Western Midstream Announces Second-Quarter 2020 Results
HOUSTON, Aug. 10, 2020 /PRNewswire/ -- Today Western Midstream Partners, LP (NYSE: WES) ("WES" or the "Partnership") announced second-quarter 2020 financial and operating results. Net income (loss) available to limited partners for the second quarter of 2020 totaled $267.6 million, or $0.60 per common unit (diluted), with second-quarter 2020 Adjusted EBITDA((1)) totaling $514.4 million, second-quarter 2020 Cash flows from operating activities totaling $345.7 million, and second-quarter 2020 Free cash flow((1)) totaling $208.6 million.
SECOND-QUARTER HIGHLIGHTS
-- Gathered record Delaware Basin produced-water throughput of 773 MBbls/d,
representing an 8-percent sequential-quarter increase
-- Achieved record Delaware oil throughput of 202 MBbls/d, representing a
5-percent sequential-quarter increase
-- Executed open-market repurchases for $64.5 million of Senior Notes due
2021, 2022, and 2023 for an aggregate repurchase price of $63 million
(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.
In July 2020, WES announced its second-quarter 2020 per-unit distribution of $0.3110, which is unchanged from WES's first-quarter 2020 per-unit distribution. Second-quarter 2020 Free cash flow after distributions totaled $67.7 million.
"Less-than-expected producer curtailments, commercial successes, and realized cost efficiencies underpin our impressive and above-expectation second-quarter results," said Chief Executive Officer, Michael Ure. "Although our sector continues to face significant uncertainty, we are optimistic that activity will increase into 2021 and confident in our ability to generate meaningful free cash flow after distributions while advancing our long-term objectives."
Second-quarter 2020 total natural-gas throughput((1)) averaged 4.4 Bcf/d, representing a 1-percent sequential-quarter decrease and a 3-percent increase from second-quarter 2019. Second-quarter 2020 total throughput for crude-oil and NGLs assets((1)) averaged 711 MBbls/d, representing a 6-percent sequential-quarter decrease and a 19-percent increase from second-quarter 2019. Second-quarter 2020 total throughput for produced-water assets averaged 773 MBbls/d, representing an 8-percent sequential-quarter increase and a 50-percent increase from second-quarter 2019.
Second-quarter 2020 and year-to-date capital expenditures((2) )totaled $69.6 million and $227.6 million, respectively.
(1) Represents total throughput
attributable to WES, which
excludes the 25% third-party
interest in Chipeta and the 2.0%
Occidental subsidiary-owned
limited partner interest in WES
Operating, which collectively
represent WES's noncontrolling
interests.
(2) Accrual-based, includes equity
investments, and excludes
capitalized interest and capital
expenditures associated with the
25% third-party interest in
Chipeta.
REVISED 2020 GUIDANCE
Revised 2020 guidance is based on to-date results and customer-provided production-forecast information obtained by WES. Updated guidance is as follows:
-- Adjusted EBITDA((1)) between $1.85 billion and $1.90 billion, which
represents a $100 million increase to the midpoint of guidance
previously issued with WES's first-quarter 2020 earnings results ("prior
guidance")
-- Total capital expenditures((2)) between $400 million and $450 million,
which represents a $75 million reduction to the prior-guidance midpoint.
Total year capital expenditures include capital expenditures
attributable to the second Latham train completed during first-quarter
2020 and the addition of approximately 28,750 horsepower of compression,
65 miles of gathering lines, 90 MBbls/d of Delaware Basin
saltwater-disposal capacity, and two 30 MBbls/d oil-stabilization
trains, also in the Delaware Basin
"Second-quarter commodity-price increases lessened the adverse impact of production curtailments and current commodity prices support continued producer activity," said Chief Financial Officer, Mike Pearl. "We expect incremental drilling and completion activity to continue into 2021 and beyond so long as commodity prices remain supportive. Irrespective of market conditions, we will remain committed to exercising capital discipline and realizing cost savings to maximize Free cash flow after distributions, which we will prioritize toward leverage reduction."
