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Western Midstream Announces First-Quarter 2019 Results

HOUSTON, April 30, 2019 /PRNewswire/ -- Western Midstream Partners, LP (WES) ("WES" or the "Partnership") today announced first-quarter 2019 financial and operating results. Net income (loss) available to limited partners for the first quarter of 2019 totaled $118.7 million, or $0.30 per common unit (diluted), with first-quarter 2019 Adjusted EBITDA(1) of $428.3 million and first-quarter 2019 Distributable cash flow(1) of $340.2 million. Financial and operational information has been recast to include the financial position and results attributable to the assets acquired from Anadarko Petroleum Corporation in February 2019 (the "Anadarko Midstream Assets" or "AMA") as if WES had owned them for all periods presented.

FIRST-QUARTER 2019 HIGHLIGHTS

  • Completed simplification and acquisition transactions
  • Closed 30% acquisition of Red Bluff Express gas pipeline
  • Commenced processing through second train at Mentone gas plant
  • Increased gas throughput by approximately 5%, or 200 MMcf/d, sequentially
  • Increased produced water throughput by approximately 25%, or 100 MBbls/d, sequentially

WES previously declared a quarterly distribution of $0.610 per unit for the first quarter of 2019. This distribution represented a 1% increase over the prior quarter's distribution and a 7% increase over the first-quarter 2018 distribution. The first-quarter 2019 Coverage ratio(1) of 1.23 times includes a net increase to Distributable cash flow(1) from a one-time $7.4 million cash receipt related to legacy commodity swaps and $6.3 million associated with revenue recognition accounting standard ASC 606.

______________________________________________

(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.

"We are very pleased with our first-quarter results and the start-up of the second train at our Mentone gas processing facility in the Delaware basin," said Chief Executive Officer, Robin Fielder. "With the recent acquisition of the highly complementary liquids assets in the Delaware and DJ Basins, WES is better positioned to provide integrated midstream services to our customers and fee-based distribution growth to our unitholders."

Total throughput attributable to WES for natural gas assets(1) for the first quarter of 2019 averaged 4.2 Bcf/d, which was a 5% sequential increase and a 13% increase from the first quarter of 2018. Total throughput attributable to WES for crude oil, NGLs and produced water assets(1) for the first quarter of 2019 averaged 1,102 MBbls/d, which was a 10% sequential increase and a 123% increase from the first quarter of 2018.

Capital expenditures attributable to WES, including equity investments but excluding acquisitions and capitalized interest, totaled $416.5 million on a cash basis during the first quarter of 2019, with maintenance capital expenditures on a cash basis of $35.7 million.

ADDITIONAL INFORMATION

In light of Anadarko Petroleum Corporation's entry into an agreement and plan of merger with Chevron Corporation on April 11, 2019, and subsequent related announcements, WES will not host the previously announced first-quarter 2019 earnings conference call scheduled for May 1, 2019. 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 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.

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

______________________________________________

(1)

Excludes the 25% interest in Chipeta held by a third-party member and the 2.0% limited partner interest in WES Operating held by a subsidiary of Anadarko, which collectively represent WES's noncontrolling interests as of March 31, 2019.

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 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. These factors include the ability to meet financial guidance or distribution growth expectations; the 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; the 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 in its other public filings and press releases. Western Midstream Partners, LP undertakes no obligation to publicly update or revise any forward-looking statements.

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

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

Below are reconciliations of (i) net income (loss) (GAAP) to WES's Distributable cash flow (non-GAAP), (ii) net income (loss) (GAAP) and net cash provided by operating activities (GAAP) to Adjusted EBITDA attributable to Western Midstream Partners, LP ("Adjusted EBITDA") (non-GAAP), and (iii) operating income (loss) (GAAP) to Adjusted gross margin attributable to Western Midstream 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 Midstream Partners, LP and other applicable performance measures, such as operating income (loss) or cash flows from operating activities.

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 Operating'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, and income taxes and excluding Distributable cash flow attributable to noncontrolling interests to the extent such amounts are not excluded from Adjusted EBITDA.

WES defines Adjusted EBITDA as net income (loss), 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 and excluding the noncontrolling interests owners' proportionate share of revenues and expenses.

