99,962


Cash and cash equivalents at end of period


$

56,376



$

152,282


(PRNewsfoto/Western Midstream Partners, LP)
(PRNewsfoto/Western Midstream Partners, LP)
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SOURCE Western Midstream Partners, LP