(1) A reconciliation of the Adjusted
EBITDA range to net cash
provided by operating activities
and net income (loss) is not
provided because the items
necessary to estimate such
amounts are not reasonably
estimable at this time.
(2) Accrual-based, includes equity
investments, and excludes
capitalized interest and capital
expenditures associated with the
25% third-party interest in
Chipeta.
CONFERENCE CALL TOMORROW AT 1 P.M. CDT
WES will host a conference call on Tuesday, August 11, 2020, at 1:00 p.m. Central Daylight Time (2:00 p.m. Eastern Daylight Time) to discuss second-quarter 2020 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 2048166. 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 for two weeks following the call.
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 the Rocky Mountains, North-central Pennsylvania, Texas, and New Mexico, WES is engaged in the business of gathering, compressing, treating, processing, and transporting natural gas; gathering, stabilizing, and transporting condensate, natural-gas liquids, and crude oil; and gathering and disposing of produced water for 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 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 meet financial guidance or distribution expectations; 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 S. Shults
Vice President, Investor Relations and Communications
Kristen.Shults@westernmidstream.com
832.636.6000
Abby Dempsey
Investor Relations Supervisor
Abby.Dempsey@westernmidstream.com
832.636.6000
Western Midstream Partners, LP
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
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.
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 interests owners' proportionate share of revenues and expenses.
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 interests owners' proportionate share of revenues and cost of product.
Below are reconciliations of (i) net cash provided by operating activities (GAAP) to Free cash flow (non-GAAP), (ii) net income (loss) (GAAP) and net cash provided by operating activities (GAAP) to Adjusted EBITDA (non-GAAP), and (iii) operating income (loss) (GAAP) to Adjusted gross margin (non-GAAP), as required under Regulation G of the Securities Exchange Act of 1934. Management believes that WES's Free cash flow, Adjusted EBITDA, and Adjusted gross margin 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. Free cash flow, Adjusted EBITDA, and Adjusted gross margin as defined by WES, may not be comparable to similarly titled measures used by other companies. Therefore, WES's Free cash flow, Adjusted EBITDA, and Adjusted gross margin should be considered in conjunction with net income (loss) attributable to Western Midstream Partners, LP and other applicable performance measures, such as operating income (loss) or cash flows from operating activities.
Western Midstream Partners, LP
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (CONTINUED)
Free Cash Flow
Three Months Ended Six Months Ended
June 30,
June 30,
thousands 2020 2019 2020 2019
Reconciliation of Net cash provided by operating activities to Free cash flow
Net cash provided by operating activities $
345,688 $
343,458 $
738,999 $
686,531
Less:
Capital expenditures 140,249 318,281 313,065 704,425
Contributions to equity investments 5,104 40,790 16,064 77,333
Add:
Distributions from equity investments in excess of cumulative earnings 8,288 9,260 13,340 17,052
Free cash flow $
208,623 $
(6,353) $
423,210 $
(78,175)
Cash flow information
Net cash provided by operating activities $
738,999 $
686,531
Net cash used in investing activities (355,001) (2,865,168)
Net cash provided by (used in) financing activities (424,222) 2,182,290
---
Western Midstream Partners, LP
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (CONTINUED)
Adjusted EBITDA
Three Months Ended
Six Months Ended
June 30,
June 30,
