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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Western Midstream Partners LP | NYSE:WES | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 42.07 | 0 | 09:00:00 |
Announces Revised 2023 Guidance
Today Western Midstream Partners, LP (NYSE: WES) (“WES” or the “Partnership”) announced second-quarter 2023 financial and operating results. Net income (loss) attributable to limited partners for the second quarter of 2023 totaled $247.1 million, or $0.64 per common unit (diluted), with second-quarter 2023 Adjusted EBITDA(1) totaling $488.3 million. Second-quarter 2023 Cash flows provided by operating activities totaled $490.8 million, and second-quarter 2023 Free cash flow(1) totaled $340.1 million.
RECENT HIGHLIGHTS
On August 14, 2023, WES will pay its second-quarter 2023 per-unit Base Distribution of $0.5625, representing a 12.5-percent sequential-quarter increase to the Partnership’s first-quarter Base Distribution. Second-quarter 2023 Free cash flow(1) after distributions, which included the payment of our first Enhanced Distribution, totaled $3.1 million. Second-quarter 2023 and year-to-date capital expenditures(3) totaled $184.3 million and $363.6 million, respectively.
Second-quarter 2023 natural-gas throughput(4) averaged 4.3 Bcf/d, representing a 4-percent sequential-quarter increase. Second-quarter 2023 throughput for crude-oil and NGLs assets(4) averaged 626 MBbls/d, representing a 2-percent sequential-quarter increase. Second-quarter 2023 throughput for produced-water assets(4) averaged 943 MBbls/d, representing a 1-percent sequential-quarter decrease.
“Once again, we experienced record natural-gas and crude-oil and NGLs throughput in the Delaware Basin,” said Michael Ure, President and Chief Executive Officer. “Additionally, second-quarter throughput from our Utah and Wyoming assets increased as inclement weather experienced during the first quarter subsided, driving an overall increase in our natural-gas and crude-oil volumes.”
Mr. Ure continued, “Despite these throughput increases, second-quarter Adjusted EBITDA declined on a sequential-quarter basis primarily due to an expected seasonal increase in operation and maintenance expense and normalized property and other taxes.”
“We still anticipate year-over-year throughput growth across all three products. However, producer operational challenges appeared during the second quarter when new wells came online and outperformed expectations leading to challenges across the production chain. Based on discussions with our producers and after analyzing their revised forecasts, we expect these challenges to be temporary in nature. However, we do expect these challenges to continue into the second half of 2023, causing year-over-year growth to be at a slower pace than our initial expectations.”
“These throughput changes, specifically in the Delaware Basin, have caused us to revise our 2023 Adjusted EBITDA guidance range to $1.950 billion to $2.050 billion, a reduction of approximately 5-percent at the midpoint. With that said, we continue to believe that our producers will meet their volume expectations over the long-run, and the outperformance from the most recent wells further support our belief that our assets service the best rock in the Delaware Basin.”
“While we are disappointed in the new outlook for the second half of 2023, we are confident in the protections that our stable, long-term contract structures provide. In situations such as these, when current year cash flow expectations decline due to volumetric changes, the protections included in our cost-of-service contracts should benefit WES in future periods, allowing us to still earn our stated rate of return over the life of the contract.”
“Subsequent to quarter end, we announced a 12.5-percent increase in the quarterly Base Distribution to $0.5625 per unit. Our ability to significantly reduce leverage, coupled with numerous commercial successes, supported this distribution increase. Additionally, while our growth may be more weighted towards 2024 than originally anticipated, our confidence in our underlying business and contract structures reaffirms our decision regarding the Base Distribution increase and our view that the long-term trajectory of WES remains strong. Furthermore, our investment-grade balance sheet and strong financial position continue to provide optionality and allow us to continue generating long-term value for our stakeholders.”
