PR Newswire | Aug 9, 2021 04:06PM EDT

08/09 15:05 CDT

Western Midstream Announces Second-Quarter 2021 Results HOUSTON, Aug. 9, 2021

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 ShultsSenior Vice President, Finance and CommunicationsKristen.Shults@westernmidstream.com832.636.6000

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



Three Months Ended Six Months Ended June 30, 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, LPCONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)

June 30, December 31,thousands except number of units 2020 2021

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 June30, 2021, 2,927,066 2,778,339 and December 31, 2020, respectively)

General partner units (9,060,641 units issued and outstanding at June 30, 2021,and December (13,923) (17,208) 31, 2020)

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 - 21,373 13,340 related parties

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, LPRECONCILIATION 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

June 30, March 31, thousands 2021 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

^ For all periods presented, includes (i) the 25% third-party interest in(1) 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

June 30, March 31, thousands 2021 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 - 9,232 12,141 related parties

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)

^ For all periods presented, includes (i) the 25% third-party interest in(1) 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

June 30, March 31, thousands 2021 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 - 9,232 12,141 related parties

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,March 31, 2021 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 assets687 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



^ Represents the 22% share of average Rendezvous throughput, 50% share of(1) average Mi Vida and Ranch Westex throughput, and 30% share of average Red Bluff Express throughput.

^ For all periods presented, includes (i) the 2.0% Occidental(2) 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.

^ Represents the 10% share of average White Cliffs throughput; 25% share of(3) 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.

^ Average for period. Calculated as Adjusted gross margin for natural-gas(4) assets, divided by total throughput (MMcf/d) attributable to WES for natural-gas assets.

^ Average for period. Calculated as Adjusted gross margin for crude-oil and(5) NGLs assets, divided by total throughput (MBbls/d) attributable to WES for crude-oil and NGLs assets.

^ Average for period. Calculated as Adjusted gross margin for produced-water(6) 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,March 31, 2021 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 assets701 616

Throughput for produced-water assets (MBbls/d)

Delaware Basin 702 607

Total throughput for produced-water assets 702 607

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SOURCE Western Midstream Partners, LP