thousands 2020 2019 2020 2019
Reconciliation of Net income (loss) to Adjusted EBITDA
Net income (loss) $
281,341 $
175,058 $
(8,059) $
387,037
Add:
Distributions from equity investments 71,576 70,522 137,496 132,535
Non-cash equity-based compensation expense 5,677 4,343 10,911 6,141
Interest expense 94,654 79,472 183,240 145,348
Income tax expense 5,044 1,278 5,044 11,370
Depreciation and amortization 119,805 121,117 252,124 235,063
Impairments (1) 10,150 797 606,952 1,187
Other expense (2,098) 58,639 1,950 93,852
Less:
Gain (loss) on divestiture and other, net (2,843) (1,061) (2,883) (1,651)
Gain (loss) on early extinguishment of debt 1,395 8,740
Equity income, net - related parties 54,415 63,598 115,762 121,590
Interest income - Anadarko note receivable 4,225 4,225 8,450 8,450
Other income 1,652 1,652
Income tax benefit 4,280
Adjusted EBITDA attributable to noncontrolling interests (2) 12,864 11,544 25,629 22,894
Adjusted EBITDA $
514,441 $
432,920 $
1,028,028 $
861,250
Reconciliation of Net cash provided by operating activities to Adjusted EBITDA
Net cash provided by operating activities $
345,688 $
343,458 $
738,999 $
686,531
Interest (income) expense, net 90,429 75,247 174,790 136,898
Uncontributed cash-based compensation awards 1,218 648
Accretion and amortization of long-term obligations, net (2,197) (1,337) (4,297) (2,848)
Current income tax expense (benefit) 2,077 458 (35) 6,485
Other (income) expense, net (3) (2,173) (470) (412) (902)
Cash paid to settle interest-rate swaps 12,763 12,763
Distributions from equity investments in excess of cumulative earnings - related parties 8,288 9,260 13,340 17,052
Changes in assets and liabilities:
Accounts receivable, net 207,838 6,818 200,136 (2,668)
Accounts and imbalance payables and accrued liabilities, net (101,247) 25,669 (72,323) 81,198
Other items, net (34,161) (15,857) (9,304) (38,250)
Adjusted EBITDA attributable to noncontrolling interests (2) (12,864) (11,544) (25,629) (22,894)
Adjusted EBITDA $
514,441 $
432,920 $
1,028,028 $
861,250
Cash flow information
Net cash provided by operating activities $
738,999 $
686,531
Net cash used in investing activities (355,001) (2,865,168)
Net cash provided by (used in) financing activities (424,222) 2,182,290
---
(1) Includes goodwill impairment for
the six months ended June 30,
2020.
(2) 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.
(3) Excludes non-cash losses on
interest-rate swaps of $59.0
million and $94.6 million for the
three and six months ended June
30, 2019, respectively.
Western Midstream Partners, LP
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (CONTINUED)
Adjusted Gross Margin
Three Months Ended
Six Months Ended
June 30,
June 30,
thousands 2020 2019 2020 2019
Reconciliation of Operating income (loss) to Adjusted gross margin
Operating income (loss) $
373,766 $
310,060 $
158,863 $
628,988
Add:
Distributions from equity investments 71,576 70,522 137,496 132,535
Operation and maintenance 145,186 148,431 304,377 291,260
General and administrative 36,423 30,027 76,888 52,871
Property and other taxes 19,395 14,282 37,871 30,567
Depreciation and amortization 119,805 121,117 252,124 235,063
Impairments (1) 10,150 797 606,952 1,187
Less:
Gain (loss) on divestiture and other, net (2,843) (1,061) (2,883) (1,651)
Equity income, net - related parties 54,415 63,598 115,762 121,590
Reimbursed electricity-related charges recorded as revenues 21,605 20,189 40,828 36,778
Adjusted gross margin attributable to noncontrolling interests (2) 16,167 16,034 32,592 31,584
Adjusted gross margin $
686,957 $
596,476 $
1,388,272 $
1,184,170
Adjusted gross margin for natural-gas assets $
454,476 $
412,494 $
925,842 $
824,922
Adjusted gross margin for crude-oil and NGLs assets 165,767 137,716 333,595 269,086
Adjusted gross margin for produced-water assets 66,714 46,266 128,835 90,162
---
(1) Includes goodwill impairment for
the six months ended June 30,
2020.
