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WES Investors

Western Midstream Announces Second-Quarter 2021 Results

HOUSTON, Aug. 9, 2021 /PRNewswire/ -- Today Western Midstream Partners, LP (NYSE: WES) ("WES" or the "Partnership") announced second-quarter 2021 financial and operating results. Net income (loss) available to limited partners for the second quarter of 2021 totaled $226.3 million, or $0.55 per common unit (diluted), with second-quarter 2021 Adjusted EBITDA(1) totaling $491.1 million, second-quarter 2021 Cash flows provided by operating activities totaling $452.1 million, and second-quarter 2021 Free cash flow(1) totaling $379.8 million.

RECENT HIGHLIGHTS

  • Achieved record DJ Basin gas throughput of 1.4 Bcf/d for the second quarter, representing a 5-percent sequential-quarter increase.
  • Executed a long-term gas gathering and processing agreement with Crestone Peak Resources ("Crestone"), whereby Crestone dedicated all of its existing Watkins acreage, totaling approximately 74,000 acres, to the Partnership. As part of the agreement, Crestone will also dedicate to WES up to 148,000 additional acres that may be acquired and connected to Crestone's gas gathering system in the future.

(1)  Please see the definitions of the Partnership's non-GAAP measures at the end of this release and reconciliation of GAAP to non-GAAP measures.

On August 13, 2021, WES will pay its second-quarter 2021 per-unit distribution of $0.319, which represents a 1.3-percent increase over the prior quarter's distribution and is consistent with an annualized distribution growth of 5-percent. Second-quarter 2021 Free cash flow after distributions totaled $246.8 million. Second-quarter 2021 and year-to-date capital expenditures(1) totaled $84.0 million and $142.3 million, respectively.

"Our strong second-quarter Adjusted EBITDA and free cash flow was a result of increased throughput across all product lines in the Delaware and DJ Basins," said Michael Ure, President and Chief Executive Officer. "Higher commodity prices continue to provide support for sustained increased producer activity, specifically in the Delaware Basin, and we've been successful in attracting incremental third-party business. With the hard work of our operations, engineering, and commercial teams, we've been able to fully leverage our expansive infrastructure to bring these additional volumes on the system."

Mr. Ure continued, "As we prepare for increased throughput, which will largely materialize in 2022, we expect to deploy additional capital-efficient dollars and be at or above the high end of our 2021 capital expenditures range of $275 million to $375 million. We've reduced our cost structure and enhanced our operational efficiencies, and we expect increased capital spend to be dedicated to gathering these incremental volumes. Furthermore, as a result of this activity coupled with our second-quarter outperformance, we now expect to be near the high end of our 2021 Adjusted EBITDA range of $1.825 billion to $1.925 billion."

Second-quarter 2021 total natural-gas throughput(2) averaged 4.3 Bcf/d, representing a 5-percent sequential-quarter increase. Second-quarter 2021 total throughput for crude-oil and NGLs assets(2) averaged 687 MBbls/d, representing a 14-percent sequential-quarter increase. Second-quarter 2021 total throughput for produced-water assets(2) averaged 688 MBbls/d, representing a 16-percent sequential-quarter increase.

(1)  Accrual-based, includes equity investments, excludes capitalized interest, and excludes capital expenditures associated with the 25% third-party interest in Chipeta.
(2)  Represents total throughput attributable to WES, which excludes (i) the 2.0% Occidental subsidiary-owned limited partner interest in WES Operating and (ii) for natural-gas throughput, the 25% third-party interest in Chipeta, which collectively represent WES's noncontrolling interests.

CONFERENCE CALL TOMORROW AT 1:00 P.M. CDT

WES will host a conference call on Tuesday, August 10, 2021, at 1:00 p.m. Central Daylight Time (2:00 p.m. Eastern Daylight Time) to discuss second-quarter 2021 results. To participate, individuals should dial 877-883-0383 (Domestic) or 412-902-6506 (International) 15 minutes before the scheduled conference call time and enter participant access code 7589922. To access the live audio webcast of the conference call, please visit the investor relations section of the Partnership's website at www.westernmidstream.com. A replay of the conference call also will be available on the website following the call.

