Western Gas Equity Partners: Fourth-Quarter And Full-Year 2020 Results ANNOUNCES 2021 GUIDANCE HOUSTON—

The following excerpt is from the company's SEC filing.
(PRNEWSWIRE)—February 23, 2021 – Today Western Midstream Partners, LP (NYSE: WES) (“WES” or the “Partnership”) announced fourth-quarter and full-year 2020 financial and operating results. Net income (loss) available to limited partners for the fourth quarter of 2020 totaled $258.2 million, or $0.62 per common unit (diluted), with fourth-quarter 2020 Adjusted EBITDA
totaling $484.0 million, fourth-quarter 2020 Cash flows from operating activities totaling $505.5 million, and fourth-quarter 2020 Free cash flow
totaling $464.7 million. Net income (loss) available to limited partners for 2020 totaled $515.9 millio n, or $1.18 per common unit (diluted), with full-year 2020 Adjusted EBITDA
totaling $2.0 billion, full-year 2020 Cash flows from operating activities totaling $1.6 billion, and full-year 2020 Free cash flow
totaling $1.2 billion.
RECENT HIGHLIGHTS
Strengthened operational performance by maintaining system availability above 99-percent for full-year 2020
Repurchased 2,368,711 common units for aggregate consideration of $32.5 million during the fourth quarter as part of the recently announced buyback program of up to $250 million of the Partnership’s common units through December 31, 2021
Executed open-market repurchases for $24.5 million of Senior Note due 2023 during the fourth quarter for an aggregate repurchase price of $23.5 million; full-year 2020 repurchases totaled $218.0 million of Senior Notes due 2021, 2022, and 2023 for an aggregate repurchase price of $203.9 million
Completed the sale of WES’s 14.81-percent equity interest in Fort Union Gas Gathering, LLC, with an option agreement to sell WES’s Bison treating facility for upfront consideration of $27.0 million
______________________________________________________________________________________________
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 February 2021, WES paid its fourth-quarter 2020 per-unit distribution of $0.3110, which was unchanged from WES’s third-quarter 2020 per-unit distribution. Fourth-quarter and full-year 2020 Free cash flow after distributions totaled $332.4 million and $531.3 million, respectively.
“Despite the unprecedented challenges brought on by the global pandemic and reduced producer activity, Western Midstream significantly outperformed all expectations in 2020 in our first full year as a stand-alone midstream operator,” said President, Chief Executive Officer, and Chief Financial Officer, Michael Ure. “This year, we undertook the significant effort of transferring an employee base, separating our systems and processes into a standalone structure, and creating an entrepreneurial culture unique to WES. The organization’s ability to achieve operational efficiencies and sustainable cost savings of approximately $175 million while keenly focusing on our customers enabled us to exceed the high end of our pre-COVID full-year Adjusted EBITDA range of $1.975 billion, while reducing capital expenditures to $322 million, which was nearly 50 percent of our originally issued full-year guidance range.”
Mr. Ure continued, “I’m incredibly proud of our employees’ ability to deliver this level of outperformance despite organizational changes, the ongoing COVID-19 pandemic, and the challenged commodity environment. These results demonstrate the resiliency of our people, quality of our industry-leading assets, and strength and durability of our contract portfolio.”
As a result of depressed upstream investment in 2020, our fourth-quarter 2020 volumes declined as expected. Fourth-quarter 2020 total natural-gas throughput
averaged 4.0 Bcf/d, representing a 7-percent sequential-quarter decrease and an 8-percent decrease from fourth-quarter 2019. Fourth-quarter 2020 total throughput for crude-oil and NGLs assets
averaged 619 MBbls/d, representing a 10-percent sequential-quarter decrease and a 21-percent decrease from fourth-quarter 2019. Fourth-quarter 2020 total throughput for produced-water assets
averaged 657 MBbls/d, representing a 2-percent sequential-quarter decrease and a 10-percent increase from fourth-quarter 2019.