“WES remains committed to executing on its balanced approach of returning capital to our stakeholders. During the second quarter, we utilized a portion of the net proceeds from our $750 million senior notes issuance in mid-March to repurchase $117.6 million of near-term maturity senior notes at approximately 94-percent of par. These activities have continued into the third quarter, and we have now repurchased a total of $276.7 million of senior notes to date since the beginning of the second quarter.”
“Moving to operations, in May, we announced the sanctioning of the 250 MMcf/d North Loving Plant to support our producers’ long-term throughput growth needs in the Delaware Basin. This new plant is supported by long-term commercial agreements with significant minimum-volume commitments, and is expected to be online by the end of 2024, or early 2025. Together with Mentone Train III, we are growing our Delaware Basin processing capacity by approximately 36-percent, securing our position as one of the leading natural-gas processors in the Delaware Basin,” concluded Mr. Ure.
REVISED 2023 GUIDANCE
Based on the most current production forecast information from our producer customers, WES is providing revised 2023 guidance as follows:
CONFERENCE CALL TOMORROW AT 1:00 P.M. CT
WES will host a conference call on Wednesday, August 9, 2023, at 1:00 p.m. Central Time (2:00 p.m. Eastern Time) to discuss its second-quarter 2023 results. To participate, individuals should dial 888-770-7129 (Domestic) or 929-203-2109 (International) ten to fifteen minutes before the scheduled conference call time and enter the participant access code 2187921. 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; 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 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.
_______________________________________(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)
A reconciliation of the Adjusted EBITDA range to net cash provided by operating activities and net income (loss), and a reconciliation of the Free cash flow range to net cash provided by operating activities, is not provided because the items necessary to estimate such amounts are not reasonably estimable at this time. These items, net of tax, may include, but are not limited to, impairments of assets and other charges, divestiture costs, acquisition costs, or changes in accounting principles. All of these items could significantly impact such financial measures. At this time, WES is not able to estimate the aggregate impact, if any, of these items on future period reported earnings. Accordingly, WES is not able to provide a corresponding GAAP equivalent for the Adjusted EBITDA or Free cash flow ranges.
(3)
Accrual-based, includes equity investments, excludes capitalized interest, and excludes capital expenditures associated with the 25% third-party interest in Chipeta.
(4)
Represents total throughput attributable to WES, which excludes (i) the 2.0% limited partner interest in WES Operating owned by an Occidental subsidiary and (ii) for natural-gas throughput, the 25% third-party interest in Chipeta, which collectively represent WES’s noncontrolling interests.
(5)
Subject to Board review and approval on a quarterly basis based on the needs of the business.
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
2023
2022
2023
2022
Revenues and other
Service revenues – fee based
$
661,506
$
655,952
$
1,309,373
$
1,287,550
Service revenues – product based
46,956
70,498
93,766
111,365
Product sales
29,659
149,736
68,684
235,325
Other
152
233
432
476
Total revenues and other
738,273
876,419
1,472,255
1,634,716
Equity income, net – related parties
42,324
48,464
81,345
98,071
Operating expenses
Cost of product
44,746
148,556
96,205
221,404
Operation and maintenance
183,431
168,153
357,670
297,129
General and administrative
53,405
47,848
104,522
96,450
