What changed in this filing

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Item 1. Financial Statements

2021-05-10 compared with 2020-11-09 · 264 added, 595 removed, 710 unchanged (55% of the section changed)

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

thousands except per-unit amounts 2021 2020

1 unchanged sentence

Service revenues – fee based $ 572,275 $ 701,396

$ 636,522 $ 587,965 $ 1,980,546 $ 1,761,483

Service revenues – product based 31,652 15,921

12,316 9,476 35,237 45,530

Product sales 70,805 56,649

10 unchanged sentences

Long - lived asset and other impairments

14,866 155,785

Goodwill impairment — 441,017

7 unchanged sentences

Other income (expense), net ( 1,207 ) ( 1,761 )

720 ( 67,894 ) 612 ( 161,577 )

Income (loss) before income taxes 192,347 ( 293,680 )

5 unchanged sentences

Net income (loss) attributable to Western Midstream Partners, LP $ 185,791 $ ( 256,527 )

Pre-acquisition net (income) loss allocated to Anadarko — — — ( 29,279 )

General partner interest in net (income) loss ( 3,993 ) 5,131

5 unchanged sentences

413,104 443,971

(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.

_________________________________________________________________________________________

(1) Total revenues and other includes related - party amounts of $ 378.3 million and $ 482.4 million for the three months ended March 31, 2021 and 2020, respectively.

(2) Total operating expenses includes related - party amounts of $ 39.9 million and $ 132.6 million for the three months ended March 31, 2021 and 2020, respectively.

(3) See Note 5.

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

thousands except number of units September 30,

thousands except number of units March 31,

2021 December 31,

4 unchanged sentences

Total current assets 611,160 943,064

Anadarko note receivable — 260,000

Property, plant, and equipment

13 unchanged sentences

Short - term debt

7,752 438,870

Accrued ad valorem taxes 55,610 41,427

3 unchanged sentences

Long - term debt

7,416,001 7,415,832

Deferred income taxes 22,752 22,195

2 unchanged sentences

Total long - term liabilities

8,002,661 7,973,880

Total liabilities (3)

1 unchanged sentence

Equity and partners’ capital

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

Common units ( 413,062,133 and 413,839,863 units issued and outstanding at March 31, 2021, and December 31, 2020, respectively)

2,821,455 2,778,339

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

General partner units ( 9,060,641 units issued and outstanding at March 31, 2021, and December 31, 2020)

( 16,033 ) ( 17,208 )

4 unchanged sentences

________________________________________________________________________________________

(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 .

(1) Other assets includes $ 8.9 million and $ 4.2 million of NGLs line - fill inventory as of March 31, 2021, and December 31, 2020, respectively.

Other assets also includes $ 68.5 million and $ 71.9 million of materials and supplies inventory as of March 31, 2021, and December 31, 2020, respectively.

(2) Total assets includes related - party amounts of $ 1.5 billion and $ 1.6 billion as of March 31, 2021, and December 31, 2020, respectively, which includes related - party Accounts receivable, net of $ 253.6 million and $ 291.3 million as of March 31, 2021, and December 31, 2020, respectively.

(3) Total liabilities includes related - party amounts of $ 215.5 million and $ 164.7 million as of March 31, 2021, and December 31, 2020, respectively.

See accompanying Notes to Consolidated Financial Statements.

3 unchanged sentences

thousands Common

Units General

Units General Partner

Units Noncontrolling

3 unchanged sentences

Distributions to Chipeta noncontrolling interest owner — — ( 276 ) ( 276 )

— — ( 1,738 ) ( 1,738 )

Distributions to noncontrolling interest owner of WES Operating

— — ( 5,807 ) ( 5,807 )

Distributions to Partnership unitholders

( 276,151 ) ( 5,635 ) — ( 281,786 )

Acquisitions from related parties

( 3,987 ) — 3,987 —

Contributions of equity-based compensation from Occidental 4,105 — — 4,105

Equity-based compensation expense 1,129 — — 1,129

Net contributions from (distributions to) related parties (1)

489 — 20,000 20,489

Balance at March 31, 2020 $ 2,684,136 $ ( 24,990 ) $ 133,139 $ 2,792,285

Net income (loss) 267,576 5,461 8,304 281,341

Distributions to Chipeta noncontrolling interest owner

— — ( 1,037 ) ( 1,037 )

Distributions to noncontrolling interest owner of WES Operating

— — ( 2,869 ) ( 2,869 )

Distributions to Partnership unitholders

( 138,075 ) ( 2,818 ) — ( 140,893 )

Contributions of equity-based compensation from Occidental

3,562 — — 3,562

Equity-based compensation expense

2,115 — — 2,115

Net contributions from (distributions to) related parties 1,343 — — 1,343

( 330 ) — — ( 330 )

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 noncontrolling interest owners of WES Operating — — ( 2,551 ) ( 2,551 )

Distributions to Partnership unitholders ( 128,447 ) ( 2,818 ) — ( 131,265 )

( 138,083 ) ( 2,817 ) — ( 140,900 )

Unit exchange with Occidental (2)

Unit repurchases (1)

( 16,241 ) — — ( 16,241 )

4 unchanged sentences

Net contributions from (distributions to) related parties 1,627 — — 1,627

1,141 — — 1,141

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

Other ( 2,355 ) — — ( 2,355 )

Balance at March 31, 2021 $ 2,821,455 $ ( 16,033 ) $ 136,698 $ 2,942,120

_________________________________________________________________________________________

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

(1) See Note 5 .

See accompanying Notes to Consolidated Financial Statements.

WESTERN MIDSTREAM PARTNERS, LP

CONSOLIDATED STATEMENTS OF EQUITY AND PARTNERS’ CAPITAL

Partners’ Capital

thousands Net

by Anadarko Common

thousands Common

Units General Partner

Units Noncontrolling

2 unchanged sentences

Net income (loss) ( 251,396 ) ( 5,131 ) ( 32,873 ) ( 289,400 )

Cumulative impact of the Merger transactions (1)

— 3,169,800 ( 3,169,800 ) —

Above-market component of swap agreements with Anadarko (2)

— 7,407 — 7,407

WES Operating equity transactions, net (3)

— ( 752,796 ) 752,796 —

Distributions to Chipeta noncontrolling interest owner — — ( 1,738 ) ( 1,738 )

— — ( 1,935 ) ( 1,935 )

Distributions to noncontrolling interest owners of WES Operating

— — ( 100,999 ) ( 100,999 )

Distributions to Partnership unitholders

— ( 131,910 ) — ( 131,910 )

Acquisitions from related parties (4)

( 2,141,827 ) 106,856 27,470 ( 2,007,501 )

Contributions of equity-based compensation from Anadarko

— 1,840 — 1,840

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

451,591 — — 451,591

Adjustments of net deferred tax liabilities 273,102 ( 4,375 ) — 268,727

— ( 332 ) ( 9 ) ( 341 )

Balance at March 31, 2019 $ — $ 3,437,922 $ 153,619 $ 3,591,541

Net income (loss) 163 169,431 5,464 175,058

Distributions to Chipeta noncontrolling interest owner

— — ( 1,858 ) ( 1,858 )

Distributions to noncontrolling interest owner of WES Operating — — ( 5,807 ) ( 5,807 )

— — ( 5,667 ) ( 5,667 )

Distributions to Partnership unitholders ( 276,151 ) ( 5,635 ) — ( 281,786 )

— ( 276,324 ) — ( 276,324 )

Acquisitions from related parties ( 3,987 ) — 3,987 —

( 5,510 ) 4,493 1,017 —

Contributions of equity-based compensation from Anadarko

— 2,768 — 2,768

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

5,347 — — 5,347

— 356 ( 11 ) 345

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

4,105 — — 4,105

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

Equity - based compensation expense

1,129 — — 1,129

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

Net contributions from (distributions to) related parties (1)

489 — 20,000 20,489

(1) See Note 1 .

(2) See Note 6 .

(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.

Balance at March 31, 2020 $ 2,684,136 $ ( 24,990 ) $ 133,139 $ 2,792,285

_________________________________________________________________________________________

(1) See Services Agreement within Note 6 .

See accompanying Notes to Consolidated Financial Statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

thousands 2021 2020

4 unchanged sentences

Long - lived asset and other impairments

14,866 155,785

Goodwill impairment — 441,017

4 unchanged sentences

Distributions from equity - investment earnings – related parties

49,048 60,868

(Gain) loss on divestiture and other, net 583 40

(Gain) loss on early extinguishment of debt 289 ( 7,345 )

(Gain) loss on interest-rate swaps — 162,974

Cash paid to settle interest-rate swaps ( 19,181 ) —

Other 11 2,287

2 unchanged sentences

Increase (decrease) in accounts and imbalance payables and accrued liabilities, net ( 16,467 ) ( 28,924 )

37,814 ( 69,390 )

Change in other items, net ( 35,600 ) ( 24,857 )

3 unchanged sentences

Acquisitions from related parties ( 2,000 ) —

Acquisitions from third parties — ( 93,303 )

Contributions to equity investments – related parties ( 86 ) ( 10,960 )

Distributions from equity investments in excess of cumulative earnings – related parties 12,141 5,052

Proceeds from the sale of assets to third parties — 342

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

Decreases to materials and supplies inventory and other 3,256 —

Net cash used in investing activities ( 46,472 ) ( 178,724 )

1 unchanged sentence

Borrowings, net of debt issuance costs 100,000 3,586,173

3,681,173 3,950,750

Repayments of debt ( 531,085 ) ( 3,470,139 )

( 3,780,390 ) ( 1,467,595 )

Increase (decrease) in outstanding checks ( 22,017 ) ( 7,308 )

Registration expenses related to the issuance of Partnership common units — ( 855 )

Distributions to Partnership unitholders (1)

3 unchanged sentences

Net contributions from (distributions to) related parties 1,627 20,489

Above-market component of swap agreements with Anadarko (3)

Finance lease payments ( 1,816 ) ( 2,151 )

( 12,241 ) ( 253 )

Unit repurchases ( 16,241 ) —

Net cash provided by (used in) financing activities ( 603,624 ) ( 162,267 )

3 unchanged sentences

Supplemental disclosures

Non-cash unit exchange with Occidental (3)

$ ( 261,878 ) $ —

Interest paid, net of capitalized interest $ 153,979 $ 75,844

2 unchanged sentences

_________________________________________________________________________________________

(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.

(1) See Note 6 .

(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

September 30, Nine Months Ended

September 30,

thousands 2021 2020

14 unchanged sentences

Long - lived asset and other impairments

14,866 155,785

Goodwill impairment — 441,017

7 unchanged sentences

Other income (expense), net ( 1,210 ) ( 1,763 )

718 ( 67,902 ) 606 ( 161,648 )

Income (loss) before income taxes 193,230 ( 292,275 )

1 unchanged sentence

Net income (loss) 192,118 ( 287,995 )

Net income attributable to noncontrolling interest 2,488 1,497 ( 22,471 ) 5,318

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

Limited partners’ interest in net income (loss):

Net income (loss) attributable to noncontrolling interest 1,633 ( 27,665 )

Net income (loss) attributable to Western Midstream Operating, LP $ 190,485 $ ( 260,330 )

Pre-acquisition net (income) loss allocated to Anadarko — — — ( 29,279 )

Common and Class C limited partners’ interest in net income (loss) (4)

________________________________________________________________________________________

(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.

(1) Total revenues and other includes related - party amounts of $ 378.3 million and $ 482.4 million for the three months ended March 31, 2021 and 2020, respectively.

(2) Total operating expenses includes related - party amounts of $ 40.4 million and $ 132.5 million for the three months ended March 31, 2021 and 2020, respectively.

See accompanying Notes to Consolidated Financial Statements.

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

thousands except number of units September 30,

thousands except number of units March 31,

2021 December 31,

4 unchanged sentences

Total current assets 583,081 869,330

Anadarko note receivable — 260,000

Property, plant, and equipment

13 unchanged sentences

Short - term debt

7,752 438,870

Accrued ad valorem taxes 55,610 41,427

3 unchanged sentences

Long - term debt

7,416,001 7,415,832

Deferred income taxes 22,752 22,195

2 unchanged sentences

Total long - term liabilities

8,002,661 7,973,880

Total liabilities (3)

1 unchanged sentence

Equity and partners’ capital

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

Common units ( 318,675,578 units issued and outstanding at March 31, 2021, and December 31, 2020)

2,909,877 2,831,199

4 unchanged sentences

_________________________________________________________________________________________

(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.

(1) Other assets includes $ 8.9 million and $ 4.2 million of NGLs line - fill inventory as of March 31, 2021, and December 31, 2020, respectively.

Other assets also includes $ 68.5 million and $ 71.9 million of materials and supplies inventory as of March 31, 2021, and December 31, 2020, respectively.

(2) Total assets includes related - party amounts of $ 1.5 billion as of March 31, 2021, and December 31, 2020, which includes related - party Accounts receivable, net of $ 231.3 million and $ 246.1 million as of March 31, 2021, and December 31, 2020, respectively.

(3) Total liabilities includes related - party amounts of $ 215.2 million and $ 164.3 million as of March 31, 2021, and December 31, 2020, respectively.

See accompanying Notes to Consolidated Financial Statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF EQUITY AND PARTNERS’ CAPITAL

Partners’ Capital

thousands Common

Units Noncontrolling

Interest Total

Interests Total

Balance at December 31, 2020 $ 2,831,199 $ 29,552 $ 2,860,751

1 unchanged sentence

Distributions to Chipeta noncontrolling interest owner — ( 276 ) ( 276 )

— ( 1,738 ) ( 1,738 )

Distributions to WES Operating unitholders ( 127,470 ) — ( 127,470 )

Acquisitions from related parties ( 3,987 ) 3,987 —

Contributions of equity - based compensation from Occidental

3,210 — 3,210

Net contributions from (distributions to) related parties (1)

20,489 — 20,489

Balance at March 31, 2020

$ 2,756,583 $ 29,783 $ 2,786,366

Net income (loss) 279,814 2,706 282,520

Distributions to Chipeta noncontrolling interest owner

— ( 1,037 ) ( 1,037 )

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

Contributions of equity-based compensation from Occidental

3,562 — 3,562

Net contributions from (distributions to) related parties

1,343 — 1,343

Balance at June 30, 2020

$ 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)

Contributions of equity - based compensation from WES

10,826 — 10,826

Net contributions from (distributions to) related parties 1,627 — 1,627

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.

WESTERN MIDSTREAM OPERATING, LP

CONSOLIDATED STATEMENTS OF EQUITY AND PARTNERS’ CAPITAL

Partners’ Capital

thousands Net

by Anadarko Common

Units Class C

Units General

Balance at March 31, 2021 $ 2,909,877 $ 30,909 $ 2,940,786

thousands Common

Units Noncontrolling

2 unchanged sentences

Net income (loss) ( 260,330 ) ( 27,665 ) ( 287,995 )

Cumulative impact of the Merger transactions (1)

— 926,236 ( 802,588 ) ( 123,648 ) — —

Above-market component of swap agreements with Anadarko (2)

— 7,407 — — — 7,407

Amortization of beneficial conversion feature of Class C units

— ( 542 ) 542 — — —

Distributions to Chipeta noncontrolling interest owner — ( 1,738 ) ( 1,738 )

— — — — ( 1,935 ) ( 1,935 )

Distributions to WES Operating unitholders ( 290,314 ) — ( 290,314 )

Acquisitions from related parties ( 3,987 ) 3,987 —

( 2,141,827 ) 134,326 — — — ( 2,007,501 )

Contributions of equity-based compensation from Anadarko

— 1,819 — 19 — 1,838

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

451,591 — — — — 451,591

Adjustments of net deferred tax liabilities

Contributions of equity - based compensation from Occidental

4,105 — 4,105

Net contributions from (distributions to) related parties (1)

20,489 — 20,489

1 unchanged sentence

_______________________________________________________________________________________

Net income (loss) 163 174,849 — — 1,967 176,979

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

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

Acquisitions from related parties (3)

( 5,510 ) 5,510 — — — —

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

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

5,347 — — — — 5,347

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 .

(2) See Note 6 .

(3) The amount allocated to common unitholders represents a non-cash investing activity related to the assets and liabilities assumed in the AMA acquisition.

(1) See Services Agreement within Note 6 .

See accompanying Notes to Consolidated Financial Statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

thousands 2021 2020

4 unchanged sentences

Long - lived asset and other impairments

14,866 155,785

Goodwill impairment — 441,017

4 unchanged sentences

Distributions from equity - investment earnings – related parties

49,048 60,868

(Gain) loss on divestiture and other, net 583 40

(Gain) loss on early extinguishment of debt 289 ( 7,345 )

(Gain) loss on interest-rate swaps — 162,974

Cash paid to settle interest-rate swaps ( 19,181 ) —

Other 11 2,287

2 unchanged sentences

Increase (decrease) in accounts and imbalance payables and accrued liabilities, net ( 3,748 ) ( 35,474 )

4,836 ( 68,277 )

Change in other items, net ( 36,028 ) ( 25,176 )

3 unchanged sentences

Acquisitions from related parties ( 2,000 ) —

Acquisitions from third parties — ( 93,303 )

Contributions to equity investments – related parties ( 86 ) ( 10,960 )

Distributions from equity investments in excess of cumulative earnings – related parties 12,141 5,052

Proceeds from the sale of assets to third parties — 342

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

Decreases to materials and supplies inventory and other 3,256 —

Net cash used in investing activities ( 46,472 ) ( 178,724 )

1 unchanged sentence

Borrowings, net of debt issuance costs 100,000 3,586,173

3,681,173 3,950,750

Repayments of debt ( 531,085 ) ( 3,470,139 )

( 3,780,390 ) ( 1,439,595 )

Increase (decrease) in outstanding checks ( 22,209 ) ( 7,308 )

3 unchanged sentences

Net contributions from (distributions to) related parties 1,627 20,489

Above-market component of swap agreements with Anadarko (3)

Finance lease payments ( 1,816 ) ( 2,151 )

( 12,241 ) ( 253 )

Net cash provided by (used in) financing activities ( 581,229 ) ( 164,988 )

3 unchanged sentences

Supplemental disclosures

Non-cash unit exchange with Occidental (3)

$ ( 261,878 ) $ —

Interest paid, net of capitalized interest $ 153,979 $ 75,844

2 unchanged sentences

________________________________________________________________________________________

(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.

(1) See Note 6.

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

See accompanying Notes to Consolidated Financial Statements.

3 unchanged sentences

Western Midstream Partners, LP is a Delaware master limited partnership formed in September 2012.

Western Midstream Operating, LP (together with its subsidiaries, “WES Operating”) is a Delaware limited partnership formed by Anadarko Petroleum Corporation in 2007 to acquire, own, develop, and operate midstream assets.

Western Midstream Operating, LP (together with its subsidiaries, “WES Operating”) is a Delaware limited partnership formed in 2007 to acquire, own, develop, and operate midstream assets.

Western Midstream Partners, LP owns, directly and indirectly, a 98.0 % limited partner interest in WES Operating, and directly owns all of the outstanding equity interests of Western Midstream Operating GP, LLC, which holds the entire non - economic general partner interest in WES Operating.

“Anadarko” refers to Anadarko Petroleum Corporation and its subsidiaries, excluding Western Midstream Holdings, LLC.

Anadarko became a wholly owned subsidiary of Occidental Petroleum Corporation as a result of Occidental Petroleum Corporation’s acquisition by merger of Anadarko on August 8, 2019.

For purposes of these consolidated financial statements, the “Partnership” refers to Western Midstream Partners, LP in its individual capacity or to Western Midstream Partners, LP and its subsidiaries, including Western Midstream Operating GP, LLC and WES Operating, as the context requires.

2 unchanged sentences

“Occidental” refers to Occidental Petroleum Corporation, as the context requires, and its subsidiaries, excluding the general partner.

“Related parties” refers to Occidental and the Partnership’s equity interests in Fort Union Gas Gathering, LLC (“Fort Union”), White Cliffs Pipeline, LLC (“White Cliffs”), Rendezvous Gas Services, LLC (“Rendezvous”), Enterprise EF78 LLC (“Mont Belvieu JV”), Texas Express Pipeline LLC (“TEP”), Texas Express Gathering LLC (“TEG”), Front Range Pipeline LLC (“FRP”), Whitethorn Pipeline Company LLC (“Whitethorn LLC”), Cactus II Pipeline LLC (“Cactus II”), Saddlehorn Pipeline Company, LLC (“Saddlehorn”), Panola Pipeline Company, LLC (“Panola”), Mi Vida JV LLC (“Mi Vida”), Ranch Westex JV LLC (“Ranch Westex”), and Red Bluff Express Pipeline, LLC (“Red Bluff Express”).

The interests in TEP, TEG, and FRP are referred to collectively as the “TEFR Interests.” “MGR assets” refers to the Red Desert complex and the Granger straddle plant.

The “West Texas complex” refers to the Delaware Basin Midstream, LLC (“DBM”) complex and DBJV and Haley systems.

“Anadarko” refers to Anadarko Petroleum Corporation and its subsidiaries, excluding Western Midstream Holdings, LLC.

Anadarko became a wholly owned subsidiary of Occidental Petroleum Corporation as a result of Occidental Petroleum Corporation’s acquisition by merger of Anadarko on August 8, 2019.

“Related parties” refers to Occidental (see Note 6 ) and the Partnership’s investments accounted for under the equity method of accounting (see Note 7 ).

The Partnership is engaged in the business of gathering, compressing, treating, processing, and transporting natural gas;

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

As of March 31, 2021, the Partnership’s assets and investments consisted of the following:

Operated Operated

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(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, 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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (CONTINUED)

December 2019 Agreements.

On December 31, 2019, (i) the Partnership and certain of its subsidiaries, including WES Operating and WES Operating GP, entered into the below-described agreements with Occidental and/or certain of its subsidiaries, including Anadarko, and (ii) WES Operating entered into the below-described amendments to its debt agreements (collectively, the “ December 2019 Agreements ”).

• Exchange Agreement.

Western Gas Resources, Inc.

(“WGRI”), the general partner, and the Partnership entered into a partnership interests exchange agreement (the “Exchange Agreement”), pursuant to which the Partnership canceled the non-economic general partner interest in the Partnership and simultaneously issued a 2.0 % general partner interest to the general partner in exchange for which WGRI transferred 9,060,641 common units to the Partnership, which immediately canceled such units on receipt.

• Services, Secondment, and Employee Transfer Agreement.

Occidental, Anadarko, and WES Operating GP entered into an amended and restated Services, Secondment, and Employee Transfer Agreement (the “Services Agreement”), pursuant to which Occidental, Anadarko, and their subsidiaries (i) seconded certain personnel employed by Occidental to WES Operating GP, in exchange for which WES Operating GP pays a monthly secondment and shared services fee to Occidental equivalent to the direct cost of the seconded employees until their transfer to the Partnership and (ii) agreed to continue to provide certain administrative and operational services to the Partnership for up to a two-year transition period.

In January 2020, pursuant to the Services Agreement, Occidental made a one-time cash contribution of $ 20.0 million to WES Operating for anticipated transition costs required to establish stand-alone human resources and information technology functions.

The Services Agreement also includes provisions governing the transfer of certain employees to the Partnership and the assumption by the Partnership of liabilities relating to those employees at the time of their transfer.

In late March 2020, seconded employees’ employment was transferred to the Partnership.

• RCF amendment.

WES Operating entered into an amendment to its $ 2.0 billion senior unsecured revolving credit facility (“RCF”) to, among other things, (i) effective on February 14, 2020, exercise the final one-year extension option to extend the maturity date of the RCF to February 14, 2025, for the extending lenders, and (ii) modify the change of control definition to provide, among other things, that, subject to certain conditions, if the limited partners of the Partnership elect to remove the general partner as the general partner of the Partnership in accordance with the terms of the partnership agreement, then such removal will not constitute a change of control under the RCF.

• Term loan facility amendment.

WES Operating entered into an amendment to its $ 3.0 billion senior unsecured credit facility (“Term loan facility”) to, among other things, modify the change of control definition to provide, among other things, that, subject to certain conditions, if the limited partners of the Partnership elect to remove the general partner as the general partner of the Partnership in accordance with the terms of the partnership agreement, then such removal will not constitute a change of control under the Term loan facility.

See Note 11 .

• Termination of debt-indemnification agreements.

WES Operating GP and certain wholly owned subsidiaries of Occidental mutually terminated the debt-indemnification agreements related to certain indebtedness incurred by WES Operating.

• Termination of omnibus agreements.

The Partnership and WES Operating entered into agreements with Occidental to terminate the WES and WES Operating omnibus agreements.

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

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (CONTINUED)

Merger transactions .

On February 28, 2019, the Partnership, WES Operating, Anadarko, and certain of their affiliates completed the transactions contemplated by the Contribution Agreement and Agreement and Plan of Merger (the “Merger Agreement”), dated November 7, 2018, pursuant to which, among other things, (i) Clarity Merger Sub, LLC, a wholly owned subsidiary of the Partnership, merged with and into WES Operating, with WES Operating continuing as the surviving entity and as a subsidiary of the Partnership (the “Merger”), and (ii) WES Operating acquired the Anadarko Midstream Assets (“AMA”).

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Basis of presentation.

The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”).

The consolidated financial statements include the accounts of the Partnership and entities in which it holds a controlling financial interest, including WES Operating and WES Operating GP.

The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and include the accounts of the Partnership and entities in which it holds a controlling financial interest, including WES Operating, WES Operating GP, proportionately consolidated interests, and equity investments (see table below).

All significant intercompany transactions have been eliminated.

6 unchanged sentences

Equity investments (3)

Red Bluff Express

Mont Belvieu JV

Whitethorn LLC

Fort Union (4)

Mi Vida JV LLC (“Mi Vida”) 50.00 %

Ranch Westex JV LLC (“Ranch Westex”) 50.00 %

Front Range Pipeline LLC (“FRP”) 33.33 %

Red Bluff Express Pipeline, LLC (“Red Bluff Express”) 30.00 %

Enterprise EF78 LLC (“Mont Belvieu JV”) 25.00 %

Rendezvous Gas Services, LLC (“Rendezvous”) 22.00 %

Texas Express Pipeline LLC (“TEP”) 20.00 %

Texas Express Gathering LLC (“TEG”) 20.00 %

Whitethorn Pipeline Company LLC (“Whitethorn LLC”) 20.00 %

Saddlehorn Pipeline Company, LLC (“Saddlehorn”) 20.00 %

Cactus II Pipeline LLC (“Cactus II”) 15.00 %

Panola Pipeline Company, LLC (“Panola”) 15.00 %

White Cliffs Pipeline, LLC (“White Cliffs”) 10.00 %

_________________________________________________________________________________________

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

(4) See Note 3 .

Certain information and note disclosures commonly included in annual financial statements have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

Accordingly, the accompanying consolidated financial statements and notes should be read in conjunction with the Partnership’s 2020 Form 10 - K, as filed with the SEC on February 26, 2021.

Management believes that the disclosures made are adequate to make the information not misleading.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (CONTINUED)

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

The consolidated financial results of WES Operating are included in the Partnership’s consolidated financial statements.

Throughout these notes to consolidated financial statements, and to the extent material, any differences between the consolidated financial results of the Partnership and WES Operating are discussed separately.

The Partnership’s consolidated financial statements differ from those of WES Operating primarily as a result of (i) the presentation of noncontrolling interest ownership (see Noncontrolling interests below and Note 5 ), (ii) the elimination of WES Operating GP’s investment in WES Operating with WES Operating GP’s underlying capital account, (iii) the general and administrative expenses incurred by the Partnership, which are separate from, and in addition to, those incurred by WES Operating, (iv) the inclusion of the impact of Partnership equity balances and Partnership distributions, and (v) the senior secured revolving credit facility (“WGP RCF”) until its repayment in March 2019.

See Note 11 .

The Partnership’s consolidated financial statements differ from those of WES Operating primarily as a result of (i) the presentation of noncontrolling interest ownership (see Noncontrolling interests below), (ii) the elimination of WES Operating GP’s investment in WES Operating with WES Operating GP’s underlying capital account, (iii) the general and administrative expenses incurred by the Partnership, which are separate from, and in addition to, those incurred by WES Operating, and (iv) the inclusion of the impact of Partnership equity balances and Partnership distributions.

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 September 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.

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Effects on the business, financial condition, and results of operations resulting from revisions to estimates are recognized when the facts that give rise to the revisions become known.

The information included herein reflects all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the consolidated financial statements, and certain prior-period amounts have been reclassified to conform to the current-year presentation.

The information included herein reflects all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the consolidated financial statements.

Noncontrolling interests.

For periods subsequent to Merger completion, the Partnership’s noncontrolling interests in the consolidated financial statements consist of (i) the 25 % third-party interest in Chipeta and (ii) the 2.0 % Occidental subsidiary-owned limited partner interest in WES Operating.

For periods prior to Merger completion, the Partnership’s noncontrolling interests in the consolidated financial statements consisted of (i) the 25 % third-party interest in Chipeta, (ii) the publicly held limited partner interests in WES Operating, (iii) the common units issued by WES Operating to subsidiaries of Anadarko as part of the consideration paid for prior-period acquisitions from Anadarko, and (iv) the Class C units issued by WES Operating to a subsidiary of Anadarko as part of the funding for the acquisition of DBM.

For all periods presented, WES Operating’s noncontrolling interest in the consolidated financial statements consists of the 25 % third-party interest in Chipeta.

When WES Operating issues equity, the carrying amount of the noncontrolling interest reported by the Partnership is adjusted to reflect the noncontrolling ownership interest in WES Operating.

The resulting impact of such noncontrolling interest adjustment on the Partnership’s interest in WES Operating is reflected as an adjustment to the Partnership’s partners’ capital.

The cost of NGLs inventory is determined by the weighted-average cost method on a location-by-location basis.

Inventory is stated at the lower of weighted-average cost or net realizable value.

NGLs inventory is reported in Other current assets and NGLs line-fill inventory is reported in Other assets on the consolidated balance sheets.

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

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 .

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (CONTINUED)

Shutdown of gathering systems.

In May 2018, after assessing a number of factors, and with the safety of the community and the protection of the environment as primary factors, the Partnership permanently ceased operations at the Kitty Draw gathering system in Wyoming (part of the Hilight system) and the Third Creek gathering system in Colorado (part of the DJ Basin complex).

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 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 noncontrolling interests in the consolidated financial statements consist of (i) the 25 % third - party interest in Chipeta and (ii) the 2.0 % Occidental subsidiary - owned limited partner interest in WES Operating.

WES Operating’s noncontrolling interest in the consolidated financial statements consists of the 25 % third - party interest in Chipeta.

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;

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Equity-based compensation.

On February 10, 2020, the Board of Directors approved awards of phantom units (the “Awards”) to the Partnership’s executive officers under the Western Gas Equity Partners, LP 2012 Long-Term Incentive Plan (“WES LTIP”).

The Awards include (i) an award of time-vested phantom units that vest ratably over a three-year period (“Time-Based Awards”), (ii) a market award that vests after a three-year performance period based on the Partnership’s relative total unitholder return as compared to a group of peer companies (“TUR Awards”), and (iii) a performance award that vests based on the Partnership’s average return on assets over a three-year performance period (“ROA Awards”).

At vesting, the value of the TUR Awards and the ROA Awards will be determined in accordance with the terms of the respective Award Agreements that provide for payout percentages ranging from 0 % to 200 % based on results achieved over the applicable performance period.

At vesting, the Awards generally will be settled in Partnership common units.

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

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.

Prior to vesting, the awards to non-executive employees and independent directors pay distribution equivalents in cash.

The equity-based compensation expense attributable to these awards is amortized over the vesting periods applicable to the awards using the straight-line method.

Expense is recognized based on the grant-date fair value and recorded, net of any forfeitures, as General and administrative expense in the consolidated statements of operations.

The fair value of the Time-based Awards, ROA Awards, and non-executive awards is based on the observable market price of the Partnership’s units on the grant date of the award.

The fair value of the TUR Awards is determined using a Monte Carlo simulation at the grant date of the award.

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 $ 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.

During the three months ended March 31, 2021, the Partnership issued 338,078 common units under the Western Gas Equity Partners, LP 2012 Long - Term Incentive Plan (“WES LTIP”).

Compensation expense for the WES LTIP was $ 3.5 million and $ 1.1 million for the three months ended March 31, 2021 and 2020, respectively.

On March 22, 2021, the Board of Directors approved the Western Midstream Partners, LP 2021 Long - Term Incentive Plan, which authorized the issuance of up to 9.5 million of the Partnership’s common units.

This plan provides for the grant of unit options, unit appreciation rights, restricted units, phantom units, other unit - based awards, cash awards, and a unit award or a substitute award to employees and directors of the Partnership and its general partner.

Affiliates of Occidental who held a majority of the Partnership’s outstanding common units as of March 22, 2021, approved the 2021 Long - Term Incentive Plan via written consent.

On April 7, 2021, the Partnership mailed an information statement on Schedule 14C to its unitholders of record as of March 22, 2021.

The 2021 Long - Term Incentive Plan became effective on April 27, 2021, which is 20 calendar days after the Partnership mailed out the information statement.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Defined-contribution plan.

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The Partnership also makes other contributions based on plan guidelines.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (CONTINUED)

Recently adopted accounting standards.

Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326) significantly changes the accounting and disclosure requirements related to credit losses on financial assets.

Under the new standard, entities are now required to estimate lifetime expected credit losses for trade receivables, loans, and other financial instruments as of the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts, resulting in earlier recognition of credit losses.

There was no impact to the consolidated financial statements with the Partnership’s adoption of the standard on January 1, 2020.

The Partnership has implemented the necessary changes to its processes and controls to support accounting and disclosure requirements under this ASU.

Accounts receivable and contract assets.

Accounts receivable represent contractual rights for services performed, with, on average, 30-day payment terms from the date of invoice.

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

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.

The Partnership recognized expense related to the plan of $ 6.9 million and $ 0.4 million for the three months ended March 31, 2021 and 2020, respectively.

REVENUE FROM CONTRACTS WITH CUSTOMERS

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Three Months Ended

September 30, Nine Months Ended

September 30,

thousands 2021 2020

1 unchanged sentence

Service revenues – fee based $ 529,413 $ 641,921

$ 582,725 $ 587,965 $ 1,806,097 $ 1,761,483

Service revenues – product based 31,652 15,921

12,316 9,476 35,237 45,530

Product sales 70,805 56,649

3 unchanged sentences

42,862 59,475

Net gains (losses) on commodity-price swap agreements — — — ( 667 )

Other 242 347

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_________________________________________________________________________________________

(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.

(1) Includes fixed - and variable - lease revenue from an operating and maintenance agreement entered into with Occidental.

See Operating lease within Note 6.

Certain of the Partnership’s midstream services contracts have minimum - volume commitment demand fees and fees that require periodic rate redeterminations based on the related facility cost - of - service rate provisions.

During the year ended December 31, 2020, and the quarter ended March 31, 2021, the Partnership constrained revenue on certain cost-of-service agreements based on the status of commercial negotiations relating to a legal dispute with one of our contract counterparties.

Future revenue reversals could occur to the extent the outcome of the legal proceedings and commercial negotiations differ from our current assumptions.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

REVENUE FROM CONTRACTS WITH CUSTOMERS (CONTINUED)

REVENUE FROM CONTRACTS WITH CUSTOMERS

Contract balances.

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.

The following table summarizes current-period activity related to contract assets from contracts with customers:

Balance at December 31, 2019 $ 67,357

Amounts transferred to Accounts receivable, net that were included in the contract assets balance at the beginning of the period (1)

Receivables from customers, which are included in Accounts receivable, net on the consolidated balance sheets were $ 469.3 million and $ 428.2 million as of March 31, 2021, and December 31, 2020, respectively.

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

The following table summarizes activity related to contract assets from contracts with customers:

Contract assets balance at December 31, 2020 $ 56,344

Additional estimated revenues recognized 4,571

Balance at September 30, 2020 $ 79,150

Contract assets at September 30, 2020

Contract assets balance at March 31, 2021 $ 60,915

Contract assets at March 31, 2021

Other current assets $ 14,745

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Total contract assets from contracts with customers $ 60,915

_________________________________________________________________________________________

(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.

The following table summarizes current-period activity related to contract liabilities from contracts with customers:

Balance at December 31, 2019 $ 222,274

Contract liabilities primarily relate to (i) aid - in - construction payments received from customers that must be recognized 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) 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.

The following table summarizes activity related to contract liabilities from contracts with customers:

Contract liabilities balance at December 31, 2020 $ 266,937

Cash received or receivable, excluding revenues recognized during the period 15,260

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

Balance at September 30, 2020 $ 245,010

Contract liabilities at September 30, 2020

Contract liabilities balance at March 31, 2021 $ 280,130

Contract liabilities at March 31, 2021

Accrued liabilities $ 19,250

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Total contract liabilities from contracts with customers $ 280,130

_________________________________________________________________________________________

(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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

REVENUE FROM CONTRACTS WITH CUSTOMERS (CONTINUED)

REVENUE FROM CONTRACTS WITH CUSTOMERS

Transaction price allocated to remaining performance obligations.

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.

Revenues expected to be recognized from certain performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2021, are presented in the following table.

The Partnership applies the optional exemptions in Revenue from Contracts with Customers (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.

Therefore, the following table represents only a portion of expected future revenues from existing contracts as most future revenues from customers are dependent on future variable customer volumes and, in some cases, variable commodity prices for those volumes.

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2022 1,055,916

2023 1,000,434

Thereafter 2,715,378

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ACQUISITIONS AND DIVESTITURES

AMA acquisition.

In February 2019, WES Operating acquired AMA from Anadarko, which is comprised of (i) the DJ Basin oil system and Wattenberg processing plant located in the DJ basin;

(ii) the DBM oil system, APC water systems, a 50 % interest in Mi Vida, and a 50 % interest in Ranch Westex, located in West Texas;

(iii) the Wamsutter pipeline located in Wyoming;

(iv) a 20 % interest in Saddlehorn, a crude-oil and condensate pipeline that originates in Laramie County, Wyoming and terminates in Cushing, Oklahoma;

and (v) a 15 % interest in Panola, an NGLs pipeline that originates in Panola County, Texas, and terminates in Mont Belvieu, Texas.

AMA was acquired in exchange for aggregate consideration of $ 2.0 billion of cash, less the outstanding amount payable pursuant to an intercompany note (the “APCWH Note Payable”) assumed by WES Operating in connection with the transfer, and 45,760,201 WES Operating common units.

These WES Operating common units, less 6,375,284 WES Operating common units retained by WGR Asset Holding Company LLC (“WGRAH”), converted into the right to receive common units of the Partnership at Merger completion.

Red Bluff Express acquisition.

In January 2019, the Partnership acquired a 30 % interest in Red Bluff Express, which owns a third-party-operated natural-gas pipeline connecting processing plants in Reeves and Loving Counties, Texas, to the WAHA hub in Pecos County, Texas.

The Partnership acquired its 30 % interest from a third party via an initial net investment of $ 92.5 million, which represented a 30% share of costs incurred up to the date of acquisition.

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.

In October 2020, the Partnership (i) sold its 14.81 % interest in Fort Union Gas Gathering, LLC (“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, located in Northeast Wyoming, to a third party, initially exercisable during the first quarter of 2021 and subsequently extended to May 9, 2021.

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 was recorded in the fourth quarter of 2020 as Gain (loss) on divestiture and other, net in the consolidated statements of operations.

During the second quarter of 2021, the third party exercised its option to purchase the Bison treating facility and it satisfied the held - for - sale criteria.

The sale is expected to close in the second quarter of 2021.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

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Partnership distributions.

The partnership agreement requires the Partnership to distribute all of its available cash (as defined in its partnership agreement) to unitholders of record on the applicable record date within 55 days following each quarter’s end.

Under its partnership agreement, the Partnership distributes all of its available cash (beyond proper reserves as defined in its partnership agreement) to unitholders of record on the applicable record date within 55 days following each quarter’s end.

The Board of Directors of the general partner (the “Board of Directors”) declared the following cash distributions to the Partnership’s unitholders for the periods presented:

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Cash Distribution Distribution

$ 0.61000 $ 276,324 May 2019

0.61800 279,959 August 2019

0.62000 280,880 November 2019

0.62200 281,786 February 2020

March 31 $ 0.31100 $ 140,893 May 2020

June 30 0.31100 140,900 August 2020

September 30 0.31100 132,255 November 2020

December 31 0.31100 131,265 February 2021

$ 0.31500 $ 132,969 May 2021

0.31100 140,900 August 2020

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.

(1) The Board of Directors declared a cash distribution to the Partnership’s unitholders for the first quarter of 2021 of $ 0.31500 per unit, or $ 133.0 million in aggregate.

The cash distribution is payable on May 14, 2021 to unitholders of record at the close of business on April 30, 2021, including the general partner units.

Available cash.

The amount of available cash (as defined in the partnership agreement) generally is all cash on hand at the end of the quarter, plus, at the discretion of the general partner, working capital borrowings made subsequent to the end of such quarter, less the amount of cash reserves established by the general partner to provide for the proper conduct of the Partnership’s business, including reserves to fund future capital expenditures;

The amount of available cash (beyond proper reserves as defined in our partnership agreement) generally is all cash on hand at the end of the quarter, plus, at the discretion of the general partner, working capital borrowings made subsequent to the end of such quarter, less the amount of cash reserves established by the general partner to provide for the proper conduct of the Partnership’s business, including reserves to fund future capital expenditures;

to comply with applicable laws, debt instruments, or other agreements;

or to provide funds for unitholder distributions for any one or more of the next four quarters.

Working capital borrowings generally include borrowings made under a credit facility or similar financing arrangement.

Working capital borrowings generally are intended to be repaid or refinanced within 12 months.

Working capital borrowings generally include borrowings made under a credit facility or similar financing arrangement and are intended to be repaid or refinanced within 12 months.

In all cases, working capital borrowings are used solely for working capital purposes or to fund unitholder distributions.

WES Operating partnership distributions.

Immediately prior to the closing of the Merger, the WES Operating incentive distribution rights (“IDRs”) and general partner units were converted into WES Operating common units and a non-economic general partner interest in WES Operating, and at Merger completion, all WES Operating common units held by the public and subsidiaries of Anadarko (other than common units held by the Partnership, WES Operating GP, and 6.4 million common units held by a subsidiary of Anadarko) were converted into common units of the Partnership.

Beginning with the first quarter of 2019, WES Operating has made cash distributions to the Partnership and WGRAH, a subsidiary of Occidental, in respect of their proportionate share of limited partner interests in WES Operating.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PARTNERSHIP DISTRIBUTIONS (CONTINUED)

WES Operating makes quarterly cash distributions to the Partnership and WGR Asset Holding Company LLC (“WGRAH”), a subsidiary of Occidental, in proportion to their share of limited partner interests in WES Operating.

WES Operating made the following cash distributions to its limited partners for the periods presented:

2 unchanged sentences

Cash Distribution

March 31 $ 143,404

June 30 143,404

September 30 143,404

December 31 127,470

March 31 $ 137,030

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EQUITY AND PARTNERS’ CAPITAL

Holdings of Partnership equity.

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 Partnership’s common units are listed on the New York Stock Exchange under the ticker symbol “WES.” As of March 31, 2021, Occidental held 202,781,578 common units, representing a 48.0 % 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 2.2 % general partner interest in the Partnership.

The public held 210,280,555 common units, representing a 49.8 % limited partner interest in the Partnership.

In March 2021, an affiliate of Occidental sold 11,500,000 of the Partnership’s common units it held to the public through an underwritten offering, including 1,500,000 common units pursuant to the full exercise of the underwriters’ over - allotment option.

The Partnership did not receive any proceeds from the public offering.

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.

Partnership equity repurchases.

In November 2020, the Board of Directors authorized the Partnership to buy back up to $ 250.0 million of the Partnership’s common units through December 31, 2021 (the “Purchase Program”).

The common units may be purchased from time to time in the open market at prevailing market prices or in privately negotiated transactions.

During the quarter ended March 31, 2021, the Partnership repurchased 1,115,808 common units on the open market for an aggregate purchase price of $ 16.2 million.

The units were canceled by the Partnership immediately upon receipt.

As of March 31, 2021, the Partnership had an authorized amount of $ 201.2 million remaining under the Purchase Program.

Holdings of WES Operating equity.

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.

In November 2014, WES Operating issued 10,913,853 Class C units to APC Midstream Holdings, LLC (“AMH”), pursuant to a Unit Purchase Agreement with Anadarko and AMH.

The Class C units were issued to partially fund the acquisition of DBM.

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)

As of March 31, 2021, (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 ).

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

Following the transactions contemplated by the Exchange Agreement, the common and general partner unitholders’ allocation of net income (loss) attributable to the Partnership was equal to their cash distributions plus their respective allocations of undistributed earnings or losses using the two-class method.

Specifically, net income equal to the amount of available cash (as defined by the partnership agreement) was allocated to the common and general partner unitholders consistent with actual cash distributions and capital account allocations.

The common and general partner unitholders’ allocation of net income (loss) attributable to the Partnership was equal to their cash distributions plus their respective allocations of undistributed earnings or losses using the two - class method.

Specifically, net income equal to the amount of available cash (beyond proper reserves as defined by the partnership agreement) was allocated to the common and general partner unitholders consistent with actual cash distributions and capital account allocations.

Undistributed earnings (net income in excess of distributions) or undistributed losses (available cash in excess of net income (loss)) were then allocated to the common and general partner unitholders in accordance with their weighted - average ownership percentage during each period.

The Partnership’s basic net income (loss) per common unit is calculated by dividing the limited partners’ interest in net income (loss) by the weighted - average number of common units outstanding during the period.

Net income (loss) attributable to assets acquired from Anadarko for periods prior to the acquisition of such assets was not allocated to the limited partners when calculating net income (loss) per common unit.

WES Operating’s net income (loss) per common unit.

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.

Net income (loss) per common unit for WES Operating is not calculated because it has no publicly traded units.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED-PARTY TRANSACTIONS

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

thousands 2021 2020

10 unchanged sentences

General and administrative (2)

7,607 27,724 40,456 73,510

Total operating expenses 39,862 132,599

3 unchanged sentences

(1) See Note 7 .

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

Also see Incentive Plans within this Note 6.

(2) Includes (i) amounts charged by Occidental pursuant to the shared services agreement (see Services Agreement within this Note 6 ) and (ii) equity - based compensation expense allocated to the Partnership by Occidental, which is not reimbursed to Occidental and is reflected as a contribution to partners’ capital in the consolidated statements of equity and partners’ capital (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)

RELATED-PARTY TRANSACTIONS

Consolidated balance sheets

thousands September 30,

thousands March 31,

2021 December 31,

Accounts receivable, net $ 253,553 $ 291,253

$ 292,895 $ 113,345

Other current assets 14,096 5,493

Anadarko note receivable — 260,000

Equity investments (1)

1 unchanged sentence

Other assets (2)

46,124 50,967

Total assets 1,529,648 1,572,526

Accounts and imbalance payables 8,929 6,664

Short-term debt (3)

Accrued liabilities 52,779 19,195

2 unchanged sentences

_________________________________________________________________________________________

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

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

(1) See Note 7 .

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

(2) For the three months ended March 31, 2021, includes the addition of a $ 30.0 million right - of - use (“ROU”) asset recognized in connection with related - party operating leases (see Operating lease within this Note 6) .

Consolidated statements of cash flows

Nine Months Ended

September 30,

Three Months Ended

thousands 2021 2020

Distributions from equity - investment earnings – related parties

$ 49,048 $ 60,868

Acquisitions from related parties ( 2,000 ) —

1 unchanged sentence

Distributions from equity investments in excess of cumulative earnings – related parties 12,141 5,052

APCWH Note Payable borrowings — 11,000

Repayment of APCWH Note Payable

— ( 439,595 )

Distributions to Partnership unitholders (1)

3 unchanged sentences

Net contributions from (distributions to) related parties 1,627 20,489

Above-market component of swap agreements with Anadarko

Finance lease payments — ( 202 )

1 unchanged sentence

(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 ).

(2) Represents distributions paid to a certain subsidiary 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)

RELATED-PARTY TRANSACTIONS

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

September 30, Nine Months Ended

September 30,

thousands 2021 2020

2 unchanged sentences

_________________________________________________________________________________________

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

Also see Incentive Plans within this Note 6.

(1) Includes (i) amounts charged by Occidental pursuant to the shared services agreement (see Services Agreement within this Note 6 ) and (ii) equity - based compensation expense allocated to WES Operating by Occidental, which is not reimbursed to Occidental and is reflected as a contribution to partners’ capital in the consolidated statements of equity and partners’ capital (see Incentive Plans within this Note 6 ).

Consolidated balance sheets

thousands September 30,

thousands March 31,

2021 December 31,

1 unchanged sentence

Consolidated statements of cash flows

Nine Months Ended

September 30,

Three Months Ended

thousands 2021 2020

2 unchanged sentences

_________________________________________________________________________________________

(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 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 ).

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

Related-party revenues.

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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 gathers, processes, and/or 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 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.

While Occidental is the contracting counterparty of the Partnership, these arrangements with Occidental include not just Occidental - produced volumes, but also, in some instances, the volumes of other working - interest owners of Occidental who rely on the Partnership’s facilities and infrastructure to bring their volumes to market.

Natural - gas throughput (excluding equity - investment throughput) attributable to production owned or controlled by Occidental was 35 % and 42 % for the three months ended March 31, 2021 and 2020, respectively.

Crude - oil and NGLs throughput (excluding equity - investment throughput) attributable to production owned or controlled by Occidental was 88 % and 89 % for the three months ended March 31, 2021 and 2020, respectively.

Produced - water throughput attributable to production owned or controlled by Occidental was 86 % and 89 % for the three months ended March 31, 2021 and 2020, respectively.

The Partnership is currently involved in a dispute with Occidental regarding the calculation of the cost - of - service rates under an oil - gathering contract related to the Partnership’s DJ Basin oil - gathering system.

If such dispute is resolved in a manner adverse to the Partnership, such resolution could have a negative impact on our financial condition and results of operations, including a reduction in rates and a non - cash charge to earnings.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED-PARTY TRANSACTIONS (CONTINUED)

RELATED-PARTY TRANSACTIONS

In connection with the sale of its Eagle Ford assets in 2017, Anadarko remained the primary counterparty to the Partnership’s Brasada gas processing agreement and entered into an agency relationship with Sanchez Energy Corporation (“Sanchez”), now Mesquite Energy, Inc.

(“Mesquite”) that allows Mesquite to process gas under such agreement.

For this reason, Anadarko continues to be liable under the Brasada gas processing agreement through 2034 to the extent Mesquite does not perform.

For all periods presented, Mesquite has performed Anadarko’s obligations under the Brasada gas processing agreement pursuant to its agency arrangement with Anadarko.

Further, in connection with the sale of its Uinta Basin assets in 2020, Kerr McGee Oil & Gas Onshore LP, a subsidiary of Occidental, retained the deficiency payment obligations under a gas processing agreement at the Chipeta plant.

This contingent payment obligation extends through the earlier of October 1, 2022, or the termination of the processing agreement.

Commodity purchase and sale agreements.

The Partnership sells a significant amount of its natural gas and NGLs to Anadarko Energy Services Company (“AESC”), Occidental’s marketing affiliate.

Through December 31, 2020, the Partnership purchased and sold a significant amount of natural gas and NGLs from and to Anadarko Energy Services Company (“AESC”), Occidental’s marketing affiliate.

Prior to April 1, 2020, AESC acted as an agent on behalf of either the Partnership or the Partnership’s customers for third - party sales.

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This change has no impact to Operating income (loss), Net income (loss), the balance sheets, cash flows, or any non - GAAP metric used to evaluate the Partnership’s operations (see Key Performance Metrics under Part I, Item 2 of this Form 10-Q).

In addition, the Partnership purchases natural gas from AESC pursuant to purchase agreements.

Marketing Transition Services Agreement.

Effective December 31, 2019, certain subsidiaries of Anadarko entered into a transition services agreement (the “Marketing Transition Services Agreement”) to provide marketing-related services to certain of the Partnership’s subsidiaries through December 31, 2020.

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.

Effective December 31, 2019, certain subsidiaries of Anadarko entered into a transition services agreement (the “Marketing Transition Services Agreement”) to provide marketing - related services to certain of the Partnership’s subsidiaries through December 31, 2020, subject to the option to extend such services for an additional six - month period.

The Marketing Transition Services Agreement was terminated on December 31, 2020.

While the Partnership still has some marketing agreements with affiliates of Occidental, the Partnership began marketing and selling substantially all of its natural gas and NGLs directly to third parties beginning on January 1, 2021.

Operating lease.

Effective December 31, 2019, an affiliate of Occidental and a wholly owned subsidiary of the Partnership entered into an operating and maintenance agreement pursuant to which Occidental provides operational and maintenance services with respect to a crude-oil gathering system and associated treating facilities owned by the Partnership through December 31, 2021.

As a result of the surface - use and salt - water disposal agreements being amended under the CUA (see Related-party Commercial Agreement below), these agreements are now classified as operating leases and a $ 30.0 million ROU asset was recognized during the first quarter of 2021.

The ROU asset will be amortized to Operation and maintenance expense over the remaining term of the agreements.

Effective December 31, 2019, an affiliate of Occidental and a wholly owned subsidiary of the Partnership, the lessor, entered into an operating and maintenance agreement pursuant to which Occidental provides operational and maintenance services with respect to a crude - oil gathering system and associated treating facilities owned by the Partnership through December 31, 2021.

The agreement and underlying contracts include (i) fixed consideration, which is measured as the minimum - volume commitment for both gathering and treating, and (ii) variable consideration, which consists of all volumes above the minimum - volume commitment.

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 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.

In April 2021, the Partnership exercised its option to terminate the operating and maintenance agreement with Occidental effective December 31, 2021.

For each of the three months ended March 31, 2021 and 2020, the Partnership recognized fixed - lease revenues of $ 43.9 million and variable - lease revenue of $( 1.1 ) million and $ 15.6 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

Related-party expenses.

Operation and maintenance expense includes amounts accrued for or paid to related parties for the operation of the Partnership’s assets and for services provided to related parties, including field labor, measurement and analysis, and other disbursements.

Operation and maintenance expense includes amounts accrued for or paid to related parties for field - related costs provided by related parties at certain of the Partnership’s assets.

A portion of general and administrative expense is paid by Occidental, which results in related - party transactions pursuant to the reimbursement provisions of the Partnership’s and WES Operating’s agreements with Occidental.

Cost of product expense includes amounts related to certain continuing marketing arrangements with affiliates of Occidental, related - party imbalances, and transactions with affiliates accounted for under the equity method of accounting.

See Commodity purchase and sale agreements and Marketing Transition Services Agreement in the sections above.

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.

Pursuant to the agreements discussed below, Occidental performs certain centralized corporate functions for the Partnership and WES Operating.

Services Agreement.

General and administrative expense includes costs incurred pursuant to the Services Agreement, under which Occidental has performed certain centralized corporate functions for the Partnership and WES Operating.

Pursuant to the Services Agreement, which was amended and restated on December 31, 2019, specified employees of Occidental were seconded to WES Operating GP to provide, under the direction, supervision, and control of the general partner, (i) operating and routine maintenance service and (ii) corporate, administrative, and other services, with respect to the assets owned and operated by the Partnership.

Occidental is reimbursed for the services provided by the seconded employees.

In late March 2020, seconded employees’ employment was transferred to the Partnership.

Further, Occidental continues to provide certain administrative and operational services to the Partnership.

Occidental was reimbursed for the services provided by the seconded employees.

In January 2020, pursuant to the Services Agreement, Occidental made a one - time cash contribution of $ 20.0 million to WES Operating for anticipated transition costs required to establish stand - alone human resources and information technology functions.

For additional information on the Services Agreement, see Note 1 .

• WES and WES Operating omnibus agreements.

Prior to December 31, 2019, the Partnership had an omnibus agreement with Occidental and the general partner and WES Operating had a separate omnibus agreement with Occidental and WES Operating GP.

These agreements governed, among other things, the obligation to reimburse Occidental for expenses incurred or payments made on the Partnership’s and WES Operating’s behalf in conjunction with general and administrative services provided by Occidental.

The omnibus agreements were terminated as part of the December 2019 Agreements (see Note 1 ).

In late March 2020, seconded employees’ employment was transferred to the Partnership.

Occidental continues to provide certain limited administrative and operational services to the Partnership, with most services expected to be fully transitioned to the Partnership by December 31, 2021.

Incentive Plans.

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 $ 3.5 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.

December 2019 Agreements.

As discussed in more detail in Note 1 , on December 31, 2019, the Partnership and certain of its subsidiaries, including WES Operating and WES Operating GP, entered into agreements with Occidental and/or certain of its subsidiaries, including Anadarko.

Merger transactions.

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.

General and administrative expense includes non - cash 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 allocated expense related to the Incentive Plans of $ 3.2 million and $ 4.1 million for the three months ended March 31, 2021 and 2020, respectively.

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

Related-party Commercial Agreement.

During the first quarter of 2021, an affiliate of Occidental and certain wholly owned subsidiaries of the Partnership entered into a Commercial Understanding Agreement (“CUA”).

Under the CUA, certain West Texas surface - use and salt - water disposal agreements were amended to reduce usage fees owed by the Partnership in exchange for the forgiveness of certain deficiency fees owed by Occidental and other unrelated contractual amendments.

The present value of the reduced usage fees under the CUA was $ 30.0 million.

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.

In May 2008, WES Operating loaned $ 260.0 million to Anadarko in exchange for a 30 - year note that bore interest at a fixed annual rate and was 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 WES Operating transferred the note receivable to Anadarko, which Anadarko immediately canceled and retired 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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED-PARTY TRANSACTIONS (CONTINUED)

APCWH Note Payable.

In June 2017, APC Water Holdings 1, LLC (“APCWH”) entered into an eight-year note payable agreement with Anadarko, which was repaid in the first quarter of 2019 at the Merger completion date.

See Note 11 .

Commodity-price swap agreements.

WES Operating previously entered into commodity-price swap agreements with Anadarko to mitigate exposure to the commodity-price risk inherent in WES Operating’s percent-of-proceeds, percent-of-product, and keep-whole natural-gas processing contracts.

These commodity-price swap agreements expired without renewal on December 31, 2018.

Notional volumes for each product-based commodity-price swap agreement were not specifically defined.

Instead, the commodity-price swap agreements applied to the actual volumes of natural gas, condensate, and NGLs purchased and sold.

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 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.

During the fourth quarter of 2020, a subsidiary of the Partnership entered into an agreement to purchase three electrical substations located in the DJ Basin from a subsidiary of Occidental for $ 2.0 million.

This purchase was recorded as an Accrued capital expenditure as of December 31, 2020, and cash was paid in January of 2021.

Concentration of credit risk.

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 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 September 30, 2020

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

The following table presents the financial statement impact of the Partnership’s equity investments for the three months ended March 31, 2021:

thousands Balance at December 31, 2020 Equity

income, net Contributions Distributions Distributions

Balance at March 31, 2021

White Cliffs $ 45,623 $ 381 $ — $ ( 236 ) $ ( 2,644 ) $ 43,124

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_________________________________________________________________________________________

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

(1) 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.

1 unchanged sentence

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 September 30,

thousands Estimated Useful Life March 31,

2021 December 31,

5 unchanged sentences

168,205 168,205

Produced-water disposal systems 20 years 824,491 754,774

Produced - water disposal systems

20 years 844,794 831,719

Assets under construction N/A 94,005 176,834

7 unchanged sentences

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.

During the three months ended March 31, 2021, the Partnership recognized impairments of $ 14.9 million, primarily attributable to $ 13.5 million of impairments at the DJ Basin complex due to cancellation of projects.

During the three months ended March 31, 2020, the Partnership recognized impairments of $ 155.8 million, primarily due to $ 145.1 million of impairments for assets located in Wyoming and Utah.

These assets were impaired to estimated fair values of $ 91.0 million and estimated salvage value of $ 6.7 million.

The Partnership assesses whether events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

The fair value of assets with impairment triggers were measured using the income approach and Level - 3 fair value inputs.

The income approach was based on the Partnership’s projected future earnings before interest, taxes, depreciation, and amortization (“EBITDA”) and free cash flows, which requires significant assumptions including, among others, future throughput volumes based on current expectations of producer activity and operating costs.

The income approach was based on the Partnership’s projected future EBITDA and free cash flows, which requires significant assumptions including, among others, future throughput volumes based on current expectations of producer activity and operating costs.

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 $ 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 ).

The remaining impairments of $ 10.7 million were primarily at the DJ Basin complex due to cancellation of projects and impairments of rights - of - way.

Potential future long-lived asset impairments.

As of March 31, 2021, it is reasonably possible that future commodity - price declines, prolonged depression of commodity prices, changes to producers’ drilling plans in response to lower prices, and potential producer bankruptcies could result in future long - lived asset impairments.

For example, on April 29, 2020, the Partnership received notice that Sanchez, in its bankruptcy, is attempting to reject a number of midstream and downstream agreements with commercial counterparties, including Sanchez’s Springfield gathering agreements and agreements obligating Sanchez to deliver the gas volumes gathered by the Springfield system to our Brasada processing plant.

On May 6, 2021, the Bankruptcy Court issued an opinion determining, among other things, that Sanchez’s Springfield gathering agreements were rejected, but that such agreements contain covenants running with the land that survive rejection, thus preserving the acreage dedication to the Partnership’s Springfield system.

Depending on the ultimate outcome of the Partnership’s continuing efforts to defend its contractual rights in the bankruptcy proceeding, as well as the Partnership’s ongoing commercial discussions, the Partnership’s South Texas assets could be impaired.

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.

2 unchanged sentences

(i) gathering and processing and (ii) transportation.

The Partnership evaluates goodwill for impairment annually, as of October 1, or more often as facts and circumstances warrant.

The Partnership evaluates goodwill for impairment at the reporting - unit level on an annual basis, as of October 1, or more often as facts and circumstances warrant.

An initial qualitative assessment is performed to determine the likelihood of whether goodwill is impaired and if deemed necessary based on this assessment, a quantitative assessment is then performed.

If the quantitative assessment indicates that the carrying amount of the reporting unit, including goodwill, exceeds its fair value, a goodwill impairment is recorded for the amount by which the reporting unit’s carrying value exceeds its fair value.

If the quantitative assessment indicates that the carrying value of the reporting unit, including goodwill, exceeds its fair value, a goodwill impairment is recorded for the amount by which the reporting unit’s carrying value exceeds its fair value.

During the three months ended March 31, 2020, the Partnership performed an interim goodwill impairment test due to a significant decline in the trading price of the Partnership’s common units, triggered by the combined impacts from the global outbreak of COVID - 19 and the oil - market disruption resulting from significantly lower global demand and corresponding oversupply of crude oil.

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Impairment determinations involve significant assumptions and judgments, and differing assumptions regarding any of these inputs could have a significant effect on the valuations.

As a result of the interim impairment test, the Partnership recognized a goodwill impairment of $ 441.0 million during the first quarter of 2020, which reduced the carrying amount of goodwill to zero for the gathering and processing reporting unit.

As a result of the interim impairment test, the Partnership recognized a goodwill impairment of $ 441.0 million during the first quarter of 2020, which reduced the carrying value of goodwill for the gathering and processing reporting unit to zero .

Goodwill allocated to the transportation reporting unit of $ 4.8 million as of March 31, 2020, was not impaired.

Recurring goodwill impairment assessments have indicated no further impairment.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

COMPONENTS OF WORKING CAPITAL

SELECTED COMPONENTS OF WORKING CAPITAL

A summary of accounts receivable, net is as follows:

The Partnership WES Operating

thousands September 30,

thousands March 31,

2021 December 31,

2019 September 30,

2020 March 31,

2021 December 31,

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The Partnership WES Operating

thousands September 30,

thousands March 31,

2021 December 31,

2019 September 30,

2020 March 31,

2021 December 31,

NGLs inventory $ 4,373 $ 882 $ 4,373 $ 882

Materials and supplies inventory (1)

— 23,444 — 23,444

Imbalance receivables 29,723 12,976 29,723 12,976

3 unchanged sentences

Total other current assets $ 74,079 $ 45,262 $ 72,488 $ 43,244

_________________________________________________________________________________________

(1) See Note 1 .

A summary of accrued liabilities is as follows:

The Partnership WES Operating

thousands September 30,

thousands March 31,

2021 December 31,

2019 September 30,

2020 March 31,

2021 December 31,

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_________________________________________________________________________________________

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

(1) As of March 31, 2021, includes $ 29.1 million of field - related accruals owed to related parties, portions of which include the weather - related impacts caused by winter storm Uri.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

3 unchanged sentences

The following table presents the outstanding debt:

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

thousands Principal Carrying

4 unchanged sentences

Finance lease liabilities 7,752 7,752 7,752 8,264 8,264 8,264

8,436 8,436 8,436 7,873 7,873 7,873

Total short - term debt

3 unchanged sentences

$ 580,917 $ 580,613 $ 596,358 $ 580,917 $ 580,555 $ 597,568

4.000 % Senior Notes due 2022

580,917 580,498 585,519 670,000 669,322 689,784

Floating - Rate Senior Notes due 2023

20 unchanged sentences

1,000,000 983,561 1,082,044 1,000,000 983,512 1,100,375

— — — 380,000 380,000 380,000

Term loan facility — — — 3,000,000 3,000,000 3,000,000

Finance lease liabilities 22,207 22,207 22,207 23,644 23,644 23,644

3 unchanged sentences

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

(2) Includes related-party amounts as of December 31, 2019.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DEBT AND INTEREST EXPENSE (CONTINUED)

DEBT AND INTEREST EXPENSE

Debt activity.

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

The following table presents the debt activity for the three months ended March 31, 2021:

thousands Carrying Value

1 unchanged sentence

RCF borrowings 100,000

Issuance of Floating-Rate Senior Notes due 2023 300,000

Issuance of 3.100 % Senior Notes due 2025

Issuance of 4.050 % Senior Notes due 2030

Issuance of 5.250 % Senior Notes due 2050

Finance lease liabilities 26,001

Repayments of RCF borrowings ( 100,000 )

Repayment of Term loan facility borrowings ( 3,000,000 )

Repayment of 5.375 % Senior Notes due 2021

Repayment of 4.000 % Senior Notes due 2022

Repayment of Floating-Rate Senior Notes due 2023 ( 35,537 )

Other ( 32,744 )

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

Finance lease liabilities ( 1,949 )

Balance at March 31, 2021 $ 7,423,753

WES Operating Senior Notes.

In January 2020, WES Operating issued the following notes:

• 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 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 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.

Interest is determined at a benchmark rate (which is initially a three-month London Interbank Offered Rate) on the interest determination date plus 0.85 %.

Net proceeds from the Fixed-Rate Senior Notes and Floating-Rate Senior Notes were used to repay the $ 3.0 billion in outstanding borrowings under the Term loan facility and outstanding amounts under the RCF, and for general partnership purposes.

The interest payable on each of the Fixed-Rate Senior Notes and Floating-Rate Senior Notes is subject to adjustment from time to time if the credit rating assigned to such notes declines below certain specified levels or if credit-rating downgrades are subsequently followed by credit-rating upgrades.

In March 2020, Fitch Ratings (“Fitch”) and Standard and Poor’s (“S&P”) downgraded WES Operating’s long-term debt from “BBB-” to “BB+.” In May 2020, Fitch downgraded WES Operating’s long-term debt to “BB” and in June 2020, Moody’s Investors Service downgraded WES Operating’s long-term debt from “Ba1” to “Ba2.” As a result of these downgrades, annualized borrowing costs will increase by $ 34.6 million.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DEBT AND INTEREST EXPENSE (CONTINUED)

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.

In mid - January 2020, WES Operating issued the Fixed - Rate 3.100 % Senior Notes due 2025, 4.050 % Senior Notes due 2030, and 5.250 % Senior Notes due 2050 (collectively referred to as the “Fixed - Rate Senior Notes”) and the Floating - Rate Senior Notes due 2023 (the “Floating - Rate Senior Notes”).

Including the effects of the issuance prices, underwriting discounts, and interest - rate adjustments, the effective interest rates of the Senior Notes due 2025, 2030, and 2050, were 4.542 %, 5.424 %, and 6.629 %, respectively, at March 31, 2021, and were 3.287 %, 4.168 %, and 5.362 %, respectively, at March 31, 2020.

The interest rate on the Floating - Rate Senior Notes was 2.33 % and 2.69 % at March 31, 2021 and 2020, respectively.

The effective interest rate of these notes is subject to adjustment from time to time due to a change in credit rating.

During the first quarter of 2021, WES Operating redeemed the total principal amount outstanding of the 5.375% Senior Notes due 2021 at par value, pursuant to the optional redemption terms in WES Operating’s indenture.

At March 31, 2021, WES Operating was in compliance with all covenants under the relevant governing indentures.

Revolving credit facility.

In December 2019, WES Operating entered into an amendment to the RCF, which is expandable to a maximum of $ 2.5 billion, to, among other things, exercise the final one-year extension option to extend the maturity date of the RCF from February 2024 to February 2025, for each extending lender.

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 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 %.

WES Operating’s $2.0 billion senior unsecured revolving credit facility (“RCF”) is expandable to a maximum of $ 2.5 billion, and matures in February 2025 for each extending lender.

The non - extending lender’s commitments mature in February 2024 and represent $ 100.0 million out of $ 2.0 billion of total commitments from all lenders.

As of March 31, 2021, there were no outstanding borrowings and $ 5.1 million of outstanding letters of credit, resulting in $ 2.0 billion of available borrowing capacity under the RCF.

As of March 31, 2021 and 2020, the interest rate on any outstanding RCF borrowings was 1.61 % and 2.13 %, respectively.

The facility - fee rate was 0.25 % and 0.20 % at March 31, 2021 and 2020, respectively.

At March 31, 2021, WES Operating was in compliance with all covenants under the RCF.

Term loan facility.

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 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).

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 its $ 3.0 billion senior unsecured credit facility (“Term loan facility”), see WES Operating Senior Notes above.

During the first quarter of 2020, a loss of $ 2.3 million was recognized for the early termination of the Term loan facility.

1 unchanged sentence

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 $ 39.0 million as of September 30, 2020.

APCWH Note Payable.

In June 2017, in connection with funding the construction of the APC water systems that were acquired as part of the AMA acquisition, APCWH entered into an eight-year note payable agreement with Anadarko.

This note payable had a maximum borrowing limit of $ 500.0 million, including accrued interest.

The APCWH Note Payable was repaid at Merger completion.

Interest-rate swaps.

In December 2018 and March 2019, WES Operating entered into interest-rate swap agreements with an aggregate notional principal amount of $ 750.0 million and $ 375.0 million, respectively, to manage interest-rate risk associated with anticipated debt issuances.

In November and December 2019, WES Operating entered into additional interest-rate swap agreements with an aggregate notional principal amount of $ 1,125.0 million, effectively offsetting the swap agreements entered into in December 2018 and March 2019.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DEBT AND INTEREST EXPENSE (CONTINUED)

In December 2019, all outstanding interest-rate swap agreements were settled.

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 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 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.

DEBT AND INTEREST EXPENSE

Interest expense.

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

thousands 2021 2020

1 unchanged sentence

Long - term and short - term debt

$ ( 95,722 ) $ ( 89,769 )

Finance lease liabilities ( 298 ) ( 405 )

3 unchanged sentences

Related parties

APCWH Note Payable — — — ( 1,833 )

Finance lease liabilities — ( 43 )

6 unchanged sentences

Other commitments.

The Partnership has short-term payment obligations, or commitments, related to its capital spending programs, and those of its unconsolidated related parties, the majority of which is expected to be paid in the next twelve months.

These commitments primarily relate to construction and expansion projects at the West Texas and DJ Basin complexes, DBM water systems, and DBM oil system.

The Partnership has payment obligations, or commitments, that include, among other things, a revolving credit facility, other third - party long - term debt, obligations related to the Partnership’s capital spending programs, pipeline commitments, and various operating and finance leases.

The payment obligations related to the Partnership’s capital spending programs, the majority of which is expected to be paid in the next twelve months, primarily relate to construction, expansion, and asset - integrity projects at the West Texas complex, DBM water systems, DJ Basin complex, and DBM oil system.

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