Full-year 2020 total natural-gas throughput
averaged 4.3 Bcf/d, representing a 1-percent increase from full-year 2019. Full-year 2020 total throughput for crude-oil and NGLs assets
averaged 698 MBbls/d, representing a 7-percent increase from full-year 2019. Full-year 2020 total throughput for produced-water assets
averaged 698 MBbls/d, representing a 28-percent increase from full-year 2019.
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.
Fourth-quarter and full-year 2020 capital expenditures
totaled $58.0 million and $322.1 million, respectively, with full-year capital meaningfully below the low-end of our previously updated 2020 guidance range of $400 million to $450 million.
2021 GUIDANCE
While we are still evaluating the full financial impact of the recent winter storm, our 2021 guidance is unchanged:
between $1.825 billion and $1.925 billion
Total capital expenditures
between $275 million and $375 million
Debt to Trailing Twelve Month (“TTM”) Adjusted EBITDA at or below 4.0 times at year-end 2021
Full-year 2021 distributions of at least $1.24 per unit
“The organizational and operational changes made during 2020 have become a part of who we are as a company and will continue to generate value for our stakeholders for the foreseeable future,” said Michael Ure. “By successfully creating a stand-alone midstream enterprise, we have generated significant momentum leading into 2021 and will continue to focus and refine our approach around realizing further sustainable cost efficiencies, safely delivering superior customer service, and returning value to stakeholders.”
Ure continued, “During 2020, we returned over $1.2 billion to stakeholders through debt repurchases, cash distributions, unit buybacks, and units acquired through the Anadarko note exchange. We remain steadfast in our commitment to responsibly manage our balance sheet by maintaining leverage at or below 4.0 times at year-end 2021 and repaying our 2021 maturities using free cash flow, and based upon today’s assessment, we intend to be at or below 3.5 times at year-end 2022. Furthermore, we intend to continue executing our $250 million common unit repurchase program, as market opportunities present themselves. By continuously evaluating and improving our operations, we will ensure our ability to meet these financial goals and further solidify our reputation as a premier midstream operator.”
Accrual-based, includes equity investments, excludes capitalized interest, and excludes capital expenditures associated with the 25% third-party interest in Chipeta.
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.
The Board of Directors will continue to evaluate the distribution on a quarterly basis.
CONFERENCE CALL TOMORROW AT 1:00 P.M. CST
WES will host a conference call on Wednesday, February 24, 2021, at 1:00 p.m. Central Standard Time (2:00 p.m. Eastern Standard Time) to discuss fourth-quarter and full-year 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 7882576. 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.
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 and any impact on such guidance and expectations that may result from disruptions caused by the recent cold-weather events; 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 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 Shults
Vice President, Investor Relations and Communications
Kristen.Shults@WesternMidstream.com
832.636.6000
Abby Dempsey
Investor Relations Supervisor
Abby.Dempsey@WesternMidstream.com
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) other income, (vi) income tax benefit, 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.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (CONTINUED)
Free Cash Flow
Three Months Ended 
December 31,
Year Ended 
thousands
Reconciliation of Net cash provided by operating activities to Free cash flow
505,525
297,415 
1,637,418
1,324,100 
Capital expenditures
50,829
241,563 
423,091
1,188,829 
Contributions to equity investments – related parties
20,275 
19,388
128,393 
Distributions from equity investments in excess of cumulative earnings – related parties