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 interests owners' proportionate share of revenues and cost of product.

Western Midstream Partners, LP

RECONCILIATION OF GAAP TO NON-GAAP MEASURES (CONTINUED)


Distributable Cash Flow



Three Months Ended
March 31,

thousands except Coverage ratio

2019


2018 (1)

Reconciliation of Net income (loss) to Distributable cash flow and calculation of the Coverage ratio




Net income (loss)

$

211,979



$

181,010


Add:




Distributions from equity investments

62,013



40,426


Non-cash equity-based compensation expense

1,798



2,152


Income tax (benefit) expense

10,092



10,884


Depreciation and amortization

113,946



84,790


Impairments

390



200


Above-market component of swap agreements with Anadarko

7,407



14,282


Other expense

35,213



143


Less:




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

(6,258)



1,400


Gain (loss) on divestiture and other, net

(590)



116


Equity income, net – affiliates

57,992



30,229


Cash paid for maintenance capital expenditures

35,691



21,228


Capitalized interest

6,205



6,962


Cash paid for (reimbursement of) income taxes

96



(87)


Other income



817


Distributable cash flow attributable to noncontrolling interests (2)

9,534



9,134


Distributable cash flow

$

340,168



$

264,088


Distributions declared




Distributions from WES Operating

$

277,604




Less: Cash reserve for the proper conduct of WES's business

1,280




Distributions to WES unitholders (3)

$

276,324




Coverage ratio

1.23


x




(1)

Financial information has been recast to include the financial position and results attributable to AMA.

(2)

For all periods presented, includes (i) the 25% interest in Chipeta held by a third-party member and (ii) the 2.0% limited partner interest in WES Operating held by a subsidiary of Anadarko, which collectively represent WES's noncontrolling interests as of March 31, 2019.

(3)

Reflects a cash distribution of $0.61000 per unit declared for the three months ended March 31, 2019.

 

Western Midstream Partners, LP

RECONCILIATION OF GAAP TO NON-GAAP MEASURES (CONTINUED)


Adjusted EBITDA



Three Months Ended
March 31,

thousands

2019


2018 (1)

Reconciliation of Net income (loss) to Adjusted EBITDA




Net income (loss)

$

211,979



$

181,010


Add:




Distributions from equity investments

62,013



40,426


Non-cash equity-based compensation expense

1,798



2,152


Interest expense

65,876



38,015


Income tax expense

10,092



10,884


Depreciation and amortization

113,946



84,790


Impairments

390



200


Other expense

35,213



143


Less:




Gain (loss) on divestiture and other, net

(590)



116


Equity income, net – affiliates

57,992



30,229


Interest income – affiliates

4,225



4,225


Other income



817


Adjusted EBITDA attributable to noncontrolling interests (2)

11,350



10,093


Adjusted EBITDA

$

428,330



$

312,140


Reconciliation of Net cash provided by operating activities to Adjusted EBITDA




Net cash provided by operating activities

$

343,073



$

300,151


Interest (income) expense, net

61,651



33,790


Uncontributed cash-based compensation awards

(570)



522


Accretion and amortization of long-term obligations, net

(1,511)



(2,103)


Current income tax (benefit) expense

6,027



(13,335)


Other (income) expense, net (3)

(432)



(817)


Distributions from equity investments in excess of cumulative earnings – affiliates

7,792



8,850


Changes in assets and liabilities:




Accounts receivable, net

(9,486)



29,632


Accounts and imbalance payables and accrued liabilities, net

55,529



(28,904)


Other items, net

(22,393)



(5,553)


Adjusted EBITDA attributable to noncontrolling interests (2)

(11,350)



(10,093)


Adjusted EBITDA

$

428,330



$

312,140


Cash flow information




Net cash provided by operating activities

$

343,073



$

300,151


Net cash used in investing activities

(2,515,732)



(524,219)


Net cash provided by (used in) financing activities

2,180,564



668,166




(1)

Financial information has been recast to include the financial position and results attributable to AMA.

(2)

For all periods presented, includes (i) the 25% interest in Chipeta held by a third-party member and (ii) the 2.0% limited partner interest in WES Operating held by a subsidiary of Anadarko, which collectively represent WES's noncontrolling interests as of March 31, 2019.

