PR Newswire | Nov 9, 2021 04:06PM EST

11/09 15:05 CST

Western Midstream Announces Third-Quarter 2021 Results HOUSTON, Nov. 9, 2021

HOUSTON, Nov. 9, 2021 /PRNewswire/ -- Today Western Midstream Partners, LP (NYSE: WES) ("WES" or the "Partnership") announced third-quarter 2021 financial and operating results. Net income (loss) available to limited partners for the third quarter of 2021 totaled $250.2 million, or $0.61 per common unit (diluted), with third-quarter 2021 Adjusted EBITDA(1) totaling $531.6 million, third-quarter 2021 Cash flows provided by operating activities totaling $391.3 million, and third-quarter 2021 Free cash flow(1) totaling $320.0 million.

RECENT HIGHLIGHTS

* Executed a debt tender offer and repaid $500.0 million of Senior notes due 2022, 2023, 2025, and 2026 for an aggregate purchase price of approximately $521.9 million, decreasing the Partnership's annualized borrowing costs by $20.6 million(2). * Repurchased 4.5 million common units for aggregate consideration of $88.1 million during the third quarter as part of the previously announced buyback program of up to $250.0 million of the Partnership's common units through December 31, 2021. Since announcing the buyback program, the Partnership has repurchased approximately 8.0 million common units for aggregate consideration of $136.9 million through September 30, 2021. * Received an upgrade for WES Operating's long-term debt from "BB" to "BB+" from Standard & Poor's, decreasing the Partnership's annualized borrowing costs by approximately $7.9 million, and a revised outlook rating from "Stable" to "Positive" from Fitch. * Increased Regional Oil Treating Facility capacity by 20-percent, or 36 MBbls/d, for minimal capital to meet expected growth in Delaware Basin oil volumes.

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^(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.

^(2)Annualized borrowing costs calculated using the effective coupon rates as of September 30, 2021.

On November 12, 2021, WES will pay its third-quarter 2021 per-unit distribution of $0.323, which represents a 1.3-percent increase over the prior quarter's distribution and is consistent with an annualized distribution growth of 5-percent. Third-quarter 2021 Free cash flow after distributions totaled $185.4 million. Third-quarter 2021 and year-to-date capital expenditures(1) totaled $82.0 million and $224.3 million, respectively. Net income and Adjusted EBITDA for the quarter include a non-cash increase to revenue of $19 million associated with a revenue recognition cumulative adjustment related to reversal of constrained revenues.

"The consistent execution of our strategic priorities has led to our strong third-quarter results and positions us for continued success," said Michael Ure, President and Chief Executive Officer. "Across the organization, our best-in-class teams continue to pursue cost and capital efficiencies, attract additional volumes on our systems, and maximize our asset value."

"With our expansive asset footprint and strong producer relationships in the Delaware Basin, we continue to capitalize on robust activity levels in this world-class producing basin. For the third-consecutive quarter, throughput increased across all three products within the Delaware Basin, contributing to our outperformance."

"Due to our outperformance this quarter, we now expect to finish the year above the high end of our 2021 Adjusted EBITDA range of $1.825 to $1.925 billion. Furthermore, we expect to be below the high end of our 2021 capital expenditure range of $275 million to $375 million. This expectation reflects a slight shift in producer activity into 2022, thus reducing capital requirements in 2021, and our team's continued focus on reducing costs and enhancing operational efficiencies."

Mr. Ure continued, "Our operational results have again set the stage for significant free cash flow generation, which provides the resources needed to reduce debt and improve the health of our balance sheet. We've been able to reduce our outstanding Senior Notes by more than $930 million year to date, or 12 percent of our year-end 2020 balance, through the retirement of our 2021 maturity and successful execution of our recent tender offer. With third-quarter Debt-to-Trailing Twelve Month Adjusted EBITDA below 3.7x, we are well below our 2021 target of 4.0x and nearing our 2022 target of 3.5x."

