Western Midstream Announces First-Quarter 2021 Results

Rhea-AI Summary

Western Midstream Partners, LP (WES) reported first-quarter 2021 financial results with a net income of $181.8 million, equating to $0.44 per common unit. The Partnership achieved Adjusted EBITDA of $443.1 million and cash flows from operating activities of $261.6 million. Notably, WES repaid $431 million of Senior Notes and repurchased over 1.1 million common units. Additionally, a distribution of $0.315 per unit was declared, marking a 1.3% increase from the previous quarter. Despite challenges from Winter Storm Uri, management remains optimistic about throughput and EBITDA growth in 2021.

Positive

• Net income of $181.8 million, $0.44 per common unit.
• Adjusted EBITDA reached $443.1 million.
• Cash flows from operating activities totaled $261.6 million.
• Increased distribution of $0.315 per unit, 1.3% up from last quarter.
• Successful debt repayment of $431 million in Senior Notes.
• Unit buyback program authorized, with over 1.1 million units repurchased.

Negative

• First-quarter throughput for crude-oil and NGLs decreased by 2%.
• Produced-water throughput decreased 9% sequentially.
• Volumes declined compared to fourth-quarter 2020 due to Winter Storm Uri.

HOUSTON, May 10, 2021 /PRNewswire/ -- Today Western Midstream Partners, LP (NYSE: WES) ("WES" or the "Partnership") announced first-quarter 2021 financial and operating results. Net income (loss) available to limited partners for the first quarter of 2021 totaled $181.8 million, or $0.44 per common unit (diluted), with first-quarter 2021 Adjusted EBITDA⁽¹⁾ totaling $443.1 million, first-quarter 2021 Cash flows provided by operating activities totaling $261.6 million, and first-quarter 2021 Free cash flow⁽¹⁾ totaling $213.8 million.

RECENT HIGHLIGHTS

• Awarded first place in the division-one category by the GPA Midstream Association for outstanding safety performance in 2020
• Repaid the 5.375% Senior Notes due 2021 at par value, for total consideration of $431 million
• Repurchased 1,115,808 common units for aggregate consideration of approximately $16.2 million during the first quarter as part of the recently announced buyback program of up to $250 million of the Partnership's common units through December 31, 2021

___________________________
(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.

On May 14, 2021, WES will pay its first-quarter 2021 per-unit distribution of $0.315, which represents a 1.3-percent increase over the prior quarter's distribution and is consistent with an annualized distribution growth of 5-percent. First-quarter 2021 Free cash flow after distributions totaled $82.5 million.

"Thanks to the dedication of our employees, we ended the first quarter by winning GPA Midstream Association's first-place safety award in the large category for the second consecutive year," said Michael Ure, President, Chief Executive Officer and Chief Financial Officer. "I'm proud of our team's work to strengthen our safety culture and environmental performance while providing continuous, reliable service for our customers."

Mr. Ure continued, "Although our first-quarter results were impacted from Winter Storm Uri, we remain optimistic about current activity levels in the Delaware and DJ basins and expect total throughput and EBITDA to increase through the remainder of 2021 and into 2022. We remain comfortable with our previously-stated full-year guidance targets."

"Since becoming a standalone organization, we have been immensely focused on our financial policy. This shift to free-cash-flow generation has led to a trifecta of results, including the authorization of a unit buyback program, retirement of upcoming debt maturities, and an increase in our distribution. Through the unit buyback program and Anadarko note exchange, we have repurchased 31.34 million units to date, which represents over 7-percent of our outstanding units as of the filing of our second-quarter 2020 10-Q. We believe our ability to generate significant free cash flow will continue to deliver value to our stakeholders for the foreseeable future."