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 to acquire, own, develop, and operate midstream assets. With midstream assets located in Texas, New Mexico, Colorado, Utah, Wyoming, and Pennsylvania, 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 its customers. In its capacity as a natural-gas processor, WES also buys and sells natural gas, natural-gas liquids, and condensate on behalf of itself and as an agent for its customers under certain contracts.

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

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 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 our ability to meet financial guidance or distribution expectations; the ultimate impact of efforts to fight COVID-19 on the global economy and the timeline for a recovery in commodity demand and prices; our 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; our 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 other public filings and press releases. WES undertakes no obligation to publicly update or revise any forward-looking statements.

WESTERN MIDSTREAM CONTACT

Kristen Shults
Senior Vice President, Finance and Communications
Kristen.Shults@westernmidstream.com
832.636.6000

Western Midstream Partners, LP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 
   

Three Months Ended 

June 30,

 

Six Months Ended 

June 30,

thousands except per-unit amounts

 

2021

 

2020

 

2021

 

2020

Revenues and other

               

Service revenues – fee based

 

$

618,985

   

$

642,628

   

$

1,191,260

   

$

1,344,024

 

Service revenues – product based

 

27,803

   

7,000

   

59,455

   

22,921

 

Product sales

 

72,256

   

21,736

   

143,061

   

78,385

 

Other

 

87

   

391

   

329

   

738

 

Total revenues and other

 

719,131

   

671,755

   

1,394,105

   

1,446,068

 

Equity income, net – related parties

 

58,666

   

54,415

   

110,831

   

115,762

 

Operating expenses

               

Cost of product

 

78,044

   

18,602

   

167,013

   

121,872

 

Operation and maintenance

 

153,028

   

145,186

   

293,360

   

304,377

 

General and administrative

 

44,448

   

36,423

   

89,564

   

76,888

 

Property and other taxes

 

17,967

   

19,395

   

32,351

   

37,871

 

Depreciation and amortization

 

137,849

   

119,805

   

268,402

   

252,124

 

Long-lived asset and other impairments

 

12,738

   

10,150

   

27,604

   

165,935

 

Goodwill impairment

 

   

   

   

441,017

 

Total operating expenses

 

444,074

   

349,561

   

878,294

   

1,400,084

 

Gain (loss) on divestiture and other, net

 

1,225

   

(2,843)

   

642

   

(2,883)

 

Operating income (loss)

 

334,948

   

373,766

   

627,284

   

158,863

 

Interest income – Anadarko note receivable

 

   

4,225

   

   

8,450

 

Interest expense

 

(95,290)

   

(94,654)

   

(193,783)

   

(183,240)

 

Gain (loss) on early extinguishment of debt

 

   

1,395

   

(289)

   

8,740

 

Other income (expense), net

 

84

   

1,653

   

(1,123)

   

(108)

 

Income (loss) before income taxes

 

239,742

   

286,385

   

432,089

   

(7,295)

 

Income tax expense (benefit)

 

1,465

   

5,044

   

2,577

   

764

 

Net income (loss)

 

238,277

   

281,341

   

429,512

   

(8,059)

 

Net income (loss) attributable to noncontrolling interests

 

7,018

   

8,304

   

12,462

   

(24,569)

 

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

 

$

231,259

   

$

273,037

   

$

417,050

   

$

16,510

 

Limited partners' interest in net income (loss):

               

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

 

$

231,259

   

$

273,037

   

$

417,050

   

$

16,510

 

General partner interest in net (income) loss

 

(4,964)

   

(5,461)

   

(8,957)

   

(330)

 

Limited partners' interest in net income (loss)

 

$

226,295

   

$

267,576

   

$

408,093

   

$

16,180

 

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

 

$

0.55

   

$

0.60

   

$

0.99

   

$

0.04

 

Weighted-average common units outstanding – basic and diluted

 

413,070

   

443,973

   

413,087

   

443,972

 

 

Western Midstream Partners, LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

 

thousands except number of units

 

June 30,

2021

 

