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Western Midstream Announces Fourth-Quarter and Full-Year 2022 Results

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Western Midstream Partners, LP (WES) reported strong financial results for Q4 and full-year 2022, with a net income of $328.6 million for Q4 and $1.190 billion for the full year. Adjusted EBITDA for 2022 totaled $2.128 billion, exceeding guidance. WES achieved a year-end net leverage ratio of 3.1 times and announced a quarterly Base Distribution of $0.50 per unit, correlating to an annualized $2.00 per unit for 2023. The company projects 2023 Adjusted EBITDA between $2.050 billion and $2.150 billion. An Enhanced Distribution of $140 million is anticipated, pending board approval. The firm expects to maintain strong free cash flow despite increasing capital expenditures.

Positive
  • Q4 2022 Net income of $328.6 million, or $0.85 per common unit.
  • Full-year 2022 Net income of $1.190 billion, achieving Adjusted EBITDA of $2.128 billion.
  • Maintained a year-end net leverage ratio of 3.1 times, below the Enhanced Distribution threshold of 3.4 times.
  • Repurchased 19.5 million common units for $487.6 million.
  • Anticipated Enhanced Distribution of $140 million or $0.36 per unit for Q1 2023.
Negative
  • Q4 2022 throughput for crude-oil and NGLs decreased by 9% sequentially.
  • Fourth-quarter Free cash flow decreased from previous quarters, totaling $168.5 million.

Announces 2023 Guidance and 2022 Enhanced Distribution Expectation

  • Reported fourth-quarter 2022 Net income attributable to limited partners of $328.6 million, generating fourth-quarter Adjusted EBITDA(1) of $515.8 million.
  • Reported full-year 2022 Net income attributable to limited partners of $1.190 billion, generating full-year Adjusted EBITDA(1) of $2.128 billion, achieving the full-year 2022 Adjusted EBITDA guidance range of $2.125 billion to $2.225 billion.
  • Reported fourth-quarter 2022 Cash flows provided by operating activities of $489.2 million, generating fourth-quarter Free cash flow(1) of $365.6 million.
  • Reported full-year 2022 Cash flows provided by operating activities of $1.701 billion, generating full-year Free cash flow(1) of $1.268 billion, achieving the full-year 2022 Free cash flow guidance range of $1.250 billion to $1.350 billion.
  • Achieved year-end 2022 net leverage ratio(2) of 3.1 times.
  • Repurchased 19,532,305 common units for aggregate consideration of $487.6 million through December 31, 2022.
  • Provided 2023 Adjusted EBITDA(3) guidance range of $2.050 billion to $2.150 billion and total capital expenditures(4) range between $575.0 million and $675.0 million.
  • Expect to maintain a quarterly Base Distribution of $0.50 per unit, or $2.00 per unit annualized for full-year 2023.
  • Expect to announce an Enhanced Distribution of $140.0 million, or approximately $0.36 per unit, which if approved, would be paid in conjunction with the first-quarter 2023 Base Distribution.(5)

 

HOUSTON--(BUSINESS WIRE)-- Today Western Midstream Partners, LP (NYSE: WES) (“WES” or the “Partnership”) announced fourth-quarter and full-year 2022 financial and operating results. Net income (loss) attributable to limited partners for the fourth quarter of 2022 totaled $328.6 million, or $0.85 per common unit (diluted), with fourth-quarter 2022 Adjusted EBITDA(1) totaling $515.8 million, fourth-quarter 2022 Cash flows provided by operating activities totaling $489.2 million, and fourth-quarter 2022 Free cash flow(1) totaling $365.6 million. Net income (loss) attributable to limited partners for full-year 2022 totaled $1.190 billion, or $3.01 per common unit (diluted), with full-year 2022 Adjusted EBITDA(1) totaling $2.128 billion, full-year 2022 Cash flows provided by operating activities totaling $1.701 billion, and full-year 2022 Free cash flow(1) totaling $1.268 billion.

