Western Midstream Announces First-Quarter 2019 Results

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

FIRST-QUARTER 2019 HIGHLIGHTS

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

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

______________________________________________

(1)

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

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

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

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

ADDITIONAL INFORMATION

In light of Anadarko Petroleum Corporation's entry into an agreement and plan of merger with Chevron Corporation on April 11, 2019, and subsequent related announcements, WES will not host the previously announced first-quarter 2019 earnings conference call scheduled for May 1, 2019. For additional details on WES's financial and operational performance, please refer to the earnings slides and updated investor presentation available at www.westernmidstream.com.

ABOUT WESTERN MIDSTREAM

Western Midstream Partners, LP ("WES") is a Delaware master limited partnership formed by Anadarko Petroleum Corporation to acquire, own, develop and operate midstream assets. With midstream assets located in the Rocky Mountains, North-central Pennsylvania, Texas and New Mexico, WES is engaged in the business of gathering, compressing, treating, processing and transporting natural gas; gathering, stabilizing and transporting condensate, natural gas liquids and crude oil; and gathering and disposing of produced water for Anadarko, as well as for third-party customers. In addition, in its capacity as a processor of natural gas, WES also buys and sells natural gas, NGLs and condensate on behalf of itself and as agent for its customers under certain of its contracts.

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

______________________________________________

(1)

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

This news release contains forward-looking statements. WES's management believes that its expectations are based on reasonable assumptions. No assurance, however, can be given that such expectations will prove to have been correct. A number of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this news release. These factors include the ability to meet financial guidance or distribution growth expectations; the ability to safely and efficiently operate WES's assets; the supply of, demand for, and price of oil, natural gas, NGLs and related products or services; the ability to meet projected in-service dates for capital growth projects; construction costs or capital expenditures exceeding estimated or budgeted costs or expenditures; and the other factors described in the "Risk Factors" section of WES's most recent Form 10-K and Form 10-Q filed with the Securities and Exchange Commission and in its other public filings and press releases. Western Midstream Partners, LP undertakes no obligation to publicly update or revise any forward-looking statements.

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

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

Below are reconciliations of (i) net income (loss) (GAAP) to WES's Distributable cash flow (non-GAAP), (ii) net income (loss) (GAAP) and net cash provided by operating activities (GAAP) to Adjusted EBITDA attributable to Western Midstream Partners, LP ("Adjusted EBITDA") (non-GAAP), and (iii) operating income (loss) (GAAP) to Adjusted gross margin attributable to Western Midstream Partners, LP ("Adjusted gross margin") (non-GAAP), as required under Regulation G of the Securities Exchange Act of 1934. Management believes that WES's Distributable cash flow, Adjusted EBITDA, Adjusted gross margin, and Coverage ratio are widely accepted financial indicators of WES's financial performance compared to other publicly traded partnerships and are useful in assessing its ability to incur and service debt, fund capital expenditures and make distributions. Distributable cash flow, Adjusted EBITDA, Adjusted gross margin and Coverage ratio, as defined by WES, may not be comparable to similarly titled measures used by other companies. Therefore, WES's Distributable cash flow, Adjusted EBITDA, Adjusted gross margin and Coverage ratio should be considered in conjunction with net income (loss) attributable to Western Midstream Partners, LP and other applicable performance measures, such as operating income (loss) or cash flows from operating activities.

WES defines "Distributable cash flow" as Adjusted EBITDA, plus interest income and the net settlement amounts from the sale and/or purchase of natural gas, condensate and NGLs under WES Operating's commodity price swap agreements to the extent such amounts are not recognized as Adjusted EBITDA, less Service revenues – fee based recognized in Adjusted EBITDA (less than) in excess of customer billings, net cash paid (or to be paid) for interest expense (including amortization of deferred debt issuance costs originally paid in cash, offset by non-cash capitalized interest), maintenance capital expenditures, and income taxes and excluding Distributable cash flow attributable to noncontrolling interests to the extent such amounts are not excluded from Adjusted EBITDA.