December 31,
2020

Total current assets

 

$

886,251

   

$

943,064

 

Net property, plant, and equipment

 

8,589,965

   

8,709,945

 

Other assets

 

2,150,083

   

2,177,018

 

Total assets

 

$

11,626,299

   

$

11,830,027

 

Total current liabilities

 

$

1,126,671

   

$

960,935

 

Long-term debt

 

6,835,838

   

7,415,832

 

Asset retirement obligations

 

267,624

   

260,283

 

Other liabilities

 

343,293

   

297,765

 

Total liabilities

 

8,573,426

   

8,934,815

 

Equity and partners' capital

       

Common units (413,076,351 and 413,839,863 units issued and outstanding at June 30, 2021, 
   and December 31, 2020, respectively)

 

2,927,066

   

2,778,339

 

General partner units (9,060,641 units issued and outstanding at June 30, 2021, and December
   31, 2020)

 

(13,923)

   

(17,208)

 

Noncontrolling interests

 

139,730

   

134,081

 

Total liabilities, equity, and partners' capital

 

$

11,626,299

   

$

11,830,027

 

 

Western Midstream Partners, LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 
   

Six Months Ended 

June 30,

thousands

 

2021

 

2020

Cash flows from operating activities

       

Net income (loss)

 

$

429,512

   

$

(8,059)

 

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

       

Depreciation and amortization

 

268,402

   

252,124

 

Long-lived asset and other impairments

 

27,604

   

165,935

 

Goodwill impairment

 

   

441,017

 

(Gain) loss on divestiture and other, net

 

(642)

   

2,883

 

(Gain) loss on early extinguishment of debt

 

289

   

(8,740)

 

Cash paid to settle interest-rate swaps

 

   

(12,763)

 

Change in other items, net

 

(11,504)

   

(93,398)

 

Net cash provided by operating activities

 

$

713,661

   

$

738,999

 

Cash flows from investing activities

       

Capital expenditures

 

$

(137,928)

   

$

(313,065)

 

Acquisitions from related parties

 

(2,000)

   

 

Contributions to equity investments - related parties

 

(3,508)

   

(16,064)

 

Distributions from equity investments in excess of cumulative earnings – related parties

 

21,373

   

13,340

 

Proceeds from the sale of assets to third parties

 

8,003

   

 

(Increase) decrease in materials and supplies inventory and other

 

7,656

   

(39,212)

 

Net cash used in investing activities

 

$

(106,404)

   

$

(355,001)

 

Cash flows from financing activities

       

Borrowings, net of debt issuance costs

 

$

100,000

   

$

3,586,173

 

Repayments of debt

 

(531,085)

   

(3,583,149)

 

Increase (decrease) in outstanding checks

 

(29,102)

   

(4,686)

 

Distributions to Partnership unitholders

 

(264,234)

   

(422,679)

 

Distributions to Chipeta noncontrolling interest owner

 

(1,521)

   

(2,775)

 

Distributions to noncontrolling interest owner of WES Operating

 

(5,292)

   

(8,676)

 

Net contributions from (distributions to) related parties

 

4,508

   

21,832

 

Finance lease payments

 

(3,639)

   

(10,262)

 

Unit repurchases

 

(16,241)

   

 

Net cash provided by (used in) financing activities

 

$

(746,606)

   

$

(424,222)

 

Net increase (decrease) in cash and cash equivalents

 

$

(139,349)

   

$

(40,224)

 

Cash and cash equivalents at beginning of period

 

444,922

   

99,962

 

Cash and cash equivalents at end of period

 

$

305,573

   

$

59,738

 

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

WES defines Adjusted gross margin attributable to Western Midstream Partners, LP ("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 owners' proportionate share of revenues and cost of product.

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

WES defines Free cash flow as net cash provided by operating activities less total capital expenditures and contributions to equity investments, plus distributions from equity investments in excess of cumulative earnings. Management considers Free cash flow an appropriate metric for assessing capital discipline, cost efficiency, and balance-sheet strength. Although Free cash flow is the metric used to assess WES's ability to make distributions to unitholders, this measure should not be viewed as indicative of the actual amount of cash that is available for distributions or planned for distributions for a given period. Instead, Free cash flow should be considered indicative of the amount of cash that is available for distributions, debt repayments, and other general partnership purposes.