2022 HIGHLIGHTS

  • Increased average throughput for natural-gas, crude-oil and NGLs, and produced-water by 1-percent, 3-percent, and 19-percent year-over-year, respectively.
  • Repurchased 19,532,305 common units for aggregate consideration of $487.6 million through year-end, including 1,549,948 common units in the fourth quarter for an aggregate consideration of $40.5 million. This represents 39.0-percent of the $1.250 billion common unit repurchase program, which runs through December 31, 2024. The total common units repurchased since September 2020 now represent 13.7-percent of total unaffected units outstanding.
  • Achieved year-end 2022 net leverage ratio(2) of 3.1 times, which surpasses the 2022 Enhanced Distribution leverage threshold of 3.4 times.
  • Achieved full-year Base Distribution guidance of $2.00 per unit.
  • Acquired the remaining 50-percent interest in Ranch Westex JV for $40.1 million and sold our 15-percent interest in Cactus II for $264.8 million.
  • Executed multiple, long-term commercial agreements with some of our largest producers in the Delaware Basin supported by either minimum volume commitments or acreage dedications and executed several agreements with new customers in the Maverick Basin.

On February 13, 2023, WES paid its fourth-quarter 2022 per-unit distribution of $0.50, which is in line with the prior quarter’s distribution and is consistent with the Partnership’s previously announced annualized regular quarterly distribution (“Base Distribution”) target of $2.00 per unit. Fourth-quarter and full-year 2022 Free cash flow(1) after distributions totaled $168.5 million and $532.7 million, respectively. Fourth-quarter and full-year 2022 capital expenditures(4) totaled $156.0 million and $538.1 million, respectively.

Fourth-quarter 2022 natural-gas throughput(7) averaged 4.2 Bcf/d, representing a 1-percent sequential-quarter decrease and a 1-percent increase from fourth-quarter 2021. Fourth-quarter 2022 throughput for crude-oil and NGLs assets(7) averaged 649 MBbls/d, representing a 9-percent sequential-quarter decrease and an 8-percent decrease from fourth-quarter 2021. Fourth-quarter 2022 throughput for produced-water assets(7) averaged 851 MBbls/d, representing a 3-percent sequential-quarter decrease and a 7-percent increase from fourth-quarter 2021.

Full-year 2022 natural-gas throughput(7) averaged 4.2 Bcf/d, representing a 1-percent increase from full-year 2021. Full-year 2022 throughput for crude-oil and NGLs assets(7) averaged 676 MBbls/d, representing a 3-percent increase from full-year 2021. Full-year 2022 throughput for produced-water assets(7) averaged 836 MBbls/d, representing a 19-percent increase from full-year 2021.

“2022 was an incredibly successful year for WES. We grew average year-over-year throughput across all three products and generated the highest Net income and Adjusted EBITDA in our partnership’s history,” said Michael Ure, President and Chief Executive Officer. “Coming into the year, we introduced our capital-return framework, and we have acted on that framework by increasing our Base Distribution by 53-percent, buying back just under 50-percent of our original unit buyback authorization, retiring $504 million of senior notes, and recommending to pay our first Enhanced Distribution payment. As we reflect on 2022 in its entirety, I am very proud of our team’s accomplishments, which include accretive M&A activity, numerous commercial successes, and meaningful execution on our capital-return framework that continues to create substantial value for our stakeholders.”

2022 ENHANCED DISTRIBUTION

“We have been able to meaningfully improve the health of our balance sheet and reduce net leverage from 4.6 times at year-end 2019 to 3.1 times at year-end 2022, which is significantly below our 2022 Enhanced Distribution threshold of 3.4 times,” said Kristen Shults, Senior Vice President and Chief Financial Officer. “Additionally, we continued to focus on returning capital to stakeholders through a balanced approach of repurchasing $488 million of common units, paying $736 million in Base Distributions, and retiring $504 million of senior notes in 2022.”

Ms. Shults continued, “Taking our financial success and current business needs into consideration, we have recommended that the Board use its discretion to consider WES’s 2022 net proceeds from asset sales of $224.2 million as cash flow available for distribution and consider an Enhanced Distribution for 2022 of $140.0 million, or approximately $0.36 per unit based on our current unit count outstanding. WES expects to request formal approval of this Enhanced Distribution in April and to pay this distribution in conjunction with its first-quarter 2023 distribution in May.”