10,410
9,053 
32,160
30,256 
464,735
44,630 
1,227,099
37,134 
Cash flow information
Net cash used in investing activities
(448,254)
(3,387,853)
Net cash provided by (used in) financing activities
(844,204)
2,071,573 
Reconciliation of Net income (loss) to Adjusted EBITDA
270,776
295,440 
516,852
807,700 
69,231
61,288 
278,797
264,828 
Non-cash equity-based compensation expense
4,114 
22,462
14,392 
Interest expense
101,247
79,414 
380,058
303,286 
Income tax expense
10,278
13,472 
Depreciation and amortization
106,398
120,278 
491,086
483,255 
Impairments
1,985 
644,906
6,279 
Other expense
161,813 
Gain (loss) on divestiture and other, net
12,285
(1,406)
Gain (loss) on early extinguishment of debt
11,234
Equity income, net – related parties
49,962
62,035 
226,750
237,518 
Interest income – Anadarko note receivable
4,225 
11,736
16,900 
Other income
37,792 
Income tax benefit
Adjusted EBITDA attributable to noncontrolling interests
11,606
11,636 
50,607
45,131 
483,980
447,627 
2,030,366
1,719,090 
Reconciliation of Net cash provided by operating activities to Adjusted EBITDA
Interest (income) expense, net
75,189 
368,322
286,386 
Uncontributed cash-based compensation awards
(1,891)
(1,102)
Accretion and amortization of long-term obligations, net
(2,172)
(1,942)
(8,654)
(8,441)
Current income tax expense (benefit)
5,863 
Other (income) expense, net
(1,025)
(1,549)
Cash paid to settle interest-rate swaps
107,685 
25,621
Changes in assets and liabilities:
Accounts receivable, net
35,283 
193,688
45,033 
Accounts and imbalance payables and accrued liabilities, net
(106,623)
(38,524)
(144,437)
30,866 
Other items, net
(21,481)
(22,638)
(24,822)
(54,876)
(11,606)
(11,636)
(50,607)
(45,131)
Includes goodwill impairment for the year ended December 31, 2020.
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.
Excludes non-cash losses on interest-rate swaps of $25.6 million, paid in 2020, for the three months and year ended December 31, 2019.
Adjusted Gross Margin
Reconciliation of Operating income (loss) to Adjusted gross margin
372,954
333,630 
878,913
1,231,343 
Operation and maintenance
144,204
173,387 
580,874
641,219 
General and administrative
37,303
30,951 
155,769
114,591 
Property and other taxes
11,077
15,504 
68,340
61,352 
Reimbursed electricity-related charges recorded as revenues
18,161
13,882 
79,261
74,629 
Adjusted gross margin attributable to noncontrolling interests
15,669
16,846 
65,835
64,049 
648,404
644,263 
2,718,205
2,428,077 
Adjusted gross margin for natural-gas assets
436,294
429,739 
1,820,926
1,656,041 
Adjusted gross margin for crude-oil and NGLs assets
152,909
161,196 
647,390
578,100 
Adjusted gross margin for produced-water assets
59,201
53,328 
249,889
193,936 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
thousands except per-unit amounts
Revenues and other
Service revenues – fee based
603,777
626,708 
2,584,323
2,388,191 
Service revenues – product based
13,132
24,597 
48,369
70,127 
Product sales
30,068
71,538 
138,559
286,388 
1,468 
Total revenues and other
647,480
723,210 
2,772,592
2,746,174 
Operating expenses
Cost of product
34,477
109,507 
188,088
444,247 
Long-lived asset and other impairments
203,889
Goodwill impairment
441,017
Total operating expenses
336,773
451,612 
2,129,063
1,750,943 
(101,247)
(79,414)
(380,058)
(303,286)
Other income (expense), net
(123,785)
Income (loss) before income taxes
272,982
296,233 
522,850
821,172 
Income tax expense (benefit)
Net income (loss) attributable to noncontrolling interests
7,670 
(10,160)
110,459 
Net income (loss) attributable to Western Midstream Partners, LP
263,891
287,770 
527,012
697,241 
Limited partners’ interest in net income (loss):
Pre-acquisition net (income) loss allocated to Anadarko
(29,279)
General partner interest in net (income) loss
(5,642)
(5,637)
(11,104)
258,249
282,133 
515,908
662,325 
Net income (loss) per common unit – basic and diluted
Weighted-average common units outstanding – basic and diluted
415,597
452,934 
435,554
415,794 
Includes losses associated with the interest-rate swap agreements for the year ended December 31, 2019.