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

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

 

Adjusted Gross Margin

 
   

Three Months Ended

thousands

 

June 30,

2021

 

March 31,

2021

Reconciliation of Gross margin to Adjusted gross margin

       

Total revenues and other

 

$

719,131

   

$

674,974

 

Less:

       

Cost of product

 

78,044

   

88,969

 

Depreciation and amortization

 

137,849

   

130,553

 

Gross margin

 

503,238

   

455,452

 

Add:

       

Distributions from equity investments

 

70,947

   

61,189

 

Depreciation and amortization

 

137,849

   

130,553

 

Less:

       

Reimbursed electricity-related charges recorded as revenues

 

17,585

   

17,312

 

Adjusted gross margin attributable to noncontrolling interests (1)

 

17,213

   

15,258

 

Adjusted gross margin

 

$

677,236

   

$

614,624

 

Adjusted gross margin for natural-gas assets

 

$

469,409

   

$

432,389

 

Adjusted gross margin for crude-oil and NGLs assets

 

150,317

   

133,145

 

Adjusted gross margin for produced-water assets

 

57,510

   

49,090

 
   

(1) 

For all periods presented, includes (i) the 25% third-party interest in Chipeta and (ii) the 2.0% Occidental subsidiary-owned limited partner interest in WES Operating, which collectively represent WES's noncontrolling interests.

 

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

 

Adjusted EBITDA

 
   

Three Months Ended

thousands

 

June 30,

2021

 

March 31,

2021

Reconciliation of Net income (loss) to Adjusted EBITDA

       

Net income (loss)

 

$

238,277

   

$

191,235

 

Add:

       

Distributions from equity investments

 

70,947

   

61,189

 

Non-cash equity-based compensation expense

 

7,121

   

6,734

 

Interest expense

 

95,290

   

98,493

 

Income tax expense

 

1,465

   

1,112

 

Depreciation and amortization

 

137,849

   

130,553

 

Impairments

 

12,738

   

14,866

 

Other expense

 

30

   

1,218

 

Less:

       

Gain (loss) on divestiture and other, net

 

1,225

   

(583)

 

Gain (loss) on early extinguishment of debt

 

   

(289)

 

Equity income, net – related parties

 

58,666

   

52,165

 

Other income

 

84

   

 

Adjusted EBITDA attributable to noncontrolling interests (1)

 

12,616

   

10,997

 

Adjusted EBITDA

 

$

491,126

   

$

443,110

 

Reconciliation of Net cash provided by operating activities to Adjusted EBITDA

       

Net cash provided by operating activities

 

$

452,111

   

$

261,550

 

Interest (income) expense, net

 

95,290

   

98,493

 

Accretion and amortization of long-term obligations, net

 

(1,914)

   

(2,088)

 

Current income tax expense (benefit)

 

749

   

555

 

Other (income) expense, net

 

(84)

   

1,207

 

Distributions from equity investments in excess of cumulative earnings – related parties

 

9,232

   

12,141

 

Changes in assets and liabilities:

       

Accounts receivable, net

 

38,982

   

30,182

 

Accounts and imbalance payables and accrued liabilities, net

 

(55,758)

   

16,467

 

Other items, net

 

(34,866)

   

35,600

 

Adjusted EBITDA attributable to noncontrolling interests (1)

 

(12,616)

   

(10,997)

 

Adjusted EBITDA

 

$

491,126

   

$

443,110

 

Cash flow information

       

Net cash provided by operating activities

 

$

452,111

   

$

261,550

 

Net cash used in investing activities

 

(59,932)

   

(46,472)

 

Net cash provided by (used in) financing activities

 

(142,982)

   

(603,624)

 
   

(1) 

 For all periods presented, includes (i) the 25% third-party interest in Chipeta and (ii) the 2.0% Occidental subsidiary-owned limited partner interest in WES Operating, which collectively represent WES's noncontrolling interests.

