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Western Gas Announces Acquisition and Fourth-Quarter and Full-Year 2013 Results
02/27/2014

HOUSTON, TX -- (Marketwired) -- 02/27/14 -- Western Gas Partners, LP (NYSE: WES) ("WES" or the "Partnership") today announced that it has agreed to acquire from Anadarko a 20% interest in each ofTexas Express Pipeline LLC and Texas Express Gathering LLC and a 33.33% interest in Front Range Pipeline LLC for $375 million.

"This immediately accretive acquisition marks our entry into the long-haul NGL transportation business, which is a natural complement to our existing portfolio," said Chief Executive Officer, Don Sinclair. "These 100% fee-based assets gather and transport liquids from the Anadarko, Permian, and DJ Basins, all of which are recognized as world class resource plays."

The Partnership intends to finance the acquisition with the borrowing of $350 million on its revolving credit facility, $6 million of cash on hand, and the issuance of 308,490 common units to Anadarko at an implied price of $60.78 per unit. The acquisition price is equal to the assets' book value as of the acquisition date, and the acquisition is expected to close on March 3, 2014. The Partnership projects a blended base case, unlevered internal rate of return of 14% to 18% for the three projects. "Given that the growth profile of the assets is supported by firm transportation commitments from investment-grade shippers that increase over time, we believe it is appropriate to value the assets on a project basis as opposed to our historical method of using the next twelve months' cash flows," added Sinclair.

The terms of the acquisition were unanimously approved by the board of directors of the Partnership's general partner and by the board's special committee, which is comprised entirely of independent directors. The special committee engaged Evercore Partners to act as its financial advisor andBracewell and Giuliani LLP to act as its legal advisor.

FOURTH-QUARTER AND FULL-YEAR 2013 RESULTS

The Partnership and Western Gas Equity Partners, LP (NYSE: WGP) ("WGP") today also announced fourth-quarter and full-year 2013 financial and operating results.

"In 2012 we made a significant step change in our capital program, and in the second half of 2013 we started to realize the full benefits of that program," said Sinclair. "Our strong fourth-quarter performance, which was achieved despite unfavorable weather conditions across most of our systems, is evidence of the resilience of our well-diversified portfolio."

WESTERN GAS PARTNERS, LP

Net income available to limited partners(1) for 2013 totaled $200.9 million, or $1.83 per common unit (diluted), with full-year 2013 Adjusted EBITDA(2) of $457.8 million and full-year 2013 Distributable cash flow(2) of $380.5 million.

Net income available to limited partners(1) for the fourth quarter of 2013 totaled $64.0 million, or $0.56per common unit (diluted), with fourth-quarter 2013 Adjusted EBITDA(2) of $129.0 million and fourth-quarter 2013 Distributable cash flow(2) of $105.7 million.

WES paid a quarterly distribution of $0.60 per unit for the fourth quarter of 2013. This distribution represented a 3% increase over the prior quarter's distribution and a 15% increase over the fourth-quarter 2012 distribution of $0.52 per unit. The full-year 2013 distribution of $2.28 per unit represented a 16% increase over the full-year 2012 distribution. The fourth-quarter 2013 Coverage ratio(2) of 1.14 times is based on the quarterly distribution of $0.60 per unit.

Total throughput attributable to WES(1) for the fourth quarter of 2013 averaged 3.5 Bcf/d, which was 6% above the prior quarter and 20% above the fourth quarter of 2012. For the full-year 2013, total throughput attributable to WES(1) averaged 3.2 Bcf/d, 14% above the prior-year average.

(1) Includes net income or net throughput (as applicable) attributable to (i) the 33.75% interest in certain third-party operated Marcellus gathering assets acquired from Anadarko (the "Non-Operated Marcellus Interest") for all periods of comparison, (ii) the additional Chipeta interest beginning in August 2012, (iii) the 33.75% interest in certain Anadarko-operated Marcellus gathering assets acquired from a third party (the "Anadarko-Operated Marcellus Interest") beginning in March 2013, and (iv) Overland Trail Transmission, LLC ("OTTCO") beginning in September 2013.
(2) Please see the tables at the end of this release for a reconciliation of non-GAAP to GAAP measures and calculation of the Coverage ratio.