CONDENSED CONSOLIDATED BALANCE SHEETS
thousands except number of units
Total current assets
943,064
402,412 
260,000 
Net property, plant, and equipment
8,709,945
9,064,931 
Other assets
2,177,018
2,619,110 
Total assets
11,830,027
12,346,453 
Total current liabilities
960,935
485,954 
Long-term debt
7,415,832
7,951,565 
Asset retirement obligations
260,283
336,396 
Other liabilities
297,765
227,245 
Total liabilities
8,934,815
9,001,160 
Equity and partners’ capital
Common units (413,839,863 and 443,971,409 units issued and outstanding at December 31, 2020 and 2019, respectively)
2,778,339
3,209,947 
General partner units (9,060,641 units issued and outstanding at December 31, 2020 and 2019)
(17,208)
(14,224)
Noncontrolling interests
134,081
149,570 
Total liabilities, equity, and partners’ capital
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Adjustments to reconcile net income (loss) to net cash provided by operating activities and changes in assets and liabilities:
(Gain) loss on divestiture and other, net
(8,634)
1,406 
(Gain) loss on early extinguishment of debt
(11,234)
(Gain) loss on interest-rate swaps
125,334 
(25,621)
(107,685)
Change in other items, net
30,063
7,811 
Cash flows from investing activities
(423,091)
(1,188,829)
Acquisitions from related parties
(2,007,926)
Acquisitions from third parties
(93,303)
Contributions to equity investments - related parties
(19,388)
(128,393)
Proceeds from the sale of assets to third parties
20,333
Additions to materials and supplies inventory and other
(57,757)
Cash flows from financing activities
Borrowings, net of debt issuance costs
3,681,173
4,169,695 
Repayments of debt
(3,803,888)
(1,467,595)
Increase (decrease) in outstanding checks
20,699
1,571 
Registration expenses related to the issuance of Partnership common units
Distributions to Partnership unitholders
(695,834)
(969,073)
Distributions to Chipeta noncontrolling interest owner
(8,644)
(9,663)
Distributions to noncontrolling interest owners of WES Operating
(15,434)
(118,225)
Net contributions from (distributions to) related parties
24,466
458,819 
Above-market component of swap agreements with Anadarko
7,407 
Finance lease payments
(14,207)
Unit repurchases
(32,535)
Net increase (decrease) in cash and cash equivalents
344,960
7,820 
Cash and cash equivalents at beginning of period
99,962
92,142 
Cash and cash equivalents at end of period
444,922
99,962 
OPERATING STATISTICS
Throughput for natural-gas assets (MMcf/d)
Gathering, treating, and transportation
Processing
3,532 
3,497 
Equity investments
Total throughput
4,489 
4,423 
Throughput attributable to noncontrolling interests
Total throughput attributable to WES for natural-gas assets
4,315 
4,248 
Throughput for crude-oil and NGLs assets (MBbls/d)
Total throughput attributable to WES for crude-oil and NGLs assets
Throughput for produced-water assets (MBbls/d)
Gathering and disposal
Total throughput attributable to WES for produced-water assets
Per-Mcf Adjusted gross margin for natural-gas assets
Per-Bbl Adjusted gross margin for crude-oil and NGLs assets
Per-Bbl Adjusted gross margin for produced-water assets
Represents the 14.81% share of average Fort Union throughput (until divested in October 2020), 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 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 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 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 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 assets, divided by total throughput (MBbls/d) attributable to WES for produced-water assets.
OPERATING STATISTICS (CONTINUED)
Three Months Ended December 31,
Natural gas
Crude oil & NGLs
Produced water
Delaware Basin
1,274 
DJ Basin
1,295 
1,497 
Year Ended December 31,
1,226 
1,236 

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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