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^(1)Accrual-based, includes equity investments, excludes capitalized interest, and excludes capital expenditures associated with the 25% third-party interest in Chipeta.

"We remain committed to returning value to stakeholders through continued distribution growth and opportunistically executing the remaining $113 million available under the unit buyback program."

Third-quarter 2021 total natural-gas throughput(1) averaged 4.1 Bcf/d, representing a 4-percent sequential-quarter decrease. This decrease primarily relates to (i) decreased volumes at the Bison treating facility, which was sold to a third party during the second quarter of 2021, and (ii) production declines in the DJ Basin and areas around the Marcellus Interest and Springfield gas-gathering systems.

Third-quarter 2021 total throughput for crude-oil and NGLs assets(1) averaged 641 MBbls/d, representing a 7-percent sequential-quarter decrease. This decrease primarily relates to production declines in the DJ Basin and decreased volumes on our equity investments.

Third-quarter 2021 total throughput for produced-water assets(1) averaged 735 MBbls/d, representing a 7-percent sequential-quarter increase.

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Represents total throughput attributable to WES, which excludes (i) the 2.0% ^(1)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. CTWES will host a conference call on Wednesday, November 10, 2021, at 1:00 p.m. Central Time (2:00 p.m. Eastern Time) to discuss third-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 9861840. 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 MIDSTREAMWestern 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 any related impact on 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 CONTACTS

Kristen ShultsSenior Vice President, Finance and CommunicationsKristen.Shults@westernmidstream.com832.636.1009

Daniel JenkinsDirector, Investor RelationsDaniel.Jenkins@westernmidstream.com832.636.1009

Shelby KeltnerManager, Investor RelationsShelby.Keltner@westernmidstream.com832.636.1009

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



Three Months Ended Nine Months Ended September 30, September 30,

thousands except per-unit amounts 2021 2020 2021 2020

Revenues and other

Service revenues - fee based $650,482$636,522$1,841,742$1,980,546

Service revenues - product based 28,812 12,316 88,267 35,237

Product sales 84,298 30,106 227,359 108,491

Other 248 100 577 838

Total revenues and other 763,840 679,044 2,157,945 2,125,112

Equity income, net - related parties 48,506 61,026 159,337 176,788

Operating expenses

Cost of product 83,232 31,739 250,245 153,611

Operation and maintenance 140,838 132,293 434,198 436,670

General and administrative 50,409 41,578 139,973 118,466

Property and other taxes 13,641 19,392 45,992 57,263

Depreciation and amortization 139,002 132,564 407,404 384,688

Long-lived asset and other impairments 1,594 34,640 29,198 200,575

Goodwill impairment - - - 441,017

Total operating expenses 428,716 392,206 1,307,010 1,792,290

Gain (loss) on divestiture and other, net (364) (768) 278 (3,651)

Operating income (loss) 383,266 347,096 1,010,550 505,959

Interest income - Anadarko note receivable - 3,286 - 11,736

Interest expense (93,257) (95,571) (287,040) (278,811)

Gain (loss) on early extinguishment of debt (24,655) 1,632 (24,944) 10,372

Other income (expense), net 110 720 (1,013) 612

Income (loss) before income taxes 265,464 257,163 697,553 249,868

Income tax expense (benefit) 1,826 3,028 4,403 3,792

Net income (loss) 263,638 254,135 693,150 246,076

Net income (loss) attributable to noncontrolling interests 7,913 7,524 20,375 (17,045)

Net income (loss) attributable to Western Midstream $255,725$246,611$672,775 $263,121 Partners, LP

Limited partners' interest in net income (loss):

Net income (loss) attributable to Western Midstream Partners, $255,725$246,611$672,775 $263,121 LP

General partner interest in net (income) loss (5,527) (5,132) (14,484) (5,462)

Limited partners' interest in net income (loss) $250,198$241,479$658,291 $257,659

Net income (loss) per common unit - basic $0.61 $0.55 $1.60 $0.58

Net income (loss) per common unit - diluted $0.61 $0.55 $1.59 $0.58

Weighted-average common units outstanding - basic 411,909 438,857 412,690 442,255