“Our recommendation to pay an Enhanced Distribution reflects our strong Free cash flow profile and the value creation from non-core asset sales in 2022. We view our financial policy, specifically the Enhanced Distribution framework, as a way to generate additional value for our long-term unitholders and to further differentiate WES relative to its peers,” concluded Ms. Shults.

2023 GUIDANCE

Based on the most current production-forecast information from our producer customers, WES is providing 2023 guidance as follows:

  • Adjusted EBITDA(3) between $2.050 billion and $2.150 billion.
  • Total capital expenditures(4) between $575.0 million and $675.0 million.
  • Free cash flow(3) between $1.125 billion and $1.225 billion.
  • Full-year 2023 Base Distribution of at least $2.00 per unit(6), which excludes the impact of any potential Enhanced Distribution.

“Although our 2023 Adjusted EBITDA outlook is tempered relative to 2022, we expect our profitability to remain strong. Additionally, we are confident in our ability to generate substantial Free cash flow in 2023, even with an expected year-over-year increase in capital expenditures, which predominantly relates to the construction of Mentone Train III,” said Mr. Ure. “Looking to the future, producer activity levels should remain strong on the acreage we service in the Delaware Basin, and our remaining capital budget allows us to prepare for increasing throughput growth in 2024. As our capital needs subside upon completing Mentone Train III during the fourth quarter of 2023, we will stay focused on creating even more value for our stakeholders through our capital-return framework.”

Mr. Ure continued, “We remain optimistic regarding our expected 2023 operational and financial performance, even with the current and expected challenges facing the energy industry. Our premier asset bases are located within the core of their respective basins, continue to attract producer capital, and are supported by our fee-based contract structures. Additionally, our greatly improved balance sheet puts us in a position of financial strength and enables us to take advantage of market opportunities to create additional value for all stakeholders through further debt reduction, distribution payments, and unit repurchases under our expanded unit buyback program.”

CONFERENCE CALL TOMORROW AT 1:00 P.M. CT

WES will host a conference call on Thursday, February 23, 2023, at 1:00 p.m. Central Time (2:00 p.m. Eastern Time) to discuss fourth-quarter and full-year 2022 results. To participate, individuals should dial 888-330-2354 (Domestic) or 240-789-2706 (International) fifteen minutes before the scheduled conference call time and enter participant access code 32054. 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.

FILING OF ANNUAL REPORT ON FORM 10-K

Today WES also announced the filing of its Annual Report on Form 10-K for the fiscal year ended December 31, 2022, with the Securities and Exchange Commission. A copy of the report is available for viewing and downloading on the Western Midstream website at www.westernmidstream.com. Unitholders may request hard copies of the report, which contains WES’s audited financial statements, free of charge, by emailing investors@westernmidstream.com, or by submitting a written request to Western Midstream Partners, LP at the following address: 9950 Woodloch Forest Drive, Suite 2800, The Woodlands, TX 77380, Attention: Western Midstream Investor Relations.

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)

Debt-to-Adjusted EBITDA (trailing twelve months).

(3)

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.

(4)

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

(5)

Board action on any Enhanced Distribution will be requested in April and is subject to the Board’s assessment of the needs of the business at that time.

(6)

Subject to Board review and approval on a quarterly basis based on the needs of the business.

(7)

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.

Western Midstream Partners, LP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

thousands except per-unit amounts

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenues and other

 

 

 

 

 

 

 

 

Service revenues – fee based

 

$

647,948

 

 

$

621,093

 

 

$

2,602,053

 

 

$

2,462,835

 

Service revenues – product based

 

 

46,971

 

 

 

34,317

 

 

 

249,692

 

 

 

122,584

 

Product sales

 

 

84,268

 

 

 

63,588

 

 

 

399,023

 

 

 

290,947

 

Other

 

 

250

 

 

 

212

 

 

 

953

 

 

 

789

 

Total revenues and other

 

 

779,437

 

 

 

719,210

 

 

 

3,251,721

 

 

 

2,877,155

 

Equity income, net – related parties

 

 

44,095

 

 

 

45,308

 

 

 

183,483

 

 

