Western Midstream - Investors

Western Gas Announces Fourth-Quarter and Full-Year 2008 Results

HOUSTON--(BUSINESS WIRE)--Mar. 10, 2009-- Western Gas Partners, LP (NYSE:WES) today announced fourth-quarter and full-year financial and operating results for 2008. The announced results include the full-year effect of the Partnership’s acquisition of Powder River assets fromAnadarko Petroleum Corporation (NYSE:APC), which closed in December 2008. In addition, the Partnership today announced its 2009 capital program and outlook for the year.

Net income available to limited partners(1) for 2008 totaled $41.3 million, or $0.77 per limited partner unit (diluted), with full-year 2008 Adjusted EBITDA of $112.5 million and full-year distributable cash flow of $105.2 million.(2)

Net income available to limited partners for the fourth quarter of 2008 totaled $16.1 million, or $0.30per limited partner unit (diluted). The Partnership’s fourth-quarter Adjusted EBITDA was $27.4 millionand distributable cash flow was $24.5 million, resulting in a coverage ratio of 1.44 times for the period. Adjusting these results to exclude the effects of the acquisitions and associated transaction costs, fourth-quarter Adjusted EBITDA and distributable cash flow would have been approximately$21.6 million and $19.1 million, respectively, which would have resulted in a coverage ratio of 1.18 times for the period.

“Western Gas achieved significant milestones during the year, completing our initial public offering and closing our first asset acquisition,” said Western Gas Partners’ President and Chief Executive Officer Robert Gwin. “Our business model is predominantly fee-based and minimizes direct exposure to commodity prices. This strategy, combined with the low capital intensity of our assets and our ability to manage operating costs, enabled us to deliver results consistent with expectations in a challenging market environment.”

Total throughput volumes for the quarter were 1,074 MMcf/d, an increase of approximately 2 percent over the fourth quarter of 2007.

Capital expenditures totaled approximately $12.8 million during the fourth quarter of 2008. Of this amount, maintenance capital expenditures were approximately $6.9 million. For the full-year 2008, the Partnership’s capital expenditures totaled $36.9 million, which included maintenance capital of$17.6 million, or 16 percent of Adjusted EBITDA, below the initial forecast of 30 percent of Adjusted EBITDA.

2009 CAPITAL PROGRAM AND OUTLOOK

The board of directors of the Partnership’s general partner has approved a 2009 capital budget of $31 million.

The Partnership’s 2009 performance will be driven primarily by system throughput, as its operations have minimal direct exposure to commodity prices. System throughput will be impacted by our customers’ successful drilling activity in the Partnership’s areas of operation, and the resulting volume of new production connected to our systems to offset natural field decline. Based on current expectations for drilling and completion activity, Adjusted EBITDA for 2009 is expected to be between $90 and $110 million. Total capital expenditures are expected to be between $27 and $31 million with maintenance capital expenditures expected to be between 15 percent and 20 percent of Adjusted EBITDA.

CONFERENCE CALL TOMORROW AT 9 A.M. CDT

The Partnership will host a conference call on March 11 at 9 a.m. Central Daylight Time (10 a.m. Eastern Daylight Time) to discuss fourth-quarter and year-end results and the outlook for 2009. The dial-in number is 1.888.680.0879 and the participant code is 52005646. For complete instructions on how to participate in the conference call, or to access the live audio webcast and slide presentation, please visit www.westerngas.com. A replay of the call will also be available on the Web site for approximately two weeks following the conference call.

Western Gas Partners, LP is a growth-oriented Delaware limited partnership formed by Anadarko Petroleum Corporation (NYSE:APC) to own, operate, acquire and develop midstream energy assets. With midstream assets in East and West Texas, the Rocky Mountains and the Mid-Continent, the Partnership is engaged in the business of gathering, compressing, processing, treating and transporting natural gas for Anadarko and other producers and customers. For more information about Western Gas Partners, please visit www.westerngas.com.

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Western Gas Partners 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 obtain new sources of natural gas supplies; the effect of fluctuations in commodity prices and the demand for natural gas and related products; and construction costs or capital expenditures exceeding estimated or budgeted costs or expenditures, as well as other factors described in the “Risk Factors” section of the Form S-1 registration statement filed with the Securities and Exchange Commission and other public filings and press releases by Western Gas Partners. Western Gas Partners undertakes no obligation to publicly update or revise any forward-looking statements.

