What changed in this filing

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Item 1. Financial Statements

2020-11-09 compared with 2020-08-10 · 250 added, 146 removed, 1055 unchanged (27% of the section changed)

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

thousands except per-unit amounts 2020 2019 2020 2019

15 unchanged sentences

Depreciation and amortization 132,564 127,914 384,688 362,977

Long-lived asset impairments 10,150 797 165,935 1,187

Long-lived asset and other impairments 34,640 3,107 200,575 4,294

Goodwill impairment — — 441,017 —

22 unchanged sentences

Weighted-average common units outstanding – basic and diluted 438,857 453,021 442,255 402,421

(1) Total revenues and other includes related-party amounts of $ 473.4 million and $ 955.8 million for the three and six months ended June 30, 2020, respectively, and $ 385.2 million and $ 763.6 million for the three and six months ended June 30, 2019, respectively.

(2) Total operating expenses includes related-party amounts of $ 18.5 million and $ 151.1 million for the three and six months ended June 30, 2020, respectively, and $ 127.4 million and $ 241.6 million for the three and six months ended June 30, 2019, respectively.

(3) Other income (expense), net includes losses associated with the interest-rate swap agreements for the three and six months ended June 30, 2019.

_________________________________________________________________________________________

(1) Total revenues and other includes related-party amounts of $ 455.6 million and $ 1.4 billion for the three and nine months ended September 30, 2020, respectively, and $ 398.8 million and $ 1.2 billion for the three and nine months ended September 30, 2019, respectively.

(2) Total operating expenses includes related-party amounts of $ 10.4 million and $ 161.5 million for the three and nine months ended September 30, 2020, respectively, and $ 128.2 million and $ 369.9 million for the three and nine months ended September 30, 2019, respectively.

(3) Other income (expense), net includes losses associated with the interest-rate swap agreements for the three and nine months ended September 30, 2019.

(4) See Note 5.

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

thousands except number of units June 30,

thousands except number of units September 30,

2020 December 31,

32 unchanged sentences

Equity and partners’ capital

Common units ( 443,992,499 and 443,971,409 units issued and outstanding at June 30, 2020, and December 31, 2019, respectively)

Common units ( 416,196,092 and 443,971,409 units issued and outstanding at September 30, 2020, and December 31, 2019, respectively)

2,674,682 3,209,947

General partner units ( 9,060,641 units issued and outstanding at June 30, 2020, and December 31, 2019) (4)

General partner units ( 9,060,641 units issued and outstanding at September 30, 2020, and December 31, 2019) (4)

( 20,032 ) ( 14,224 )

3 unchanged sentences

Total liabilities, equity, and partners’ capital $ 11,689,675 $ 12,346,453

(1) Other assets includes $ 3.2 million and $ 4.5 million of NGLs line-fill inventory as of June 30, 2020, and December 31, 2019, respectively.

Other assets also includes $ 62.6 million of materials and supplies inventory as of June 30, 2020.

(2) Total assets includes related-party amounts of $ 1.9 billion and $ 1.7 billion as of June 30, 2020, and December 31, 2019, respectively, which includes related-party Accounts receivable, net of $ 325.3 million and $ 113.3 million as of June 30, 2020, and December 31, 2019, respectively.

(3) Total liabilities includes related-party amounts of $ 122.3 million and $ 108.8 million as of June 30, 2020, and December 31, 2019, respectively.

________________________________________________________________________________________

(1) Other assets includes $ 3.9 million and $ 4.5 million of NGLs line-fill inventory as of September 30, 2020, and December 31, 2019, respectively.

Other assets also includes $ 80.9 million of materials and supplies inventory as of September 30, 2020.

(2) Total assets includes related-party amounts of $ 1.6 billion and $ 1.7 billion as of September 30, 2020, and December 31, 2019, respectively, which includes related-party Accounts receivable, net of $ 292.9 million and $ 113.3 million as of September 30, 2020, and December 31, 2019, respectively.

(3) Total liabilities includes related-party amounts of $ 136.8 million and $ 108.8 million as of September 30, 2020, and December 31, 2019, respectively.

(4) See Note 1 .

36 unchanged sentences

Balance at June 30, 2020 $ 2,820,327 $ ( 22,347 ) $ 137,537 $ 2,935,517

Net income (loss) 241,479 5,132 7,524 254,135

Distributions to Chipeta noncontrolling interest owner

— — ( 1,148 ) ( 1,148 )

Distributions to noncontrolling interest owner of WES Operating — — ( 2,869 ) ( 2,869 )

Distributions to Partnership unitholders

( 138,083 ) ( 2,817 ) — ( 140,900 )

Unit exchange with Occidental (2)

( 256,640 ) — ( 5,238 ) ( 261,878 )

Contributions of equity-based compensation from Occidental

3,488 — — 3,488

Equity-based compensation expense

2,128 — — 2,128

Net contributions from (distributions to) related parties 842 — — 842

1,141 — — 1,141

Balance at September 30, 2020 $ 2,674,682 $ ( 20,032 ) $ 135,806 $ 2,790,456

________________________________________________________________________________________

(1) See December 2019 Agreements—Services, Secondment, and Employee Transfer Agreement within Note 1.

(2) See Note 6 .

See accompanying Notes to Consolidated Financial Statements.

44 unchanged sentences

Balance at June 30, 2019 $ — $ 3,338,646 $ 152,564 $ 3,491,210

Net income (loss) — 121,217 4,006 125,223

WES Operating equity transactions, net (3)

— ( 2,401 ) 2,401 —

Distributions to Chipeta noncontrolling interest owner

— — ( 1,407 ) ( 1,407 )

Distributions to noncontrolling interest owner of WES Operating

— — ( 5,764 ) ( 5,764 )

Distributions to Partnership unitholders

— ( 279,959 ) — ( 279,959 )

Acquisitions from related parties (4)

( 1,881 ) 1,523 358 —

Contributions of equity-based compensation from Occidental

— 3,355 — 3,355

Net pre-acquisition contributions from (distributions to) related parties

1,881 — — 1,881

Balance at September 30, 2019 $ — $ 3,182,917 $ 152,158 $ 3,335,075

_________________________________________________________________________________________

(1) See Note 1 .

(2) See Note 6 .

(3) For the three months ended March 31, 2019, the $ 752.8 million decrease to partners’ capital, together with net income (loss) attributable to Western Midstream Partners, LP, totaled $( 634.1 ) million.

(3) The $ 752.8 million and $ 2.4 million decrease to partners’ capital for the three months ended March 31,2019, and September 30, 2019, respectively, together with net income (loss) attributable to Western Midstream Partners, LP, totaled $( 634.1 ) million and $ 118.8 million, respectively.

