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WES Investors

Western Gas Announces Fourth-Quarter And Full-Year 2018 Results
REAFFIRMS 2019 OUTLOOK

HOUSTON, Feb. 14, 2019 /PRNewswire/ -- Western Gas Partners, LP (NYSE: WES) ("WES" or the "Partnership") and Western Gas Equity Partners, LP (NYSE: WGP) ("WGP") today announced fourth-quarter and full-year 2018 financial and operating results.

WESTERN GAS PARTNERS, LP

Net income (loss) available to limited partners for 2018 totaled $99.2 million, or $0.55 per common unit (diluted), with full-year 2018 Adjusted EBITDA(1) of $1.2 billion and full-year 2018 Distributable cash flow(1) of $958.7 million. Net income (loss) available to limited partners for the fourth quarter of 2018 totaled $18.7 million, or $0.10 per common unit (diluted), with fourth-quarter 2018 Adjusted EBITDA(1) of $347.5 million and fourth-quarter 2018 Distributable cash flow(1) of $257.3 million. These results were primarily impacted by lower than anticipated throughput and margins at our West Texas complex caused by the combined effect of: (i) unplanned weather-related and operational downtime in the field, (ii) operational constraints downstream of the West Texas complex, and (iii) less than optimal recoveries partially associated with the startup of Mentone Train I. Additionally, Adjusted EBITDA(1) includes a non-cash net increase to revenue of $27 million associated with the revenue recognition accounting standard adopted effective January 1, 2018 for certain cost of service contracts, which will be recognized as cash over the life of the applicable contracts.

"The Partnership remains acutely focused on closing the announced simplification transaction and strategic asset acquisition and delivering on our 2019 growth expectations," said Chief Executive Officer, Robin Fielder. "In 2018 we successfully completed the majority of our Delaware basin gathering backbone and placed into service the first train at the Mentone processing facility. With the premier footprint, scalable capacity, and operational leverage of our assets in the Delaware and DJ basins, we remain excited about the future growth and reiterate our full-year 2019 guidance announced in November."

WES paid a quarterly distribution of $0.980 per unit for the fourth quarter of 2018. This distribution represented a 2% increase over the prior quarter's distribution and a 7% increase over the fourth-quarter 2017 distribution. The full-year 2018 distribution of $3.830 per unit represented a 7% increase over the full-year 2017 distribution of $3.590 per unit. The fourth-quarter 2018 Coverage ratio(1) of 1.10 times was based on the quarterly distribution of $0.980 per unit. The Partnership's Coverage ratio(1) for the full-year 2018 was 1.05 times.

Total throughput attributable to WES for natural gas assets for the fourth quarter of 2018 averaged 3.9 Bcf/d, which was 2% higher than the prior quarter and 13% higher than the fourth quarter of 2017. Total throughput for crude oil, NGLs and produced water assets for the fourth quarter of 2018 averaged 434 MBbls/d, which was 3% higher than the prior quarter and 81% higher than the fourth quarter of 2017. For full-year 2018, total throughput attributable to WES for natural gas assets averaged 3.8 Bcf/d, which was 6% higher than the prior-year average. For full-year 2018, total throughput for crude oil, NGLs and produced water assets averaged 365 MBbls/d, which was 82% higher than the prior-year average.

Capital expenditures attributable to WES, including equity investments but excluding acquisitions and capitalized interest, totaled $303.7 million on a cash basis during the fourth quarter of 2018, with maintenance capital expenditures on a cash basis of $29.9 million. For full-year 2018, capital expenditures attributable to WES, including equity investments but excluding acquisitions and capitalized interest, totaled $1,304 million on a cash basis, with maintenance capital expenditures on a cash basis of $91.1 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 2018 totaled $369.4 million, or $1.69 per common unit (diluted). Net income (loss) available to limited partners for the fourth quarter of 2018 totaled $93.4 million, or $0.43 per common unit (diluted).

WGP previously declared a quarterly distribution of $0.6025 per unit for the fourth quarter of 2018. This distribution represented a 1% increase over the prior quarter's distribution and a 10% increase over the fourth-quarter 2017 distribution. The full-year 2018 distribution of $2.34875 per unit represented a 12% increase over the full-year 2017 distribution of $2.1050 per unit. WGP received distributions from WES of $134.4 million attributable to the fourth quarter of 2018 and will pay $131.9 million in distributions for the same period.