As a result of depressed upstream investment in 2020 and Winter Storm Uri, our first-quarter 2021 volumes declined relative to fourth-quarter 2020. First-quarter 2021 total natural-gas throughput⁽¹⁾ averaged 4.0 Bcf/d, representing a 2-percent sequential-quarter increase. Declining natural-gas volumes were offset by an additional third-party connection to Latham II at the DJ Basin complex beginning January 1, 2021. First-quarter 2021 total throughput for crude-oil and NGLs assets⁽¹⁾ averaged 604 MBbls/d, representing a 2-percent sequential-quarter decrease. First-quarter 2021 total throughput for produced-water assets⁽¹⁾ averaged 595 MBbls/d, representing a 9-percent sequential-quarter decrease.

First-quarter 2021 capital expenditures⁽²⁾ totaled $58.3 million.

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

CONFERENCE CALL TOMORROW AT 2:00 P.M. CDT
WES will host a conference call on Tuesday, May 11, 2021, at 2:00 p.m. Central Daylight Time (3:00 p.m. Eastern Daylight Time) to discuss first-quarter 2021 results. To participate, individuals should dial 877-883-0383 (Domestic) or 412-902-6506 (International) 15 minutes before the scheduled conference call time and enter participant access code 7924735. 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; 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 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 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 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) operating income (loss) (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 operating income (loss) or cash flows provided by operating activities.

 

Western Midstream Partners, LP
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (CONTINUED)
Adjusted Gross Margin
		Three Months Ended
thousands		March 31, 2021				December 31, 2020
Reconciliation of Operating income (loss) to Adjusted gross margin
Operating income (loss)		$	292,336			$	372,954
Add:
Distributions from equity investments		61,189				69,231
Operation and maintenance		140,332				144,204
General and administrative		45,116				37,303
Property and other taxes		14,384				11,077
Depreciation and amortization		130,553				106,398
Impairments		14,866				3,314
Less:
Gain (loss) on divestiture and other, net		(583)				12,285
Equity income, net – related parties		52,165				49,962
Reimbursed electricity-related charges recorded as revenues		17,312				18,161
Adjusted gross margin attributable to noncontrolling interests (1)		15,258				15,669
Adjusted gross margin		$	614,624			$	648,404
Adjusted gross margin for natural-gas assets		$	432,389			$	436,294
Adjusted gross margin for crude-oil and NGLs assets		133,145				152,909
Adjusted gross margin for produced-water assets		49,090				59,201

(1)	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
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (CONTINUED)
Adjusted EBITDA
		Three Months Ended
thousands		March 31, 2021				December 31, 2020
Reconciliation of Net income (loss) to Adjusted EBITDA
Net income (loss)		$	191,235			$	270,776
Add:
Distributions from equity investments		61,189				69,231
Non-cash equity-based compensation expense		6,734				5,935
Interest expense		98,493				101,247
Income tax expense		1,112				2,206
Depreciation and amortization		130,553				106,398
Impairments		14,866				3,314
Other expense		1,218				—
Less:
Gain (loss) on divestiture and other, net		(583)				12,285
Gain (loss) on early extinguishment of debt		(289)				862
Equity income, net – related parties		52,165				49,962
Other income		—				412
Adjusted EBITDA attributable to noncontrolling interests (1)		10,997				11,606
Adjusted EBITDA		$	443,110			$	483,980
Reconciliation of Net cash provided by operating activities to Adjusted EBITDA
Net cash provided by operating activities		$	261,550			$	505,525
Interest (income) expense, net		98,493				101,247
Accretion and amortization of long-term obligations, net		(2,088)				(2,172)
Current income tax expense (benefit)		555				1,303
Other (income) expense, net		1,207				(413)
Cash paid to settle interest-rate swaps		—				6,440
Distributions from equity investments in excess of cumulative earnings – related parties		12,141				10,410
Changes in assets and liabilities:
Accounts receivable, net		30,182				1,350
Accounts and imbalance payables and accrued liabilities, net		16,467				(106,623)
Other items, net		35,600				(21,481)
Adjusted EBITDA attributable to noncontrolling interests (1)		(10,997)				(11,606)
Adjusted EBITDA		$	443,110			$	483,980
Cash flow information
Net cash provided by operating activities		$	261,550
Net cash used in investing activities		(46,472)
Net cash provided by (used in) financing activities		(603,624)