 

204,645

 

Operating expenses

 

 

 

 

 

 

 

 

Cost of product

 

 

92,663

 

 

 

72,040

 

 

 

420,900

 

 

 

322,285

 

Operation and maintenance

 

 

166,923

 

 

 

147,102

 

 

 

654,566

 

 

 

581,300

 

General and administrative

 

 

49,382

 

 

 

55,576

 

 

 

194,017

 

 

 

195,549

 

Property and other taxes

 

 

18,065

 

 

 

18,275

 

 

 

78,559

 

 

 

64,267

 

Depreciation and amortization

 

 

151,910

 

 

 

144,225

 

 

 

582,365

 

 

 

551,629

 

Long-lived asset and other impairments

 

 

20,491

 

 

 

1,345

 

 

 

20,585

 

 

 

30,543

 

Total operating expenses

 

 

499,434

 

 

 

438,563

 

 

 

1,950,992

 

 

 

1,745,573

 

Gain (loss) on divestiture and other, net

 

 

104,560

 

 

 

(234

)

 

 

103,676

 

 

 

44

 

Operating income (loss)

 

 

428,658

 

 

 

325,721

 

 

 

1,587,888

 

 

 

1,336,271

 

Interest expense

 

 

(84,606

)

 

 

(89,472

)

 

 

(333,939

)

 

 

(376,512

)

Gain (loss) on early extinguishment of debt

 

 

 

 

 

 

 

 

91

 

 

 

(24,944

)

Other income (expense), net

 

 

1,486

 

 

 

390

 

 

 

1,603

 

 

 

(623

)

Income (loss) before income taxes

 

 

345,538

 

 

 

236,639

 

 

 

1,255,643

 

 

 

934,192

 

Income tax expense (benefit)

 

 

504

 

 

 

(14,210

)

 

 

4,187

 

 

 

(9,807

)

Net income (loss)

 

 

345,034

 

 

 

250,849

 

 

 

1,251,456

 

 

 

943,999

 

Net income (loss) attributable to noncontrolling interests

 

 

8,710

 

 

 

7,332

 

 

 

34,353

 

 

 

27,707

 

Net income (loss) attributable to Western Midstream Partners, LP

 

$

336,324

 

 

$

243,517

 

 

$

1,217,103

 

 

$

916,292

 

Limited partners’ interest in net income (loss):

 

 

 

 

 

 

 

 

Net income (loss) attributable to Western Midstream Partners, LP

 

$

336,324

 

 

$

243,517

 

 

$

1,217,103

 

 

$

916,292

 

General partner interest in net (income) loss

 

 

(7,747

)

 

 

(5,331

)

 

 

(27,541

)

 

 

(19,815

)

Limited partners’ interest in net income (loss)

 

$

328,577

 

 

$

238,186

 

 

$

1,189,562

 

 

$

896,477

 

Net income (loss) per common unit – basic

 

$

0.85

 

 

$

0.58

 

 

$

3.01

 

 

$

2.18

 

Net income (loss) per common unit – diluted

 

$

0.85

 

 

$

0.58

 

 

$

3.00

 

 

$

2.18

 

Weighted-average common units outstanding – basic

 

 

384,885

 

 

 

407,212

 

 

 

394,951

 

 

 

411,309

 

Weighted-average common units outstanding – diluted

 

 

386,482

 

 

 

408,454

 

 

 

396,236

 

 

 

412,022

 

Western Midstream Partners, LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

thousands except number of units

 

December 31,
2022

 

December 31,
2021

Total current assets

 

$

900,425

 

$

684,764

 

Net property, plant, and equipment

 

 

8,541,600

 

 

8,512,907

 

Other assets

 

 

1,829,603

 

 

2,075,408

 

Total assets

 

$

11,271,628

 

$

11,273,079

 

Total current liabilities

 

$

903,857

 

$

1,140,197

 

Long-term debt

 

 

6,569,582

 

 

6,400,616

 

Asset retirement obligations

 

 

290,021

 

 

298,275

 

Other liabilities

 

 

400,053

 

 

338,231

 

Total liabilities

 

 

8,163,513

 

 

8,177,319

 