Property and other taxes
18,547
22,662
25,378
41,104
Depreciation and amortization
143,492
139,036
288,118
273,618
Long-lived asset and other impairments
234
90
52,635
90
Total operating expenses
443,855
526,345
924,528
929,795
Gain (loss) on divestiture and other, net
(70
)
(1,150
)
(2,188
)
(780
)
Operating income (loss)
336,672
397,388
626,884
802,212
Interest expense
(86,182
)
(80,772
)
(167,852
)
(166,227
)
Gain (loss) on early extinguishment of debt
6,813
91
6,813
91
Other income (expense), net
2,872
(45
)
4,087
61
Income (loss) before income taxes
260,175
316,662
469,932
636,137
Income tax expense (benefit)
659
1,491
2,075
3,296
Net income (loss)
259,516
315,171
467,857
632,841
Net income (loss) attributable to noncontrolling interests
6,595
8,854
11,291
17,807
Net income (loss) attributable to Western Midstream Partners, LP
$
252,921
$
306,317
$
456,566
$
615,034
Limited partners’ interest in net income (loss):
Net income (loss) attributable to Western Midstream Partners, LP
$
252,921
$
306,317
$
456,566
$
615,034
General partner interest in net (income) loss
(5,821
)
(6,767
)
(10,507
)
(13,550
)
Limited partners’ interest in net income (loss)
$
247,100
$
299,550
$
446,059
$
601,484
Net income (loss) per common unit – basic
$
0.64
$
0.74
$
1.16
$
1.49
Net income (loss) per common unit – diluted
$
0.64
$
0.74
$
1.16
$
1.49
Weighted-average common units outstanding – basic
384,614
403,027
384,542
403,140
Weighted-average common units outstanding – diluted
385,510
404,162
385,665
404,280
Western Midstream Partners, LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
thousands except number of units
June 30, 2023
December 31, 2022
Total current assets
$
797,203
$
900,425
Net property, plant, and equipment
8,600,970
8,541,600
Other assets
1,820,777
1,829,603
Total assets
$
11,218,950
$
11,271,628
Total current liabilities
$
621,544
$
903,857
Long-term debt
6,824,214
6,569,582
Asset retirement obligations
301,975
290,021
Other liabilities
449,054
400,053
Total liabilities
8,196,787
8,163,513
Equity and partners’ capital
Common units (384,613,934 and 384,070,984 units issued and outstanding at June 30, 2023, and December 31, 2022, respectively)
2,888,745
2,969,604
General partner units (9,060,641 units issued and outstanding at June 30, 2023, and December 31, 2022)
322
2,105
Noncontrolling interests
133,096
136,406
Total liabilities, equity, and partners’ capital
$
11,218,950
$
11,271,628
Western Midstream Partners, LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
thousands
2023
2022
Cash flows from operating activities
Net income (loss)
$
467,857
$
632,841
Adjustments to reconcile net income (loss) to net cash provided by operating activities and changes in assets and liabilities:
Depreciation and amortization
288,118
273,618
Long-lived asset and other impairments
52,635
90
(Gain) loss on divestiture and other, net
2,188
780
(Gain) loss on early extinguishment of debt
(6,813
)
(91
)
Change in other items, net
(10,738
)
(163,799
)
Net cash provided by operating activities
$
793,247
$
743,439
Cash flows from investing activities
Capital expenditures
$
(334,570
)
$
(191,357
)
Contributions to equity investments - related parties
(132
)
(5,040
)
Distributions from equity investments in excess of cumulative earnings – related parties
23,179
25,407
Proceeds from the sale of assets to third parties
—
1,096
(Increase) decrease in materials and supplies inventory and other
(19,145
)
(1,053
)
Net cash used in investing activities
$
(330,668
)
$
(170,947
)
Cash flows from financing activities
Borrowings, net of debt issuance costs
$
956,225
$
634,010
Repayments of debt
(918,332
)
(883,548
)
Increase (decrease) in outstanding checks
(2,951
)
13,038
Distributions to Partnership unitholders
(533,556
)
(340,946
)
Distributions to Chipeta noncontrolling interest owner
(3,470
)
(3,182
)
Distributions to noncontrolling interest owner of WES Operating