(4) The amounts allocated to common unitholders and noncontrolling interests represent a non-cash investing activity related to the assets and liabilities assumed in the AMA acquisition.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

thousands 2020 2019

3 unchanged sentences

Depreciation and amortization 384,688 362,977

Long-lived asset impairments 165,935 1,187

Long-lived asset and other impairments 200,575 4,294

Goodwill impairment 441,017 —

22 unchanged sentences

Proceeds from the sale of assets to third parties — 342

Other ( 39,212 ) —

Additions to materials and supplies inventory and other ( 57,141 ) —

Net cash used in investing activities ( 426,670 ) ( 3,134,643 )

13 unchanged sentences

Finance lease payments (4)

( 12,241 ) ( 253 )

Net cash provided by (used in) financing activities ( 667,140 ) 2,133,246

3 unchanged sentences

Supplemental disclosures

Non-cash unit exchange with Occidental (3)

$ ( 261,878 ) $ —

Interest paid, net of capitalized interest 307,713 232,147

1 unchanged sentence

Accrued capital expenditures 20,275 154,080

(1) For the six months ended June 30, 2019, includes an $ 11.0 million borrowing under the APCWH Note Payable.

(2) For the six months ended June 30, 2019, includes a $ 439.6 million repayment to settle the APCWH Note Payable.

_________________________________________________________________________________________

(1) For the nine months ended September 30, 2019, includes an $ 11.0 million borrowing under the APCWH Note Payable.

(2) For the nine months ended September 30, 2019, includes a $ 439.6 million repayment to settle the APCWH Note Payable.

(3) See Note 6 .

(4) For the six months ended June 30, 2020, includes related-party payments of $ 6.4 million.

(4) For the nine months ended September 30, 2020, includes related-party payments of $ 6.4 million.

See accompanying Notes to Consolidated Financial Statements.

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

thousands 2020 2019 2020 2019

1 unchanged sentence

Service revenues – fee based $ 636,522 $ 587,965 $ 1,980,546 $ 1,761,483

$ 642,628 $ 593,544 $ 1,344,024 $ 1,173,518

Service revenues – product based 12,316 9,476 35,237 45,530

7,000 16,675 22,921 36,054

Product sales 30,106 68,248 108,491 214,850

9 unchanged sentences

Depreciation and amortization 132,564 127,914 384,688 362,977

Long-lived asset impairments 10,150 797 165,935 1,187

Long-lived asset and other impairments 34,640 3,107 200,575 4,294

Goodwill impairment — — 441,017 —

13 unchanged sentences

Net income (loss) attributable to Western Midstream Operating, LP $ 251,740 $ 125,415 $ 271,224 $ 513,023

$ 279,814 $ 175,012 $ 19,484 $ 387,608

Limited partners’ interest in net income (loss):

3 unchanged sentences

251,740 125,415 271,224 483,744

(2) Total operating expenses includes related-party amounts of $ 18.7 million and $ 151.1 million for the three and six months ended June 30, 2020, respectively, and $ 126.9 million and $ 240.7 million for the three and six months ended June 30, 2019, respectively.

(3) Other income (expense), net includes losses associated with the interest-rate swap agreements for the three and six months ended June 30, 2019.

________________________________________________________________________________________

(2) Total operating expenses includes related-party amounts of $ 11.1 million and $ 162.2 million for the three and nine months ended September 30, 2020, respectively, and $ 127.4 million and $ 368.2 million for the three and nine months ended September 30, 2019, respectively.

(3) Other income (expense), net includes losses associated with the interest-rate swap agreements for the three and nine months ended September 30, 2019.

(4) See Note 5.

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

thousands except number of units June 30,

thousands except number of units September 30,

2020 December 31,

32 unchanged sentences

Equity and partners’ capital

Common units ( 318,675,578 units issued and outstanding at June 30, 2020, and December 31, 2019)

Common units ( 318,675,578 units issued and outstanding at September 30, 2020, and December 31, 2019)

2,750,231 3,286,620

3 unchanged sentences

Total liabilities, equity, and partners’ capital $ 11,649,426 $ 12,342,825

(1) Other assets includes $ 3.2 million and $ 4.5 million of NGLs line-fill inventory as of June 30, 2020, and December 31, 2019, respectively.

Other assets also includes $ 62.6 million of materials and supplies inventory as of June 30, 2020.

(2) Total assets includes related-party amounts of $ 1.9 billion and $ 1.7 billion as of June 30, 2020, and December 31, 2019, respectively, which includes related-party Accounts receivable, net of $ 299.3 million and $ 113.6 million as of June 30, 2020, and December 31, 2019, respectively.

(3) Total liabilities includes related-party amounts of $ 122.3 million and $ 108.8 million as of June 30, 2020, and December 31, 2019, respectively.

_________________________________________________________________________________________

(1) Other assets includes $ 3.9 million and $ 4.5 million of NGLs line-fill inventory as of September 30, 2020, and December 31, 2019, respectively.

Other assets also includes $ 80.9 million of materials and supplies inventory as of September 30, 2020.

(2) Total assets includes related-party amounts of $ 1.6 billion and $ 1.7 billion as of September 30, 2020, and December 31, 2019, respectively, which includes related-party Accounts receivable, net of $ 256.5 million and $ 113.6 million as of September 30, 2020, and December 31, 2019, respectively.

(3) Total liabilities includes related-party amounts of $ 136.8 million and $ 108.8 million as of September 30, 2020, and December 31, 2019, respectively.

See accompanying Notes to Consolidated Financial Statements.

27 unchanged sentences

$ 2,897,898 $ 31,452 $ 2,929,350

Net income (loss) 251,740 2,488 254,228

Distributions to Chipeta noncontrolling interest owner

— ( 1,148 ) ( 1,148 )

Distributions to WES Operating unitholders ( 143,404 ) — ( 143,404 )

Contributions of equity-based compensation from Occidental

3,488 — 3,488

Unit exchange with Occidental (2)

( 261,878 ) — ( 261,878 )

Net contributions from (distributions to) related parties

Other 1,545 — 1,545

Balance at September 30, 2020

$ 2,750,231 $ 32,792 $ 2,783,023

_________________________________________________________________________________________

(1) See December 2019 Agreements—Services, Secondment, and Employee Transfer Agreement within Note 1 .

(2) See Note 6 .

See accompanying Notes to Consolidated Financial Statements.