 

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

 

Free Cash Flow

 
   

Three Months Ended

thousands

 

June 30,

2021

 

March 31,

2021

Reconciliation of Net cash provided by operating activities to Free cash flow

       

Net cash provided by operating activities

 

$

452,111

   

$

261,550

 

Less:

       

Capital expenditures

 

78,145

   

59,783

 

Contributions to equity investments – related parties

 

3,422

   

86

 

Add:

       

Distributions from equity investments in excess of cumulative earnings – related parties

 

9,232

   

12,141

 

Free cash flow

 

$

379,776

   

$

213,822

 

Cash flow information

       

Net cash provided by operating activities

 

$

452,111

   

$

261,550

 

Net cash used in investing activities

 

(59,932)

   

(46,472)

 

Net cash provided by (used in) financing activities

 

(142,982)

   

(603,624)

 

 

Western Midstream Partners, LP
OPERATING STATISTICS
(Unaudited)

 
   

Three Months Ended

   

June 30,

2021

 

March 31,

2021

Throughput for natural-gas assets (MMcf/d)

       

Gathering, treating, and transportation

 

534

   

519

 

Processing

 

3,433

   

3,237

 

Equity investments (1)

 

457

   

439

 

Total throughput

 

4,424

   

4,195

 

Throughput attributable to noncontrolling interests (2)

 

159

   

150

 

Total throughput attributable to WES for natural-gas assets

 

4,265

   

4,045

 

Throughput for crude-oil and NGLs assets (MBbls/d)

       

Gathering, treating, and transportation

 

315

   

279

 

Equity investments (3)

 

386

   

337

 

Total throughput

 

701

   

616

 

Throughput attributable to noncontrolling interests (2)

 

14

   

12

 

Total throughput attributable to WES for crude-oil and NGLs assets

 

687

   

604

 

Throughput for produced-water assets (MBbls/d)

       

Gathering and disposal

 

702

   

607

 

Throughput attributable to noncontrolling interests (2)

 

14

   

12

 

Total throughput attributable to WES for produced-water assets

 

688

   

595

 

Per-Mcf Adjusted gross margin for natural-gas assets (4)

 

$

1.21

   

$

1.19

 

Per-Bbl Adjusted gross margin for crude-oil and NGLs assets (5)

 

2.40

   

2.45

 

Per-Bbl Adjusted gross margin for produced-water assets (6)

 

0.92

   

0.92

 
                 

(1) 

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

(2) 

For all periods presented, includes (i) the 2.0% Occidental subsidiary-owned limited partner interest in WES Operating and (ii) for natural-gas assets, the 25% third-party interest in Chipeta, which collectively represent WES's noncontrolling interests.

(3) 

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

(4) 

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

(5) 

Average for period. Calculated as Adjusted gross margin for crude-oil and NGLs assets, divided by total throughput (MBbls/d) attributable to WES for crude-oil and NGLs assets.

(6)

Average for period. Calculated as Adjusted gross margin for produced-water assets, divided by total throughput (MBbls/d) attributable to WES for produced-water assets.

 

Western Midstream Partners, LP
OPERATING STATISTICS (CONTINUED)
(Unaudited)

 
 

Three Months Ended

 

June 30,

2021

 

March 31,

2021

Throughput for natural-gas assets (MMcf/d)

Delaware Basin

1,244

   

1,133

 

DJ Basin

1,413

   

1,344

 

Equity investments

457

   

439

 

Other

1,310

   

1,279

 

Total throughput for natural-gas assets

4,424

   

4,195

 

Throughput for crude-oil and NGLs assets (MBbls/d)

Delaware Basin

184

   

162

 

DJ Basin

98

   

82

 

Equity investments

386

   

337

 

Other

33

   

35

 

Total throughput for crude-oil and NGLs assets

701

   

616

 

Throughput for produced-water assets (MBbls/d)

Delaware Basin

702

   

607

 

Total throughput for produced-water assets

702

   

607

 

 

(PRNewsfoto/Western Midstream Partners, LP)

 

SOURCE Western Midstream Partners, LP


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