(1)	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
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (CONTINUED)
Free Cash Flow
		Three Months Ended
thousands		March 31, 2021				December 31, 2020
Reconciliation of Net cash provided by operating activities to Free cash flow
Net cash provided by operating activities		$	261,550			$	505,525
Less:
Capital expenditures		59,783				50,829
Contributions to equity investments – related parties		86				371
Add:
Distributions from equity investments in excess of cumulative earnings – related parties		12,141				10,410
Free cash flow		$	213,822			$	464,735
Cash flow information
Net cash provided by operating activities		$	261,550
Net cash used in investing activities		(46,472)
Net cash provided by (used in) financing activities		(603,624)

 

Western Midstream Partners, LP
OPERATING STATISTICS
(Unaudited)
		Three Months Ended
		March 31, 2021				December 31, 2020
Throughput for natural-gas assets (MMcf/d)
Gathering, treating, and transportation		519				521
Processing		3,237				3,170
Equity investments (1)		439				429
Total throughput		4,195				4,120
Throughput attributable to noncontrolling interests (2)		150				149
Total throughput attributable to WES for natural-gas assets		4,045				3,971
Throughput for crude-oil and NGLs assets (MBbls/d)
Gathering, treating, and transportation		279				292
Equity investments (3)		337				339
Total throughput		616				631
Throughput attributable to noncontrolling interests (2)		12				12
Total throughput attributable to WES for crude-oil and NGLs assets		604				619
Throughput for produced-water assets (MBbls/d)
Gathering and disposal		607				670
Throughput attributable to noncontrolling interests (2)		12				13
Total throughput attributable to WES for produced-water assets		595				657
Per-Mcf Adjusted gross margin for natural-gas assets (4)		$	1.19			$	1.19
Per-Bbl Adjusted gross margin for crude-oil and NGLs assets (5)		2.45				2.69
Per-Bbl Adjusted gross margin for produced-water assets (6)		0.92				0.98

(1)	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.
(2)	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.
(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
	March 31, 2021			December 31, 2020
Throughput for natural-gas assets (MMcf/d)
Delaware Basin	1,133			1,196
DJ Basin	1,344			1,197
Equity investments	439			429
Other	1,279			1,298
Total throughput for natural-gas assets	4,195			4,120
Throughput for crude-oil and NGLs assets (MBbls/d)
Delaware Basin	162			178
DJ Basin	82			78
Equity investments	337			339
Other	35			36
Total throughput for crude-oil and NGLs assets	616			631
Throughput for produced-water assets (MBbls/d)
Delaware Basin	607			670
Total throughput for produced-water assets	607			670

 

Western Midstream Partners, LP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
		Three Months Ended  March 31,
thousands except per-unit amounts		2021				2020
Revenues and other
Service revenues – fee based		$	572,275			$	701,396
Service revenues – product based		31,652				15,921
Product sales		70,805				56,649
Other		242				347
Total revenues and other		674,974				774,313
Equity income, net – related parties		52,165				61,347
Operating expenses
Cost of product		88,969				103,270
Operation and maintenance		140,332				159,191
General and administrative		45,116				40,465
Property and other taxes		14,384				18,476
Depreciation and amortization		130,553				132,319
Long-lived asset and other impairments		14,866				155,785
Goodwill impairment		—				441,017
Total operating expenses		434,220				1,050,523
Gain (loss) on divestiture and other, net		(583)				(40)
Operating income (loss)		292,336				(214,903)
Interest income – Anadarko note receivable		—				4,225
Interest expense		(98,493)				(88,586)
Gain (loss) on early extinguishment of debt		(289)				7,345
Other income (expense), net (1)		(1,207)				(1,761)
Income (loss) before income taxes		192,347				(293,680)
Income tax expense (benefit)		1,112				(4,280)
Net income (loss)		191,235				(289,400)
Net income (loss) attributable to noncontrolling interests		5,444				(32,873)
Net income (loss) attributable to Western Midstream Partners, LP		$	185,791			$	(256,527)
Limited partners' interest in net income (loss):
Net income (loss) attributable to Western Midstream Partners, LP		$	185,791			$	(256,527)
General partner interest in net (income) loss		(3,993)				5,131
Limited partners' interest in net income (loss)		$	181,798			$	(251,396)
Net income (loss) per common unit – basic and diluted		$	0.44			$	(0.57)
Weighted-average common units outstanding – basic and diluted		413,104				443,971