(2) 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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
thousands except per-unit amounts 2020 2019 2020 2019
Revenues and other
Service revenues - fee based $
642,628 $
593,544 $
1,344,024 $
1,173,518
Service revenues - product based 7,000 16,675 22,921 36,054
Product sales 21,736 74,469 78,385 146,602
Other 391 366 738 763
Total revenues and other 671,755 685,054 1,446,068 1,356,937
Equity income, net - related parties 54,415 63,598 115,762 121,590
Operating expenses
Cost of product 18,602 122,877 121,872 236,940
Operation and maintenance 145,186 148,431 304,377 291,260
General and administrative 36,423 30,027 76,888 52,871
Property and other taxes 19,395 14,282 37,871 30,567
Depreciation and amortization 119,805 121,117 252,124 235,063
Long-lived asset impairments 10,150 797 165,935 1,187
Goodwill impairment 441,017
Total operating expenses 349,561 437,531 1,400,084 847,888
Gain (loss) on divestiture and other, net (2,843) (1,061) (2,883) (1,651)
Operating income (loss) 373,766 310,060 158,863 628,988
Interest income - Anadarko note receivable 4,225 4,225 8,450 8,450
Interest expense (94,654) (79,472) (183,240) (145,348)
Gain (loss) on early extinguishment of debt 1,395 8,740
Other income (expense), net (1) 1,653 (58,477) (108) (93,683)
Income (loss) before income taxes 286,385 176,336 (7,295) 398,407
Income tax expense (benefit) 5,044 1,278 764 11,370
Net income (loss) 281,341 175,058 (8,059) 387,037
Net income (loss) attributable to noncontrolling interests 8,304 5,464 (24,569) 98,783
Net income (loss) attributable to Western Midstream Partners, LP $
273,037 $
169,594 $
16,510 $
288,254
Limited partners' interest in net income (loss):
Net income (loss) attributable to Western Midstream Partners, LP $
273,037 $
169,594 $
16,510 $
288,254
Pre-acquisition net (income) loss allocated to Anadarko (163) (29,279)
General partner interest in net (income) loss (5,461) (330)
Limited partners' interest in net income (loss) $
267,576 $
169,431 $
16,180 $
258,975
Net income (loss) per common unit - basic and diluted $
0.60 $
0.37 $
0.04 $
0.69
Weighted-average common units outstanding - basic and diluted 443,973 453,000 443,972 376,702
---
(1) Includes losses associated
with the interest-rate swap
agreements for the three and
six months ended June 30,
2019.
Western Midstream Partners, LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
thousands except number of units June 30, December 31,
2020 2019
Total current assets $
559,163 $
402,412
Anadarko note receivable 259,481 260,000
Net property, plant, and equipment 8,914,716 9,064,931
Other assets 2,219,883 2,619,110
Total assets $
11,953,243 $
12,346,453
Total current liabilities $
891,046 $
485,954
Long-term debt 7,544,396 7,951,565
Asset retirement obligations 327,971 336,396
Other liabilities 254,313 227,245
Total liabilities 9,017,726 9,001,160
Equity and partners' capital
Common units (443,992,499 and 443,971,409 units issued and outstanding at June 30, 2020, and
December 31, 2019, respectively) 2,820,327 3,209,947
General partner units (9,060,641 units issued and outstanding at June 30, 2020, and December
31, 2019) (22,347) (14,224)
Noncontrolling interests 137,537 149,570
Total liabilities, equity, and partners' capital $
11,953,243 $
12,346,453
---
Western Midstream Partners, LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
thousands 2020 2019
Cash flows from operating activities
Net income (loss) $
(8,059) $
387,037
Adjustments to reconcile net income (loss) to net cash provided by operating activities and changes in assets and liabilities:
Depreciation and amortization 252,124 235,063
Long-lived asset impairments 165,935 1,187
Goodwill impairment 441,017
(Gain) loss on divestiture and other, net 2,883 1,651
(Gain) loss on early extinguishment of debt (8,740)