1 Excludes the results prior to the IPO and the results of the Powder River acquisitions prior to closing.

2 Please see the tables at the end of this release for a reconciliation of GAAP to non-GAAP measures.

Reconciliation of GAAP to Non-GAAP Measures

Below are reconciliations of Distributable Cash Flow and Adjusted EBITDA (non-GAAP) to Net Income (GAAP), as required under Regulation G of the Securities Exchange Act of 1934. Management believes that the presentation of Distributable Cash Flow and Adjusted EBITDA provides information useful in assessing the Partnership’s financial condition and results of operations and that Distributable Cash Flow and Adjusted EBITDA are widely accepted financial indicators of a company’s ability to incur and service debt, fund capital expenditures and make distributions. Distributable Cash Flow and Adjusted EBITDA, as defined by the Partnership, may not be comparable to similarly titled measures used by other companies. Therefore, the Partnership’s consolidated Distributable Cash Flow and Adjusted EBITDA should be considered in conjunction with net income and other performance measures, such as operating income or cash flow from operating activities.

Distributable Cash Flow

The Partnership defines Distributable Cash Flow as Adjusted EBITDA, plus interest income, less net cash paid for interest expense, maintenance capital expenditures and income taxes.

 

Quarter Ended
December 31, 2008

 

 

Year Ended
December 31, 2008

 

(in thousands)

 

 

 

 

 

 

 

Reconciliation of Net Income to Distributable Cash Flow and

Distributable Cash Flow Attributable to Initial Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

20,113

 

 

$

65,276

Add:

 

 

 

 

 

 

Distributions from equity investee

 

1,455

 

 

 

5,128

Interest expense, net – affiliate (non-cash settled)

 

 

 

 

1,147

Income tax expense

 

2,654

 

 

 

13,777

Depreciation and impairment

 

8,395

 

 

 

42,365

Less:

 

 

 

 

 

 

Equity income, net

 

896

 

 

 

4,736

Cash paid for maintenance capital expenditures

 

6,908

 

 

 

17,624

Interest income, net – affiliate (non-cash settled)

 

324

 

 

 

Other income

 

21

 

 

 

145

 

 

 

 

 

 

 

Distributable Cash Flow

$

24,468

 

 

$

105,188

 

 

 

 

 

 

 

Less: Distributable cash flow attributable to Powder River acquisition

 

6,796

 

 

 

 

Add: Transaction costs

 

1,455

 

 

 

 

Distributable cash flow attributable to initial assets(1)

$

19,127

 

 

 

 

 

 

 

 

 

 

 

(1) Initial assets refers to assets contributed to the Partnership in connection with its initial public offering and consists of Anadarko Gathering Company LLC, Pinnacle Gas Treating LLC and MIGC LLC.

 

Adjusted EBITDA

The Partnership defines Adjusted EBITDA as net income (loss), plus distributions from equity investee and interest expense, income tax expense, and depreciation and impairment, less income from equity investment, interest income, income tax benefit and other income (expense).

 

 

Quarter Ended December 31,

 

Year Ended December 31,

 

 

2008

 

2007(1)

 

 

2008

 

2007(1)

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Net Income to Adjusted EBITDA and Adjusted EBITDA attributable to Initial Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

20,113

 

$

11,900

 

 

$

65,276

 

$

36,658

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

Distributions from equity investee

 

 

1,455

 

 

1,348

 

 

 

5,128

 

 

1,348

 

Interest expense, net – affiliates

 

 

 

 

1,645

 

 

 

1,259

 

 

7,805

 

Interest expense from note – affiliate

 

 

253

 

 

 

 

 

253

 

 

 

Income tax expense

 

 

2,654

 

 

5,493

 

 

 

13,777

 

 

19,540

 

Depreciation and impairment

 

 

8,395

 

 

7,722

 

 

 

42,365

 

 

30,481

 

Other expense

 

 

 

 

15

 

 

 

 

 

15

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

Equity income, net

 

 

896

 

 

935

 

 

 

4,736

 

 

4,017

 

Interest income, net – affiliates

 

 

288

 

 

 

 

 

 

 

 

Interest income from note – affiliate

 

 

4,224

 

 

 

 

 

10,703

 

 

 

Other income

 

 

21

 

 

 

 

 

145

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

27,441

 

$

27,188

 

 

$

112,474

 

$

91,830

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Adjusted EBITDA attributable to Powder River acquisition

 

$

7,309

 

 

 

 

 

 

 

 

 

Add: Transaction costs

 

 

1,455

 

 

 

 

 

 

 

 

 

Adjusted EBITDA attributable to initial assets(2)

 

$

21,587

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Financial information for 2007 has been revised to include results attributable to the Powder River acquisition.

