HOUSTON, Nov. 4, 2019 /PRNewswire/ -- Today, Western Midstream Partners, LP (NYSE: WES) ("WES" or the "Partnership") announced third-quarter 2019 financial and operating results. Net income (loss) available to limited partners for the third quarter of 2019 totaled $121.2 million, or $0.27 per common unit (diluted), with third-quarter 2019 Adjusted EBITDA(1) totaling $410.2 million and third-quarter 2019 Distributable cash flow(1) totaling $304.4 million.
RECENT HIGHLIGHTS
- Achieved record West Texas Complex gas throughput of 1.27 Bcf/d for third quarter, representing an 8% sequential-quarter increase
- Achieved record Delaware Basin water throughput of 580 MBbls/d for third quarter, representing a 13% sequential-quarter increase
- Achieved record DJ Basin and West Texas oil throughput of 275 MBbls/d for third quarter, representing a 9% sequential-quarter increase
- Estimated 2019 total capital expenditures near the 2019 low-end guidance range of $1.3 billion to $1.4 billion
- Estimated preliminary 2020 outlook to include meaningful year-over-year Adjusted EBITDA growth and a total capital expenditures reduction
For the third quarter of 2019, WES declared a per-unit quarterly distribution of $0.6200. This represents WES's 27th consecutive quarterly distribution increase and is consistent with WES's 2019 annual distribution growth-guidance range of 5% to 6%. The third-quarter 2019 Coverage ratio(1) was 1.08 times.
(1) Please see the tables at the end of this release for a reconciliation of GAAP to non-GAAP measures and calculation of the Coverage ratio. | ||
"We continue to experience strong throughput growth in the DJ and Delaware Basins, where we are well-positioned to support Oxy's future development plans and service our highly valued third-party customers," said Chief Executive Officer, Michael Ure. "Our extensive and highly leverageable assets and dedicated workforce throughout these two basins enable us to pace our growth with that of Oxy and to adopt a renewed focus on attracting meaningful and sustainable third-party business."
Third-quarter 2019 total natural gas throughput(1) averaged 4.2 Bcf/d, representing a 2% sequential-quarter decline and a 6% increase from third-quarter 2018. Excluding the effects of since-resolved downstream constraints impacting our Rockies assets, third-quarter natural gas throughput would have been approximately 110 MMcf/d higher than reported and would have represented a 1% sequential-quarter increase and a 9% increase from third-quarter 2018. Third-quarter 2019 total throughput of crude oil, NGLs, and produced-water assets(1) averaged 1,191 MBbls/d, representing an 8% sequential-quarter increase and a 28% increase from third-quarter 2018. Third-quarter 2019 capital expenditures(2), including equity investments and excluding acquisitions and capitalized interest, totaled $265.2 million on a cash basis and $278.2 million on an accrual basis, with cash maintenance capital expenditures totaling $29.2 million.
PRELIMINARY 2020 OUTLOOK
- Total capital expenditures are expected to decline 20% – 30%, compared to the midpoint of 2019 guidance
- Adjusted EBITDA is expected to grow approximately 10% year-over-year
- Maintenance capital is expected to remain largely consistent as a percentage of Adjusted EBITDA, compared to 2019
"Our 2020 goals will encompass delivering capital-efficient, organic growth from our DJ and Delaware Basin assets," said Michael Ure. "With our backbone infrastructure in place, we remain committed to driving operational efficiencies alongside additional growth that should enable sustained distribution increases."
(1) Represents total throughput attributable to WES, which excludes the 25% third-party interest in Chipeta and the 2.0% Occidental subsidiary-owned limited partner interest in WES Operating, which collectively represent WES's noncontrolling interests as of September 30, 2019. | ||
(2) Excludes capital expenditures associated with the 25% third-party interest in Chipeta. | ||
CONFERENCE CALL TOMORROW AT 1 P.M. CST
WES will host a conference call on Tuesday, November 5, 2019, at 1:00 p.m. Central Standard Time (2:00 p.m. Eastern Standard Time) to discuss third-quarter 2019 results. Individuals who would like to participate should dial 877-883-0383 (Domestic) or 412-902-6506 (International) approximately 15 minutes before the scheduled conference call time and enter participant access code 1868618. 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 for two weeks 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 the Rocky Mountains, North-central Pennsylvania, Texas and New Mexico, 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 Occidental and third-party customers. In addition, in its capacity as a processor of natural gas, WES also buys and sells natural gas, NGLs, and condensate on behalf of itself and as agent for its customers under certain of its 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 to have been 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 the ability to meet financial guidance or distribution growth expectations; the 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; the 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 in its other public filings and press releases. Western Midstream Partners, LP undertakes no obligation to publicly update or revise any forward-looking statements.
