09.08.2021 22:05:00

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)

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SOURCE Western Midstream Partners, LP

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