     

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

SIMPLIFICATION TRANSACTION AND STRATEGIC ACQUISITION

The special meeting of WES unitholders to vote on the WGP and WES merger transaction will be held on February 27, 2019. WGP and WES expect the merger and strategic asset acquisition transactions to close during the first quarter of 2019, subject to certain closing conditions under the terms of the merger agreement, including receipt of the required approval by WES's unitholders. Upon closing of the transactions, and as part of the merger, WGP will change its name to Western Midstream Partners, LP and its common units will trade on the New York Stock Exchange under the "WES" ticker symbol.

CONFERENCE CALL TOMORROW AT 11 A.M. CST

WES and WGP will host a joint conference call on Friday, February 15, 2019, at 11:00 a.m. Central Standard Time (12:00 p.m. Eastern Standard Time) to discuss fourth-quarter and full-year 2018 results. Individuals who would like to participate should dial 877-883-0383 (Domestic) or 412-902-6506 (International) approximately 15 minutes before the scheduled conference call time, and enter participant access code 8494579. 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.

ABOUT WESTERN GAS

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 assets. With midstream assets located in the Rocky Mountains, North-central Pennsylvania, Texas and New Mexico, WES is engaged in the business of gathering, compressing, treating, processing and transporting natural gas; gathering, stabilizing and transporting condensate, natural gas liquids and crude oil; and gathering and disposing of produced water for Anadarko, as well as for third-party customers. In addition, in its capacity as a processor of natural gas, WES also buys and sells natural gas, NGLs and condensate on behalf of itself and as agent for its customers under certain of its contracts.

Western Gas Equity Partners, LP ("WGP") is a Delaware master limited partnership formed by Anadarko Petroleum Corporation 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.

Important Information for Investors and Unitholders

This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.

In connection with the proposed merger agreement and the transactions contemplated thereby (the "Simplification Transaction"), WGP filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-4, which includes a prospectus of WGP and a proxy statement of WES. WES and WGP also plan to file other documents with the Commission regarding the proposed Simplification Transaction. WES mailed a definitive proxy statement/prospectus to the unitholders of WES on January 28, 2019. INVESTORS AND UNITHOLDERS OF WES ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER DOCUMENTS RELATING TO THE PROPOSED SIMPLIFICATION TRANSACTION THAT HAVE BEEN OR WILL BE FILED WITH THE COMMISSION CAREFULLY AND IN THEIR ENTIRETY AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED SIMPLIFICATION TRANSACTION. Investors and unitholders will be able to obtain free copies of the proxy statement/prospectus and other documents containing important information about WES and WGP from the Commission, through the website maintained by the Commission at http://www.sec.gov. Copies of the documents filed with the Commission by WES and WGP will be available free of charge on their internet website at www.westerngas.com or by contacting their Investor Relations Department at 832-636-6000.

Participants in the Solicitation

WES, WGP, their respective general partners and their respective general partners' respective directors and certain of their executive officers may be deemed to be participants in the solicitation of proxies from the unitholders of WES in connection with the proposed Simplification Transaction. Information about the directors and executive officers of WES is set forth in WES's Annual Report on Form 10-K which was filed with the Commission on February 16, 2018. Information about the directors and executive officers of WGP is set forth in WGP's Annual Report on Form 10-K which was filed with the Commission on February 16, 2018. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, are contained in the proxy statement/prospectus and other relevant materials to be filed with the Commission when they become available. Free copies of these documents can be obtained using the contact information above.