(11,131
)
(8,812
)
Net contributions from (distributions to) related parties
—
784
Unit repurchases
(7,102
)
(79,217
)
Other
(14,965
)
(9,184
)
Net cash provided by (used in) financing activities
$
(535,282
)
$
(677,057
)
Net increase (decrease) in cash and cash equivalents
$
(72,703
)
$
(104,565
)
Cash and cash equivalents at beginning of period
286,656
201,999
Cash and cash equivalents at end of period
$
213,953
$
97,434
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)
(Unaudited)
Adjusted Gross Margin
Three Months Ended
thousands
June 30, 2023
March 31, 2023
Reconciliation of Gross margin to Adjusted gross margin
Total revenues and other
$
738,273
$
733,982
Less:
Cost of product
44,746
51,459
Depreciation and amortization
143,492
144,626
Gross margin
550,035
537,897
Add:
Distributions from equity investments
54,075
51,975
Depreciation and amortization
143,492
144,626
Less:
Reimbursed electricity-related charges recorded as revenues
23,286
23,569
Adjusted gross margin attributable to noncontrolling interests (1)
16,914
15,774
Adjusted gross margin
$
707,402
$
695,155
Gross margin
Gross margin for natural-gas assets (2)
$
409,634
$
393,673
Gross margin for crude-oil and NGLs assets (2)
88,024
89,281
Gross margin for produced-water assets (2)
59,130
59,549
Adjusted gross margin
Adjusted gross margin for natural-gas assets
$
489,476
$
480,009
Adjusted gross margin for crude-oil and NGLs assets
147,036
145,577
Adjusted gross margin for produced-water assets
70,890
69,569
(1)
For all periods presented, includes (i) the 25% third-party interest in Chipeta and (ii) the 2.0% limited partner interest in WES Operating owned by an Occidental subsidiary, which collectively represent WES’s noncontrolling interests.
(2)
Excludes corporate-level depreciation and amortization.
Western Midstream Partners, LP
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (CONTINUED)
(Unaudited)
Adjusted EBITDA
Three Months Ended
thousands
June 30, 2023
March 31, 2023
Reconciliation of Net income (loss) to Adjusted EBITDA
Net income (loss)
$
259,516
$
208,341
Add:
Distributions from equity investments
54,075
51,975
Non-cash equity-based compensation expense
7,665
7,199
Interest expense
86,182
81,670
Income tax expense
659
1,416
Depreciation and amortization
143,492
144,626
Impairments
234
52,401
Other expense
199
200
Less:
Gain (loss) on divestiture and other, net
(70
)
(2,118
)
Gain (loss) on early extinguishment of debt
6,813
—
Equity income, net – related parties
42,324
39,021
Other income
2,872
1,215
Adjusted EBITDA attributable to noncontrolling interests (1)
11,737
11,015
Adjusted EBITDA
$
488,346
$
498,695
Reconciliation of Net cash provided by operating activities to Adjusted EBITDA
Net cash provided by operating activities
$
490,823
$
302,424
Interest (income) expense, net
86,182
81,670
Accretion and amortization of long-term obligations, net
(2,403
)
(1,692
)
Current income tax expense (benefit)
728
492
Other (income) expense, net
(2,872
)
(1,215
)
Distributions from equity investments in excess of cumulative earnings – related parties
10,813
12,366
Changes in assets and liabilities:
Accounts receivable, net
(4,078
)
4,037
Accounts and imbalance payables and accrued liabilities, net
(36,885
)
136,460
Other items, net
(42,225
)
(24,832
)
Adjusted EBITDA attributable to noncontrolling interests (1)
(11,737
)
(11,015
)
Adjusted EBITDA
$
488,346
$
498,695
Cash flow information
Net cash provided by operating activities
$
490,823
$
302,424
Net cash used in investing activities
(151,490
)
(179,178
)
Net cash provided by (used in) financing activities
(238,025
)
(297,257
)
(1)
For all periods presented, includes (i) the 25% third-party interest in Chipeta and (ii) the 2.0% limited partner interest in WES Operating owned by an Occidental subsidiary, which collectively represent WES’s noncontrolling interests.