Equity and partners’ capital

 

 

 

 

Common units (384,070,984 and 402,993,919 units issued and outstanding at December 31, 2022 and 2021, respectively)

 

 

2,969,604

 

 

2,966,955

 

General partner units (9,060,641 units issued and outstanding at December 31, 2022 and 2021)

 

 

2,105

 

 

(8,882

)

Noncontrolling interests

 

 

136,406

 

 

137,687

 

Total liabilities, equity, and partners’ capital

 

$

11,271,628

 

$

11,273,079

 

Western Midstream Partners, LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Year Ended

December 31,

thousands

 

 

2022

 

 

 

2021

 

Cash flows from operating activities

 

 

 

 

Net income (loss)

 

$

1,251,456

 

 

$

943,999

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities and changes in assets and liabilities:

 

 

 

 

Depreciation and amortization

 

 

582,365

 

 

 

551,629

 

Long-lived asset and other impairments

 

 

20,585

 

 

 

30,543

 

(Gain) loss on divestiture and other, net

 

 

(103,676

)

 

 

(44

)

(Gain) loss on early extinguishment of debt

 

 

(91

)

 

 

24,944

 

Change in other items, net

 

 

(49,213

)

 

 

215,781

 

Net cash provided by operating activities

 

$

1,701,426

 

 

$

1,766,852

 

Cash flows from investing activities

 

 

 

 

Capital expenditures

 

$

(487,228

)

 

$

(313,674

)

Acquisitions from third parties

 

 

(40,127

)

 

 

 

Contributions to equity investments - related parties

 

 

(9,632

)

 

 

(4,435

)

Distributions from equity investments in excess of cumulative earnings – related parties

 

 

63,897

 

 

 

41,385

 

Proceeds from the sale of assets to related parties

 

 

200

 

 

 

 

Proceeds from the sale of assets to third parties

 

 

264,121

 

 

 

8,102

 

(Increase) decrease in materials and supplies inventory and other

 

 

(9,468

)

 

 

11,084

 

Net cash used in investing activities

 

$

(218,237

)

 

$

(257,538

)

Cash flows from financing activities

 

 

 

 

Borrowings, net of debt issuance costs

 

$

1,389,010

 

 

$

480,000

 

Repayments of debt

 

 

(1,518,548

)

 

 

(1,432,966

)

Increase (decrease) in outstanding checks

 

 

2,206

 

 

 

(21,631

)

Distributions to Partnership unitholders

 

 

(735,755

)

 

 

(533,758

)

Distributions to Chipeta noncontrolling interest owner

 

 

(10,736

)

 

 

(9,117

)

Distributions to noncontrolling interest owner of WES Operating

 

 

(24,898

)

 

 

(14,984

)

Net contributions from (distributions to) related parties

 

 

1,423

 

 

 

8,533

 

Unit repurchases

 

 

(487,590

)

 

 

(217,465

)

Other

 

 

(13,644

)

 

 

(10,849

)

Net cash provided by (used in) financing activities

 

$

(1,398,532

)

 

$

(1,752,237

)

Net increase (decrease) in cash and cash equivalents

 

$

84,657

 

 

$

(242,923

)

Cash and cash equivalents at beginning of period

 

 

201,999

 

 

 

444,922

 

Cash and cash equivalents at end of period

 

$

286,656

 

 

$

201,999

 

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

 

Year Ended

thousands

 

December 31,
2022

 

September 30,
2022

 

December 31,
2022

 

December 31,
2021

Reconciliation of Gross margin to Adjusted gross margin

 

 

 

 

 

 

 

 

Total revenues and other

 

$

779,437

 

$

837,568

 

$

3,251,721

 

$

2,877,155

Less:

 

 

 

 

 

 

 

 

Cost of product

 

 

92,663

 

 

106,833

 

 

420,900

 

 

322,285

Depreciation and amortization

 

 

151,910

 

 

156,837

 

 

582,365

 

 

551,629

Gross margin

 

 

534,864

 

 

573,898

 

 

2,248,456

 

 

2,003,241

Add:

 

 

 

 

 

 

 

 

Distributions from equity investments

 

 

69,282

 