Cautionary Statement Regarding Forward-Looking Statements

This news release contains forward-looking statements. For example, statements regarding future financial performance, future competitive positioning and business synergies, future acquisition cost savings, future market demand, future benefits to unitholders, future economic and industry conditions, the proposed Simplification Transaction (including its benefits, results, effects and timing) and whether and when the Simplification Transaction will be consummated, are forward-looking statements within the meaning of federal securities laws. WES, WGP and their respective general 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. Such factors include, but are not limited to:  the failure of the unitholders of WES to approve the proposed Simplification Transaction; the risk that the conditions to the closing of the proposed Simplification Transaction are not satisfied; the risk that regulatory approvals required for the proposed Simplification Transaction are not obtained or are obtained subject to conditions that are not anticipated; potential adverse reactions or changes to business relationships resulting from the announcement or completion of the proposed Simplification Transaction; uncertainties as to the timing of the proposed Simplification Transaction; competitive responses to the proposed Simplification Transaction; the inability to obtain or delay in obtaining cost savings and synergies from the proposed Simplification Transaction; unexpected costs, charges or expenses resulting from the proposed Simplification Transaction; the outcome of pending or potential litigation; the inability to retain key personnel; uncertainty of the expected financial performance of WGP following completion of the proposed Simplification Transaction; and any changes in general economic and/or industry specific conditions.

WES and WGP caution that the foregoing list of factors is not exclusive. Additional information concerning these and other risk factors is contained in WES's and WGP's most recently filed Annual Reports on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other Commission filings, which are available at the Commission's website, http://www.sec.gov. All subsequent written and oral forward-looking statements concerning WES, WGP, the proposed Simplification Transaction or other matters attributable to WES and WGP or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above. Each forward-looking statement speaks only as of the date of the particular statement. Except as required by law, WES, WGP and their respective general partners undertake no obligation to publicly update or revise any forward-looking statements.

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

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

Below are reconciliations of (i) net income (loss) attributable to Western Gas Partners, LP (GAAP) to WES's Distributable cash flow (non-GAAP), (ii) net income (loss) attributable to Western Gas Partners, LP (GAAP) and net cash provided by operating activities (GAAP) to Adjusted EBITDA attributable to Western Gas Partners, LP ("Adjusted EBITDA") (non-GAAP), and (iii) operating income (loss) (GAAP) to Adjusted gross margin attributable to Western Gas Partners, LP ("Adjusted gross margin") (non-GAAP), as required under Regulation G of the Securities Exchange Act of 1934. Management believes that WES's Distributable cash flow, Adjusted EBITDA, Adjusted gross margin, and Coverage ratio are widely accepted financial indicators of WES's financial performance compared to other publicly traded partnerships and are useful in assessing its ability to incur and service debt, fund capital expenditures and make distributions. Distributable cash flow, Adjusted EBITDA, Adjusted gross margin and Coverage ratio, as defined by WES, may not be comparable to similarly titled measures used by other companies. Therefore, WES's Distributable cash flow, Adjusted EBITDA, Adjusted gross margin and Coverage ratio should be considered in conjunction with net income (loss) attributable to Western Gas Partners, LP 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 Service revenues – fee based recognized in Adjusted EBITDA (less than) in excess of customer billings, net cash paid (or to be paid) for interest expense (including amortization of deferred debt issuance costs originally paid in cash, offset by non-cash capitalized interest), maintenance capital expenditures, Series A Preferred unit distributions and income taxes.

 

Three Months Ended
December 31,

 

Year Ended
December 31,

thousands except Coverage ratio

2018

 

2017

 

2018

 

2017

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

$

109,058

   

$

148,637

   

$

445,775

   

$

567,483

 

Add:

             

Distributions from equity investments

57,982

   

29,897

   

169,906

   

110,465

 

Non-cash equity-based compensation expense

1,480

   

1,468

   

7,032

   

4,947

 

Non-cash settled interest expense, net (1)

   

   

   

71

 

Income tax (benefit) expense

(355)

   

(39)

   

2,946

   

4,866

 

Depreciation and amortization (2)

98,637

   

73,874

   

334,645

   

288,087

 

Impairments (2)

75,629

   

8,295

   

226,950

   

178,374

 

Above-market component of swap agreements with Anadarko

10,896

   

11,832

   

51,618

   

58,551

 

Other expense (2)

8,143

   

5

   

8,327

   

145

 

Less:

             

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

14,045

   

   

14,581

   

 

Gain (loss) on divestiture and other, net

961

   

(2,629)

   

1,312

   

132,388

 

Equity income, net – affiliates

50,272

   

22,486

   

153,024

   

85,194

 

Cash paid for maintenance capital expenditures (2)

29,892

   

16,569

   

91,054

   

49,684

 