32 unchanged sentences

Distributions to Chipeta noncontrolling interest owner — — — — ( 1,858 ) ( 1,858 )

— — — — ( 1,858 ) ( 1,858 )

Distributions to WES Operating unitholders — ( 283,271 ) — — — ( 283,271 )

2 unchanged sentences

Contributions of equity-based compensation from Anadarko — 2,765 — — — 2,765

— 2,765 — — — 2,765

Net pre-acquisition contributions from (distributions to) related parties

1 unchanged sentence

Balance at June 30, 2019 $ — $ 3,433,251 $ — $ — $ 57,795 $ 3,491,046

Net income (loss) — 125,415 — — 1,497 126,912

Distributions to Chipeta noncontrolling interest owner — — — — ( 1,407 ) ( 1,407 )

Distributions to WES Operating unitholders — ( 288,083 ) — — — ( 288,083 )

Acquisitions from related parties (3)

( 1,881 ) 1,881 — — — —

Contributions of equity-based compensation from Occidental — 3,352 — — — 3,352

Net pre-acquisition contributions from (distributions to) related parties

1,881 — — — — 1,881

Balance at September 30, 2019 $ — $ 3,275,816 $ — $ — $ 57,885 $ 3,333,701

_________________________________________________________________________________________

(1) See Note 1 .

4 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

thousands 2020 2019

3 unchanged sentences

Depreciation and amortization 384,688 362,977

Long-lived asset impairments 165,935 1,187

Long-lived asset and other impairments 200,575 4,294

Goodwill impairment 441,017 —

22 unchanged sentences

Proceeds from the sale of assets to third parties — 342

Other ( 39,212 ) —

Additions to materials and supplies inventory and other ( 57,141 ) —

Net cash used in investing activities ( 426,670 ) ( 3,134,643 )

11 unchanged sentences

Finance lease payments (4)

( 12,241 ) ( 253 )

Net cash provided by (used in) financing activities ( 668,822 ) 2,128,012

3 unchanged sentences

Supplemental disclosures

Non-cash unit exchange with Occidental (3)

$ ( 261,878 ) $ —

Interest paid, net of capitalized interest 307,713 231,913

1 unchanged sentence

Accrued capital expenditures 20,275 154,080

(1) For the six months ended June 30, 2019, includes an $ 11.0 million borrowing under the APCWH Note Payable.

(2) For the six months ended June 30, 2019, includes a $ 439.6 million repayment to settle the APCWH Note Payable.

_________________________________________________________________________________________

(1) For the nine months ended September 30, 2019, includes an $ 11.0 million borrowing under the APCWH Note Payable.

(2) For the nine months ended September 30, 2019, includes a $ 439.6 million repayment to settle the APCWH Note Payable.

(3) See Note 6.

(4) For the six months ended June 30, 2020, includes related-party payments of $ 6.4 million.

(4) For the nine months ended September 30, 2020, includes related-party payments of $ 6.4 million.

See accompanying Notes to Consolidated Financial Statements.

18 unchanged sentences

In its capacity as a natural-gas processor, the Partnership also buys and sells natural gas, NGLs, and condensate on behalf of itself and as an agent for its customers under certain contracts.

As of June 30, 2020, the Partnership’s assets and investments consisted of the following:

As of September 30, 2020, the Partnership’s assets and investments consisted of the following:

Operated Operated

7 unchanged sentences

Crude-oil pipelines 3 1 — 3

_________________________________________________________________________________________

(1) Includes the DBM water systems.

These assets and investments are located in the Rocky Mountains (Colorado, Utah, and Wyoming), North-central Pennsylvania, Texas, and New Mexico.

Latham Train II, a cryogenic train at the DJ Basin complex, and Loving ROTF Train III, an oil-stabilization train at the DBM oil system, commenced operations during the first quarter of 2020.

Latham Train II, a cryogenic train at the DJ Basin complex, commenced operations during the first quarter of 2020.

Loving ROTF Trains III and IV, oil-stabilization trains at the DBM oil system, commenced operations during the first and third quarters of 2020, respectively.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

39 unchanged sentences

Whitethorn LLC

Fort Union (4)

_________________________________________________________________________________________

(1) The 25 % third-party interest in Chipeta Processing LLC (“Chipeta”) is reflected within noncontrolling interests in the consolidated financial statements.

3 unchanged sentences

“Equity-investment throughput” refers to the Partnership’s share of average throughput for these investments.

(4) See Note 3 .

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

6 unchanged sentences

Presentation of the Partnership’s assets.

The Partnership’s assets include assets owned and ownership interests accounted for by the Partnership under the equity method of accounting, through its 98.0 % partnership interest in WES Operating as of June 30, 2020 (see Note 7 ).

The Partnership also owns and controls the entire non-economic general partner interest in WES Operating GP, and the Partnership’s general partner is owned by Occidental.

15 unchanged sentences

Materials and supplies inventory is valued at weighted-average cost and is reviewed periodically for obsolescence.

As of June 30, 2020, materials and supplies inventory, previously reported in Other current assets, is prospectively reported in Other assets on the consolidated balance sheets.

Beginning with the second quarter of 2020, materials and supplies inventory, previously reported in Other current assets, is prospectively reported in Other assets on the consolidated balance sheets.

See Note 10 .

5 unchanged sentences

An accrual of $ 10.9 million for anticipated costs associated with system shutdowns was recorded in 2018 as a reduction in related-party Product sales in the consolidated statements of operations.

During the first quarter of 2019, $ 5.5 million of the accrual related to the Kitty Draw gathering system was reversed due to producer settlements being less than their initial estimates.

During the nine months ended September 30, 2019, $ 6.1 million of the accrual related to the Kitty Draw gathering system was reversed due to producer settlements being less than their initial estimates.

The Partnership’s operations continue to be organized into a single operating segment, the assets of which gather, compress, treat, process, and transport natural gas;

7 unchanged sentences

Prior to vesting, the Awards pay in-kind distributions in the form of Partnership common units.

The Partnership issued 21,090 common units as in-kind distributions under such Awards during the quarter ended June 30, 2020.

During the nine months ended September 30, 2020, the Partnership issued 80,081 common units as in-kind distributions under such Awards.

In addition, phantom units are awarded under the WES LTIP to non-executive employees and independent directors of the Partnership from time to time, which vest ratably over a three-year period and one year from the grant date, respectively.

5 unchanged sentences

For ROA Awards, all performance-related fair-value changes are recognized in compensation expense during the performance period.

Compensation expense for the WES LTIP was $ 2.1 million and $ 3.2 million for the three and six months ended June 30, 2020, respectively, and $ 0.4 million for the three and six months ended June 30, 2019.

Compensation expense for the WES LTIP was $ 2.1 million and $ 5.4 million for the three and nine months ended September 30, 2020, respectively, and $ 0.6 million and $ 1.0 million for the three and nine months ended September 30, 2019, respectively.

Defined-contribution plan.

2 unchanged sentences

The Partnership also makes other contributions based on plan guidelines.

The Partnership recognized expense related to the plan of $ 4.0 million and $ 4.4 million for the three and six months ended June 30, 2020, respectively, recorded as General and administrative expense in the consolidated statements of operations.