WESTERN MIDSTREAM CONTACTS
Kristen Shults
Vice President, Investor Relations and Communications
[email protected]
832.636.6000
Jack Spinks
Manager, Investor Relations
[email protected]
832.636.6000
Western Midstream Partners, LP
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
Below are reconciliations of (i) net income (loss) (GAAP) to WES's Distributable cash flow (non-GAAP), (ii) net income (loss) (GAAP) and net cash provided by operating activities (GAAP) to Adjusted EBITDA attributable to Western Midstream Partners, LP ("Adjusted EBITDA") (non-GAAP), and (iii) operating income (loss) (GAAP) to Adjusted gross margin attributable to Western Midstream Partners, LP ("Adjusted gross margin") (non-GAAP), as required under Regulation G of the Securities Exchange Act of 1934. Management believes that WES's Distributable cash flow, Adjusted EBITDA, Adjusted gross margin, and Coverage ratio 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. Distributable cash flow, Adjusted EBITDA, Adjusted gross margin, and Coverage ratio, as defined by WES, may not be comparable to similarly titled measures used by other companies. Therefore, WES's Distributable cash flow, Adjusted EBITDA, Adjusted gross margin, and Coverage ratio 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.
WES defines "Distributable cash flow" as Adjusted EBITDA, plus interest income and the net settlement amounts from the sale and/or purchase of natural gas, condensate, and NGLs under WES Operating's commodity-price swap agreements to the extent such amounts are not recognized as Adjusted EBITDA, less Service revenues – fee based recognized in Adjusted EBITDA in excess of (less than) customer billings, net cash paid (or to be paid) for interest expense (including amortization of deferred debt issuance costs originally paid in cash, offset by non-cash capitalized interest), maintenance capital expenditures, income taxes, and Distributable cash flow attributable to noncontrolling interests to the extent such amounts are not excluded from Adjusted EBITDA.
WES defines Adjusted EBITDA as net income (loss), plus distributions from equity investments, non-cash equity-based compensation expense, interest expense, income tax expense, depreciation and amortization, impairments, and other expense (including lower of cost or market inventory adjustments recorded in cost of product), less gain (loss) on divestiture and other, net, income from equity investments, interest income, income tax benefit, other income, and the noncontrolling interests owners' proportionate share of revenues and expenses.
WES defines 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.
Western Midstream Partners, LP | ||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (CONTINUED) | ||||||||||||||||
Distributable Cash Flow | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
thousands except Coverage ratio | 2019 | 2018 (1) | 2019 | 2018 (1) | ||||||||||||
Reconciliation of Net income (loss) to Distributable cash flow and calculation of the Coverage ratio | ||||||||||||||||
Net income (loss) | $ | 125,223 | $ | 198,560 | $ | 512,260 | $ | 446,737 | ||||||||
Add: | ||||||||||||||||
Distributions from equity investments | 71,005 | 66,493 | 203,540 | 145,650 | ||||||||||||
Non-cash equity-based compensation expense | 4,137 | 1,614 | 10,278 | 5,766 | ||||||||||||
Non-cash settled interest expense, net | 20 | — | 20 | — | ||||||||||||
Income tax (benefit) expense | 1,309 | 15,005 | 12,679 | 36,193 | ||||||||||||
Depreciation and amortization | 127,914 | 97,479 | 362,977 | 270,757 | ||||||||||||
Impairments | 3,107 | 27,902 | 4,294 | 155,286 | ||||||||||||
Above-market component of swap agreements with Anadarko | — | 12,601 | 7,407 | 40,722 | ||||||||||||
Other expense | 67,961 | 33 | 161,813 | 184 | ||||||||||||
Less: | ||||||||||||||||
Recognized Service revenues – fee based in excess of (less than) customer billings | (3,934) | 6,014 | (22,230) | 8,971 | ||||||||||||
Gain (loss) on divestiture and other, net | 248 | 65 | (1,403) | 351 | ||||||||||||
Equity income, net – affiliates | 53,893 | 54,215 | 175,483 | 133,874 | ||||||||||||
Cash paid for maintenance capital expenditures | 29,298 | 32,620 | 94,888 | 81,537 | ||||||||||||
Capitalized interest | 8,386 | 8,449 | 20,933 | 25,283 | ||||||||||||
Cash paid for (reimbursement of) income taxes | — | — | 96 | (87) | ||||||||||||
Other income | — | 655 | — | 2,749 | ||||||||||||