Weighted-average common units outstanding - diluted 412,714 438,926 413,150 442,275

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



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

Total current assets $756,710 $943,064

Net property, plant, and equipment 8,524,081 8,709,945

Other assets 2,138,587 2,177,018

Total assets $11,419,378$11,830,027

Total current liabilities $1,307,342 $960,935

Long-term debt 6,399,874 7,415,832

Asset retirement obligations 271,022 260,283

Other liabilities 344,694 297,765

Total liabilities 8,322,932 8,934,815

Equity and partners' capital

Common units (408,610,916 and 413,839,863 units issued and outstanding at September 30, 2,965,944 2,778,339 2021, and December 31, 2020, respectively)

General partner units (9,060,641 units issued and outstanding at September 30, 2021, and (11,286) (17,208) December 31, 2020)

Noncontrolling interests 141,788 134,081

Total liabilities, equity, and partners' capital $11,419,378$11,830,027

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



Nine Months Ended September 30,

thousands 2021 2020

Cash flows from operating activities

Net income (loss) $693,150 $246,076

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

Depreciation and amortization 407,404 384,688

Long-lived asset and other impairments 29,198 200,575

Goodwill impairment - 441,017

(Gain) loss on divestiture and other, net (278) 3,651

(Gain) loss on early extinguishment of debt 24,944 (10,372)

Cash paid to settle interest-rate swaps - (19,181)

Change in other items, net (49,424) (114,561)

Net cash provided by operating activities $1,104,994 $1,131,893

Cash flows from investing activities

Capital expenditures $(217,757) $(372,262)

Purchases from related parties (2,000) -

Contributions to equity investments - related parties (3,683) (19,017)

Distributions from equity investments in excess of cumulative earnings - 30,075 21,750 related parties

Proceeds from the sale of assets to third parties 8,002 -

(Increase) decrease in materials and supplies inventory and other (1,924) (57,141)

Net cash used in investing activities $(187,287) $(426,670)

Cash flows from financing activities

Borrowings, net of debt issuance costs $400,000 $3,681,173

Repayments of debt (1,132,966) (3,780,390)

Increase (decrease) in outstanding checks (11,757) 691

Distributions to Partnership unitholders (398,896) (563,579)

Distributions to Chipeta noncontrolling interest owner (2,734) (3,923)

Distributions to noncontrolling interest owner of WES Operating (9,934) (11,545)

Net contributions from (distributions to) related parties 6,673 22,674

Finance lease payments (5,295) (12,241)

Unit repurchases (104,366) -

Other (3,492) -

Net cash provided by (used in) financing activities $(1,262,767)$(667,140)

Net increase (decrease) in cash and cash equivalents $(345,060) $38,083

Cash and cash equivalents at beginning of period 444,922 99,962

Cash and cash equivalents at end of period $99,862 $138,045

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

September June 30, thousands 30, 2021 2021

Reconciliation of Gross margin to Adjusted gross margin

Total revenues and other $763,840$719,131

Less:

Cost of product 83,232 78,044

Depreciation and amortization 139,002 137,849

Gross margin 541,606 503,238

Add:

Distributions from equity investments 62,711 70,947

Depreciation and amortization 139,002 137,849

Less:

Reimbursed electricity-related charges recorded as 19,725 17,585 revenues

Adjusted gross margin attributable to noncontrolling 18,187 17,213 interests ^(1)

Adjusted gross margin $705,407$677,236

Adjusted gross margin for natural-gas assets $492,708$469,409

Adjusted gross margin for crude-oil and NGLs assets 148,939 150,317

Adjusted gross margin for produced-water assets 63,760 57,510





For all periods presented, includes (i) the 25% third-party interest in Chipeta ^(1)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 September 30,June 30, 2021 2021

Reconciliation of Net income (loss) to Adjusted EBITDA

Net income (loss) $263,638 $238,277

Add:

Distributions from equity investments 62,711 70,947

Non-cash equity-based compensation expense 6,979 7,121

Interest expense 93,257 95,290

Income tax expense 1,826 1,465

Depreciation and amortization 139,002 137,849

Impairments 1,594 12,738

Other expense 4 30

Less:

Gain (loss) on divestiture and other, net (364) 1,225

Gain (loss) on early extinguishment of debt (24,655) -

Equity income, net - related parties 48,506 58,666

Other income 109 84

Adjusted EBITDA attributable to noncontrolling interests^ (1) 13,835 12,616

Adjusted EBITDA $531,580 $491,126

Reconciliation of Net cash provided by operating activities to Adjusted EBITDA

Net cash provided by operating activities $391,333 $452,111

Interest (income) expense, net 93,257 95,290

Accretion and amortization of long-term obligations, net (1,871) (1,914)

Current income tax expense (benefit) 824 749

Other (income) expense, net (110) (84)

Distributions from equity investments in excess of cumulative earnings - 8,702 9,232 related parties

Changes in assets and liabilities:

Accounts receivable, net 61,609 38,982

Accounts and imbalance payables and accrued liabilities, net (17,204) (55,758)

Other items, net 8,875 (34,866)

Adjusted EBITDA attributable to noncontrolling interests^ (1) (13,835) (12,616)

Adjusted EBITDA $531,580 $491,126

Cash flow information

Net cash provided by operating activities $391,333 $452,111

Net cash used in investing activities (80,883) (59,932)

Net cash provided by (used in) financing activities (516,161) (142,982)





For all periods presented, includes (i) the 25% third-party interest in Chipeta ^(1)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 September 30,June 30, 2021 2021

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

Net cash provided by operating activities $391,333 $452,111

Less:

Capital expenditures 79,829 78,145

Contributions to equity investments - related parties 175 3,422

Add:

Distributions from equity investments in excess of cumulative earnings - 8,702 9,232 related parties

Free cash flow $320,031 $379,776

Cash flow information

Net cash provided by operating activities $391,333 $452,111

Net cash used in investing activities (80,883) (59,932)

Net cash provided by (used in) financing activities (516,161) (142,982)

Western Midstream Partners, LP OPERATING STATISTICS (Unaudited)



Three Months Ended

September 30,June 30, 2021 2021

Throughput for natural-gas assets (MMcf/d)

Gathering, treating, and transportation 378 534

Processing 3,416 3,433

Equity investments ^(1) 443 457

Total throughput 4,237 4,424

Throughput attributable to noncontrolling interests ^(2) 156 159

Total throughput attributable to WES for natural-gas assets 4,081 4,265

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

Gathering, treating, and transportation 304 315

Equity investments ^(3) 350 386

Total throughput 654 701

Throughput attributable to noncontrolling interests ^(2) 13 14

Total throughput attributable to WES for crude-oil and NGLs assets 641 687

Throughput for produced-water assets (MBbls/d)

Gathering and disposal 750 702

Throughput attributable to noncontrolling interests ^(2) 15 14

Total throughput attributable to WES for produced-water assets 735 688

Per-Mcf Adjusted gross margin for natural-gas assets^ (4) $1.31 $ 1.21

Per-Bbl Adjusted gross margin for crude-oil and NGLs assets^ (5) 2.52 2.40

Per-Bbl Adjusted gross margin for produced-water assets^ (6) 0.94 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.

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

^(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

September 30,June 30, 2021 2021

Throughput for natural-gas assets (MMcf/d)

Delaware Basin 1,274 1,244

DJ Basin 1,368 1,413

Equity investments 443 457

Other 1,152 1,310

Total throughput for natural-gas assets 4,237 4,424

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

Delaware Basin 185 184

DJ Basin 87 98

Equity investments 350 386

Other 32 33

Total throughput for crude-oil and NGLs assets654 701

Throughput for produced-water assets (MBbls/d)

Delaware Basin 750 702

Total throughput for produced-water assets 750 702

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SOURCE Western Midstream Partners, LP