The Partnership recognized expense related to the plan of $ 3.8 million and $ 8.2 million for the three and nine months ended September 30, 2020, respectively, recorded as General and administrative expense in the consolidated statements of operations.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

9 unchanged sentences

Contract assets primarily relate to revenue accrued but not yet billed under cost-of-service contracts and accrued deficiency fees.

As of June 30, 2020, there have been no negative indications regarding the collectability of significant receivables as it relates to impacts from the global outbreak of the coronavirus (“COVID-19”) and the oil-market disruption resulting from significantly lower global demand and corresponding oversupply of crude oil.

As of September 30, 2020, there have been no negative indications regarding the collectability of significant receivables as it relates to impacts from the global outbreak of the coronavirus (“COVID-19”) and the oil-market disruption resulting from significantly lower global demand and corresponding oversupply of crude oil.

The Partnership will continue to monitor the credit quality of its customer base and assess collectability of these assets as appropriate.

Notes receivable.

In May 2008, WES Operating loaned $ 260.0 million to Anadarko in exchange for a 30-year note bearing interest at a fixed annual rate of 6.50 %, payable quarterly (the “Anadarko note receivable”).

Following Occidental’s acquisition by merger of Anadarko in August 2019, Occidental became the ultimate counterparty.

Since the first quarter of 2020, the Partnership has assessed the recoverability of the Anadarko note receivable under the loss-given-default method using historical data from internal and external sources, current market conditions, and reasonable and supportable forecasted information.

The loss-given-default method was based on applicable probability of default percentages for similar debt instruments and the fair value of the Anadarko note receivable, which reflects an analysis of Occidental’s yield based on quoted market yields of similar Occidental debt instruments.

As of June 30, 2020, the Partnership recognized an allowance for expected credit losses of $ 0.5 million related to the Anadarko note receivable.

REVENUE FROM CONTRACTS WITH CUSTOMERS

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

thousands 2020 2019 2020 2019

12 unchanged sentences

Total revenues and other $ 679,044 $ 666,027 $ 2,125,112 $ 2,022,964

(1) For the three and six months ended June 30, 2020, includes fixed- and variable-lease revenue from an operating and maintenance agreement entered into with Occidental.

_________________________________________________________________________________________

(1) For the three and nine months ended September 30, 2020, includes fixed- and variable-lease revenue from an operating and maintenance agreement entered into with Occidental.

See Operating lease within Note 6.

3 unchanged sentences

Contract balances.

Receivables from customers, which are included in Accounts receivable, net on the consolidated balance sheets were $ 507.3 million and $ 362.6 million as of June 30, 2020, and December 31, 2019, respectively.

Receivables from customers, which are included in Accounts receivable, net on the consolidated balance sheets were $ 459.1 million and $ 362.6 million as of September 30, 2020, and December 31, 2019, respectively.

Contract assets primarily relate to revenue accrued but not yet billed under cost-of-service contracts with fixed and variable fees and accrued deficiency fees the Partnership expects to charge customers once the related performance periods are completed.

3 unchanged sentences

Additional estimated revenues recognized (2)

Balance at June 30, 2020 $ 74,411

Contract assets at June 30, 2020

Balance at September 30, 2020 $ 79,150

Contract assets at September 30, 2020

Other current assets $ 20,152

1 unchanged sentence

Total contract assets from contracts with customers $ 79,150

(1) Includes $( 2.6 ) million for the three months ended June 30, 2020.

(2) Includes $ 4.3 million for the three months ended June 30, 2020.

_________________________________________________________________________________________

(1) Includes $( 0.2 ) million for the three months ended September 30, 2020.

(2) Includes $ 4.9 million for the three months ended September 30, 2020.

Contract liabilities primarily relate to (i) fees that are charged to customers for only a portion of the contract term and must be recognized as revenues over the expected period of customer benefit, (ii) fixed and variable fees under cost-of-service contracts that are received from customers for which revenue recognition is deferred, and (iii) aid-in-construction payments received from customers that must be recognized over the expected period of customer benefit.

3 unchanged sentences

Revenues recognized that were included in the contract liability balance at the beginning of the period (2)

Balance at June 30, 2020 $ 235,643

Contract liabilities at June 30, 2020

Balance at September 30, 2020 $ 245,010

Contract liabilities at September 30, 2020

Accrued liabilities $ 9,312

1 unchanged sentence

Total contract liabilities from contracts with customers $ 245,010

(1) Includes $ 12.7 million for the three months ended June 30, 2020.

(2) Includes $( 1.6 ) million for the three months ended June 30, 2020.

_________________________________________________________________________________________

(1) Includes $ 11.0 million for the three months ended September 30, 2020.

(2) Includes $( 1.7 ) million for the three months ended September 30, 2020.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

2 unchanged sentences

Transaction price allocated to remaining performance obligations.

Revenues expected to be recognized from certain performance obligations that are unsatisfied (or partially unsatisfied) as of June 30, 2020, are presented in the following table.

Revenues expected to be recognized from certain performance obligations that are unsatisfied (or partially unsatisfied) as of September 30, 2020, are presented in the following table.

The Partnership applies the optional exemptions in Topic 606 and does not disclose consideration for remaining performance obligations with an original expected duration of one year or less or for variable consideration related to unsatisfied (or partially unsatisfied) performance obligations.

17 unchanged sentences

The initial investment was funded with cash on hand and the interest in Red Bluff Express is accounted for under the equity method of accounting.

Fort Union and Bison facilities.

In October 2020, the Partnership (i) sold its 14.81 % interest in Fort Union, which was accounted for under the equity method of accounting, and (ii) entered into an option agreement to sell the Bison treating facility during the first quarter of 2021, located in Northeast Wyoming, to a third party.

The Partnership received combined proceeds of $ 27.0 million, resulting in a net gain on sale of $ 21.0 million related to the Fort Union interest that will be recorded in the fourth quarter of 2020.

A gain related to the option agreement and potential sale of the Bison treating facility will be recognized in the first quarter of 2021 if the option is exercised or expires.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

15 unchanged sentences

0.31100 140,900 August 2020

(1) The Board of Directors declared a cash distribution to the Partnership’s unitholders for the second quarter of 2020 of $ 0.31100 per unit, or $ 140.9 million in aggregate.

The cash distribution is payable on August 13, 2020 to unitholders of record at the close of business on July 31, 2020, including the general partner units that were issued on December 31, 2019 (see Note 1 ).

Following the transactions contemplated by the Exchange Agreement, the general partner is entitled to 2.0 % of all quarterly distributions beginning with the cash distribution declared for the fourth quarter of 2019.

September 30 (1)

0.31100 132,255 November 2020

_________________________________________________________________________________________

(1) The Board of Directors declared a cash distribution to the Partnership’s unitholders for the third quarter of 2020 of $ 0.31100 per unit, or $ 132.3 million in aggregate.