Distributable cash flow attributable to noncontrolling interests (2) | 8,401 | 9,399 | 27,464 | 27,138 | ||||||||||||
Distributable cash flow | $ | 304,384 | $ | 308,270 | $ | 980,037 | $ | 821,479 | ||||||||
Distributions declared | ||||||||||||||||
Distributions from WES Operating | $ | 283,881 | $ | 843,804 | ||||||||||||
Less: Cash reserve for the proper conduct of WES's business | 3,001 | 6,641 | ||||||||||||||
Distributions to WES unitholders (3) | $ | 280,880 | $ | 837,163 | ||||||||||||
Coverage ratio | 1.08 | x | 1.17 | x | ||||||||||||
(1) | Financial information has been recast to include the financial position and results attributable to the assets acquired from Anadarko Petroleum Corporation in February 2019 (the "Anadarko Midstream Assets" or "AMA"). |
(2) | 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 as of September 30, 2019. |
(3) | Reflects cash distributions of $0.62000 and $1.84800 per unit declared for the three and nine months ended September 30, 2019, respectively. |
Western Midstream Partners, LP | ||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (CONTINUED) | ||||||||||||||||
Adjusted EBITDA | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
thousands | 2019 | 2018 (1) | 2019 | 2018 (1) | ||||||||||||
Reconciliation of Net income (loss) to Adjusted EBITDA | ||||||||||||||||
Net income (loss) | $ | 125,223 | $ | 198,560 | $ | 512,260 | $ | 446,737 | ||||||||
Add: | ||||||||||||||||
Distributions from equity investments | 71,005 | 66,493 | 203,540 | 145,650 | ||||||||||||
Non-cash equity-based compensation expense | 4,137 | 1,614 | 10,278 | 5,766 | ||||||||||||
Interest expense | 78,524 | 48,869 | 223,872 | 129,129 | ||||||||||||
Income tax expense | 1,309 | 15,005 | 12,679 | 36,193 | ||||||||||||
Depreciation and amortization | 127,914 | 97,479 | 362,977 | 270,757 | ||||||||||||
Impairments | 3,107 | 27,902 | 4,294 | 155,286 | ||||||||||||
Other expense | 67,961 | 33 | 161,813 | 184 | ||||||||||||
Less: | ||||||||||||||||
Gain (loss) on divestiture and other, net | 248 | 65 | (1,403) | 351 | ||||||||||||
Equity income, net – affiliates | 53,893 | 54,215 | 175,483 | 133,874 | ||||||||||||
Interest income – affiliates | 4,225 | 4,225 | 12,675 | 12,675 | ||||||||||||
Other income | — | 655 | — | 2,749 | ||||||||||||
Adjusted EBITDA attributable to noncontrolling interests (2) | 10,601 | 10,976 | 33,495 | 30,950 | ||||||||||||
Adjusted EBITDA | $ | 410,213 | $ | 385,819 | $ | 1,271,463 | $ | 1,009,103 | ||||||||
Reconciliation of Net cash provided by operating activities to Adjusted EBITDA | ||||||||||||||||
Net cash provided by operating activities | $ | 340,154 | $ | 335,869 | $ | 1,026,685 | $ | 965,195 | ||||||||
Interest (income) expense, net | 74,299 | 44,644 | 211,197 | 116,454 | ||||||||||||
Uncontributed cash-based compensation awards | 141 | (55) | 789 | 932 | ||||||||||||
Accretion and amortization of long-term obligations, net | (3,651) | (1,283) | (6,499) | (4,659) | ||||||||||||
Current income tax (benefit) expense | (407) | (19,432) | 6,078 | (47,102) | ||||||||||||
Other (income) expense, net (3) | (495) | (655) | (1,397) | (2,749) | ||||||||||||
Distributions from equity investments in excess of cumulative earnings – affiliates | 4,151 | 6,184 | 21,203 | 19,816 | ||||||||||||
Changes in assets and liabilities: | ||||||||||||||||
Accounts receivable, net | 12,418 | 56,281 | 9,750 | 64,853 | ||||||||||||
Accounts and imbalance payables and accrued liabilities, net | (11,808) | (19,041) | 69,390 | (61,081) | ||||||||||||
Other items, net | 6,012 | (5,717) | (32,238) | (11,606) | ||||||||||||
Adjusted EBITDA attributable to noncontrolling interests (2) | (10,601) | (10,976) | (33,495) | (30,950) | ||||||||||||
Adjusted EBITDA | $ | 410,213 | $ | 385,819 | $ | 1,271,463 | $ | 1,009,103 | ||||||||
Cash flow information | ||||||||||||||||
Net cash provided by operating activities | $ | 1,026,685 | $ | 965,195 | ||||||||||||
Net cash used in investing activities | (3,134,643) | (1,798,702) | ||||||||||||||
Net cash provided by (used in) financing activities | 2,133,246 | 886,796 | ||||||||||||||
(1) | Financial information has been recast to include the financial position and results attributable to AMA. |
(2) | 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 as of September 30, 2019. |
(3) | Excludes non-cash losses on interest-rate swaps of $68.3 million and $162.9 million for the three and nine months ended September 30, 2019, respectively. |