Capitalized interest

6,489

   

2,835

   

23,521

   

6,826

 

Cash paid for (reimbursement of) income taxes

2,495

   

1,005

   

2,408

   

1,194

 

Series A Preferred unit distributions

   

   

   

7,453

 

Other income (2)

   

323

   

2,592

   

1,283

 

Distributable cash flow

$

257,316

   

$

233,380

   

$

958,707

   

$

928,967

 

Distributions declared (3)

             

Limited partners – common units

$

149,557

       

$

584,487

     

General partner

85,230

       

327,363

     

Total

$

234,787

       

$

911,850

     

Coverage ratio

1.10

 

x

   

1.05

 

x

 
   

(1)

Includes amounts related to the Deferred purchase price obligation - Anadarko.

(2)

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

(3)

Reflects cash distributions of $0.980 and $3.830 per unit declared for the three months and year ended December 31, 2018, 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 investments, non-cash equity-based compensation expense, interest expense, income tax expense, depreciation and amortization, impairments, and other expense (including lower of cost or market inventory adjustments recorded in cost of product), less gain (loss) on divestiture and other, net, income from equity investments, interest income, income tax benefit, and other income.

 

Three Months Ended
December 31,

 

Year Ended
December 31,

thousands

2018

 

2017

 

2018

 

2017

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

$

109,058

   

$

148,637

   

$

445,775

   

$

567,483

 

Add:

             

Distributions from equity investments

57,982

   

29,897

   

169,906

   

110,465

 

Non-cash equity-based compensation expense

1,480

   

1,468

   

7,032

   

4,947

 

Interest expense

52,345

   

35,592

   

184,008

   

142,386

 

Income tax expense

   

   

3,301

   

4,905

 

Depreciation and amortization (1)

98,637

   

73,874

   

334,645

   

288,087

 

Impairments (1)

75,629

   

8,295

   

226,950

   

178,374

 

Other expense (1)

8,143

   

5

   

8,327

   

145

 

Less:

             

Gain (loss) on divestiture and other, net

961

   

(2,629)

   

1,312

   

132,388

 

Equity income, net – affiliates

50,272

   

22,486

   

153,024

   

85,194

 

Interest income – affiliates

4,225

   

4,225

   

16,900

   

16,900

 

Other income (1)

   

323

   

2,592

   

1,283

 

Income tax benefit

355

   

39

   

355

   

39

 

Adjusted EBITDA attributable to Western Gas Partners, LP

$

347,461

   

$

273,324

   

$

1,205,761

   

$

1,060,988

 

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

             

Net cash provided by operating activities

$

268,912

   

$

256,396

   

$

1,020,634

   

$

901,495

 

Interest (income) expense, net

48,120

   

31,367

   

167,108

   

125,486

 

Uncontributed cash-based compensation awards

(53)

   

119

   

879

   

25

 

Accretion and amortization of long-term obligations, net

(1,259)

   

(1,060)

   

(5,142)

   

(4,254)

 

Current income tax (benefit) expense

233

   

1,385

   

480

   

2,408

 

Other (income) expense, net (2)

(408)

   

(330)

   

(3,017)

   

(1,299)

 

Distributions from equity investments in excess of cumulative earnings – affiliates

7,510

   

6,830

   

25,607

   

23,085

 

Changes in assets and liabilities:

             

Accounts receivable, net

(7,877)

   

(30,845)

   

56,667

   

16,127

 

Accounts and imbalance payables and accrued liabilities, net

24,632

   

10,937

   

(30,722)

   

6,930

 

Other items, net

10,176

   

1,426

   

(13,873)

   

4,491

 

Adjusted EBITDA attributable to noncontrolling interest

(2,525)

   

(2,901)

   

(12,860)

   

(13,506)

 

Adjusted EBITDA attributable to Western Gas Partners, LP

$

347,461

   

$

273,324

   

$

1,205,761

   

$

1,060,988

 

Cash flow information of Western Gas Partners, LP

             

Net cash provided by operating activities

       

$

1,020,634

   

$

901,495

 

Net cash used in investing activities

       

(1,459,798)

   

(763,604)

 

Net cash provided by (used in) financing activities

       

450,798

   

(417,002)

 
   

(1)

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

(2)

Excludes the non-cash loss on interest-rate swaps of $8.0 million for the three months and year ended December 31, 2018.