WES defines Adjusted EBITDA as net income (loss), plus distributions from equity investments, non-cash equity-based compensation expense, interest expense, income tax expense, depreciation and amortization, impairments, and other expense (including lower of cost or market inventory adjustments recorded in cost of product), less gain (loss) on divestiture and other, net, income from equity investments, interest income, income tax benefit, and other income and excluding the noncontrolling interests owners' proportionate share of revenues and expenses.

WES defines Adjusted gross margin as total revenues and other (less reimbursements for electricity-related expenses recorded as revenue), less cost of product, plus distributions from equity investments, and excluding the noncontrolling interests owners' proportionate share of revenues and cost of product.

Western Midstream Partners, LP

RECONCILIATION OF GAAP TO NON-GAAP MEASURES (CONTINUED)

 

Distributable Cash Flow

 
 

Three Months Ended
March 31,

thousands except Coverage ratio

2019

 

2018 (1)

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

     

Net income (loss)

$

211,979

   

$

181,010

 

Add:

     

Distributions from equity investments

62,013

   

40,426

 

Non-cash equity-based compensation expense

1,798

   

2,152

 

Income tax (benefit) expense

10,092

   

10,884

 

Depreciation and amortization

113,946

   

84,790

 

Impairments

390

   

200

 

Above-market component of swap agreements with Anadarko

7,407

   

14,282

 

Other expense

35,213

   

143

 

Less:

     

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

(6,258)

   

1,400

 

Gain (loss) on divestiture and other, net

(590)

   

116

 

Equity income, net – affiliates

57,992

   

30,229

 

Cash paid for maintenance capital expenditures

35,691

   

21,228

 

Capitalized interest

6,205

   

6,962

 

Cash paid for (reimbursement of) income taxes

96

   

(87)

 

Other income

   

817

 

Distributable cash flow attributable to noncontrolling interests (2)

9,534

   

9,134

 

Distributable cash flow

$

340,168

   

$

264,088

 

Distributions declared

     

Distributions from WES Operating

$

277,604

     

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

1,280

     

Distributions to WES unitholders (3)

$

276,324

     

Coverage ratio

1.23

 

x

 
   

(1)

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

(2)

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

(3)

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

 

Western Midstream Partners, LP

RECONCILIATION OF GAAP TO NON-GAAP MEASURES (CONTINUED)

 

Adjusted EBITDA

 
 

Three Months Ended
March 31,

thousands

2019

 

2018 (1)

Reconciliation of Net income (loss) to Adjusted EBITDA

     

Net income (loss)

$

211,979

   

$

181,010

 

Add:

     

Distributions from equity investments

62,013

   

40,426

 

Non-cash equity-based compensation expense

1,798

   

2,152

 

Interest expense

65,876

   

38,015

 

Income tax expense

10,092

   

10,884

 

Depreciation and amortization

113,946

   

84,790

 

Impairments

390

   

200

 

Other expense

35,213

   

143

 

Less:

     

Gain (loss) on divestiture and other, net

(590)

   

116

 

Equity income, net – affiliates

57,992

   

30,229

 

Interest income – affiliates

4,225

   

4,225

 

Other income

   

817

 

Adjusted EBITDA attributable to noncontrolling interests (2)

11,350

   

10,093

 

Adjusted EBITDA

$

428,330

   

$

312,140

 

Reconciliation of Net cash provided by operating activities to Adjusted EBITDA

     

Net cash provided by operating activities

$

343,073

   

$

300,151

 

Interest (income) expense, net

61,651

   

33,790

 

Uncontributed cash-based compensation awards

(570)

   

522

 

Accretion and amortization of long-term obligations, net

(1,511)

   

(2,103)

 

Current income tax (benefit) expense

6,027

   

(13,335)

 

Other (income) expense, net (3)

(432)

   

(817)

 

Distributions from equity investments in excess of cumulative earnings – affiliates

7,792

   

8,850

 

Changes in assets and liabilities:

     

Accounts receivable, net

(9,486)

   

29,632

 

Accounts and imbalance payables and accrued liabilities, net

55,529

   

(28,904)

 

Other items, net

(22,393)

   

(5,553)

 

Adjusted EBITDA attributable to noncontrolling interests (2)

(11,350)

   

(10,093)

 

Adjusted EBITDA

$

428,330

   

$

312,140

 

Cash flow information

     

Net cash provided by operating activities

$

343,073

   

$

300,151

 

Net cash used in investing activities

(2,515,732)

   

(524,219)

 

Net cash provided by (used in) financing activities

2,180,564

   

668,166

 
   

(1)

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

(2)

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

(3)

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

 

Western Midstream Partners, LP

RECONCILIATION OF GAAP TO NON-GAAP MEASURES (CONTINUED)

 

Adjusted Gross Margin

 
 

Three Months Ended
March 31,

thousands

2019

 

2018 (1)

Reconciliation of Operating income (loss) to Adjusted gross margin

     

Operating income (loss)

$

318,928

   

$

224,867

 

Add:

     

Distributions from equity investments

62,013

   

40,426

 

Operation and maintenance

142,829

   

96,795

 

General and administrative

22,844

   

15,829

 

Property and other taxes

16,285

   

14,600

 

Depreciation and amortization

113,946

   

84,790

 

Impairments

390

   

200

 

Less:

     

Gain (loss) on divestiture and other, net

(590)

   

116

 

Equity income, net – affiliates

57,992

   

30,229

 

Reimbursed electricity-related charges recorded as revenues

16,589

   

15,457

 

Adjusted gross margin attributable to noncontrolling interests (2)

15,550

   

12,871

 

Adjusted gross margin

$

587,694

   

$

418,834

 

Adjusted gross margin for natural gas assets

$

412,428

   

$

335,614

 

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

175,266

   

83,220

 
   

(1)

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

(2)

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

 

Western Midstream Partners, LP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 
 

Three Months Ended
March 31,

thousands except per-unit amounts

2019

 

2018 (1)

Revenues and other

     

Service revenues – fee based

$

579,974

   

$

393,773

 

Service revenues – product based

19,379

   

23,423

 

Product sales

72,133

   

83,625

 

Other

397

   

233

 

Total revenues and other

671,883

   

501,054

 

Equity income, net – affiliates

57,992

   

30,229

 

Operating expenses

     

Cost of product

114,063

   

94,318

 

Operation and maintenance

142,829

   

96,795

 

General and administrative

22,844

   

15,829

 

Property and other taxes

16,285

   

14,600

 

Depreciation and amortization

113,946

   

84,790

 

Impairments

390

   

200

 

Total operating expenses

410,357

   

306,532

 

Gain (loss) on divestiture and other, net

(590)

   

116

 

Operating income (loss)

318,928

   

224,867

 

Interest income – affiliates

4,225

   

4,225

 

Interest expense

(65,876)

   

(38,015)

 

Other income (expense), net (2)

(35,206)

   

817

 

Income (loss) before income taxes

222,071

   

191,894

 

Income tax expense (benefit)

10,092

   

10,884

 

Net income (loss)

211,979

   

181,010

 

Net income (loss) attributable to noncontrolling interests

93,319

   

49,483

 

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

$

118,660

   

$

131,527

 

Limited partners' interest in net income (loss):

     

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

$

118,660

   

$

131,527

 

Pre-acquisition net (income) loss allocated to Anadarko

(29,116)

   

(30,522)

 

Limited partners' interest in net income (loss)

$

89,544

   

$

101,005

 

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

$

0.30

   

$

0.46

 

Weighted-average common units outstanding – basic and diluted

299,556

   

218,933

 
   

(1)

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

(2)

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

 

Western Midstream Partners, LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

thousands except number of units

March 31,
2019

 

December 31,
2018 (1)

Current assets

$

335,942

   

$

340,362

 

Note receivable – Anadarko

260,000

   

260,000

 

Net property, plant and equipment

8,629,999

   

8,410,353

 

Other assets

2,571,054

   

2,446,490

 

Total assets

$

11,796,995

   

$

11,457,205

 

Current liabilities

$

2,518,854

   

$

637,477

 

Long-term debt

5,208,411

   

4,787,381

 

APCWH Note Payable

   

427,493

 

Asset retirement obligations

311,716

   

300,024

 

Other liabilities

166,473

   

412,147

 

Total liabilities

8,205,454

   

6,564,522

 

Equity and partners' capital

     

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

3,437,922

   

951,888

 

Net investment by Anadarko

   

1,388,018

 

Noncontrolling interests

153,619

   

2,552,777

 

Total liabilities, equity and partners' capital

$

11,796,995

   

$

11,457,205

 
   

(1)

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

 

Western Midstream Partners, LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 
 

Three Months Ended
March 31,

thousands

2019

 

2018 (1)

Cash flows from operating activities

     

Net income (loss)

$

211,979

   

$

181,010

 

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

     

Depreciation and amortization

113,946

   

84,790

 

Impairments

390

   

200

 

(Gain) loss on divestiture and other, net

590

   

(116)

 

Change in other items, net

16,168

   

34,267

 

Net cash provided by operating activities

$

343,073

   

$

300,151

 

Cash flows from investing activities

     

Capital expenditures

$

(386,144)

   

$

(533,185)

 

Acquisitions from affiliates

(2,007,501)

   

 

Acquisitions from third parties

(93,303)

   

 

Investments in equity affiliates

(36,543)

   

 

Distributions from equity investments in excess of cumulative earnings – affiliates

7,792

   

8,850

 

Proceeds from the sale of assets to third parties

(33)

   

116

 

Net cash used in investing activities

$

(2,515,732)

   

$

(524,219)

 

Cash flows from financing activities

     

Borrowings, net of debt issuance costs

$

2,430,750

   

$

1,444,082

 

Repayments of debt

(467,595)

   

(630,000)

 

Increase (decrease) in outstanding checks

(5,890)

   

(6,684)

 

Registration expenses related to the issuance of Partnership common units

(855)

   

 

Distributions to WES unitholders

(131,910)

   

(120,140)

 

Distributions to Chipeta noncontrolling interest owner

(1,935)

   

(3,353)

 

Distributions to noncontrolling interest owners of WES Operating

(100,999)

   

(94,272)

 

Net contributions from (distributions to) Anadarko

451,591

   

64,251

 

Above-market component of swap agreements with Anadarko

7,407

   

14,282

 

Net cash provided by (used in) financing activities

$

2,180,564

   

$

668,166

 

Net increase (decrease) in cash and cash equivalents

$

7,905

   

$

444,098

 

Cash and cash equivalents at beginning of period

92,142

   

79,588

 

Cash and cash equivalents at end of period

$

100,047

   

$

523,686

 
   

(1)

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

 

Western Midstream Partners, LP

OPERATING STATISTICS

(Unaudited)

 
 

Three Months Ended
March 31,

 

2019

 

2018 (1)

Throughput for natural gas assets (MMcf/d)

     

Gathering, treating and transportation

527

   

508

 

Processing

3,471

   

3,101

 

Equity investment (2)

377

   

294

 

Total throughput for natural gas assets

4,375

   

3,903

 

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

176

   

172

 

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

4,199

   

3,731

 

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

     

Gathering, treating, transportation and disposal

820

   

350

 

Equity investment (4)

304

   

155

 

Total throughput for crude oil, NGLs and produced water assets

1,124

   

505

 

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

22

   

10

 

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

1,102

   

495

 

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

$

1.09

   

$

1.00

 

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

1.77

   

1.87

 
   

(1)

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

(2)

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

(3)

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

(4)

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

(5)

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

(6)

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

 

   

Three Months Ended March 31,

   

2019

 

2018

 

2019

 

2018

 

2019

 

2018

   

Natural gas

(MMcf/d)

 

Crude oil & NGLs

(MBbls/d)

 

Produced water

(MBbls/d)

Delaware Basin

 

1,178

   

919

   

145

   

111

   

518

   

78

 

DJ Basin

 

1,258

   

1,107

   

102

   

102

   

   

 

Equity investments

 

377

   

294

   

304

   

155

   

   

 

Other

 

1,562

   

1,583

   

55

   

59

   

   

 

Total throughput

 

4,375

   

3,903

   

606

   

427

   

518

   

78

 

 

(PRNewsfoto/Western Midstream Partners, LP)

 

 

SOURCE Western Midstream Partners, LP


Additional assets available online:

http://investors.westernmidstream.com/2019-04-30-Western-Midstream-Announces-First-Quarter-2019-Results