 

58,957

 

 

250,050

 

 

254,901

Depreciation and amortization

 

 

151,910

 

 

156,837

 

 

582,365

 

 

551,629

Less:

 

 

 

 

 

 

 

 

Reimbursed electricity-related charges recorded as revenues

 

 

23,577

 

 

20,741

 

 

81,764

 

 

74,405

Adjusted gross margin attributable to noncontrolling interests (1)

 

 

17,490

 

 

18,886

 

 

73,632

 

 

67,850

Adjusted gross margin

 

$

714,989

 

$

750,065

 

$

2,925,475

 

$

2,667,516

 

 

 

 

 

 

 

 

 

Gross margin

 

 

 

 

 

 

 

 

Gross margin for natural-gas assets (2)

 

$

403,043

 

$

422,709

 

$

1,676,732

 

$

1,536,163

Gross margin for crude-oil and NGLs assets (2)

 

 

75,690

 

 

90,581

 

 

346,406

 

 

287,391

Gross margin for produced-water assets (2)

 

 

61,189

 

 

65,439

 

 

245,274

 

 

197,821

Adjusted gross margin

 

 

 

 

 

 

 

 

Adjusted gross margin for natural-gas assets

 

$

492,591

 

$

521,117

 

$

2,031,600

 

$

1,882,726

Adjusted gross margin for crude-oil and NGLs assets

 

 

150,611

 

 

153,225

 

 

607,769

 

 

547,134

Adjusted gross margin for produced-water assets

 

 

71,787

 

 

75,723

 

 

286,106

 

 

237,656

(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.

(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

 

Year Ended

thousands

 

December 31,
2022

 

September 30,
2022

 

December 31,
2022

 

December 31,
2021

Reconciliation of Net income (loss) to Adjusted EBITDA

 

 

 

 

 

 

 

 

Net income (loss)

 

$

345,034

 

 

$

273,581

 

 

$

1,251,456

 

 

$

943,999

 

Add:

 

 

 

 

 

 

 

 

Distributions from equity investments

 

 

69,282

 

 

 

58,957

 

 

 

250,050

 

 

 

254,901

 

Non-cash equity-based compensation expense

 

 

6,538

 

 

 

6,464

 

 

 

27,783

 

 

 

27,676

 

Interest expense

 

 

84,606

 

 

 

83,106

 

 

 

333,939

 

 

 

376,512

 

Income tax expense

 

 

504

 

 

 

387

 

 

 

4,187

 

 

 

4,403

 

Depreciation and amortization

 

 

151,910

 

 

 

156,837

 

 

 

582,365

 

 

 

551,629

 

Impairments

 

 

20,491

 

 

 

4

 

 

 

20,585

 

 

 

30,543

 

Other expense

 

 

209

 

 

 

165

 

 

 

555

 

 

 

1,468

 

Less:

 

 

 

 

 

 

 

 

Gain (loss) on divestiture and other, net

 

 

104,560

 

 

 

(104

)

 

 

103,676

 

 

 

44

 

Gain (loss) on early extinguishment of debt

 

 

 

 

 

 

 

 

91

 

 

 

(24,944

)

Equity income, net – related parties

 

 

44,095

 

 

 

41,317

 

 

 

183,483

 

 

 

204,645

 

Other income

 

 

1,484

 

 

 

58

 

 

 

1,648

 

 

 

585

 

Income tax benefit

 

 

 

 

 

 

 

 

 

 

 

14,210

 

Adjusted EBITDA attributable to noncontrolling interests (1)

 

 

12,654

 

 

 

13,406

 

 

 

54,049

 

 

 

49,901

 

Adjusted EBITDA

 

$

515,781

 

 

$

524,824

 

 

$

2,127,973

 

 

$

1,946,690

 

Reconciliation of Net cash provided by operating activities to Adjusted EBITDA

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

489,219

 

 

$

468,768

 

 

$

1,701,426

 

 

$

1,766,852

 

Interest (income) expense, net

 

 

84,606

 

 

 

83,106

 

 

 

333,939

 

 

 

376,512

 

Accretion and amortization of long-term obligations, net

 

 

(1,783

)