(2) Initial assets refers to assets contributed to the Partnership in connection with its initial public offering and consists of Anadarko Gathering Company LLC, Pinnacle Gas Treating LLC and MIGC LLC.

 

Western Gas Partners, LP

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

 

 

 

 

 

 

Quarter Ended

 

Year Ended

 

 

December 31,

 

December 31,

 

 

2008

 

2007(1)

 

2008

 

2007(1)

 

 

(in thousands, except per-unit amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Gathering, processing and transportation of natural gas

 

$

30,379

 

$

27,713

 

$

123,540

 

$

104,026

Natural gas, natural gas liquids and condensate sales

 

 

23,034

 

 

40,940

 

 

170,891

 

 

148,923

Equity income and other

 

 

3,999

 

 

1,811

 

 

17,217

 

 

8,544

Total Revenues

 

$

57,412

 

$

70,464

 

$

311,648

 

$

261,493

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product

 

$

14,479

 

$

26,904

 

$

134,715

 

$

112,283

Operation and maintenance

 

 

9,525

 

 

12,718

 

 

44,765

 

 

40,756

General and administrative

 

 

5,541

 

 

2,557

 

 

14,385

 

 

8,364

Property and other taxes

 

 

985

 

 

1,510

 

 

5,701

 

 

5,591

Depreciation

 

 

8,395

 

 

7,722

 

 

33,011

 

 

30,481

Impairment

 

 

 

 

 

 

9,354

 

 

Total Operating Expenses

 

$

38,925

 

$

51,411

 

$

241,931

 

$

197,475

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

$

18,487

 

$

19,053

 

$

69,717

 

$

64,018

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income (expense), net – affiliates

 

 

4,259

 

 

(1,645)

 

 

9,191

 

 

(7,805)

Other income (expense)

 

 

21

 

 

(15)

 

 

145

 

 

(15)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Before Income Taxes

 

$

22,767

 

$

17,393

 

$

79,053

 

$

56,198

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax Expense

 

 

2,654

 

 

5,493

 

 

13,777

 

 

19,540

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

20,113

 

$

11,900

 

$

65,276

 

$

36,658

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Limited Partner Interest in Net Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

20,113

 

 

n/a

 

$

65,276

 

 

n/a

Less predecessor interest in net income

 

 

3,655

 

 

n/a

 

 

23,173

 

 

n/a

Less general partner interest in net income

 

 

329

 

 

n/a

 

 

842

 

 

n/a

Limited partner interest in net income

 

$

16,129

 

 

n/a

 

$

41,261

 

 

n/a

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per limited partner unit – basic

 

$

0.30

 

 

n/a

 

$

0.78

 

 

n/a

Net income per limited partner unit – diluted

 

$

0.30

 

 

n/a

 

$

0.77

 

 

n/a

 

 

 

 

 

 

 

 

 

 

 

 

 

Limited partner units outstanding – basic

 

 

53,434

 

 

n/a

 

 

53,216

 

 

n/a

Limited partner units outstanding – diluted

 

 

53,464

 

 

n/a

 

 

53,246

 

 

n/a

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Financial information for 2007 has been revised to include results attributable to the Powder River acquisition.

 

Western Gas Partners, LP

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

December 31,
2008

 

December 31,
2007(1)

 

(in thousands)

 

 

Cash and cash equivalents

$

33,306

 

$

Other current assets

 

12,073

 

 

9,658

Note receivable – Anadarko

 

260,000

 

 

Net property, plant and equipment

 

517,815

 

 

511,775

Goodwill

 

14,436

 

 

12,347

Equity investment

 

18,183

 

 

10,511

Other assets

 

628

 

 

27

Total Assets

$

856,441

 

$

544,318

 

 

 

 

 

 

Accounts payable

$

5,544

 

$

3,737

Other current liabilities

 

10,797

 

 

8,640

Note payable – Anadarko

 

175,000

 

 

Other long-term liabilities

 

10,146

 

 

139,801

Total Liabilities

$

201,487

 

$

152,178

 

 

 

 

 

 

Common unit partner capital 
(29,093 units issued and outstanding at December 31, 2008)

$

368,049

 

$

Subordinated unit partner capital 
(26,536 units issued and outstanding at December 31, 2008)

 

275,917

 

 

General partner capital 
(1,135 units issued and outstanding at December 31, 2008)

 

10,988

 

 

Parent net investment

 

 

 

392,140

Total Partners’ Capital and Parent Net Investment

$

654,954

 

$

392,140

Total Liabilities, Partners’ Capital and Parent Net Investment

$

856,441

 

$

544,318

 

 

 

 

 

 

(1) Financial information as of December 31, 2007 has been revised to include assets, liabilities and parent net equity attributable to the Powder River acquisition.

 

Western Gas Partners, LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

Year Ended December 31,

 

2008

 

 

2007(1)

 

 

(in thousands)

 

 

Cash Flows from Operating Activities

 

Net income

$

65,276

 

 

$

36,658

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation and impairment

 

42,365

 

 

 

30,481

 

Deferred income taxes

 

1,624

 

 

 

10,816

 

Changes in assets and liabilities:

 

 

 

 

 

(Increase) in accounts receivable

 

(4,047

)

 

 

(3,466

)

(Increase) in natural gas imbalance receivable

 

(912

)

 

 

(226

)

Increase (decrease) in accounts payable and accrued expenses

 

4,840

 

 

 

142

 

Increase (decrease) in other items, net

 

650

 

 

 

(1,497

)

Net cash provided by operating activities

$

109,796

 

 

$

72,908

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

Capital expenditures

$

(36,864

)

 

$

(54,328

)

Acquisition of Powder River Basin operations

 

(175,000

)

 

 

 

Investment in equity – affiliate

 

(8,095

)

 

 

 

Loan to Anadarko

 

(260,000

)

 

 

 

Net cash used in investing activities

$

(479,959

)

 

$

(54,328

)

 

 

Cash Flows from Financing Activities

 

 

 

 

 

Proceeds from issuance of common units

$

315,161

 

 

$

 

Issuance of note payable to Anadarko

 

175,000

 

 

 

 

Reimbursement of capital expenditures to parent

 

(45,161

)

 

 

 

Distributions to unitholders

 

(24,814

)

 

 

 

Net advance to parent

 

(16,717

)

 

 

(19,038

)

Net cash provided by (used in) financing activities

$

403,469

 

 

$

(19,038

)

 

 

Net Increase (Decrease) in Cash and Cash Equivalents

 

33,306

 

 

 

(458

)

Cash and Cash Equivalents at Beginning of Period

 

 

 

 

458

 

Cash and Cash Equivalents at End of Period

$

33,306

 

 

$

 

 

 

 

 

 

 

(1) Financial information for 2007 has been revised to include results attributable to the Powder River acquisition.

 

Western Gas Partners, LP

Operating Statistics

 

 

 

 

 

Quarter Ended

 

Year Ended

 

December 31,

 

December 31,

 

2008

 

2007(1)

 

2008

 

2007(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Throughput volumes (MMcf/d)

 

 

 

 

 

 

 

 

 

 

 

Gathering and transportation

 

923

 

 

946

 

 

966

 

 

1,007

Processing

 

30

 

 

29

 

 

30

 

 

30

Reported throughput

 

953

 

 

975

 

 

996

 

 

1,037

Equity investment(2)

 

121

 

 

82

 

 

112

 

 

84

Total throughput

 

1,074

 

 

1,057

 

 

1,108

 

 

1,121

 

 

 

 

 

 

 

 

 

 

 

 

Average gross margin per Mcf(3)

$

0.44

 

$

0.47

 

$

0.44

 

$

0.37

 

 

 

 

 

 

 

 

 

 

 

 

(1) Operating statistics for 2007 have been revised to include results attributable to the Powder River acquisition.

(2) Represents the Partnership’s proportionate share of volumes attributable to its 14.81% interest in Fort Union.

(3) Calculated as gross operating margin (operating revenues less cost of product) divided by reported throughput.

 

Source: Western Gas Partners, LP

Western Gas Partners, LP
Chris Campbell, CFA, 832-636-6012
chris.campbell@westerngas.com


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