Excluding acquisitions, capital expenditures attributable to WES on a cash basis totaled $173.9 millionduring the fourth quarter of 2013. Of this amount, maintenance capital expenditures were $10.3 million, or 8% of Adjusted EBITDA(1). For the full-year 2013, capital expenditures attributable to WES totaled $632.7 million on a cash basis, excluding acquisitions. Capital expenditures attributable to WES on an accrual basis and excluding acquisitions totaled $167.5 million during the fourth quarter of 2013 and $616.2 million for the full-year 2013.

WESTERN GAS EQUITY PARTNERS, LP

As of December 31, 2013, WGP indirectly owned the 2% general partner interest in WES, 100% of the incentive distribution rights in WES and 49,296,205 WES common units. Net income available to limited partners for 2013 totaled $155.5 million, or $0.71 per common unit (diluted). Net income available to limited partners for the fourth quarter of 2013 totaled $48.8 million, or $0.22 per common unit (diluted).

WGP paid a quarterly distribution of $0.23125 per unit for the fourth quarter of 2013. This distribution represented an 8% increase over the prior quarter's distribution and a 40% increase over the non-prorated distribution for the fourth quarter of 2012. WGP received distributions from WES of $51.6 million attributable to the fourth quarter and subsequently paid out $50.6 million in distributions for the same period.

2014 WES OUTLOOK

Based on the current forecast, which includes the aforementioned acquisition effective March 1, 2014, WES's Adjusted EBITDA(1) for 2014 is expected to be between $600 million and $650 million. Total capital expenditures including equity investments, but excluding acquisitions, are expected to be between $650 million and $700 million with maintenance capital expenditures expected to be between 8% and 11% of Adjusted EBITDA(1). The 2014 forecast includes the continued construction of a second train at WES's Lancaster facility and continued well connections in the DJ Basin and Marcellus shale. WES expects no less than 15% distribution growth in 2014. Details surrounding the 2014 forecast will be provided during the joint earnings conference call.

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

WESTERN GAS EQUITY PARTNERS, LP

Based on the expectation of no less than 15% distribution growth at WES, WGP expects that its 2014 distribution growth will be no less than 34%.

INCREASED SIZE OF REVOLVING CREDIT FACILITY

The Partnership also announced today that it has entered into a new $1.2 billion five-year revolving credit facility with a group of twenty lenders. The new facility, which replaces the Partnership's existing facility, matures in February 2019, and is expandable to $1.5 billion under its accordion feature. The new facility lowers the Partnership's borrowing cost and contains terms and borrowing conditions that are substantially the same as those under the preceding facility.

MANAGEMENT APPOINTMENT

The general partners of WES and WGP also announced today that their boards of directors have appointed Jacqueline A. Dimpel as Senior Vice President. Ms. Dimpel also serves as Anadarko's Vice President of Midstream, having succeeded Danny Rea upon his retirement at the end of 2013.

CONFERENCE CALL TOMORROW AT 9 A.M. CST

WES and WGP will host a joint conference call on Friday, February 28, 2014, at 9:00 a.m. Central Standard Time (10:00 a.m. Eastern Standard Time) to discuss fourth-quarter and full-year 2013 results and the outlook for 2014. To participate via telephone, please dial 877.621.4819 and enter participant code 28641715. Please call in 10 minutes prior to the scheduled start time. To access the live audio webcast of the conference call and slide presentation, please visit www.westerngas.com. A replay of the call will also be available on the website for approximately two weeks following the conference call.

Western Gas Partners, LP ("WES") is a growth-oriented Delaware master limited partnership formed byAnadarko Petroleum Corporation to own, operate, acquire and develop midstream energy assets. With midstream assets in East, West and South Texas, the Rocky Mountains, north-central Pennsylvania and the Mid-Continent, WES is engaged in the business of gathering, processing, compressing, treating and transporting natural gas, condensate, natural gas liquids and crude oil for Anadarko and other producers and customers.

Western Gas Equity Partners, LP ("WGP") is a Delaware master limited partnership formed by Anadarko to own the following types of interests in WES: (i) the 2.0% 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.

This news release contains forward-looking statements. Western Gas Partners and Western Gas Equity 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. These factors include the ability to meet financial guidance or distribution growth expectations; the ability to safely and efficiently operate WES's assets; 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; 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" sections of WES's and WGP's most recent Forms 10-K filed with the Securities and Exchange Commission and in their other public filings and press releases. Western Gas Partners and Western Gas Equity Partners undertake no obligation to publicly update or revise any forward-looking statements.

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

Below are reconciliations of WES's Distributable cash flow (non-GAAP) to net income attributable toWestern Gas Partners, LP (GAAP) and Adjusted EBITDA (non-GAAP) to net income attributable toWestern Gas Partners, LP (GAAP) and net cash provided by operating activities (GAAP), as required under Regulation G of the Securities Exchange Act of 1934. Management believes that WES's Distributable cash flow, Adjusted EBITDA 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 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 and Coverage ratio should be considered in conjunction with net income and other applicable performance measures, such as operating income or cash flows from operating activities.

Distributable Cash Flow

WES defines Distributable cash flow as Adjusted EBITDA, plus interest income, less net cash 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.

 

 

 

 

 

 

Three Months Ended
December 31,

 

 

Year Ended
December 31,

thousands except Coverage ratio

2013

 

 

 

2012

 

 

2013

 

 

2012

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

$

85,879

 

 

 

$

(9,118

)

 

$

275,136

 

 

$

134,421

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distributions from equity investees

 

6,573

 

 

 

 

5,057

 

 

 

22,136

 

 

 

20,660

 

Non-cash equity-based compensation expense(1)

 

912

 

 

 

 

57,101

 

 

 

3,575

 

 

 

73,508

 

Interest expense, net (non-cash settled)

 

-

 

 

 

 

82

 

 

 

-

 

 

 

326

 

Income tax (benefit) expense

 

(1,801

)

 

 

 

6,127

 

 

 

2,630

 

 

 

20,715

 

Depreciation, amortization and impairments (2)

 

38,724

 

 

 

 

36,772

 

 

 

143,375

 

 

 

118,279

 

Other expense (2)

 

175

 

 

 

 

-

 

 

 

175

 

 

 

1,665

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity income, net

 

11,527

 

 

 

 

5,359

 

 

 

23,732

 

 

 

16,111

 

Cash paid for maintenance capital expenditures (2) (3)

 

10,255

 

 

 

 

7,596

 

 

 

29,850

 

 

 

36,459

 

Capitalized interest

 

2,393

 

 

 

 

2,369

 

 

 

11,945

 

 

 

6,196

 

Cash paid for income taxes

 

552

 

 

 

 

-

 

 

 

552

 

 

 

495

 

Other income (2) (4)

 

-

 

 

 

 

181

 

 

 

419

 

 

 

368

Distributable cash flow

$

105,735

 

 

 

$

80,516

 

 

$

380,529

 

 

$

309,945

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distributions declared (5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Limited partners

$

70,574

 

 

 

 

 

 

 

$

255,308

 

 

 

 

 

General partner

 

22,035

 

 

 

 

 

 

 

 

70,745

 

 

 

 

 

Total

$

92,609

 

 

 

 

 

 

 

$

326,053

 

 

 

 

Coverage ratio

 

1.14

 

x

 

 

 

 

 

 

1.17

 

x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Includes $56.2 million and $69.8 million of equity-based compensation associated with the Western Gas Holdings, LLC Equity Incentive Plan, as amended and restated, paid and contributed by Anadarko during the three months and year ended December 31, 2012, respectively.

(2)

Includes WES's 51% share prior to August 1, 2012, and its 75% share after August 1, 2012, of depreciation, amortization and impairments; other expense; cash paid for maintenance capital expenditures; and other income attributable to Chipeta.

(3)

Net of a prior period adjustment reclassifying $0.7 million from capital expenditures to operating expenses for the year ended December 31, 2012.

(4)

Excludes income of $0.4 million for each of the three months ended December 31, 2013 and 2012, and $1.6 million for each of the years ended December 31, 2013 and 2012, related to a component of a gas processing agreement accounted for as a capital lease.

(5)

Reflects distributions of $0.60 and $2.28 per unit declared for the three months and year ended December 31, 2013, respectively.

 

 

 

 

 

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

Adjusted EBITDA

WES defines Adjusted EBITDA as net income (loss) attributable to Western Gas Partners, LP, plus distributions from equity investees, non-cash equity-based compensation expense, interest expense, income tax expense, depreciation, amortization and impairments, and other expense, less income from equity investments, interest income, income tax benefit, and other income.

 

 

 

 

 

 

 

 

 

Three Months Ended
December 31,

 

 

Year Ended
December 31,

 

thousands

 

2013

 

 

2012

 

 

2013

 

 

2012

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

85,879

 

 

$

(9,118

)

 

$

275,136

 

 

$

134,421

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distributions from equity investees

 

 

6,573

 

 

 

5,057

 

 

 

22,136

 

 

 

20,660

 

 

Non-cash equity-based compensation expense (1)

 

 

912

 

 

 

57,101

 

 

 

3,575

 

 

 

73,508

 

 

Interest expense

 

 

14,314

 

 

 

11,942

 

 

 

51,797

 

 

 

42,060

 

 

Income tax expense

 

 

-

 

 

 

6,127

 

 

 

4,431

 

 

 

20,715

 

 

Depreciation, amortization and impairments (2)

 

 

38,724

 

 

 

36,772

 

 

 

143,375

 

 

 

118,279

 

 

Other expense (2)

 

 

175

 

 

 

-

 

 

 

175

 

 

 

1,665

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity income, net

 

 

11,527

 

 

 

5,359

 

 

 

23,732

 

 

 

16,111

 

 

Interest income, net - affiliates

 

 

4,225

 

 

 

4,225

 

 

 

16,900

 

 

 

16,900

 

 

Other income (2) (3)

 

 

-

 

 

 

181

 

 

 

419

 

 

 

368

 

 

Income tax benefit

 

 

1,801

 

 

 

-

 

 

 

1,801

 

 

 

-

 

Adjusted EBITDA

 

$

129,024

 

 

$

98,116

 

 

$

457,773

 

 

$

377,929

 

 

 

Reconciliation of Adjusted EBITDA to Net cash provided by operating activities

 

Adjusted EBITDA attributable to Western Gas Partners, LP

 

$

129,024

 

 

$

98,116

 

 

$

457,773

 

 

$

377,929

 

Adjusted EBITDA attributable to noncontrolling interests

 

 

3,986

 

 

 

3,505

 

 

 

13,348

 

 

 

17,214

 

 

Interest income (expense), net

 

 

(10,089

)

 

 

(7,717

)

 

 

(34,897

)

 

 

(25,160

)

 

Non-cash equity based compensation (income) expense(1)

 

 

45

 

 

 

(56,153

)

 

 

(54

)

 

 

(69,791

)

 

Debt-related amortization and other items, net

 

 

693

 

 

 

591

 

 

 

2,449

 

 

 

2,319

 

 

Current income tax (benefit) expense

 

 

280

 

 

 

2,421

 

 

 

(2,944

)

 

 

9,398

 

 

Other income (expense), net (3)

 

 

(171

)

 

 

183

 

 

 

253

 

 

 

(1,292

)

 

Distributions from equity investees less than (in excess of) equity income, net

 

 

4,954

 

 

 

302

 

 

 

1,596

 

 

 

(4,549

)

 

Changes in operating working capital:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable and natural gas imbalance receivable

 

 

(7,509

)

 

 

(23,883

)

 

 

(35,934

)

 

 

23,520

 

 

 

Accounts payable, accrued liabilities and natural gas imbalance payable

 

 

15,134

 

 

 

(24,216

)

 

 

21,952

 

 

 

5,045

 

 

 

Other

 

 

(9,695

)

 

 

1,290

 

 

 

(7,821

)

 

 

3,393

 

Net cash provided by (used in) operating activities

 

$

126,652

 

 

$

(5,561

)

 

$

415,721

 

 

$

338,026

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow information of Western Gas Partners, LP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

 

 

 

 

 

 

 

 

$

415,721

 

 

$

338,026

 

Net cash used in investing activities

 

 

 

 

 

 

 

 

 

$

(1,416,066

)

 

$

(1,249,942

)

Net cash provided by financing activities

 

 

 

 

 

 

 

 

 

$

681,092

 

 

$

1,105,338

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Includes $56.2 million and $69.8 million of equity-based compensation associated with the Western Gas Holdings, LLC Equity Incentive Plan, as amended and restated, paid and contributed by Anadarko during the three months and year ended December 31, 2012, respectively.

(2)

Includes WES's 51% share prior to August 1, 2012, and its 75% share after August 1, 2012, of depreciation, amortization and impairments; other expense; and other income attributable to Chipeta.

(3)

Excludes income of $0.4 million for each of the three months ended December 31, 2013 and 2012, and $1.6 million for each of the years ended December 31, 2013 and 2012, related to a component of a gas processing agreement accounted for as a capital lease.

 

 

 

 

 

 

 

Western Gas Partners, LP

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

(Unaudited)

 

 

 

 

 

Three Months Ended
December 31,

 

 

Year Ended
December 31,

 

thousands except per-unit amounts

 

2013

 

 

2012

 

 

2013

 

 

2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gathering, processing and transportation of natural gas and natural gas liquids

 

$

139,071

 

 

$

103,364

 

 

$

482,542

 

 

$

382,330

 

Natural gas, natural gas liquids and condensate sales

 

 

138,628

 

 

 

121,521

 

 

 

541,244

 

 

 

508,339

 

Equity income and other, net

 

 

12,922

 

 

 

5,982

 

 

 

29,709

 

 

 

19,918

 

Total revenues

 

 

290,621

 

 

 

230,867

 

 

 

1,053,495

 

 

 

910,587

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product

 

 

94,226

 

 

 

81,360

 

 

 

364,285

 

 

 

336,079

 

Operation and maintenance

 

 

47,492

 

 

 

36,802

 

 

 

168,657

 

 

 

140,106

 

General and administrative

 

 

7,523

 

 

 

63,589

 

 

 

29,751

 

 

 

99,212

 

Property and other taxes

 

 

4,724

 

 

 

4,690

 

 

 

23,244

 

 

 

19,688

 

Depreciation, amortization and impairments

 

 

39,365

 

 

 

37,345

 

 

 

145,916

 

 

 

120,608

 

Total operating expenses

 

 

193,330

 

 

 

223,786

 

 

 

731,853

 

 

 

715,693

 

Operating income

 

 

97,291

 

 

 

7,081

 

 

 

321,642

 

 

 

194,894

 

Interest income, net - affiliates

 

 

4,225

 

 

 

4,225

 

 

 

16,900

 

 

 

16,900

 

Interest expense

 

 

(14,314

)

 

 

(11,942

)

 

 

(51,797

)

 

 

(42,060

)

Other income

 

 

225

 

 

 

579

 

 

 

1,837

 

 

 

292

 

Income (loss) before income taxes

 

 

87,427

 

 

 

(57

)

 

 

288,582

 

 

 

170,026

 

Income tax (benefit) expense

 

 

(1,801

)

 

 

6,127

 

 

 

2,630

 

 

 

20,715

 

Net income (loss)

 

 

89,228

 

 

 

(6,184

)

 

 

285,952

 

 

 

149,311

 

Net income attributable to noncontrolling interests

 

 

3,349

 

 

 

2,934

 

 

 

10,816

 

 

 

14,890

 

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

 

$

85,879

 

 

$

(9,118

)

 

$

275,136

 

 

$

134,421

 

Limited partners' interest in net income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

85,879

 

 

$

(9,118

)

 

$

275,136

 

 

$

134,421

 

Pre-acquisition net (income) loss allocated to Anadarko

 

 

-

 

 

 

(7,853

)

 

 

(4,637

)

 

 

(27,435

)

General partner interest in net (income) loss

 

 

(21,900

)

 

 

(9,581

)

 

 

(69,633

)

 

 

(28,089

)

Limited partners' interest in net income (loss)

 

$

63,979

 

 

$

(26,552

)

 

$

200,866

 

 

$

78,897

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

0.56

 

 

$

(0.27

)

 

$

1.83

 

 

$

0.84

 

Weighted average common units outstanding - basic and diluted

 

 

113,825

 

 

 

97,832

 

 

 

109,872

 

 

 

93,936

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Western Gas Partners, LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

thousands except number of units

 

December 31,
2013

 

December 31,
2012

 

 

 

 

 

 

 

Current assets

 

$

194,810

 

$

477,212

Note receivable - Anadarko

 

 

260,000

 

 

260,000

Net property, plant and equipment

 

 

3,383,255

 

 

2,717,956

Other assets

 

 

429,962

 

 

294,754

Total assets

 

$

4,268,027

 

$

3,749,922

 

 

 

 

 

 

 

Current liabilities

 

$

190,460

 

$

185,306

Long-term debt

 

 

1,418,169

 

 

1,168,278

Asset retirement obligations and other

 

 

79,454

 

 

115,902

Total liabilities

 

$

1,688,083

 

$

1,469,486

 

 

 

 

 

 

 

Equity and partners' capital

 

 

 

 

 

 

Common units (117,322,812 and 104,660,553 units issued and outstanding at December 31, 2013 and 2012, respectively)

 

$

2,431,193

 

$

1,957,066

General partner units (2,394,345 and 2,135,930 units issued and outstanding at December 31, 2013 and 2012, respectively)

 

 

78,157

 

 

52,752

Net investment by Anadarko

 

 

-

 

 

199,960

Noncontrolling interests

 

 

70,594

 

 

70,658

Total liabilities, equity and partners' capital

 

$

4,268,027

 

$

3,749,922

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Western Gas Partners, LP

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(Unaudited)

 

 

 

 

 

Year Ended
December 31,

 

thousands

 

2013

 

 

2012

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net income

 

$

285,952

 

 

$

149,311

 

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

 

 

 

 

 

 

 

 

 

Depreciation, amortization and impairments

 

 

145,916

 

 

 

120,608

 

 

Change in other items, net

 

 

(16,147

)

 

 

68,107

 

Net cash provided by operating activities

 

$

415,721

 

 

$

338,026

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Capital expenditures

 

$

(646,471

)

 

$

(638,121

)

Contributions in aid of construction costs from affiliates

 

 

617

 

 

 

-

 

Acquisitions from affiliates

 

 

(476,711

)

 

 

(611,719

)

Acquisitions from third parties

 

 

(240,274

)

 

 

-

 

Investments in equity affiliates

 

 

(51,974

)

 

 

(862

)

Proceeds from the sale of assets to affiliates

 

 

85

 

 

 

760

 

Other

 

 

(1,338

)

 

 

-

 

Net cash used in investing activities

 

$

(1,416,066

)

 

$

(1,249,942

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Borrowings, net of debt issuance costs

 

$

957,503

 

 

$

1,041,648

 

Repayments of debt

 

 

(710,000

)

 

 

(549,000

)

Increase (decrease) in outstanding checks

 

 

(1,763

)

 

 

1,800

 

Proceeds from the issuance of common and general partner units, net of offering expenses

 

 

740,825

 

 

 

625,877

 

Distributions to unitholders

 

 

(299,101

)

 

 

(197,850

)

Contributions from noncontrolling interest owners

 

 

2,247

 

 

 

29,108

 

Distributions to noncontrolling interest owners

 

 

(13,127

)

 

 

(17,303

)

Net contributions from (distributions to) Anadarko

 

 

4,508

 

 

 

171,058

 

Net cash provided by financing activities

 

$

681,092

 

 

$

1,105,338

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

$

(319,253

)

 

$

193,422

 

Cash and cash equivalents at beginning of period

 

 

419,981

 

 

 

226,559

 

Cash and cash equivalents at end of period

 

$

100,728

 

 

$

419,981

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Western Gas Partners, LP

OPERATING STATISTICS

(Unaudited)

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

MMcf/d except per-unit amounts

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

 

 

Throughput

 

 

 

 

 

 

 

 

 

 

 

 

 

Gathering, treating and transportation(1)

 

 

1,974

 

 

1,610

 

 

1,803

 

 

1,601

 

Processing (2)

 

 

1,471

 

 

1,202

 

 

1,359

 

 

1,187

 

Equity investment (3)

 

 

193

 

 

232

 

 

206

 

 

235

 

 

Total throughput (4)

 

 

3,638

 

 

3,044

 

 

3,368

 

 

3,023

 

Throughput attributable to noncontrolling interests

 

 

172

 

 

151

 

 

168

 

 

228

 

Total throughput attributable to Western Gas Partners, LP

 

 

3,466

 

 

2,893

 

 

3,200

 

 

2,795

Gross margin per Mcf attributable to Western Gas Partners, LP (5)

 

$

0.60

 

$

0.55

 

$

0.58

 

$

0.54

 

 

 

 

 

 

 

 

 

 

 

 

 

                             

 

(1)

Excludes average NGL pipeline volumes of 25 MBbls/d and 24 MBbls/d for the three months ended December 31, 2013 and 2012, respectively, and 22 MBbls/d and 25 MBbls/d for the years ended December 31, 2013 and 2012, respectively. Includes 100% of Wattenberg system volumes for all periods presented, throughput beginning March 2013 attributable to the Anadarko-Operated Marcellus Interest and throughput beginning September 2013 attributable to OTTCO.

(2)

Consists of 100% of Chipeta, Hilight and Platte Valley system volumes, 100% of the Granger and Red Desert complex volumes, and 50% of Newcastle volumes.

(3)

Represents our 14.81% share of Fort Union and 22% share of Rendezvous gross volumes. Excludes our 10% share of average White Cliffs pipeline volumes consisting of 8 MBbls/d and 7 MBbls/d for the three months ended December 31, 2013 and 2012, respectively, and 7 MBbls/d and 6 MBbls/d for the years ended December 31, 2013 and 2012, respectively. Also excludes our 25% share of average Mont Belvieu JV fractionated volumes consisting of 30 MBbls/d and 8 MBbls/d for the three months and year ended December 31, 2013, respectively.

(4)

Includes affiliate, third-party and equity-investment volumes (as equity-investment volumes are defined in the above footnote).

(5)

Average for period. Calculated as gross margin, excluding the noncontrolling interest owners' proportionate share of revenues and cost of product and throughput, divided by total throughput attributable to WES (excluding throughput measured in barrels). Calculation includes gross margin attributable to our NGL pipelines, income attributable to our investments in Fort Union, White Cliffs, Rendezvous, and the Mont Belvieu JV, and volumes attributable to our investments in Fort Union and Rendezvous.

 

 

 

 

 

 

 

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, 2013

 

 

Distributions declared by Western Gas Partners, LP:

 

 

 

 

 

 

General partner interest

 

$

1,852

 

 

 

Incentive distribution rights

 

 

20,183

 

 

 

Common units held by WGP

 

 

29,578

 

 

Less:

 

 

 

 

 

 

Public company general and administrative expense

 

 

758

 

 

Cash available for distribution

 

$

50,855

 

 

 

 

 

 

 

 

Declared distribution per common unit

 

$

0.23125

 

 

 

 

 

 

 

 

Distributions declared by Western Gas Equity Partners, LP

 

$

50,620

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coverage ratio

 

 

1.00

 

x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Western Gas Equity Partners, LP

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

(Unaudited)

 

 

 

 

 

Three Months Ended
December 31,

 

 

Year Ended
December 31,

 

thousands except per-unit amounts

 

2013

 

 

2012

 

 

2013

 

 

2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gathering, processing and transportation of natural gas and natural gas liquids

 

$

139,071

 

 

$

103,364

 

 

$

482,542

 

 

$

382,330

 

Natural gas, natural gas liquids and condensate sales

 

 

138,628

 

 

 

121,521

 

 

 

541,244

 

 

 

508,339

 

Equity income and other, net

 

 

12,922

 

 

 

5,982

 

 

 

29,709

 

 

 

19,918

 

Total revenues

 

 

290,621

 

 

 

230,867

 

 

 

1,053,495

 

 

 

910,587

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product

 

 

94,226

 

 

 

81,360

 

 

 

364,285

 

 

 

336,079

 

Operation and maintenance

 

 

47,492

 

 

 

36,802

 

 

 

168,657

 

 

 

140,106

 

General and administrative

 

 

8,364

 

 

 

64,105

 

 

 

33,464

 

 

 

99,728

 

Property and other taxes

 

 

4,724

 

 

 

4,690

 

 

 

23,244

 

 

 

19,688

 

Depreciation, amortization and impairments

 

 

39,365

 

 

 

37,345

 

 

 

145,916

 

 

 

120,608

 

Total operating expenses

 

 

194,171

 

 

 

224,302

 

 

 

735,566

 

 

 

716,209

 

Operating income

 

 

96,450

 

 

 

6,565

 

 

 

317,929

 

 

 

194,378

 

Interest income, net - affiliates

 

 

4,225

 

 

 

4,225

 

 

 

16,900

 

 

 

16,900

 

Interest expense

 

 

(14,314

)

 

 

(11,942

)

 

 

(51,797

)

 

 

(42,060

)

Other income

 

 

249

 

 

 

579

 

 

 

1,935

 

 

 

292

 

Income (loss) before income taxes

 

 

86,610

 

 

 

(573

)

 

 

284,967

 

 

 

169,510

 

Income tax (benefit) expense

 

 

(1,851

)

 

 

5,119

 

 

 

2,580

 

 

 

48,909

 

Net income (loss)

 

 

88,461

 

 

 

(5,692

)

 

 

282,387

 

 

 

120,601

 

Net income (loss) attributable to noncontrolling interests

 

 

39,611

 

 

 

(12,077

)

 

 

122,173

 

 

 

59,181

 

Net income attributable to Western Gas Equity Partners, LP

 

$

48,850

 

 

$

6,385

 

 

$

160,214

 

 

$

61,420

 

Limited partners' interest in net income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Western Gas Equity Partners, LP

 

$

48,850

 

 

$

6,385

 

 

$

160,214

 

 

$

61,420

 

Results attributable to the pre-IPO period (1)

 

 

(49

)

 

 

(1,869

)

 

 

(49

)