The cash distribution is payable on November 13, 2020 to unitholders of record at the close of business on October 30, 2020, including the general partner units that were issued on December 31, 2019 (see Note 1 ).

Following the transactions contemplated by the Exchange Agreement, the general partner units are entitled to all quarterly distributions beginning with the cash distribution declared for the fourth quarter of 2019.

Available cash.

17 unchanged sentences

Holdings of Partnership equity.

The Partnership’s common units are listed on the New York Stock Exchange under the ticker symbol “WES.” As of June 30, 2020, Occidental held 242,136,976 common units, representing a 53.4 % limited partner interest in the Partnership, and through its ownership of the general partner, Occidental indirectly held 9,060,641 general partner units, representing a 2.0 % general partner interest in the Partnership (see Note 1 ).

The Partnership’s common units are listed on the New York Stock Exchange under the ticker symbol “WES.” On September 11, 2020, the Partnership assigned its 98 % interest in the 30-year $ 260.0 million note established in May 2008 between WES Operating and Anadarko (the “Anadarko note receivable”) to Anadarko, which Anadarko canceled and retired immediately upon receipt, in exchange for which Occidental caused certain of its subsidiaries to transfer an aggregate of 27,855,398 common units representing limited partner interests in the Partnership to the Partnership.

The units were canceled by the Partnership immediately upon receipt.

As of September 30, 2020, Occidental held 214,281,578 common units, representing a 50.4 % limited partner interest in the Partnership, and through its ownership of the general partner, Occidental indirectly held 9,060,641 general partner units, representing a 2.1 % general partner interest in the Partnership (see Note 1 ).

The public held 201,914,514 common units, representing a 47.5 % limited partner interest in the Partnership.

Holdings of WES Operating equity.

As of June 30, 2020, (i) the Partnership, directly and indirectly through its ownership of WES Operating GP, owned a 98.0 % limited partner interest and the entire non-economic general partner interest in WES Operating and (ii) Occidental, through its ownership of WGRAH, owned a 2.0 % limited partner interest in WES Operating, which is reflected as a noncontrolling interest within the consolidated financial statements of the Partnership (see Note 1 ).

As of September 30, 2020, (i) the Partnership, directly and indirectly through its ownership of WES Operating GP, owned a 98.0 % limited partner interest and the entire non-economic general partner interest in WES Operating and (ii) Occidental, through its ownership of WGRAH, owned a 2.0 % limited partner interest in WES Operating, which is reflected as a noncontrolling interest within the consolidated financial statements of the Partnership (see Note 1 ).

WES Operating Class C units.

2 unchanged sentences

All outstanding Class C units converted into WES Operating common units on a one -for-one basis immediately prior to the closing of the Merger (see Note 1 ).

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EQUITY AND PARTNERS’ CAPITAL (CONTINUED)

Partnership’s net income (loss) per common unit.

6 unchanged sentences

For periods subsequent to the closing of the Merger, net income (loss) per common unit for WES Operating is not calculated because no publicly traded units remained outstanding subsequent to the closing of the Merger.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED-PARTY TRANSACTIONS

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

thousands 2020 2019 2020 2019

14 unchanged sentences

Interest expense — ( 59 ) ( 43 ) ( 1,912 )

_________________________________________________________________________________________

(1) See Note 7 .

1 unchanged sentence

Also see Incentive Plans within this Note 6.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED-PARTY TRANSACTIONS (CONTINUED)

Consolidated balance sheets

thousands June 30,

thousands September 30,

2020 December 31,

12 unchanged sentences

Total liabilities 136,772 108,760

_________________________________________________________________________________________

(1) Increase attributable to the timing of certain related-party cash receipts.

The Partnership received $ 141.8 million of the June 30, 2020, Accounts receivable, net balance by July 3, 2020.

The Partnership received $ 74.8 million of the September 30, 2020, Accounts receivable, net balance by October 7, 2020.

(2) See Note 7 .

(3) Includes amounts related to finance leases (see Note 11 ) .

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED-PARTY TRANSACTIONS (CONTINUED)

Consolidated statements of cash flows

Six Months Ended

Nine Months Ended

September 30,

thousands 2020 2019

13 unchanged sentences

Finance lease payments ( 6,382 ) ( 253 )

_________________________________________________________________________________________

(1) Represents distributions paid to Occidental pursuant to the partnership agreement of the Partnership (see Note 4 and Note 5 ).

(2) Represents distributions paid to certain subsidiaries of Occidental pursuant to WES Operating’s partnership agreement (see Note 4 and Note 5 ).

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED-PARTY TRANSACTIONS (CONTINUED)

The following tables summarize material related-party transactions for WES Operating (which are included in the Partnership’s consolidated financial statements) to the extent the amounts differ from the Partnership’s consolidated financial statements:

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

thousands 2020 2019 2020 2019

1 unchanged sentence

$ 8,314 $ 26,915 $ 41,220 $ 71,793

_________________________________________________________________________________________

(1) Includes amounts charged by Occidental pursuant to the shared services agreements (see Shared services agreements within this Note 6 ).

1 unchanged sentence

Consolidated balance sheets

thousands June 30,

thousands September 30,

2020 December 31,

1 unchanged sentence

Consolidated statements of cash flows

Six Months Ended

Nine Months Ended

September 30,

thousands 2020 2019

1 unchanged sentence

$ ( 577,122 ) $ ( 736,256 )

_________________________________________________________________________________________

(1) Represents distributions paid to the Partnership and certain subsidiaries of Occidental pursuant to WES Operating’s partnership agreement (see Note 4 and Note 5 ).

For the six months ended June 30, 2019, includes distributions to the Partnership and a subsidiary of Occidental related to the repayment of the WGP RCF (see Note 11 ).

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED-PARTY TRANSACTIONS (CONTINUED)

For the nine months ended September 30, 2019, includes distributions to the Partnership and a subsidiary of Occidental related to the repayment of the WGP RCF (see Note 11 ).

Related-party revenues.

2 unchanged sentences

The Partnership has significant gathering and processing arrangements with affiliates of Occidental on most of its systems.

These arrangements with Occidental include Occidental-produced volumes and in some instances, the volumes of other working-interest owners of Occidental where the joint partnership collectively markets volumes.

These volumes are considered owned and controlled by Occidental, which is the contracting counterparty of the Partnership.

Natural-gas throughput (excluding equity-investment throughput) attributable to production owned or controlled by Occidental was 43 % and 42 % for the three and six months ended June 30, 2020, respectively, and 37 % for the three and six months ended June 30, 2019.

