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Western Gas Announces Second-Quarter 2016 Results
09/26/2016

HOUSTON, July 26, 2016 /PRNewswire/ -- Western Gas Partners, LP (NYSE: WES) ("WES" or the "Partnership") and Western Gas Equity Partners, LP (NYSE: WGP) ("WGP") today announced second-quarter 2016 financial and operating results.

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WESTERN GAS PARTNERS, LP

Net income (loss) available to limited partners for the second quarter of 2016 totaled $83.0 million, or $0.55 per common unit (diluted), with second-quarter 2016 Adjusted EBITDA(1) of $250.6 million and second-quarter 2016 Distributable cash flow(1) of $199.3 million.

WES previously declared a quarterly distribution of $0.830 per unit for the second quarter of 2016. This distribution represented a 2% increase over the prior quarter's distribution and an 11% increase over the second-quarter 2015 distribution of $0.750 per unit. The second-quarter 2016 Coverage ratio(1) of 1.22 times was based on the quarterly distribution of $0.830 per unit and was calculated by dividing the quarter's Distributable cash flow(1) by quarterly distributions declared payable to the general partner and common unitholders. Inclusion of $9.9 million(2) of the expected recoveries under WES's business interruption insurance in Distributable cash flow(1) would result in a ratio of 1.29 times.

(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.

(2)

Represents the midpoint of WES's anticipated range of $10 million to $15 million in reimbursable amounts for the quarter, less $2.6 million of proceeds received during the quarter which are included in Adjusted EBITDA.

"In addition to delivering another solid financial quarter, we reached several important milestones in the Delaware Basin. We resumed full service at Ramsey III, and also completed Ramsey IV on schedule," said Chief Executive Officer, Don Sinclair. "Furthermore, Ramsey V and related facilities are due to come online at the end of the third quarter."

Total throughput attributable to WES for natural gas assets for the second quarter of 2016 averaged 3.9 Bcf/d, which was 2% above the prior quarter and 12% below the second quarter of 2015(2). Total throughput for crude/NGL assets for the second quarter of 2016 averaged 187 MBbls/d, which was 2% above the prior quarter and 1% above the second quarter of 2015(2).

Capital expenditures attributable to WES, including equity investments but excluding acquisitions, totaled $116.3 million on a cash basis and $118.9 million on an accrual basis during the second quarter of 2016, with maintenance capital expenditures on a cash basis of $21.1 million, or 8% of Adjusted EBITDA(1). WES is adjusting its outlook ranges for full-year Adjusted EBITDA(1) to $930 million to $970 million(3), and for total capital expenditures (including equity investments but excluding acquisitions) to $490 million to $530 million.

WESTERN GAS EQUITY PARTNERS, LP

WGP indirectly owns the entire general partner interest in WES, 100% of the incentive distribution rights in WES and 50,132,046 WES common units. Net income (loss) available to limited partners for the second quarter of 2016 totaled $88.9 million, or $0.41 per common unit (diluted).

WGP previously declared a quarterly distribution of $0.43375 per unit for the second quarter of 2016. This distribution represented a 2% increase over the prior quarter's distribution and a 19% increase over the second-quarter 2015 distribution of $0.36375 per unit. WGP received distributions from WES of $96.0 million attributable to the second quarter and will pay $95.0 million in distributions for the same period. The excellent performance of WES's portfolio has reduced its need for additional equity, and WGP's 2016 distribution growth rate will therefore be 19% to 21% depending on the size and timing of additional WES equity issuances, if any.

(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.

(2)

Financial and operational information for the second quarter of 2015 has been recast for the acquisition of Springfield.

(3)

This press release contains a forward-looking estimate of the range of Adjusted EBITDA projected to be generated by WES in its 2016 fiscal year. A reconciliation of such estimated range to net cash provided by operating activities and net income is not provided because the items necessary to estimate such amounts are not reasonably accessible or estimable at this time.

CONFERENCE CALL TOMORROW AT 11 A.M. CDT

WES and WGP will host a joint conference call on Wednesday, July 27, 2016, at 11:00 a.m. Central Daylight Time (12:00 p.m. Eastern Daylight Time) to discuss second-quarter 2016 results. Individuals who would like to participate should dial 844-836-8745 (Domestic) or 412-317-5439 (International) approximately 15 minutes before the scheduled conference call time. Pre-registration is available through the investor relations page at www.westerngas.com. Pre-registrants will be issued a personal identification number to use when dialing in to the live conference call, which will enable the participant to bypass the operator and gain immediate access to the call. To access the live audio webcast of the conference call, please visit the investor relations section of the Partnership's website at www.westerngas.com. A replay of the conference call will also be available on the website for two weeks following the call.

Western Gas Partners, LP ("WES") is a growth-oriented Delaware master limited partnership formed by Anadarko Petroleum Corporation to acquire, own, develop and operate midstream energy assets. With midstream assets located in the Rocky Mountains, the Mid-Continent, North-central Pennsylvania and Texas, WES is engaged in the business of gathering, processing, compressing, treating and transporting natural gas, condensate, natural gas liquids and crude oil for Anadarko, as well as for 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 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 and Forms 10-Q 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 CONTACT
Jonathon E. VandenBrand
Director, Investor Relations
jon.vandenbrand@anadarko.com
832.636.1007

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

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

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

Distributable Cash Flow

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

 

   

Three Months Ended
June 30,

 

Six Months Ended
June 30,

thousands except Coverage ratio

 

2016

 

2015 (1)

 

2016

 

2015 (1)

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

 

$

164,521

   

$

132,343

   

$

280,581

   

$

(24,150)

 

Add:

               

Distributions from equity investees

 

24,491

   

25,902

   

49,130

   

47,572

 

Non-cash equity-based compensation expense

 

1,246

   

1,163

   

2,549

   

2,275

 

Interest expense, net (non-cash settled) (2)

 

(15,461)

   

4,190

   

(10,924)

   

5,610

 

Income tax (benefit) expense

 

326

   

12,246

   

6,959

   

24,516

 

Depreciation and amortization (3)

 

66,650

   

67,904

   

131,089

   

136,231

 

Impairments

 

2,403

   

1,620

   

8,921

   

274,244

 

Above-market component of swap extensions with Anadarko

 

9,552

   

   

16,365

   

 

Other expense (3)

 

56

   

   

56

   

 

Less:

               

Gain (loss) on divestiture and other, net

 

(1,907)

   

   

(2,539)

   

(6)

 

Equity income, net – affiliates

 

19,693

   

18,941

   

36,507

   

37,161

 

Cash paid for maintenance capital expenditures (3)

 

21,085

   

11,992

   

39,982

   

26,105

 

Capitalized interest

 

1,482

   

2,693

   

3,331

   

5,787

 

Cash paid for (reimbursement of) income taxes

 

   

   

67

   

(138)

 

Series A Preferred unit distributions

 

14,082

   

   

15,969

   

 

Other income (3)

 

   

68

   

122

   

137

 

Distributable cash flow

 

$

199,349

   

$

211,674

   

$

391,287

   

$

397,252

 

Distributions declared (4)

               

Limited partners – common units

 

$

108,458

       

$

214,951

     

General partner

 

54,369

       

106,781

     

Total

 

$

162,827

       

$

321,732

     

Coverage ratio

 

1.22

 

x

   

1.22

 

x

 
   

(1)

In March 2016, WES acquired Springfield Pipeline LLC ("Springfield") from Anadarko. Springfield owns a 50.1% interest in an oil gathering system and a gas gathering system, such interest being referred to as the "Springfield interest." Financial information has been recast to include the financial position and results attributable to the Springfield interest.

(2)

Includes accretion revisions related to the Deferred purchase price obligation - Anadarko associated with the acquisition of DBJV.

(3)

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

(4)

Reflects cash distributions of $0.830 and $1.645 per unit declared for the three and six months ended June 30, 2016, respectively.