 

 

(1,773

)

 

 

(7,142

)

 

 

(7,635

)

Current income tax expense (benefit)

 

 

262

 

 

 

550

 

 

 

2,188

 

 

 

(37

)

Other (income) expense, net

 

 

(1,486

)

 

 

(56

)

 

 

(1,603

)

 

 

623

 

Distributions from equity investments in excess of cumulative earnings – related parties

 

 

22,839

 

 

 

15,651

 

 

 

63,897

 

 

 

41,385

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(96,659

)

 

 

(66,875

)

 

 

116,296

 

 

 

(16,366

)

Accounts and imbalance payables and accrued liabilities, net

 

 

72,881

 

 

 

17,840

 

 

 

7,812

 

 

 

(114,887

)

Other items, net

 

 

(41,444

)

 

 

21,019

 

 

 

(34,791

)

 

 

(49,856

)

Adjusted EBITDA attributable to noncontrolling interests (1)

 

 

(12,654

)

 

 

(13,406

)

 

 

(54,049

)

 

 

(49,901

)

Adjusted EBITDA

 

$

515,781

 

 

$

524,824

 

 

$

2,127,973

 

 

$

1,946,690

 

Cash flow information

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

489,219

 

 

$

468,768

 

 

$

1,701,426

 

 

$

1,766,852

 

Net cash used in investing activities

 

 

138,015

 

 

 

(185,305

)

 

 

(218,237

)

 

 

(257,538

)

Net cash provided by (used in) financing activities

 

 

(499,671

)

 

 

(221,804

)

 

 

(1,398,532

)

 

 

(1,752,237

)

(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)

(Unaudited)

Free Cash Flow

 

 

Three Months Ended

 

Year Ended

thousands

 

December 31,
2022

 

September 30,
2022

 

December 31,
2022

 

December 31,
2021

Reconciliation of Net cash provided by operating activities to Free cash flow

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

489,219

 

 

$

468,768

 

 

$

1,701,426

 

 

$

1,766,852

 

Less:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

145,723

 

 

 

150,148

 

 

 

487,228

 

 

 

313,674

 

Contributions to equity investments – related parties

 

 

733

 

 

 

3,859

 

 

 

9,632

 

 

 

4,435

 

Add:

 

 

 

 

 

 

 

 

Distributions from equity investments in excess of cumulative earnings – related parties

 

 

22,839

 

 

 

15,651

 

 

 

63,897

 

 

 

41,385

 

Free cash flow

 

$

365,602

 

 

$

330,412

 

 

$

1,268,463

 

 

$

1,490,128

 

Cash flow information

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

489,219

 

 

$

468,768

 

 

$

1,701,426

 

 

$

1,766,852

 

Net cash used in investing activities

 

 

138,015

 

 

 

(185,305

)

 

 

(218,237

)

 

 

(257,538

)

Net cash provided by (used in) financing activities

 

 

(499,671

)

 

 

(221,804

)

 

 

(1,398,532

)

 

 

(1,752,237

)

Western Midstream Partners, LP

OPERATING STATISTICS

(Unaudited)

 

 

 

Three Months Ended

 

Year Ended

 

 

December 31,
2022

 

September 30,
2022

 

December 31,
2022

 

December 31,
2021

Throughput for natural-gas assets (MMcf/d)

 

 

 

 

 

 

 

 

Gathering, treating, and transportation

 

 

402

 

 

418

 

 

409

 

 

466

Processing

 

 

3,520

 

 

3,544

 

 

3,474

 

 

3,374

Equity investments (1)

 

 

463

 

 

473

 

 

483

 

 

463

Total throughput

 

 

4,385

 

 

4,435

 

 

4,366

 

 

4,303

Throughput attributable to noncontrolling interests (2)

 

 

154

 

 

161

 

 

156

 

 

155

Total throughput attributable to WES for natural-gas assets

 

 

4,231

 

 

4,274

 

 

4,210

 

 

4,148

Throughput for crude-oil and NGLs assets (MBbls/d)

 

 

 

 

 

 

 

 

Gathering, treating, and transportation

 

 

315

 

 

319

 

 

317

 

 