(Gain) loss on interest-rate swaps 94,585
Cash paid to settle interest-rate swaps (12,763)
Change in other items, net (93,398) (32,992)
Net cash provided by operating activities $
738,999 $
686,531
Cash flows from investing activities
Capital expenditures $
(313,065) $
(704,425)
Acquisitions from related parties (2,007,501)
Acquisitions from third parties (93,303)
Contributions to equity investments - related parties (16,064) (77,333)
Distributions from equity investments in excess of cumulative earnings - related parties 13,340 17,052
Proceeds from the sale of assets to third parties 342
Other (39,212)
Net cash used in investing activities $
(355,001) $
(2,865,168)
Cash flows from financing activities
Borrowings, net of debt issuance costs $
3,586,173 $
2,710,750
Repayments of debt (3,583,149) (467,595)
Increase (decrease) in outstanding checks (4,686) (5,662)
Registration expenses related to the issuance of Partnership common units (855)
Distributions to Partnership unitholders (422,679) (408,234)
Distributions to Chipeta noncontrolling interest owner (2,775) (3,793)
Distributions to noncontrolling interest owners of WES Operating (8,676) (106,666)
Net contributions from (distributions to) related parties 21,832 456,938
Above-market component of swap agreements with Anadarko 7,407
Finance lease payments (10,262)
Net cash provided by (used in) financing activities $
(424,222) $
2,182,290
Net increase (decrease) in cash and cash equivalents $
(40,224) $
3,653
Cash and cash equivalents at beginning of period 99,962 92,142
Cash and cash equivalents at end of period $
59,738 $
95,795
---
Western Midstream Partners, LP
OPERATING STATISTICS
(Unaudited)
Three Months Ended Six Months Ended
June 30,
June 30,
2020 2019 2020 2019
Throughput for natural-gas assets (MMcf/d)
Gathering, treating, and transportation 554 528 547 527
Processing 3,563 3,524 3,605 3,498
Equity investments (1) 458 402 451 390
Total throughput 4,575 4,454 4,603 4,415
Throughput attributable to noncontrolling interests (2) 162 178 164 177
Total throughput attributable to WES for natural-gas assets 4,413 4,276 4,439 4,238
Throughput for crude-oil and NGLs assets (MBbls/d)
Gathering, treating, and transportation 359 302 360 303
Equity investments (3) 367 311 391 308
Total throughput 726 613 751 611
Throughput attributable to noncontrolling interests (2) 15 13 15 13
Total throughput attributable to WES for crude-oil and NGLs assets 711 600 736 598
Throughput for produced-water assets (MBbls/d)
Gathering and disposal 773 515 745 516
Throughput attributable to noncontrolling interests (2) 15 10 15 10
Total throughput attributable to WES for produced-water assets 758 505 730 506
Per-Mcf Adjusted gross margin for natural-gas assets (4) $
1.13 $
1.06 $
1.15 $
1.08
Per-Bbl Adjusted gross margin for crude-oil and NGLs assets (5) 2.56 2.52 2.49 2.49
Per-Bbl Adjusted gross margin for produced-water assets (6) 0.97 1.01 0.97 0.98
---
(1) Represents the 14.81% share of
average Fort Union throughput, 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 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.
(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,
2020 2019 2020 2019 2020 2019
Natural gas Crude oil & NGLs Produced water
(MMcf/d)
(MBbls/d)
(MBbls/d)
Delaware Basin 1,309 1,179 202 141 773 515
DJ Basin 1,329 1,266 113 112
Equity investments 458 402 367 311
Other 1,479 1,607 44 49
Total throughput 4,575 4,454 726 613 773 515
---
Six Months Ended June 30,
2020 2019 2020 2019 2020 2019
Natural gas Crude oil & NGLs Produced water
(MMcf/d)
(MBbls/d)
(MBbls/d)
Delaware Basin 1,349 1,178 197 143 745 516
DJ Basin 1,368 1,262 120 107
Equity investments 451 390 391 308
Other 1,435 1,585 43 53
Total throughput 4,603 4,415 751 611 745 516
---
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SOURCE Western Midstream Partners, LP
