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.
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.
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
Vice President, Investor Relations and Communications
Investor Relations Supervisor
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
Reconciliation of Net cash provided by operating activities to Free cash flow
Contributions to equity investments – related parties
Distributions from equity investments in excess of cumulative earnings – related parties
Cash flow information
Net cash used in investing activities
Net cash provided by (used in) financing activities
Reconciliation of Net income (loss) to Adjusted EBITDA
Non-cash equity-based compensation expense
Income tax expense
Depreciation and amortization
Gain (loss) on divestiture and other, net
Gain (loss) on early extinguishment of debt
Equity income, net – related parties
Interest income – Anadarko note receivable
Income tax benefit
Adjusted EBITDA attributable to noncontrolling interests
Reconciliation of Net cash provided by operating activities to Adjusted EBITDA
Interest (income) expense, net
Uncontributed cash-based compensation awards
Accretion and amortization of long-term obligations, net
Current income tax expense (benefit)
Other (income) expense, net
Cash paid to settle interest-rate swaps
Changes in assets and liabilities:
Accounts receivable, net
Accounts and imbalance payables and accrued liabilities, net
Other items, net
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
Operation and maintenance
General and administrative
Property and other taxes
Reimbursed electricity-related charges recorded as revenues
Adjusted gross margin attributable to noncontrolling interests
Adjusted gross margin for natural-gas assets
Adjusted gross margin for crude-oil and NGLs assets
Adjusted gross margin for produced-water assets
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
thousands except per-unit amounts
Revenues and other
Service revenues – fee based
Service revenues – product based
Total revenues and other
Cost of product
Long-lived asset and other impairments
Total operating expenses
Other income (expense), net
Income (loss) before income taxes
Income tax expense (benefit)
Net income (loss) attributable to noncontrolling interests
Net income (loss) attributable to Western Midstream Partners, LP
Limited partners’ interest in net income (loss):
Pre-acquisition net (income) loss allocated to Anadarko
General partner interest in net (income) loss
Net income (loss) per common unit – basic and diluted
Weighted-average common units outstanding – basic and diluted
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
Net property, plant, and equipment
Total current liabilities
Asset retirement obligations
Equity and partners’ capital
Common units (413,839,863 and 443,971,409 units issued and outstanding at December 31, 2020 and 2019, respectively)
General partner units (9,060,641 units issued and outstanding at December 31, 2020 and 2019)
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
(Gain) loss on early extinguishment of debt
(Gain) loss on interest-rate swaps
Change in other items, net
Cash flows from investing activities
Acquisitions from related parties
Acquisitions from third parties
Contributions to equity investments - related parties
Proceeds from the sale of assets to third parties
Additions to materials and supplies inventory and other
Cash flows from financing activities
Borrowings, net of debt issuance costs
Repayments of debt
Increase (decrease) in outstanding checks
Registration expenses related to the issuance of Partnership common units
Distributions to Partnership unitholders
Distributions to Chipeta noncontrolling interest owner
Distributions to noncontrolling interest owners of WES Operating
Net contributions from (distributions to) related parties
Above-market component of swap agreements with Anadarko
Finance lease payments
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Throughput for natural-gas assets (MMcf/d)
Gathering, treating, and transportation
Throughput attributable to noncontrolling interests
Total throughput attributable to WES for natural-gas assets
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,
Crude oil & NGLs
Year Ended December 31,
The above information was disclosed in a filing to the SEC. To see the filing, click here.
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