Crude-oil and NGLs throughput (excluding equity-investment throughput) attributable to production owned or controlled by Occidental was 88 % for the three and six months ended June 30, 2020, and 85 % and 83 % for the three and six months ended June 30, 2019, respectively.

Produced-water throughput attributable to production owned or controlled by Occidental was 87 % and 88 % for the three and six months ended June 30, 2020, respectively, and 80 % and 82 % for the three and six months ended June 30, 2019, respectively.

Natural-gas throughput (excluding equity-investment throughput) attributable to production owned or controlled by Occidental was 41 % and 42 % for the three and nine months ended September 30, 2020, respectively, and 38 % and 37 % for the three and nine months ended September 30, 2019, respectively.

Crude-oil and NGLs throughput (excluding equity-investment throughput) attributable to production owned or controlled by Occidental was 87 % and 88 % for the three and nine months ended September 30, 2020, respectively, and 85 % and 84 % for the three and nine months ended September 30, 2019, respectively.

Produced-water throughput attributable to production owned or controlled by Occidental was 87 % and 88 % for the three and nine months ended September 30, 2020, respectively, and 80 % and 81 % for the three and nine months ended September 30, 2019, respectively.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED-PARTY TRANSACTIONS (CONTINUED)

Commodity purchase and sale agreements.

10 unchanged sentences

Additionally, under the terms of the Marketing Transition Services Agreement, the Partnership is liable for certain downstream transportation commitments through December 31, 2020.

In October 2020, the Partnership entered into a three-year NGLs marketing agreement with AESC for the sale of certain of the Partnership’s NGLs volumes processed at the DJ Basin complex.

The agreement is effective January 1, 2021.

Operating lease.

2 unchanged sentences

Subsequent to the initial two-year term, the agreement provides for automatic one-year extensions, unless either party exercises its option to terminate the lease with advance notice.

For the three and six months ended June 30, 2020, the Partnership recognized fixed-lease revenue of $ 44.0 million and $ 87.9 million, respectively, and variable-lease revenue of $ 17.2 million and $ 32.8 million, respectively, related to these agreements, with such amounts included in Service revenues – fee based in the consolidated statements of operations.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED-PARTY TRANSACTIONS (CONTINUED)

For the three and nine months ended September 30, 2020, the Partnership recognized fixed-lease revenue of $ 44.0 million and $ 131.8 million, respectively, and variable-lease revenue of $ 9.8 million and $ 42.6 million, respectively, related to these agreements, with such amounts included in Service revenues – fee based in the consolidated statements of operations.

Related-party expenses.

2 unchanged sentences

Related-party expenses do not bear a direct relationship to related-party revenues, and third-party expenses do not bear a direct relationship to third-party revenues.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED-PARTY TRANSACTIONS (CONTINUED)

Shared services agreements.

13 unchanged sentences

General and administrative expense includes equity-based compensation expense allocated to the Partnership by Occidental for awards granted to the executive officers of the general partner and to other employees prior to their employment with the Partnership under (i) the Anadarko Petroleum Corporation 2012 Omnibus Incentive Compensation Plan, as amended and restated, (ii) Occidental’s 2015 Long-Term Incentive Plan, and (iii) Occidental’s Phantom Share Unit Award Plan (collectively referred to as the “Incentive Plans”).

General and administrative expense includes costs related to the Incentive Plans of $ 3.6 million and $ 7.7 million for the three and six months ended June 30, 2020, respectively, and $ 4.0 million and $ 5.8 million for the three and six months ended June 30, 2019, respectively.

General and administrative expense includes costs related to the Incentive Plans of $ 3.5 million and $ 11.2 million for the three and nine months ended September 30, 2020, respectively, and $ 3.5 million and $ 9.3 million for the three and nine months ended September 30, 2019, respectively.

Portions of these amounts are reflected as contributions to partners’ capital in the consolidated statements of equity and partners’ capital.

3 unchanged sentences

As discussed in more detail in Note 1 , on February 28, 2019, the Partnership, WES Operating, Anadarko, and certain of their affiliates completed the Merger and the other transactions contemplated in the Merger Agreement, which included the acquisition of AMA from Anadarko.

Anadarko note receivable.

In May 2008, WES Operating loaned $ 260.0 million to Anadarko in exchange for a 30-year note bearing interest at a fixed annual rate of 6.50 %, payable quarterly and classified as interest income in the consolidated statements of operations.

On September 11, 2020, the Partnership and Occidental entered into a Unit Redemption Agreement, pursuant to which (i) WES Operating transferred and assigned its interest in the Anadarko note receivable to its limited partners on a pro-rata basis, transferring 98 % to the Partnership and 2 % to WGRAH, a subsidiary of Occidental, (ii) the Partnership subsequently assigned its 98% interest in (and accrued interest owed under) the Anadarko note receivable to Anadarko, which Anadarko canceled and retired immediately upon receipt, in exchange for which Occidental caused certain of its subsidiaries to transfer an aggregate of 27,855,398 common units of the Partnership to the Partnership, and (iii) the Partnership canceled the units immediately upon receipt.

Purchases from related parties.

During the third quarter of 2019, the Partnership purchased $ 18.4 million of materials and supplies inventory from Occidental.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

1 unchanged sentence

RELATED-PARTY TRANSACTIONS (CONTINUED)

Anadarko note receivable.

As of June 30, 2020, the accrued interest receivable balance of $ 2.8 million is classified as Accounts receivable, net on the consolidated balance sheets.

The fair value of the Anadarko note receivable was $ 241.5 million and $ 337.7 million at June 30, 2020, and December 31, 2019, respectively.

Following Occidental’s acquisition by merger of Anadarko, the fair value of the Anadarko note receivable reflects an analysis of Occidental’s yield based on quoted market yields of similar Occidental debt instruments.

Accordingly, the fair value of the Anadarko note receivable is measured using Level-2 fair value inputs.

As of June 30, 2020, the Partnership recognized an allowance for expected credit losses of $ 0.5 million related to the Anadarko note receivable.

APCWH Note Payable.

7 unchanged sentences

The commodity-price swap agreements did not satisfy the definition of a derivative financial instrument and, therefore did not require fair-value measurement.

Net gains (losses) on commodity-price swap agreements were zero and $( 0.7 ) million (due to settlement of 2018 activity in 2019) for the three and six months ended June 30, 2019, respectively, reported in the consolidated statements of operations as related-party Product sales.

Net gains (losses) on commodity-price swap agreements were zero and $( 0.7 ) million (due to settlement of 2018 activity in 2019) for the three and nine months ended September 30, 2019, respectively, reported in the consolidated statements of operations as related-party Product sales.

A capital contribution from Anadarko related to the commodity-price swap agreements of $ 7.4 million was recorded in the consolidated statements of equity and partners’ capital for the three months ended March 31, 2019.