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 reimbursements for electricity-related expenses recorded as revenue), less cost of product, plus distributions from equity investments, and excluding the noncontrolling interest owner's proportionate share of revenue and cost of product.

 

Three Months Ended
December 31,

 

Year Ended
December 31,

thousands

2018

 

2017

 

2018

 

2017

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

             

Operating income (loss)

$

166,210

   

$

181,815

   

$

629,393

   

$

707,271

 

Add:

             

Distributions from equity investments

57,982

   

29,897

   

169,906

   

110,465

 

Operation and maintenance

114,518

   

86,550

   

414,784

   

315,994

 

General and administrative

17,072

   

12,394

   

59,706

   

47,796

 

Property and other taxes

7,844

   

11,385

   

42,934

   

46,818

 

Depreciation and amortization

99,349

   

74,602

   

337,536

   

290,874

 

Impairments

75,630

   

8,295

   

228,338

   

178,374

 

Less:

             

Gain (loss) on divestiture and other, net

961

   

(2,629)

   

1,312

   

132,388

 

Proceeds from business interruption insurance claims

   

   

   

29,882

 

Equity income, net – affiliates

50,272

   

22,486

   

153,024

   

85,194

 

Reimbursed electricity-related charges recorded as revenues

16,441

   

14,485

   

66,580

   

56,823

 

Adjusted gross margin attributable to noncontrolling interest

3,525

   

3,638

   

15,875

   

16,827

 

Adjusted gross margin attributable to Western Gas Partners, LP

$

467,406

   

$

366,958

   

$

1,645,806

   

$

1,376,478

 

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

$

379,892

   

$

318,012

   

$

1,398,953

   

$

1,222,632

 

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

87,514

   

48,946

   

246,853

   

153,846

 

 

Western Gas Partners, LP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 
 

Three Months Ended
December 31,

 

Year Ended
December 31,

thousands except per-unit amounts

2018

 

2017

 

2018

 

2017

Revenues and other

             

Service revenues – fee based

$

463,146

   

$

324,513

   

$

1,609,245

   

$

1,237,949

 

Service revenues – product based

18,120

   

   

85,553

   

 

Product sales

76,254

   

299,443

   

293,992

   

989,933

 

Other

273

   

8,062

   

1,486

   

20,474

 

Total revenues and other

557,793

   

632,018

   

1,990,276

   

2,248,356

 

Equity income, net – affiliates

50,272

   

22,486

   

153,024

   

85,194

 

Operating expenses

             

Cost of product

128,403

   

276,834

   

431,921

   

908,693

 

Operation and maintenance

114,518

   

86,550

   

414,784

   

315,994

 

General and administrative

17,072

   

12,394

   

59,706

   

47,796

 

Property and other taxes

7,844

   

11,385

   

42,934

   

46,818

 

Depreciation and amortization

99,349

   

74,602

   

337,536

   

290,874

 

Impairments

75,630

   

8,295

   

228,338

   

178,374

 

Total operating expenses

442,816

   

470,060

   

1,515,219

   

1,788,549

 

Gain (loss) on divestiture and other, net

961

   

(2,629)

   

1,312

   

132,388

 

Proceeds from business interruption insurance claims

   

   

   

29,882

 

Operating income (loss)

166,210

   

181,815

   

629,393

   

707,271

 

Interest income – affiliates

4,225

   

4,225

   

16,900

   

16,900

 

Interest expense

(52,345)

   

(35,592)

   

(184,008)

   

(142,386)

 

Other income (expense), net

(7,564)

   

330

   

(4,955)

   

1,299

 

Income (loss) before income taxes

110,526

   

150,778

   

457,330

   

583,084

 

Income tax expense (benefit)

(355)

   

(39)

   

2,946

   

4,866

 

Net income (loss)

110,881

   

150,817

   

454,384

   

578,218

 

Net income attributable to noncontrolling interest

1,823

   

2,180

   

8,609

   

10,735

 

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

$

109,058

   

$

148,637

   

$

445,775

   

$

567,483

 

Limited partners' interest in net income (loss):

             

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

$

109,058

   

$

148,637

   

$

445,775

   

$

567,483

 

Series A Preferred units interest in net (income) loss

   

   

   

(42,373)

 

General partner interest in net (income) loss

(90,372)

   

(80,932)

   

(346,538)

   

(303,835)

 

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

$

18,686

   

$

67,705

   

$

99,237

   

$

221,275

 

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

$

0.10

   

$

0.39

   

$

0.55

   

$

1.30

 

Weighted-average common units outstanding – basic and diluted

152,609

   

152,602

   

152,606

   

147,194

 

 

Western Gas Partners, LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

thousands except number of units

December 31,
2018

 

December 31,
2017

Current assets

$

333,463

   

$

254,062

 

Note receivable – Anadarko

260,000

   

260,000

 

Net property, plant and equipment

6,612,073

   

5,730,891

 

Other assets

2,030,746

   

1,769,397

 

Total assets

$

9,236,282

   

$

8,014,350

 

Current liabilities

$

507,582

   

$

424,333

 

Long-term debt

4,787,381

   

3,464,712

 

Asset retirement obligations

259,976

   

143,394

 

Other liabilities

149,764

   

10,900

 

Total liabilities

5,704,703

   

4,043,339

 

Equity and partners' capital

     

Common units (152,609,285 and 152,602,105 units issued and outstanding at December 31, 2018 and 2017, respectively)

2,475,540

   

2,950,010

 

Class C units (14,372,665 and 13,243,883 units issued and outstanding at December 31, 2018 and 2017, respectively)

791,410

   

780,040

 

General partner units (2,583,068 units issued and outstanding at December 31, 2018 and 2017)

206,862

   

179,232

 

Noncontrolling interest

57,767

   

61,729

 

Total liabilities, equity and partners' capital

$

9,236,282

   

$

8,014,350

 

 

Western Gas Partners, LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 
 

Year Ended
December 31,

thousands

2018

 

2017

Cash flows from operating activities

     

Net income (loss)

$

454,384

   

$

578,218

 

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

     

Depreciation and amortization

337,536

   

290,874

 

Impairments

228,338

   

178,374

 

(Gain) loss on divestiture and other, net

(1,312)

   

(132,388)

 

Change in other items, net

1,688

   

(13,583)

 

Net cash provided by operating activities

$

1,020,634

   

$

901,495

 

Cash flows from investing activities

     

Capital expenditures

$

(1,193,896)

   

$

(675,025)

 

Contributions in aid of construction costs from affiliates

   

1,387

 

Acquisitions from affiliates

(254)

   

(3,910)

 

Acquisitions from third parties

(161,858)

   

(155,298)

 

Investments in equity affiliates

(133,335)

   

(384)

 

Distributions from equity investments in excess of cumulative earnings – affiliates

25,607

   

23,085

 

Proceeds from the sale of assets to third parties

3,938

   

23,564

 

Proceeds from property insurance claims

   

22,977

 

Net cash used in investing activities

$

(1,459,798)

   

$

(763,604)

 

Cash flows from financing activities

     

Borrowings, net of debt issuance costs

$

2,349,564

   

$

369,989

 

Repayments of debt

(1,040,000)

   

 

Settlement of the Deferred purchase price obligation – Anadarko

   

(37,346)

 

Increase (decrease) in outstanding checks

(3,206)

   

5,593

 

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

   

(183)

 

Distributions to unitholders

(893,649)

   

(801,300)

 

Distributions to noncontrolling interest owner

(13,529)

   

(13,569)

 

Net contributions from (distributions to) Anadarko

   

1,263

 

Above-market component of swap agreements with Anadarko

51,618

   

58,551

 

Net cash provided by (used in) financing activities

$

450,798

   

$

(417,002)

 

Net increase (decrease) in cash and cash equivalents

$

11,634

   

$

(279,111)

 

Cash and cash equivalents at beginning of period

78,814

   

357,925

 

Cash and cash equivalents at end of period

$

90,448

   

$

78,814

 

 

Western Gas Partners, LP

OPERATING STATISTICS

(Unaudited)

 
 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

2018

 

2017

 

2018

 

2017

Throughput for natural gas assets (MMcf/d)

             

Gathering, treating and transportation (1)

589

   

747

   

546

   

958

 

Processing (1)

3,295

   

2,663

   

3,205

   

2,563

 

Equity investment (2)

132

   

158

   

141

   

159

 

Total throughput for natural gas assets

4,016

   

3,568

   

3,892

   

3,680

 

Throughput attributable to noncontrolling interest for natural gas assets

84

   

98

   

90

   

105

 

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

3,932

   

3,470

   

3,802

   

3,575

 

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

             

Gathering, treating, transportation and disposal

162

   

111

   

146

   

71

 

Equity investment (3)

272

   

129

   

219

   

130

 

Total throughput for crude oil, NGLs and produced water assets

434

   

240

   

365

   

201

 

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

$

1.05

   

$

1.00

   

$

1.01

   

$

0.94

 

Adjusted gross margin per Bbl for crude oil, NGLs and produced water assets (5)

2.19

   

2.21

   

1.85

   

2.10

 
   

(1)

The combination of the DBM complex and DBJV and Haley systems, effective January 1, 2018, into a single complex now referred to as the "West Texas complex" resulted in DBJV and Haley systems throughput previously reported as "Gathering, treating and transportation" now being reported as "Processing."

(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, WES's 33.33% share of average FRP throughput and WES's 20% share of average Whitethorn 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, less 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 oil, NGLs and produced water assets (total revenues and other for crude oil, NGLs and produced water assets less reimbursements for electricity-related expenses recorded as revenue, less cost of product for crude oil, NGLs and produced water assets, and plus distributions from WES's equity investments in White Cliffs, the Mont Belvieu JV, TEG, TEP, FRP and Whitethorn), divided by total throughput (MBbls/d) for crude oil, NGLs and produced water assets.

 

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, 2018

Distributions declared by Western Gas Partners, LP:

   

General partner interest

 

$

3,908

 

Incentive distribution rights

 

81,322

 

Common units held by WGP

 

49,129

 

Less:

   

Public company general and administrative expense

 

1,810

 

Interest expense

 

339

 

Cash available for distribution

 

$

132,210

 

Declared distribution per common unit

 

$

0.60250

 

Distributions declared by Western Gas Equity Partners, LP

 

$

131,910

 

Coverage ratio

 

1.00

x

 

Western Gas Equity Partners, LP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 
 

Three Months Ended
December 31,

 

Year Ended
December 31,

thousands except per-unit amounts

2018

 

2017

 

2018

 

2017

Revenues and other

             

Service revenues – fee based

$

463,146

   

$

324,513

   

$

1,609,245

   

$

1,237,949

 

Service revenues – product based

18,120

   

   

85,553

   

 

Product sales

76,254

   

299,443

   

293,992

   

989,933

 

Other

273

   

8,062

   

1,486

   

20,474

 

Total revenues and other

557,793

   

632,018

   

1,990,276

   

2,248,356

 

Equity income, net – affiliates

50,272

   

22,486

   

153,024

   

85,194

 

Operating expenses

             

Cost of product

128,403

   

276,834

   

431,921

   

908,693

 

Operation and maintenance

114,518

   

86,550

   

414,784

   

315,994

 

General and administrative

18,882

   

13,073

   

63,735

   

50,668

 

Property and other taxes

7,844

   

11,385

   

42,934

   

46,818

 

Depreciation and amortization

99,349

   

74,602

   

337,536

   

290,874

 

Impairments

75,630

   

8,295

   

228,338

   

178,374

 

Total operating expenses

444,626

   

470,739

   

1,519,248

   

1,791,421

 

Gain (loss) on divestiture and other, net

961

   

(2,629)

   

1,312

   

132,388

 

Proceeds from business interruption insurance claims

   

   

   

29,882

 

Operating income (loss)

164,400

   

181,136

   

625,364

   

704,399

 

Interest income – affiliates

4,225

   

4,225

   

16,900

   

16,900

 

Interest expense

(52,684)

   

(36,168)

   

(186,043)

   

(144,615)

 

Other income (expense), net

(7,512)

   

355

   

(4,763)

   

1,384

 

Income (loss) before income taxes

108,429

   

149,548

   

451,458

   

578,068

 

Income tax expense (benefit)

(355)

   

(39)

   

2,946

   

4,866

 

Net income (loss)

108,784

   

149,587

   

448,512

   

573,202

 

Net income (loss) attributable to noncontrolling interests

15,414

   

50,066

   

79,083

   

196,595

 

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

$

93,370

   

$

99,521

   

$

369,429

   

$

376,607

 

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

$

0.43

   

$

0.45

   

$

1.69

   

$

1.72

 

Weighted-average common units outstanding – basic and diluted

218,938

   

218,933

   

218,936

   

218,931

 

 

Western Gas Equity Partners, LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

thousands except number of units

December 31,
2018

 

December 31,
2017

Current assets

$

335,824

   

$

255,210

 

Note receivable – Anadarko

260,000

   

260,000

 

Net property, plant and equipment

6,612,073

   

5,730,891

 

Other assets

2,030,746

   

1,770,210

 

Total assets

$

9,238,643

   

$

8,016,311

 

Current liabilities

$

536,857

   

$

424,426

 

Long-term debt

4,787,381

   

3,492,712

 

Asset retirement obligations

259,976

   

143,394

 

Other liabilities

149,764

   

10,900

 

Total liabilities

5,733,978

   

4,071,432

 

Equity and partners' capital

     

Common units (218,937,797 and 218,933,141 units issued and outstanding at December 31, 2018 and 2017, respectively)

951,888

   

1,061,125

 

Noncontrolling interests

2,552,777

   

2,883,754

 

Total liabilities, equity and partners' capital

$

9,238,643

   

$

8,016,311

 

 

Western Gas Equity Partners, LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 
 

Year Ended
December 31,

thousands

2018

 

2017

Cash flows from operating activities

     

Net income (loss)

$

448,512

   

$

573,202

 

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

     

Depreciation and amortization

337,536

   

290,874

 

Impairments

228,338

   

178,374

 

(Gain) loss on divestiture and other, net

(1,312)

   

(132,388)

 

Change in other items, net

3,621

   

(12,650)

 

Net cash provided by operating activities

$

1,016,695

   

$

897,412

 

Cash flows from investing activities

     

Capital expenditures

$

(1,193,896)

   

$

(675,025)

 

Contributions in aid of construction costs from affiliates

   

1,387

 

Acquisitions from affiliates

(254)

   

(3,910)

 

Acquisitions from third parties

(161,858)

   

(155,298)

 

Investments in equity affiliates

(133,335)

   

(384)

 

Distributions from equity investments in excess of cumulative earnings – affiliates

25,607

   

23,085

 

Proceeds from the sale of assets to third parties

3,938

   

23,564

 

Proceeds from property insurance claims

   

22,977

 

Net cash used in investing activities

$

(1,459,798)

   

$

(763,604)

 

Cash flows from financing activities

     

Borrowings, net of debt issuance costs

$

2,349,557

   

$

369,989

 

Repayments of debt

(1,040,000)

   

 

Settlement of the Deferred purchase price obligation – Anadarko

   

(37,346)

 

Increase (decrease) in outstanding checks

(3,206)

   

5,593

 

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

   

(183)

 

Distributions to WGP unitholders

(502,457)

   

(441,967)

 

Distributions to Chipeta noncontrolling interest owner

(13,529)

   

(13,569)

 

Distributions to noncontrolling interest owners of WES

(386,326)

   

(355,623)

 

Net contributions from (distributions to) Anadarko

   

1,263

 

Above-market component of swap agreements with Anadarko

51,618

   

58,551

 

Net cash provided by (used in) financing activities

$

455,657

   

$

(413,292)

 

Net increase (decrease) in cash and cash equivalents

$

12,554

   

$

(279,484)

 

Cash and cash equivalents at beginning of period

79,588

   

359,072

 

Cash and cash equivalents at end of period

$

92,142

   

$

79,588

 

 

Western Gas Partners (PRNewsFoto/Western Gas Partners, LP) (PRNewsFoto/Western Gas Partners, LP)

 

Western Gas Equity Partners (PRNewsFoto/Western Gas Partners, LP) (PRNewsFoto/Western Gas Partners, LP)

SOURCE Western Gas Partners, LP; Western Gas Equity Partners, LP


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