 

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

Adjusted EBITDA Attributable to Western Gas Partners, LP

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

 

   

Three Months Ended
June 30,

 

Six Months Ended
June 30,

thousands

 

2016

 

2015 (1)

 

2016

 

2015 (1)

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

               

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

 

$

164,521

   

$

132,343

   

$

280,581

   

$

(24,150)

 

Add:

               

Distributions from equity investees

 

24,491

   

25,902

   

49,130

   

47,572

 

Non-cash equity-based compensation expense

 

1,246

   

1,163

   

2,549

   

2,275

 

Interest expense

 

12,883

   

27,604

   

44,919

   

50,564

 

Income tax expense

 

326

   

12,246

   

6,959

   

24,516

 

Depreciation and amortization (2)

 

66,650

   

67,904

   

131,089

   

136,231

 

Impairments

 

2,403

   

1,620

   

8,921

   

274,244

 

Other expense (2)

 

56

   

   

56

   

 

Less:

               

Gain (loss) on divestiture and other, net

 

(1,907)

   

   

(2,539)

   

(6)

 

Equity income, net – affiliates

 

19,693

   

18,941

   

36,507

   

37,161

 

Interest income – affiliates

 

4,225

   

4,225

   

8,450

   

8,450

 

Other income (2)

 

   

68

   

122

   

137

 

Adjusted EBITDA attributable to Western Gas Partners, LP

 

$

250,565

   

$

245,548

   

$

481,664

   

$

465,510

 
 

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

               

Adjusted EBITDA attributable to Western Gas Partners, LP

 

$

250,565

   

$

245,548

   

$

481,664

   

$

465,510

 

Adjusted EBITDA attributable to noncontrolling interest

 

3,456

   

3,463

   

7,133

   

7,335

 

Interest income (expense), net

 

(8,658)

   

(23,379)

   

(36,469)

   

(42,114)

 

Uncontributed cash-based compensation awards

 

(86)

   

(68)

   

(158)

   

(145)

 

Accretion and amortization of long-term obligations, net

 

(14,522)

   

4,958

   

(9,055)

   

7,070

 

Current income tax benefit (expense)

 

(198)

   

(11,673)

   

(4,979)

   

(18,134)

 

Other income (expense), net

 

(53)

   

71

   

71

   

142

 

Distributions from equity investments in excess of cumulative earnings – affiliates

 

(5,827)

   

(5,574)

   

(10,611)

   

(8,538)

 

Changes in operating working capital:

               

  Accounts receivable, net

 

(45,800)

   

(26,725)

   

(33,242)

   

(41,358)

 

  Accounts and imbalance payables and accrued liabilities, net

 

(20,205)

   

(8,389)

   

(2,227)

   

4,407

 

  Other

 

(1,309)

   

(744)

   

1,739

   

(1,854)

 

Net cash provided by (used in) operating activities

 

$

157,363

   

$

177,488

   

$

393,866

   

$

372,321

 

Cash flow information of Western Gas Partners, LP

               

Net cash provided by (used in) operating activities

         

$

393,866

   

$

372,321

 

Net cash provided by (used in) investing activities

         

(952,824)

   

(371,878)

 

Net cash provided by (used in) financing activities

         

618,692

   

20,271

 
   

(1)

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

(2)

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

                                   

 

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

Adjusted gross margin attributable to Western Gas Partners, LP

WES defines Adjusted gross margin as total revenues and other, less cost of product and reimbursements for electricity-related expenses recorded as revenue, plus distributions from equity investees and excluding the noncontrolling interest owner's proportionate share of revenue and cost of product.

 

   

Three Months Ended
June 30,

 

Six Months Ended
June 30,

thousands

 

2016

 

2015 (1)

 

2016

 

2015 (1)

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

               

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

 

$

294,661

   

$

293,560

   

$

571,190

   

$

564,806

 

Adjusted gross margin for crude/NGL assets

 

34,593

   

33,237

   

69,288

   

64,641

 

Adjusted gross margin attributable to Western Gas Partners, LP

 

329,254

   

326,797

   

640,478

   

629,447

 

Adjusted gross margin attributable to noncontrolling interest

 

4,183

   

4,661

   

8,604

   

9,469

 

Gain (loss) on divestiture and other, net

 

(1,907)

   

   

(2,539)

   

(6)

 

Proceeds from business interruption insurance claims

 

2,603

   

   

2,603

   

 

Equity income, net – affiliates

 

19,693

   

18,941

   

36,507

   

37,161

 

Reimbursed electricity-related charges recorded as revenues

 

14,869

   

13,221

   

30,537

   

25,031

 

Less:

               

Distributions from equity investees

 

24,491

   

25,902

   

49,130

   

47,572

 

Operation and maintenance

 

75,173

   

77,837

   

151,386

   

154,022

 

General and administrative

 

10,883

   

9,408

   

22,160

   

20,489

 

Property and other taxes

 

12,078

   

9,586

   

22,428

   

18,866

 

Depreciation and amortization

 

67,305

   

68,554

   

132,400

   

137,529

 

Impairments

 

2,403

   

1,620

   

8,921

   

274,244

 

Operating income (loss)

 

$

176,362

   

$

170,713

   

$

329,765

   

$

48,380

 
   

(1)

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

                                   

 

Western Gas Partners, LP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 
   

Three Months Ended
June 30,

 

Six Months Ended
June 30,

thousands except per-unit amounts

 

2016

 

2015 (1)

 

2016

 

2015 (1)

Revenues and other

               

Gathering, processing and transportation

 

$

301,136

   

$

290,900

   

$

595,140

   

$

561,168

 

Natural gas and natural gas liquids sales

 

126,993

   

174,202

   

215,549

   

339,874

 

Other

 

535

   

891

   

1,116

   

1,957

 

Total revenues and other

 

428,664

   

465,993

   

811,805

   

902,999

 

Equity income, net – affiliates

 

19,693

   

18,941

   

36,507

   

37,161

 

Operating expenses

               

Cost of product

 

104,849

   

147,216

   

181,316

   

286,624

 

Operation and maintenance

 

75,173

   

77,837

   

151,386

   

154,022

 

General and administrative

 

10,883

   

9,408

   

22,160

   

20,489

 

Property and other taxes

 

12,078

   

9,586

   

22,428

   

18,866

 

Depreciation and amortization

 

67,305

   

68,554

   

132,400

   

137,529

 

Impairments

 

2,403

   

1,620

   

8,921

   

274,244

 

Total operating expenses

 

272,691

   

314,221

   

518,611

   

891,774

 

Gain (loss) on divestiture and other, net

 

(1,907)

   

   

(2,539)

   

(6)

 

Proceeds from business interruption insurance claims

 

2,603

   

   

2,603

   

 

Operating income (loss)

 

176,362

   

170,713

   

329,765

   

48,380

 

Interest income – affiliates

 

4,225

   

4,225

   

8,450

   

8,450

 

Interest expense

 

(12,883)

   

(27,604)

   

(44,919)

   

(50,564)

 

Other income (expense), net

 

(53)

   

71

   

71

   

142

 

Income (loss) before income taxes

 

167,651

   

147,405

   

293,367

   

6,408

 

Income tax (benefit) expense

 

326

   

12,246

   

6,959

   

24,516

 

Net income (loss)

 

167,325

   

135,159

   

286,408

   

(18,108)

 

Net income attributable to noncontrolling interest

 

2,804

   

2,816

   

5,827

   

6,042

 

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

 

$

164,521

   

$

132,343

   

$

280,581

   

$

(24,150)

 

Limited partners' interest in net income (loss):

               

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

 

$

164,521

   

$

132,343

   

$

280,581

   

$

(24,150)

 

Pre-acquisition net (income) loss allocated to Anadarko

 

   

(18,719)

   

(11,326)

   

(43,758)

 

Series A Preferred units interest in net (income) loss

 

(23,121)

   

   

(25,450)

   

 

General partner interest in net (income) loss

 

(58,381)

   

(45,971)

   

(113,781)

   

(83,148)

 

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

 

$

83,019

   

$

67,653

   

$

130,024

   

$

(151,056)

 

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

 

$

0.55

   

$

0.46

   

$

0.86

   

$

(1.14)

 

Weighted-average common units outstanding – basic

 

130,669

   

128,481

   

129,830

   

128,111

 

Weighted-average common units outstanding – diluted

 

163,227

   

139,504

   

153,291

   

139,092

 
   

(1)

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

 

Western Gas Partners, LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

thousands except number of units

 

June 30,
2016

 

December 31,
2015 
(1)

Current assets

 

$

385,253

   

$

299,217

 

Note receivable – Anadarko

 

260,000

   

260,000

 

Net property, plant and equipment

 

5,002,144

   

4,858,779

 

Other assets

 

1,856,705

   

1,883,201

 

Total assets

 

$

7,504,102

   

$

7,301,197

 

Current liabilities

 

$

241,565

   

$

235,488

 

Long-term debt

 

2,932,004

   

2,690,651

 

Asset retirement obligations and other

 

143,159

   

268,356

 

Deferred purchase price obligation – Anadarko

 

29,150

   

188,674

 

Total liabilities

 

$

3,345,878

   

$

3,383,169

 

Equity and partners' capital

       

Series A Preferred units (21,922,831 and zero units issued and outstanding at June 30, 2016, and December 31, 2015, respectively)

 

$

617,094

   

$

 

Common units (130,671,970 and 128,576,965 units issued and outstanding at June 30, 2016, and December 31, 2015, respectively)

 

2,613,806

   

2,588,991

 

Class C units (11,946,008 and 11,411,862 units issued and outstanding at June 30, 2016, and December 31, 2015, respectively)

 

729,731

   

710,891

 

General partner units (2,583,068 units issued and outstanding at June 30, 2016, and December 31, 2015)

 

131,842

   

120,164

 

Net investment by Anadarko

 

   

430,598

 

Noncontrolling interest

 

65,751

   

67,384

 

Total liabilities, equity and partners' capital

 

$

7,504,102

   

$

7,301,197

 
   

(1)

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

                   

 

Western Gas Partners, LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 
   

Six Months Ended
June 30,

thousands

 

2016

 

2015 (1)

Cash flows from operating activities

       

Net income (loss)

 

$

286,408

   

$

(18,108)

 

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

       

Depreciation and amortization

 

132,400

   

137,529

 

Impairments

 

8,921

   

274,244

 

(Gain) loss on divestiture and other, net

 

2,539

   

6

 

Change in other items, net

 

(36,402)

   

(21,350)

 

Net cash provided by (used in) operating activities

 

$

393,866

   

$

372,321

 

Cash flows from investing activities

       

Capital expenditures

 

$

(255,923)

   

$

(361,798)

 

Contributions in aid of construction costs from affiliates

 

3,854

   

 

Acquisitions from affiliates

 

(715,199)

   

(9,056)

 

Acquisitions from third parties

 

   

(3,514)

 

Investments in equity affiliates

 

139

   

(6,770)

 

Distributions from equity investments in excess of cumulative earnings – affiliates

 

10,611

   

8,538

 

Proceeds from the sale of assets to affiliates

 

613

   

700

 

Proceeds from the sale of assets to third parties

 

137

   

22

 

Proceeds from property insurance claims

 

2,944

   

 

Net cash provided by (used in) investing activities

 

$

(952,824)

   

$

(371,878)

 

Cash flows from financing activities

       

Borrowings, net of debt issuance costs

 

$

530,000

   

$

769,694

 

Repayments of debt

 

(290,000)

   

(520,000)

 

Increase (decrease) in outstanding checks

 

(1,314)

   

(2,938)

 

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

 

25,000

   

57,376

 

Proceeds from the issuance of Series A Preferred units, net of offering expenses

 

686,940

   

 

Distributions to unitholders

 

(313,380)

   

(259,247)

 

Distributions to noncontrolling interest owner

 

(7,460)

   

(7,175)

 

Net contributions from (distributions to) Anadarko

 

(27,459)

   

(17,439)

 

Above-market component of swap extensions with Anadarko

 

16,365

   

 

Net cash provided by (used in) financing activities

 

$

618,692

   

$

20,271

 

Net increase (decrease) in cash and cash equivalents

 

$

59,734

   

$

20,714

 

Cash and cash equivalents at beginning of period

 

98,033

   

67,054

 

Cash and cash equivalents at end of period

 

$

157,767

   

$

87,768

 
   

(1)

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

                     

 

Western Gas Partners, LP

OPERATING STATISTICS

(Unaudited)

 
   

Three Months Ended
June 30,

 

Six Months Ended
June 30,

   

2016

 

2015 (1)

 

2016

 

2015 (1)

Throughput for natural gas assets (MMcf/d)

               

Gathering, treating and transportation

 

1,508

   

1,920

   

1,553

   

1,942

 

Processing

 

2,320

   

2,465

   

2,226

   

2,362

 

Equity investment (2)

 

170

   

172

   

178

   

169

 

  Total throughput for natural gas assets

 