1 unchanged sentence

Occidental was the only customer from which revenues exceeded 10% of consolidated revenues for all periods presented in the consolidated statements of operations.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EQUITY INVESTMENTS

The following table presents the equity-investments activity for the six months ended June 30, 2020:

thousands Balance at December 31, 2019 Equity

The following table presents the financial statement impact of the Partnership’s equity-investments for the nine months ended September 30, 2020:

thousands Balance at December 31, 2019 Other-than-temporary

income, net Contributions Distributions Distributions in

Balance at June 30, 2020

Balance at September 30, 2020

Fort Union $ ( 610 ) $ — $ ( 554 ) $ — $ — $ — $ ( 1,164 )

13 unchanged sentences

Total $ 1,285,717 $ ( 29,399 ) $ 176,788 $ 19,017 $ ( 187,816 ) $ ( 21,750 ) $ 1,242,557

_________________________________________________________________________________________

(1) Recorded in Long-lived asset and other impairments in the consolidated statements of operations.

(2) Distributions in excess of cumulative earnings, classified as investing cash flows in the consolidated statements of cash flows, are calculated on an individual-investment basis.

The investment balance in Saddlehorn at June 30, 2020, is $ 9.8 million less than the Partnership’s underlying equity in Saddlehorn’s net assets, primarily due to income from an expansion project that was funded by Saddlehorn’s other owners being disproportionately allocated to the Partnership beginning in the second quarter of 2020.

This difference will be amortized to Equity income, net – related parties in the consolidated statements of operations over the remaining estimated useful life of the Saddlehorn pipeline.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EQUITY INVESTMENTS (CONTINUED)

The investment balance in Ranch Westex at September 30, 2020, was $ 25.3 million less than the Partnership’s underlying equity in Ranch Westex’s net assets primarily due to an impairment loss recognized by the Partnership in the third quarter of 2020.

The impairment loss of $ 29.4 million resulted from a decline in value below the carrying value, which was determined to be other than temporary in nature.

This investment was impaired to its estimated fair value of $ 16.7 million, using the income approach and Level-3 fair value inputs, due to a reduction in estimated future cash flows resulting from lower forecasted producer throughput.

The investment balance in Saddlehorn at September 30, 2020, was $ 14.1 million less than the Partnership’s underlying equity in Saddlehorn’s net assets, primarily due to income from an expansion project that was funded by Saddlehorn’s other owners being disproportionately allocated to the Partnership beginning in the second quarter of 2020.

This difference will be amortized to Equity income, net – related parties in the consolidated statements of operations over the remaining estimated useful life of the Saddlehorn pipeline.

PROPERTY, PLANT, AND EQUIPMENT

A summary of the historical cost of property, plant, and equipment is as follows:

thousands Estimated Useful Life June 30,

thousands Estimated Useful Life September 30,

2020 December 31,

14 unchanged sentences

These amounts represent property that is not yet placed into productive service as of the respective balance sheet date.

Long-lived asset impairments.

During the six months ended June 30, 2020, the Partnership recognized impairments of $ 165.9 million, primarily due to $ 149.4 million of impairments for assets located in Wyoming and Utah.

Long-lived asset and other impairments.

During the nine months ended September 30, 2020, the Partnership recognized impairments of $ 200.6 million, primarily due to $ 150.2 million of impairments for assets located in Wyoming and Utah.

These assets were impaired to estimated fair values of $ 112.2 million.

3 unchanged sentences

These impairments were primarily triggered by reductions in estimated future cash flows resulting from lower forecasted producer throughput and lower commodity prices.

The remaining impairments of $ 16.5 million were primarily at the DJ Basin complex due to cancellation of projects and impairments of rights-of-way.

During the year ended December 31, 2019, the Partnership recognized impairments of $ 6.3 million, primarily at the DJ Basin complex due to impairments of rights-of-way and cancellation of projects.

Potential future long-lived asset impairments.

As of June 30, 2020, it is reasonably possible that prolonged low commodity prices, further commodity-price declines, and changes to producers’ drilling plans in response to lower prices could result in future long-lived asset impairments.

The remaining impairments of $ 21.0 million were primarily at the DJ Basin complex and DBM water systems due to the cancellation of projects and impairments of rights-of-way.

Long-lived asset and other impairments on the consolidated statements of operations also includes a $ 29.4 million other-than-temporary impairment for the nine months ended September 30, 2020, of the Partnership’s investment in Ranch Westex (see Note 7 ).

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PROPERTY, PLANT, AND EQUIPMENT (CONTINUED)

During the year ended December 31, 2019, the Partnership recognized impairments of $ 6.3 million, primarily at the DJ Basin complex due to impairments of rights-of-way and cancellation of projects.

Potential future long-lived asset impairments.

As of September 30, 2020, it is reasonably possible that prolonged low commodity prices, further commodity-price declines, changes to producers’ drilling plans in response to lower prices, and potential producer bankruptcies could result in future long-lived asset impairments.

Goodwill is recorded when the purchase price of a business acquired exceeds the fair market value of the tangible and separately measurable intangible net assets.

21 unchanged sentences

The Partnership WES Operating

thousands June 30,

thousands September 30,

2020 December 31,

2019 June 30,

2019 September 30,

2020 December 31,

4 unchanged sentences

The Partnership WES Operating

thousands June 30,

thousands September 30,

2020 December 31,

2019 June 30,

2019 September 30,

2020 December 31,

1 unchanged sentence

Materials and supplies inventory (1)

— 23,444 — 23,444

Imbalance receivables 5,724 4,690 5,724 4,690

3 unchanged sentences

Total other current assets $ 54,104 $ 41,938 $ 51,659 $ 39,914

_________________________________________________________________________________________

(1) See Note 1 .

A summary of accrued liabilities is as follows:

The Partnership WES Operating

thousands June 30,

thousands September 30,

2020 December 31,

2019 June 30,

2019 September 30,

2020 December 31,

8 unchanged sentences

Total accrued liabilities $ 175,915 $ 149,793 $ 142,844 $ 149,639

(1) Includes amounts related to WES Operating’s interest-rate swap agreements as of June 30, 2020, and December 31, 2019 (see Note 11 ).

_________________________________________________________________________________________

(1) Includes amounts related to WES Operating’s interest-rate swap agreements as of September 30, 2020, and December 31, 2019 (see Note 11 ).

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

3 unchanged sentences

The following table presents the outstanding debt:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

thousands Principal Carrying

39 unchanged sentences

$ 7,520,818 $ 7,440,394 $ 7,013,732 $ 8,000,000 $ 7,951,565 $ 7,849,818

_________________________________________________________________________________________

(1) Fair value is measured using the market approach and Level-2 fair value inputs.

4 unchanged sentences

Debt activity.