306

Equity investments (1)

 

 

347

 

 

411

 

 

373

 

 

366

Total throughput

 

 

662

 

 

730

 

 

690

 

 

672

Throughput attributable to noncontrolling interests (2)

 

 

13

 

 

15

 

 

14

 

 

13

Total throughput attributable to WES for crude-oil and NGLs assets

 

 

649

 

 

715

 

 

676

 

 

659

Throughput for produced-water assets (MBbls/d)

 

 

 

 

 

 

 

 

Gathering and disposal

 

 

868

 

 

895

 

 

853

 

 

717

Throughput attributable to noncontrolling interests (2)

 

 

17

 

 

18

 

 

17

 

 

14

Total throughput attributable to WES for produced-water assets

 

 

851

 

 

877

 

 

836

 

 

703

Per-Mcf Gross margin for natural-gas assets (3)

 

$

1.00

 

$

1.04

 

$

1.05

 

$

0.98

Per-Bbl Gross margin for crude-oil and NGLs assets (3)

 

 

1.24

 

 

1.35

 

 

1.38

 

 

1.17

Per-Bbl Gross margin for produced-water assets (3)

 

 

0.77

 

 

0.79

 

 

0.79

 

 

0.76

 

 

 

 

 

 

 

 

 

Per-Mcf Adjusted gross margin for natural-gas assets (4)

 

$

1.27

 

$

1.33

 

$

1.32

 

$

1.24

Per-Bbl Adjusted gross margin for crude-oil and NGLs assets (4)

 

 

2.53

 

 

2.33

 

 

2.46

 

 

2.28

Per-Bbl Adjusted gross margin for produced-water assets (4)

 

 

0.92

 

 

0.94

 

 

0.94

 

 

0.93

(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% 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)

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

 

Year Ended

 

 

December 31,
2022

 

September 30,
2022

 

December 31,
2022

 

December 31,
2021

Throughput for natural-gas assets (MMcf/d)

 

 

 

 

 

 

 

 

Delaware Basin

 

1,524

 

1,536

 

1,470

 

1,256

DJ Basin

 

1,343

 

1,326

 

1,331

 

1,369

Equity investments

 

463

 

473

 

483

 

463

Other

 

1,055

 

1,100

 

1,082

 

1,215

Total throughput for natural-gas assets

 

4,385

 

4,435

 

4,366

 

4,303

Throughput for crude-oil and NGLs assets (MBbls/d)

 

 

 

 

 

 

 

 

Delaware Basin

 

203

 

199

 

198

 

183

DJ Basin

 

77

 

81

 

82

 

90

Equity investments

 

347

 

411

 

373

 

366

Other

 

35

 

39

 

37

 

33

Total throughput for crude-oil and NGLs assets

 

662

 

730

 

690

 

672

Throughput for produced-water assets (MBbls/d)

 

 

 

 

 

 

 

 

Delaware Basin

 

868

 

895

 

853

 

717

Total throughput for produced-water assets

 

868

 

895

 

853

 

717

 

Daniel Jenkins

Director, Investor Relations

Daniel.Jenkins@westernmidstream.com

832.636.1009

Shelby Keltner

Manager, Investor Relations

Shelby.Keltner@westernmidstream.com

832.636.1009

Source: Western Midstream Partners, LP.

FAQ

What were Western Midstream's Q4 2022 financial results?

Western Midstream reported a net income of $328.6 million and Adjusted EBITDA of $515.8 million for Q4 2022.

What is the 2023 guidance for WES?

WES provided 2023 Adjusted EBITDA guidance of $2.050 billion to $2.150 billion and expects Free cash flow between $1.125 billion and $1.225 billion.

What is the Enhanced Distribution expected from WES?

WES anticipates an Enhanced Distribution of $140 million, approximately $0.36 per unit, pending board approval.

How much did WES spend on unit repurchases?

WES repurchased 19,532,305 common units for an aggregate consideration of $487.6 million up to December 31, 2022.

What was WES's net leverage ratio at the end of 2022?

WES achieved a year-end net leverage ratio of 3.1 times, below the Enhanced Distribution threshold.

Western Midstream Partners, LP

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