(3)

Excludes the non-cash loss on interest-rate swaps of $35.6 million for the three months ended March 31, 2019.

 

Western Midstream Partners, LP

RECONCILIATION OF GAAP TO NON-GAAP MEASURES (CONTINUED)


Adjusted Gross Margin



Three Months Ended
March 31,

thousands

2019


2018 (1)

Reconciliation of Operating income (loss) to Adjusted gross margin




Operating income (loss)

$

318,928



$

224,867


Add:




Distributions from equity investments

62,013



40,426


Operation and maintenance

142,829



96,795


General and administrative

22,844



15,829


Property and other taxes

16,285



14,600


Depreciation and amortization

113,946



84,790


Impairments

390



200


Less:




Gain (loss) on divestiture and other, net

(590)



116


Equity income, net – affiliates

57,992



30,229


Reimbursed electricity-related charges recorded as revenues

16,589



15,457


Adjusted gross margin attributable to noncontrolling interests (2)

15,550



12,871


Adjusted gross margin

$

587,694



$

418,834


Adjusted gross margin for natural gas assets

$

412,428



$

335,614


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

175,266



83,220




(1)

Financial information has been recast to include the financial position and results attributable to AMA.

(2)

For all periods presented, includes (i) the 25% interest in Chipeta held by a third-party member and (ii) the 2.0% limited partner interest in WES Operating held by a subsidiary of Anadarko, which collectively represent WES's noncontrolling interests as of March 31, 2019.

 

Western Midstream Partners, LP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



Three Months Ended
March 31,

thousands except per-unit amounts

2019


2018 (1)

Revenues and other




Service revenues – fee based

$

579,974



$

393,773


Service revenues – product based

19,379



23,423


Product sales

72,133



83,625


Other

397



233


Total revenues and other

671,883



501,054


Equity income, net – affiliates

57,992



30,229


Operating expenses




Cost of product

114,063



94,318


Operation and maintenance

142,829



96,795


General and administrative

22,844



15,829


Property and other taxes

16,285



14,600


Depreciation and amortization

113,946



84,790


Impairments

390



200


Total operating expenses

410,357



306,532


Gain (loss) on divestiture and other, net

(590)



116


Operating income (loss)

318,928



224,867


Interest income – affiliates

4,225



4,225


Interest expense

(65,876)



(38,015)


Other income (expense), net (2)

(35,206)



817


Income (loss) before income taxes

222,071



191,894


Income tax expense (benefit)

10,092



10,884


Net income (loss)

211,979



181,010


Net income (loss) attributable to noncontrolling interests

93,319



49,483


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

$

118,660



$

131,527


Limited partners' interest in net income (loss):




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

$

118,660



$

131,527


Pre-acquisition net (income) loss allocated to Anadarko

(29,116)



(30,522)


Limited partners' interest in net income (loss)

$

89,544



$

101,005


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

$

0.30



$

0.46


Weighted-average common units outstanding – basic and diluted

299,556



218,933




(1)

Financial information has been recast to include the financial position and results attributable to AMA.

(2)

Includes the non-cash loss on interest-rate swaps of $35.6 million for the three months ended March 31, 2019.

 

Western Midstream Partners, LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


thousands except number of units

March 31,
2019


December 31,
2018 (1)

Current assets

$

335,942



$

340,362


Note receivable – Anadarko

260,000



260,000


Net property, plant and equipment

8,629,999



8,410,353


Other assets

2,571,054



2,446,490


Total assets

$

11,796,995



$

11,457,205


Current liabilities

$

2,518,854



$

637,477


Long-term debt

5,208,411



4,787,381


APCWH Note Payable



427,493


Asset retirement obligations

311,716



300,024


Other liabilities

166,473



412,147


Total liabilities

8,205,454



6,564,522


Equity and partners' capital




Common units (452,990,862 and 218,937,797 units issued and outstanding at March 31, 2019, and December 31, 2018, respectively)

3,437,922



951,888


Net investment by Anadarko



1,388,018


Noncontrolling interests

153,619



2,552,777


Total liabilities, equity and partners' capital

$

11,796,995



$

11,457,205




(1)

Financial information has been recast to include the financial position and results attributable to AMA.