3,998

   

4,557

   

3,957

   

4,473

 

  Throughput attributable to noncontrolling interest for natural gas assets

 

128

   

159

   

132

   

161

 

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

 

3,870

   

4,398

   

3,825

   

4,312

 

Throughput for crude/NGL assets (MBbls/d)

               

Gathering, treating and transportation

 

59

   

74

   

59

   

75

 

Equity investment (3)

 

128

   

111

   

127

   

109

 

  Total throughput for crude/NGL assets

 

187

   

185

   

186

   

184

 

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

 

$

0.84

   

$

0.73

   

$

0.82

   

$

0.72

 

Adjusted gross margin per Bbl for crude/NGL assets (5)

 

2.03

   

1.98

   

2.05

   

1.95

 
                                 
   

(1)

Throughput and adjusted gross margin have been recast to include results attributable to the Springfield interest.

(2)

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

(3)

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

(4)

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

(5)

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

 

Western Gas Equity Partners, LP

CALCULATION OF CASH AVAILABLE FOR DISTRIBUTION

(Unaudited)

 

thousands except per-unit amount and Coverage ratio

 

Three Months Ended
June 30, 2016

Distributions declared by Western Gas Partners, LP:

   

General partner interest

 

$

3,156

 

Incentive distribution rights

 

51,213

 

Common units held by WGP

 

41,610

 

Less:

   

Public company general and administrative expense

 

1,004

 

Interest expense

 

547

 

Cash available for distribution

 

$

94,428

 

Declared distribution per common unit

 

$

0.43375

 

Distributions declared by Western Gas Equity Partners, LP

 

$

94,958

 

Coverage ratio

 

0.99

x

 

Western Gas Equity Partners, LP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 
   

Three Months Ended
June 30,

 

Six Months Ended
June 30,

thousands except per-unit amounts

 

2016

 

2015 (1)

 

2016

 

2015 (1)

Revenues and other

               

Gathering, processing and transportation

 

$

301,136

   

$

290,900

   

$

595,140

   

$

561,168

 

Natural gas and natural gas liquids sales

 

126,993

   

174,202

   

215,549

   

339,874

 

Other

 

535

   

891

   

1,116

   

1,957

 

Total revenues and other

 

428,664

   

465,993

   

811,805

   

902,999

 

Equity income, net – affiliates

 

19,693

   

18,941

   

36,507

   

37,161

 

Operating expenses

               

Cost of product

 

104,849

   

147,216

   

181,316

   

286,624

 

Operation and maintenance

 

75,173

   

77,837

   

151,386

   

154,022

 

General and administrative

 

11,887

   

10,183

   

24,402

   

22,099

 

Property and other taxes

 

12,093

   

9,612

   

22,443

   

18,892

 

Depreciation and amortization

 

67,305

   

68,554

   

132,400

   

137,529

 

Impairments

 

2,403

   

1,620

   

8,921

   

274,244

 

Total operating expenses

 

273,710

   

315,022

   

520,868

   

893,410

 

Gain (loss) on divestiture and other, net

 

(1,907)

   

   

(2,539)

   

(6)

 

Proceeds from business interruption insurance claims

 

2,603

   

   

2,603

   

 

Operating income (loss)

 

175,343

   

169,912

   

327,508

   

46,744

 

Interest income – affiliates

 

4,225

   

4,225

   

8,450

   

8,450

 

Interest expense

 

(13,429)

   

(27,604)

   

(45,568)

   

(50,566)

 

Other income (expense), net

 

(36)

   

80

   

105

   

160

 

Income (loss) before income taxes

 

166,103

   

146,613

   

290,495

   

4,788

 

Income tax (benefit) expense

 

326

   

12,246

   

6,959

   

24,516

 

Net income (loss)

 

165,777

   

134,367

   

283,536

   

(19,728)

 

Net income (loss) attributable to noncontrolling interests

 

76,914

   

46,716

   

112,857

   

(91,007)

 

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

 

$

88,863

   

$

87,651

   

$

170,679

   

$

71,279

 

Limited partners' interest in net income (loss):

               

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

 

$

88,863

   

$

87,651

   

$

170,679

   

$

71,279

 

Pre-acquisition net (income) loss allocated to Anadarko

 

   

(18,719)