Western Midstream Partners, LP
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (CONTINUED)
(Unaudited)
Free Cash Flow
Three Months Ended
thousands
June 30, 2023
March 31, 2023
Reconciliation of Net cash provided by operating activities to Free cash flow
Net cash provided by operating activities
$
490,823
$
302,424
Less:
Capital expenditures
161,482
173,088
Contributions to equity investments – related parties
22
110
Add:
Distributions from equity investments in excess of cumulative earnings – related parties
10,813
12,366
Free cash flow
$
340,132
$
141,592
Cash flow information
Net cash provided by operating activities
$
490,823
$
302,424
Net cash used in investing activities
(151,490
)
(179,178
)
Net cash provided by (used in) financing activities
(238,025
)
(297,257
)
Western Midstream Partners, LP
OPERATING STATISTICS
(Unaudited)
Three Months Ended
June 30, 2023
March 31, 2023
Throughput for natural-gas assets (MMcf/d)
Gathering, treating, and transportation
395
369
Processing
3,567
3,454
Equity investments (1)
454
423
Total throughput
4,416
4,246
Throughput attributable to noncontrolling interests (2)
162
139
Total throughput attributable to WES for natural-gas assets
4,254
4,107
Throughput for crude-oil and NGLs assets (MBbls/d)
Gathering, treating, and transportation
316
309
Equity investments (1)
323
314
Total throughput
639
623
Throughput attributable to noncontrolling interests (2)
13
12
Total throughput attributable to WES for crude-oil and NGLs assets
626
611
Throughput for produced-water assets (MBbls/d)
Gathering and disposal
963
977
Throughput attributable to noncontrolling interests (2)
20
20
Total throughput attributable to WES for produced-water assets
943
957
Per-Mcf Gross margin for natural-gas assets (3)
$
1.02
$
1.03
Per-Bbl Gross margin for crude-oil and NGLs assets (3)
1.51
1.59
Per-Bbl Gross margin for produced-water assets (3)
0.68
0.68
Per-Mcf Adjusted gross margin for natural-gas assets (4)
$
1.26
$
1.30
Per-Bbl Adjusted gross margin for crude-oil and NGLs assets (4)
2.58
2.65
Per-Bbl Adjusted gross margin for produced-water assets (4)
0.83
0.81
(1)
Represents our share of average throughput for investments accounted for under the equity method of accounting.
(2)
For all periods presented, includes (i) the 2.0% limited partner interest in WES Operating owned by an Occidental subsidiary and (ii) for natural-gas assets, the 25% third-party interest in Chipeta, which collectively represent WES’s noncontrolling interests.
(3)
Average for period. Calculated as Gross margin for natural-gas assets, crude-oil and NGLs assets, or produced-water assets, divided by the respective total throughput (MMcf or MBbls) for natural-gas assets, crude-oil and NGLs assets, or produced-water assets.
(4)
Average for period. Calculated as Adjusted gross margin for natural-gas assets, crude-oil and NGLs assets, or produced-water assets, divided by the respective total throughput (MMcf or MBbls) attributable to WES for natural-gas assets, crude-oil and NGLs assets, or produced-water assets.
Western Midstream Partners, LP
OPERATING STATISTICS (CONTINUED)
(Unaudited)
Three Months Ended
June 30, 2023
March 31, 2023
Throughput for natural-gas assets (MMcf/d)
Delaware Basin
1,592
1,569
DJ Basin
1,309
1,306
Equity investments
454
423
Other
1,061
948
Total throughput for natural-gas assets
4,416
4,246
Throughput for crude-oil and NGLs assets (MBbls/d)
Delaware Basin
208
205
DJ Basin
66
69
Equity investments
323
314
Other
42
35
Total throughput for crude-oil and NGLs assets
639
623
Throughput for produced-water assets (MBbls/d)
Delaware Basin
963
977
Total throughput for produced-water assets
963
977
View source version on businesswire.com: https://www.businesswire.com/news/home/20230808469408/en/
Daniel Jenkins Director, Investor Relations Investors@westernmidstream.com 866.512.3523 Rhianna Disch Manager, Investor Relations Investors@westernmidstream.com 866.512.3523
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