 

Western Midstream Partners, LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



Three Months Ended
March 31,

thousands

2019


2018 (1)

Cash flows from operating activities




Net income (loss)

$

211,979



$

181,010


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




Depreciation and amortization

113,946



84,790


Impairments

390



200


(Gain) loss on divestiture and other, net

590



(116)


Change in other items, net

16,168



34,267


Net cash provided by operating activities

$

343,073



$

300,151


Cash flows from investing activities




Capital expenditures

$

(386,144)



$

(533,185)


Acquisitions from affiliates

(2,007,501)




Acquisitions from third parties

(93,303)




Investments in equity affiliates

(36,543)




Distributions from equity investments in excess of cumulative earnings – affiliates

7,792



8,850


Proceeds from the sale of assets to third parties

(33)



116


Net cash used in investing activities

$

(2,515,732)



$

(524,219)


Cash flows from financing activities




Borrowings, net of debt issuance costs

$

2,430,750



$

1,444,082


Repayments of debt

(467,595)



(630,000)


Increase (decrease) in outstanding checks

(5,890)



(6,684)


Registration expenses related to the issuance of Partnership common units

(855)




Distributions to WES unitholders

(131,910)



(120,140)


Distributions to Chipeta noncontrolling interest owner

(1,935)



(3,353)


Distributions to noncontrolling interest owners of WES Operating

(100,999)



(94,272)


Net contributions from (distributions to) Anadarko

451,591



64,251


Above-market component of swap agreements with Anadarko

7,407



14,282


Net cash provided by (used in) financing activities

$

2,180,564



$

668,166


Net increase (decrease) in cash and cash equivalents

$

7,905



$

444,098


Cash and cash equivalents at beginning of period

92,142



79,588


Cash and cash equivalents at end of period

$

100,047



$

523,686




(1)

Financial information has been recast to include the financial position and results attributable to AMA.

 

Western Midstream Partners, LP

OPERATING STATISTICS

(Unaudited)



Three Months Ended
March 31,


2019


2018 (1)

Throughput for natural gas assets (MMcf/d)




Gathering, treating and transportation

527



508


Processing

3,471



3,101


Equity investment (2)

377



294


Total throughput for natural gas assets

4,375



3,903


Throughput attributable to noncontrolling interests for natural gas assets (3)

176



172


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

4,199



3,731


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




Gathering, treating, transportation and disposal

820



350


Equity investment (4)

304



155


Total throughput for crude oil, NGLs and produced water assets

1,124



505


Throughput attributable to noncontrolling interests for crude oil, NGLs and produced water assets (3)

22



10


Total throughput attributable to Western Midstream Partners, LP for crude oil, NGLs and produced water assets

1,102



495


Adjusted gross margin per Mcf for natural gas assets (5)

$

1.09



$

1.00


Adjusted gross margin per Bbl for crude oil, NGLs and produced water assets (6)

1.77



1.87




(1)

Throughput and Adjusted gross margin have been recast to include the results attributable to AMA.

(2)

Represents the 14.81% share of average Fort Union throughput, 22% share of average Rendezvous throughput, 50% share of average Mi Vida throughput, 50% share of average Ranch Westex throughput and 30% share of average Red Bluff Express throughput.

(3)

For all periods presented, includes (i) the 25% interest in Chipeta held by a third-party member and (ii) the 2.0% limited partner interest in WES Operating held by a subsidiary of Anadarko, which collectively represent WES's noncontrolling interests as of March 31, 2019.

(4)

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

(5)

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

(6)

Average for period. Calculated as Adjusted gross margin for crude oil, NGLs and produced water assets, divided by total throughput (MBbls/d) attributable to Western Midstream Partners, LP for crude oil, NGLs and produced water assets.

 



Three Months Ended March 31,



2019


2018


2019


2018


2019


2018



Natural gas

(MMcf/d)


Crude oil & NGLs

(MBbls/d)


Produced water

(MBbls/d)

Delaware Basin


1,178



919



145



111



518



78


DJ Basin


1,258



1,107



102



102






Equity investments


377



294



304



155






Other


1,562



1,583



55



59






Total throughput


4,375



3,903



606



427



518



78


 

(PRNewsfoto/Western Midstream Partners, LP)

 

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