 

 

(56,904

)

Pre-acquisition net (income) loss allocated to Anadarko

 

 

-

 

 

 

(1,707

)

 

 

(4,637

)

 

 

(1,707

)

Limited partners' interest in net income

 

$

48,801

 

 

$

2,809

 

 

$

155,528

 

 

$

2,809

 

Net income per common unit - basic and diluted (1)

 

$

0.22

 

 

$

0.01

 

 

$

0.71

 

 

$

0.01

 

Weighted average number of common units outstanding - basic and diluted (1)

 

 

218,896

 

 

 

218,896

 

 

 

218,896

 

 

 

218,896

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Includes financial results prior to WGP's IPO on December 12, 2012.

 

 

 

 

 

 

 

Western Gas Equity Partners, LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

thousands except number of units

 

December 31,
2013

 

December 31,
2012

 

 

 

 

 

 

 

Current assets

 

$

207,827

 

$

478,104

Note receivable - Anadarko

 

 

260,000

 

 

260,000

Net property, plant and equipment

 

 

3,383,255

 

 

2,717,956

Other assets

 

 

429,962

 

 

294,754

Total assets

 

$

4,281,044

 

$

3,750,814

 

 

 

 

 

 

 

Current liabilities

 

$

191,483

 

$

186,255

Long-term debt

 

 

1,418,169

 

 

1,168,278

Asset retirement obligations and other

 

 

79,454

 

 

115,902

Total liabilities

 

$

1,689,106

 

$

1,470,435

 

 

 

 

 

 

 

Equity and partners' capital

 

 

 

 

 

 

Common units (218,895,515 issued and outstanding at December 31, 2013 and 2012)

 

$

905,082

 

$

912,376

Net investment by Anadarko

 

 

-

 

 

199,960

Noncontrolling interests

 

 

1,686,856

 

 

1,168,043

Total liabilities, equity and partners' capital

 

$

4,281,044

 

$

3,750,814

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Western Gas Equity Partners, LP

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(Unaudited)

 

 

 

 

 

Year Ended
December 31,

 

thousands

 

2013

 

 

2012

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net income

 

$

282,387

 

 

$

120,601

 

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

 

 

 

 

 

 

 

 

 

Depreciation, amortization and impairments

 

 

145,916

 

 

 

120,608

 

 

Change in other items, net

 

 

(16,003

)

 

 

36,251

 

Net cash provided by operating activities

 

$

412,300

 

 

$

277,460

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Capital expenditures

 

$

(646,471

)

 

$

(638,121

)

Contributions in aid of construction costs from affiliates

 

 

617

 

 

 

-

 

Acquisitions from affiliates

 

 

(476,711

)

 

 

(611,719

)

Acquisitions from third parties

 

 

(240,274

)

 

 

-

 

Investments in equity affiliates

 

 

(51,974

)

 

 

(862

)

Proceeds from the sale of assets to affiliates

 

 

85

 

 

 

760

 

Other

 

 

(1,338

)

 

 

-

 

Net cash used in investing activities

 

$

(1,416,066

)

 

$

(1,249,942

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Borrowings, net of debt issuance costs

 

$

957,503

 

 

$

1,041,648

 

Repayments of debt

 

 

(710,000

)

 

 

(549,000

)

Increase (decrease) in outstanding checks

 

 

(1,763

)

 

 

1,800

 

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

 

 

725,050

 

 

 

211,932

 

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

 

 

(2,367

)

 

 

412,020

 

Contributions received from Chipeta noncontrolling interest owners (including Anadarko)

 

 

2,247

 

 

 

29,108

 

Distributions to Chipeta noncontrolling interest owners (including Anadarko)

 

 

(13,127

)

 

 

(17,303

)

Distributions to WES common unitholders

 

 

(130,706

)

 

 

(99,570

)

Distributions to WGP unitholders

 

 

(137,000

)

 

 

-

 

Net contributions from (distributions to) Anadarko

 

 

4,458

 

 

 

137,844

 

Net cash provided by financing activities

 

$

694,295

 

 

$

1,168,479

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

$

(309,471

)

 

$

195,997

 

Cash and cash equivalents at beginning of period

 

 

422,556

 

 

 

226,559

 

Cash and cash equivalents at end of period

 

$

113,085

 

 

$

422,556

 

 

WESTERN GAS CONTACT

Benjamin Fink, CFA
SVP, Chief Financial Officer and Treasurer
832.636.6010
Email Contact

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