 

Western Midstream Partners, LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
thousands except number of units		March 31, 2021				December 31, 2020
Total current assets		$	611,160			$	943,064
Net property, plant, and equipment		8,639,538				8,709,945
Other assets		2,184,345				2,177,018
Total assets		$	11,435,043			$	11,830,027
Total current liabilities		$	490,262			$	960,935
Long-term debt		7,416,001				7,415,832
Asset retirement obligations		267,962				260,283
Other liabilities		318,698				297,765
Total liabilities		8,492,923				8,934,815
Equity and partners' capital
Common units (413,062,133 and 413,839,863 units issued and outstanding at March 31, 2021, and December 31, 2020, respectively)		2,821,455				2,778,339
General partner units (9,060,641 units issued and outstanding at March 31, 2021, and   December 31, 2020)		(16,033)				(17,208)
Noncontrolling interests		136,698				134,081
Total liabilities, equity, and partners' capital		$	11,435,043			$	11,830,027

 

Western Midstream Partners, LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
		Three Months Ended  March 31,
thousands		2021				2020
Cash flows from operating activities
Net income (loss)		$	191,235			$	(289,400)
Adjustments to reconcile net income (loss) to net cash provided by operating activities and changes in assets and liabilities:
Depreciation and amortization		130,553				132,319
Long-lived asset and other impairments		14,866				155,785
Goodwill impairment		—				441,017
(Gain) loss on divestiture and other, net		583				40
(Gain) loss on early extinguishment of debt		289				(7,345)
Change in other items, net		(75,976)				(39,105)
Net cash provided by operating activities		$	261,550			$	393,311
Cash flows from investing activities
Capital expenditures		$	(59,783)			$	(172,816)
Acquisitions from related parties		(2,000)				—
Contributions to equity investments - related parties		(86)				(10,960)
Distributions from equity investments in excess of cumulative earnings – related parties		12,141				5,052
Decreases to materials and supplies inventory and other		3,256				—
Net cash used in investing activities		$	(46,472)			$	(178,724)
Cash flows from financing activities
Borrowings, net of debt issuance costs		$	100,000			$	3,586,173
Repayments of debt		(531,085)				(3,470,139)
Increase (decrease) in outstanding checks		(22,017)				(7,308)
Distributions to Partnership unitholders		(131,265)				(281,786)
Distributions to Chipeta noncontrolling interest owner		(276)				(1,738)
Distributions to noncontrolling interest owners of WES Operating		(2,551)				(5,807)
Net contributions from (distributions to) related parties		1,627				20,489
Finance lease payments		(1,816)				(2,151)
Unit repurchases		(16,241)				—
Net cash provided by (used in) financing activities		$	(603,624)			$	(162,267)
Net increase (decrease) in cash and cash equivalents		$	(388,546)			$	52,320
Cash and cash equivalents at beginning of period		444,922				99,962
Cash and cash equivalents at end of period		$	56,376			$	152,282

 

 

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SOURCE Western Midstream Partners, LP

FAQ

What were Western Midstream Partners' Q1 2021 earnings results?

WES reported a net income of $181.8 million, or $0.44 per common unit for Q1 2021.

How much was WES's Adjusted EBITDA for the first quarter of 2021?

Adjusted EBITDA for Q1 2021 was $443.1 million.

What is the new distribution per unit declared by WES for Q1 2021?

WES declared a distribution of $0.315 per unit for Q1 2021.

Did WES conduct any stock buybacks in Q1 2021?

Yes, WES repurchased 1,115,808 common units for approximately $16.2 million.

How did Winter Storm Uri impact WES's performance?

Winter Storm Uri contributed to a decline in volumes compared to the previous quarter.