   

(11,326)

   

(43,758)

 

Limited partners' interest in net income (loss)

 

$

88,863

   

$

68,932

   

$

159,353

   

$

27,521

 

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

 

$

0.41

   

$

0.31

   

$

0.73

   

$

0.13

 

Weighted-average common units outstanding – basic and diluted

 

218,921

   

218,912

   

218,920

   

218,911

 
   

(1)

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

                                   

 

Western Gas Equity Partners, LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

thousands except number of units

 

June 30,
2016

 

December 31,
2015 
(1)

Current assets

 

$

387,167

   

$

301,364

 

Note receivable – Anadarko

 

260,000

   

260,000

 

Net property, plant and equipment

 

5,002,144

   

4,858,779

 

Other assets

 

1,858,502

   

1,883,201

 

Total assets

 

$

7,507,813

   

$

7,303,344

 

Current liabilities

 

$

241,706

   

$

235,565

 

Long-term debt

 

2,960,004

   

2,690,651

 

Asset retirement obligations and other

 

143,159

   

268,356

 

Deferred purchase price obligation – Anadarko

 

29,150

   

188,674

 

Total liabilities

 

$

3,374,019

   

$

3,383,246

 

Equity and partners' capital

       

Common units (218,922,303 and 218,919,380 units issued and outstanding at June 30, 2016, and December 31, 2015, respectively)

 

$

1,052,619

   

$

1,060,842

 

Net investment by Anadarko

 

   

430,598

 

Noncontrolling interests

 

3,081,175

   

2,428,658

 

Total liabilities, equity and partners' capital

 

$

7,507,813

   

$

7,303,344

 
   

(1)

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

                   

 

Western Gas Equity Partners, LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 
   

Six Months Ended
June 30,

thousands

 

2016

 

2015 (1)

Cash flows from operating activities

       

Net income (loss)

 

$

283,536

   

$

(19,728)

 

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

       

Depreciation and amortization

 

132,400

   

137,529

 

Impairments

 

8,921

   

274,244

 

(Gain) loss on divestiture and other, net

 

2,539

   

6

 

Change in other items, net

 

(35,581)

   

(20,828)

 

Net cash provided by (used in) operating activities

 

$

391,815

   

$

371,223

 

Cash flows from investing activities

       

Capital expenditures

 

$

(255,923)

   

$

(361,798)

 

Contributions in aid of construction costs from affiliates

 

3,854

   

 

Acquisitions from affiliates

 

(715,199)

   

(9,056)

 

Acquisitions from third parties

 

   

(3,514)

 

Investments in equity affiliates

 

139

   

(6,770)

 

Distributions from equity investments in excess of cumulative earnings – affiliates

 

10,611

   

8,538

 

Proceeds from the sale of assets to affiliates

 

613

   

700

 

Proceeds from the sale of assets to third parties

 

137

   

22

 

Proceeds from property insurance claims

 

2,944

   

 

Net cash provided by (used in) investing activities

 

$

(952,824)

   

$

(371,878)

 

Cash flows from financing activities

       

Borrowings, net of debt issuance costs

 

$

556,017

   

$

769,694

 

Repayments of debt

 

(290,000)

   

(521,150)

 

Increase (decrease) in outstanding checks

 

(1,314)

   

(2,938)

 

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

 

   

57,376

 

Proceeds from the issuance of WES Series A Preferred units, net of offering expenses

 

686,940

   

 

Distributions to WGP unitholders

 

(181,156)

   

(143,386)

 

Distributions to Chipeta noncontrolling interest owner

 

(7,460)

   

(7,175)

 

Distributions to noncontrolling interest owners of WES

 

(130,947)

   

(112,278)

 

Net contributions from (distributions to) Anadarko

 

(27,459)

   

(17,439)

 

Above-market component of swap extensions with Anadarko

 

16,365

   

 

Net cash provided by (used in) financing activities

 

$

620,986

   

$

22,704

 

Net increase (decrease) in cash and cash equivalents

 

$

59,977

   

$

22,049

 

Cash and cash equivalents at beginning of period

 

99,694

   

67,213

 

Cash and cash equivalents at end of period

 

$

159,671

   

$

89,262

 
   

(1)

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

                     

 

SOURCE Western Gas

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