The following table presents the debt activity for the six months ended June 30, 2020:

The following table presents the debt activity for the nine months ended September 30, 2020:

thousands Carrying Value

12 unchanged sentences

Other ( 32,744 )

Balance at June 30, 2020 $ 7,983,015

Balance at September 30, 2020 $ 7,879,156

WES Operating Senior Notes.

1 unchanged sentence

• Fixed-Rate 3.100 % Senior Notes due 2025, 4.050 % Senior Notes due 2030, and 5.250 % Senior Notes due 2050, offered to the public at prices of 99.962 %, 99.900 %, and 99.442 %, respectively, of the face amount (collectively referred to as the “Fixed-Rate Senior Notes”).

Including the effects of the issuance and underwriting discounts, the effective interest rates of the Senior Notes due 2025, 2030, and 2050, are 3.287 %, 4.168 %, and 5.362 %, respectively.

Including the effects of the issuance prices, underwriting discounts, and interest-rate adjustments (described below), the effective interest rates of the Senior Notes due 2025, 2030, and 2050, were 4.291 %, 5.173 %, and 6.375 %, respectively, at September 30, 2020, and 3.287 %, 4.168 %, and 5.362 %, respectively, at June 30, 2020.

Interest is paid on each such series semi-annually on February 1 and August 1 of each year, beginning August 1, 2020;

• Floating-Rate Senior Notes due 2023 (the “Floating-Rate Senior Notes”).

As of June 30, 2020, the interest rate on the Floating-Rate Senior Notes was 2.66 %.

As of September 30, 2020, the interest rate on the Floating-Rate Senior Notes was 2.12 %.

Interest is paid quarterly in arrears on January 13, April 13, July 13, and October 13 of each year.

6 unchanged sentences

DEBT AND INTEREST EXPENSE (CONTINUED)

During the first quarter of 2020, WES Operating purchased and retired $ 61.4 million of the 5.375 % Senior Notes due 2021 and $ 38.6 million of the 4.000 % Senior Notes due 2022 via open-market repurchases.

During the second quarter of 2020, WES Operating purchased and retired (i) an additional $ 7.5 million of the 5.375% Senior Notes due 2021 and $ 47.0 million of the 4.000% Senior Notes due 2022, and (ii) $ 10.0 million of the Floating-Rate Senior Notes, each via open-market repurchases.

For the three and six months ended June 30, 2020, gains of $ 1.4 million and $ 11.0 million, respectively, were recognized for the early retirement of these notes.

As of June 30, 2020, the 5.375% Senior Notes due 2021 were classified as short-term debt on the consolidated balance sheet.

At June 30, 2020, WES Operating was in compliance with all covenants under the relevant governing indentures.

During the three and nine months ended September 30, 2020, WES Operating purchased and retired $ 29.0 million and $ 193.5 million, respectively, of certain of its senior notes and Floating-Rate Senior Notes via open-market repurchases.

For the three and nine months ended September 30, 2020, gains of $ 1.7 million and $ 12.7 million, respectively, were recognized for the early retirement of these notes.

As of September 30, 2020, the 5.375% Senior Notes due 2021 were classified as short-term debt on the consolidated balance sheet.

At September 30, 2020, WES Operating was in compliance with all covenants under the relevant governing indentures.

The WGP RCF, which previously was available to purchase WES Operating common units and for general partnership purposes, matured in March 2019 and the $ 28.0 million of outstanding borrowings were repaid.

2 unchanged sentences

The maturity date with respect to each non-extending lender, whose commitments represent $ 100.0 million out of $ 2.0 billion of total commitments from all lenders, remains February 2024.

As of June 30, 2020, there were $ 75.0 million of outstanding borrowings and $ 5.0 million of outstanding letters of credit, resulting in $ 1.9 billion of available borrowing capacity under the RCF.

As of June 30, 2020 and 2019, the interest rate on any outstanding RCF borrowings was 1.66 % and 3.71 %, respectively.

The facility-fee rate was 0.25 % and 0.20 % at June 30, 2020 and 2019, respectively.

At June 30, 2020, WES Operating was in compliance with all covenants under the RCF.

As of September 30, 2020, there were no outstanding borrowings and $ 5.0 million of outstanding letters of credit, resulting in $ 2.0 billion of available borrowing capacity under the RCF.

As of September 30, 2020 and 2019, the interest rate on any outstanding RCF borrowings was 1.65 % and 3.34 %, respectively.

The facility-fee rate was 0.25 % and 0.20 % at September 30, 2020 and 2019, respectively.

At September 30, 2020, WES Operating was in compliance with all covenants under the RCF.

As a result of credit-rating downgrades received from Fitch and S&P (see WES Operating Senior Notes above), beginning in the second quarter of 2020, the interest rate on outstanding RCF borrowings increased by 0.20 % and the RCF facility-fee rate increased by 0.05 %, from 0.20 % to 0.25 %.

1 unchanged sentence

In December 2018, WES Operating entered into the Term loan facility, the proceeds from which were used to fund substantially all of the cash portion of the consideration under the Merger Agreement and the payment of related transaction costs (see Note 1 ).

As of June 30, 2019, the interest rate on the outstanding borrowings was 3.78 %.

As of September 30, 2019, the interest rate on the outstanding borrowings was 3.42 %.

In January 2020, WES Operating repaid the outstanding borrowings with proceeds from the issuance of the Fixed-Rate Senior Notes and Floating-Rate Senior Notes and terminated the Term loan facility (see WES Operating Senior Notes above).

2 unchanged sentences

The Partnership subleased equipment from Occidental via finance leases through April 2020.

During the first quarter of 2020, the Partnership entered into finance leases with third parties for equipment and vehicles extending through 2029, with future lease payments of $ 41.3 million as of June 30, 2020.

APCWH Note Payable.

10 unchanged sentences

As part of the settlement, WES Operating made cash payments of $ 107.7 million and recorded an accrued liability of $ 25.6 million to be paid quarterly in 2020.

For the six months ended June 30, 2020, WES Operating made cash payments of $ 12.8 million.

For the nine months ended September 30, 2020, WES Operating made cash payments of $ 19.2 million.

These cash payments were classified as cash flows from operating activities in the consolidated statements of cash flows.

The Partnership did not apply hedge accounting and, therefore, gains and losses associated with the interest-rate swap agreements were recognized in earnings.

For the three and six months ended June 30, 2019, non-cash losses of $ 59.0 million and $ 94.6 million, respectively, were recognized, which are included in Other income (expense), net in the consolidated statements of operations.

For the three and nine months ended September 30, 2019, non-cash losses of $ 68.3 million and $ 162.9 million, respectively, were recognized, which are included in Other income (expense), net in the consolidated statements of operations.

Interest expense.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

thousands 2020 2019 2020 2019

18 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements