What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-09 compared with 2021-08-09 · 235 added, 116 removed, 927 unchanged (27% of the section changed)

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

thousands except per-unit amounts 2021 2020 2021 2020

34 unchanged sentences

250,198 241,479 658,291 257,659

Net income (loss) per common unit – basic and diluted (3)

Net income (loss) per common unit – basic (3)

$ 0.61 $ 0.55 $ 1.60 $ 0.58

Weighted - average common units outstanding – basic and diluted

Net income (loss) per common unit – diluted (3)

$ 0.61 $ 0.55 $ 1.59 $ 0.58

Weighted - average common units outstanding – basic (3)

411,909 438,857 412,690 442,255

(1) Total revenues and other includes related - party amounts of $ 415.4 million and $ 793.7 million for the three and six months ended June 30, 2021, respectively, and $ 473.4 million and $ 955.8 million for the three and six months ended June 30, 2020, respectively.

(2) Total operating expenses includes related - party amounts of $ 29.0 million and $ 68.8 million for the three and six months ended June 30, 2021, respectively, and $ 18.5 million and $ 151.1 million for the three and six months ended June 30, 2020, respectively.

Weighted - average common units outstanding – diluted (3)

412,714 438,926 413,150 442,275

_________________________________________________________________________________________

(1) Total revenues and other includes related - party amounts of $ 431.7 million and $ 1.2 billion for the three and nine months ended September 30, 2021, respectively, and $ 455.6 million and $ 1.4 billion for the three and nine months ended September 30, 2020, respectively.

(2) Total operating expenses includes related - party amounts of $ 22.7 million and $ 91.5 million for the three and nine months ended September 30, 2021, respectively, and $ 10.4 million and $ 161.5 million for the three and nine months ended September 30, 2020, respectively.

(3) See Note 5.

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

thousands except number of units June 30,

thousands except number of units September 30,

2021 December 31,

34 unchanged sentences

Equity and partners’ capital

Common units ( 413,076,351 and 413,839,863 units issued and outstanding at June 30, 2021, and December 31, 2020, respectively)

Common units ( 408,610,916 and 413,839,863 units issued and outstanding at September 30, 2021, and December 31, 2020, respectively)

2,965,944 2,778,339

General partner units ( 9,060,641 units issued and outstanding at June 30, 2021, and December 31, 2020)

General partner units ( 9,060,641 units issued and outstanding at September 30, 2021, and December 31, 2020)

( 11,286 ) ( 17,208 )

4 unchanged sentences

________________________________________________________________________________________

(1) Other assets includes $ 7.7 million and $ 4.2 million of NGLs line - fill inventory as of June 30, 2021, and December 31, 2020, respectively.

Other assets also includes $ 60.3 million and $ 71.9 million of materials and supplies inventory as of June 30, 2021, and December 31, 2020, respectively.

(2) Total assets includes related - party amounts of $ 1.6 billion as of June 30, 2021, and December 31, 2020, which includes related - party Accounts receivable, net of $ 278.9 million and $ 291.3 million as of June 30, 2021, and December 31, 2020, respectively.

(3) Total liabilities includes related - party amounts of $ 222.8 million and $ 164.7 million as of June 30, 2021, and December 31, 2020, respectively.

(1) Other assets includes $ 11.2 million and $ 4.2 million of NGLs line - fill inventory as of September 30, 2021, and December 31, 2020, respectively.

Other assets also includes $ 63.1 million and $ 71.9 million of materials and supplies inventory as of September 30, 2021, and December 31, 2020, respectively.

(2) Total assets includes related - party amounts of $ 1.6 billion as of September 30, 2021, and December 31, 2020, which includes related - party Accounts receivable, net of $ 289.4 million and $ 291.3 million as of September 30, 2021, and December 31, 2020, respectively.

(3) Total liabilities includes related - party amounts of $ 250.7 million and $ 164.7 million as of September 30, 2021, and December 31, 2020, respectively.

See accompanying Notes to Consolidated Financial Statements.

31 unchanged sentences

Balance at June 30, 2021 $ 2,927,066 $ ( 13,923 ) $ 139,730 $ 3,052,873

Net income (loss) 250,198 5,527 7,913 263,638

Distributions to Chipeta noncontrolling interest owner — — ( 1,213 ) ( 1,213 )

Distributions to noncontrolling interest owner of WES Operating — — ( 4,642 ) ( 4,642 )

Distributions to Partnership unitholders ( 131,772 ) ( 2,890 ) — ( 134,662 )

Unit repurchases (1)

( 88,125 ) — — ( 88,125 )

Contributions of equity - based compensation from Occidental

2,311 — — 2,311

Equity - based compensation expense

4,668 — — 4,668

Net contributions from (distributions to) related parties 2,165 — — 2,165

Other ( 567 ) — — ( 567 )

Balance at September 30, 2021 $ 2,965,944 $ ( 11,286 ) $ 141,788 $ 3,096,446

_________________________________________________________________________________________

(1) See Note 5 .

See accompanying Notes to Consolidated Financial Statements.

WESTERN MIDSTREAM PARTNERS, LP

CONSOLIDATED STATEMENTS OF EQUITY AND PARTNERS’ CAPITAL

Partners’ Capital

25 unchanged sentences

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

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

Distributions to Chipeta noncontrolling interest owner — — ( 1,148 ) ( 1,148 )

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

Distributions to Partnership unitholders ( 138,083 ) ( 2,817 ) — ( 140,900 )

Unit exchange with Occidental (2)

( 256,640 ) — ( 5,238 ) ( 261,878 )

Contributions of equity-based compensation from Occidental 3,488 — — 3,488

Equity-based compensation expense 2,128 — — 2,128

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

Other 1,141 — — 1,141

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

_________________________________________________________________________________________

(1) See Services Agreement within Note 6 .

(2) See Note 6 .

See accompanying Notes to Consolidated Financial Statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

thousands 2021 2020

23 unchanged sentences

Capital expenditures ( 217,757 ) ( 372,262 )

Acquisitions from related parties ( 2,000 ) —

Purchases from related parties ( 2,000 ) —

Contributions to equity investments – related parties ( 3,683 ) ( 19,017 )

15 unchanged sentences

Unit repurchases ( 104,366 ) —

Other ( 3,492 ) —

Net cash provided by (used in) financing activities ( 1,262,767 ) ( 667,140 )

3 unchanged sentences

Supplemental disclosures

Non-cash unit exchange with Occidental (1)

$ — $ ( 261,878 )

Interest paid, net of capitalized interest 348,904 307,713

Taxes paid (reimbursements received) 932 ( 384 )

Income taxes paid (reimbursements received) 932 ( 384 )

Accrued capital expenditures 29,085 20,275

1 unchanged sentence

(1) See Note 6 .

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

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

See accompanying Notes to Consolidated Financial Statements.

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

thousands 2021 2020 2021 2020

30 unchanged sentences

________________________________________________________________________________________

(2) Total operating expenses includes related - party amounts of $ 29.6 million and $ 69.9 million for the three and six months ended June 30, 2021, respectively, and $ 18.7 million and $ 151.1 million for the three and six months ended June 30, 2020, respectively.

(2) Total operating expenses includes related - party amounts of $ 23.7 million and $ 93.6 million for the three and nine months ended September 30, 2021, respectively, and $ 11.1 million and $ 162.2 million for the three and nine months ended September 30, 2020, respectively.

See accompanying Notes to Consolidated Financial Statements.

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

thousands except number of units June 30,

thousands except number of units September 30,

2021 December 31,

34 unchanged sentences

Equity and partners’ capital

Common units ( 318,675,578 units issued and outstanding at June 30, 2021, and December 31, 2020)

Common units ( 318,675,578 units issued and outstanding at September 30, 2021, and December 31, 2020)

3,057,945 2,831,199

4 unchanged sentences

_________________________________________________________________________________________

(1) Other assets includes $ 7.7 million and $ 4.2 million of NGLs line - fill inventory as of June 30, 2021, and December 31, 2020, respectively.

Other assets also includes $ 60.3 million and $ 71.9 million of materials and supplies inventory as of June 30, 2021, and December 31, 2020, respectively.

(2) Total assets includes related - party amounts of $ 1.6 billion and $ 1.5 billion as of June 30, 2021, and December 31, 2020, respectively, which includes related - party Accounts receivable, net of $ 278.9 million and $ 246.1 million as of June 30, 2021, and December 31, 2020, respectively.

(3) Total liabilities includes related - party amounts of $ 251.0 million and $ 164.3 million as of June 30, 2021, and December 31, 2020, respectively.

(1) Other assets includes $ 11.2 million and $ 4.2 million of NGLs line - fill inventory as of September 30, 2021, and December 31, 2020, respectively.

Other assets also includes $ 63.1 million and $ 71.9 million of materials and supplies inventory as of September 30, 2021, and December 31, 2020, respectively.

(2) Total assets includes related - party amounts of $ 1.6 billion and $ 1.5 billion as of September 30, 2021, and December 31, 2020, respectively, which includes related - party Accounts receivable, net of $ 289.4 million and $ 246.1 million as of September 30, 2021, and December 31, 2020, respectively.

(3) Total liabilities includes related - party amounts of $ 291.6 million and $ 164.3 million as of September 30, 2021, and December 31, 2020, respectively.

See accompanying Notes to Consolidated Financial Statements.

23 unchanged sentences

Balance at June 30, 2021 $ 3,020,327 $ 31,928 $ 3,052,255

Net income (loss) 260,658 2,699 263,357

Distributions to Chipeta noncontrolling interest owner — ( 1,213 ) ( 1,213 )

Distributions to WES Operating unitholders ( 232,055 ) — ( 232,055 )

Contributions of equity - based compensation from Occidental

2,311 — 2,311

Contributions of equity - based compensation from WES

4,539 — 4,539

Net contributions from (distributions to) related parties 2,165 — 2,165

Balance at September 30, 2021 $ 3,057,945 $ 33,414 $ 3,091,359

See accompanying Notes to Consolidated Financial Statements.

WESTERN MIDSTREAM OPERATING, LP

CONSOLIDATED STATEMENTS OF EQUITY AND PARTNERS’ CAPITAL

thousands Common

17 unchanged sentences

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)

( 261,878 ) — ( 261,878 )

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

Other 1,545 — 1,545

Balance at September 30, 2020 $ 2,750,231 $ 32,792 $ 2,783,023

_______________________________________________________________________________________

(1) See Services Agreement within Note 6 .

(2) See Note 6 .

See accompanying Notes to Consolidated Financial Statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

thousands 2021 2020

7 unchanged sentences

Non - cash equity - based compensation expense

27,874 11,155

Deferred income taxes 2,275 2,393

13 unchanged sentences

Capital expenditures ( 217,757 ) ( 372,262 )

Acquisitions from related parties ( 2,000 ) —

Purchases from related parties ( 2,000 ) —

Contributions to equity investments – related parties ( 3,683 ) ( 19,017 )

18 unchanged sentences

Supplemental disclosures

Non-cash unit exchange with Occidental (1)

$ — $ ( 261,878 )

Interest paid, net of capitalized interest 348,904 307,713

Taxes paid (reimbursements received) 932 ( 384 )

Income taxes paid (reimbursements received) 932 ( 384 )

Accrued capital expenditures 29,085 20,275

1 unchanged sentence

(1) See Note 6.

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

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

See accompanying Notes to Consolidated Financial Statements.

16 unchanged sentences

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

As of June 30, 2021, the Partnership’s assets and investments consisted of the following:

As of September 30, 2021, the Partnership’s assets and investments consisted of the following:

Operated Operated

52 unchanged sentences

Presentation of the Partnership’s assets.

The Partnership’s assets include assets owned and ownership interests accounted for by the Partnership under the equity method of accounting, through its 98.0 % partnership interest in WES Operating, as of June 30, 2021 (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.

12 unchanged sentences

Equity-based compensation.

During the six months ended June 30, 2021, the Partnership issued 352,296 common units under the Western Gas Equity Partners, LP 2012 Long - Term Incentive Plan (“WES LTIP”).

Compensation expense for the WES LTIP was $ 4.7 million and $ 8.3 million for the three and six months ended June 30, 2021, respectively, and $ 2.1 million and $ 3.2 million for the three and six months ended June 30, 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.

During the nine months ended September 30, 2021, the Partnership issued 357,472 common units under its long-term incentive plans.

Compensation expense was $ 4.7 million and $ 12.9 million for the three and nine months ended September 30, 2021, respectively, and $ 2.1 million and $ 5.4 million for the three and nine months ended September 30, 2020, respectively.

On March 22, 2021, the Board of Directors approved the Western Midstream Partners, LP 2021 Long - Term Incentive Plan (the “2021 LTIP”).

Subject to the capitalization adjustment provisions included in the 2021 LTIP, the total aggregate number of common units that may be delivered with respect to awards under the 2021 LTIP is 9,500,000 (the “2021 LTIP Limit”).

Common units withheld from an award or surrendered by a participant to satisfy tax withholding obligations or to satisfy the payment of any exercise price with respect to an award will not be considered to be common units delivered under the 2021 LTIP for purposes of the 2021 LTIP Limit.

If any award is forfeited, cancelled, exercised, settled in cash, or otherwise terminates or expires without the actual delivery of common units, the common units subject to such award will again be available for awards under the 2021 LTIP.

The 2021 LTIP 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 LTIP 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.

The 2021 LTIP became effective on April 27, 2021.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

5 unchanged sentences

The Partnership also makes other contributions based on plan guidelines.

The Partnership recognized expense related to the plan of $ 6.1 million and $ 13.0 million for the three and six months ended June 30, 2021, respectively, and $ 4.0 million and $ 4.4 million for the three and six months ended June 30, 2020, respectively.

The Partnership recognized expense related to the plan of $ 5.3 million and $ 18.3 million for the three and nine months ended September 30, 2021, respectively, and $ 3.8 million and $ 8.2 million for the three and nine months ended September 30, 2020, respectively.

REVENUE FROM CONTRACTS WITH CUSTOMERS

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

thousands 2021 2020 2021 2020

11 unchanged sentences

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

See Operating lease within Note 6.

See Operating leases 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 six months ended June 30, 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.

During the three months ended September 30, 2021, the Partnership determined it was no longer necessary to constrain revenue under these cost-of-service agreements.

The Partnership updated its estimate of variable consideration and a cumulative catch-up revenue adjustment of $ 18.9 million was recorded to Service revenues – fee based.

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

3 unchanged sentences

Contract balances.

Receivables from customers, which are included in Accounts receivable, net on the consolidated balance sheets were $ 509.8 million and $ 428.2 million as of June 30, 2021, and December 31, 2020, respectively.

Receivables from customers, which are included in Accounts receivable, net on the consolidated balance sheets were $ 572.8 million and $ 428.2 million as of September 30, 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.

1 unchanged sentence

Contract assets balance at December 31, 2020

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

Additional estimated revenues recognized (2)

Contract assets balance at June 30, 2021 $ 64,880

Contract assets at June 30, 2021

Contract assets balance at September 30, 2021

Contract assets at September 30, 2021

Other current assets $ 23,766

2 unchanged sentences

_________________________________________________________________________________________

(1) Includes $ 4.0 million for the three months ended June 30, 2021.

(1) Includes $( 3.9 ) million for the three months ended September 30, 2021.

(2) Includes $ 8.9 million for the three months ended September 30, 2021.

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.

3 unchanged sentences

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

Contract liabilities balance at June 30, 2021 $ 292,928

Contract liabilities at June 30, 2021

Cumulative catch-up adjustment for change in estimated consideration (3)

Contract liabilities balance at September 30, 2021

Contract liabilities at September 30, 2021

Accrued liabilities $ 22,854

2 unchanged sentences

_________________________________________________________________________________________

(1) Includes $ 18.8 million for the three months ended June 30, 2021.

(2) Includes $( 6.0 ) million for the three months ended June 30, 2021.

(1) Includes $ 26.7 million for the three months ended September 30, 2021.

(2) Includes $( 5.5 ) million for the three months ended September 30, 2021, $( 1.7 ) million of which is related to the cumulative catch-up revenue adjustment recognized for the nine months ended September 30, 2021.

(3) Includes $( 17.2 ) million for the three months ended September 30, 2021.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

2 unchanged sentences

Transaction price allocated to remaining performance obligations.

Revenues expected to be recognized from certain performance obligations that are unsatisfied (or partially unsatisfied) as of June 30, 2021, are presented in the following table.

Revenues expected to be recognized from certain performance obligations that are unsatisfied (or partially unsatisfied) as of September 30, 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.

27 unchanged sentences

March 31 $ 0.31500 $ 132,969 May 2021

0.31900 134,662 August 2021

June 30 0.31900 134,662 August 2021

September 30 (1)

0.32300 134,862 November 2021

_________________________________________________________________________________________

(1) The Board of Directors declared a cash distribution to the Partnership’s unitholders for the second quarter of 2021 of $ 0.31900 per unit, or $ 134.7 million in aggregate.

The cash distribution is payable on August 13, 2021, to unitholders of record at the close of business on July 30, 2021, including the general partner units.

(1) The Board of Directors declared a cash distribution to the Partnership’s unitholders for the third quarter of 2021 of $ 0.32300 per unit, or $ 134.9 million in aggregate.

The cash distribution is payable on November 12, 2021, to unitholders of record at the close of business on November 1, 2021, including the general partner units.

Available cash.

16 unchanged sentences

June 30 140,217

September 30 140,217

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PARTNERSHIP DISTRIBUTIONS

In addition to the distributions above, during the quarter ended September 30, 2021, WES Operating made a distribution of $ 91.8 million to the Partnership and WGRAH.

The Partnership used its portion of the distribution to repurchase common units on the open market.

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.” As of June 30, 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 2.1 % general partner interest in the Partnership.

The Partnership’s common units are listed on the New York Stock Exchange under the ticker symbol “WES.” As of September 30, 2021, Occidental held 202,781,578 common units, representing a 48.5 % 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 205,829,338 common units, representing a 49.3 % limited partner interest in the Partnership.

6 unchanged sentences

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 six months ended June 30, 2021, the Partnership repurchased 1,115,808 common units on the open market for an aggregate purchase price of $ 16.2 million.

During the nine months ended September 30, 2021, the Partnership repurchased 5,586,419 common units on the open market for an aggregate purchase price of $ 104.4 million.

The units were canceled by the Partnership immediately upon receipt.

As of June 30, 2021, the Partnership had an authorized amount of $ 201.2 million remaining under the Purchase Program.

As of September 30, 2021, the Partnership had an authorized amount of $ 113.1 million remaining under the Purchase Program.

Holdings of WES Operating equity.

As of June 30, 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 ).

As of September 30, 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.

1 unchanged sentence

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.

Diluted net income (loss) per common unit includes the effect of outstanding units issued under the Partnership’s long-term incentive plans.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EQUITY AND PARTNERS’ CAPITAL

The following table provides a reconciliation between basic and diluted net income (loss) per common unit:

Three Months Ended

September 30, Nine Months Ended

September 30,

thousands except per-unit amounts 2021 2020 2021 2020

Net income (loss)

Limited partners’ interest in net income (loss) $ 250,198 $ 241,479 $ 658,291 $ 257,659

Weighted-average common units outstanding

Basic 411,909 438,857 412,690 442,255

Dilutive effect of non-vested phantom units 805 69 460 20

Diluted 412,714 438,926 413,150 442,275

Excluded due to anti-dilutive effect 4 1,084 700 1,271

Net income (loss) per common unit

Basic $ 0.61 $ 0.55 $ 1.60 $ 0.58

Diluted $ 0.61 $ 0.55 $ 1.59 $ 0.58

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

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

thousands 2021 2020 2021 2020

17 unchanged sentences

Consolidated balance sheets

thousands June 30,

thousands September 30,

2021 December 31,

15 unchanged sentences

Consolidated statements of cash flows

Six Months Ended

Nine Months Ended

September 30,

thousands 2021 2020

1 unchanged sentence

$ 164,772 $ 187,816

Acquisitions from related parties ( 2,000 ) —

Purchases from related parties ( 2,000 ) —

Contributions to equity investments – related parties ( 3,683 ) ( 19,017 )

12 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

thousands 2021 2020 2021 2020

4 unchanged sentences

Consolidated balance sheets

thousands June 30,

thousands September 30,

2021 December 31,

2 unchanged sentences

_________________________________________________________________________________________

(1) As of June 30, 2021, includes balances related to transactions between the Partnership and WES Operating.

(1) As of September 30, 2021, includes balances related to transactions between the Partnership and WES Operating.

Consolidated statements of cash flows

Six Months Ended

Nine Months Ended

September 30,

thousands 2021 2020

2 unchanged sentences

_________________________________________________________________________________________

(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 ).

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

Includes a distribution made from WES Operating to the Partnership during the quarter ended September 30, 2021, that was used by the Partnership to repurchase common units on the open market.

See Note 4 and Note 5 .

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

6 unchanged sentences

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 36 % and 35 % for the three and six months ended June 30, 2021, respectively, and 43 % and 42 % for the three and six months ended June 30, 2020, respectively.

Crude - oil and NGLs throughput (excluding equity - investment throughput) attributable to production owned or controlled by Occidental was 90 % and 89 % for the three and six months ended June 30, 2021, respectively, and 88 % for the three and six months ended June 30, 2020.

Produced - water throughput attributable to production owned or controlled by Occidental was 86 % for the three and six months ended June 30, 2021, and 87 % and 88 % for the three and six months ended June 30, 2020, respectively.

Natural - gas throughput (excluding equity - investment throughput) attributable to production owned or controlled by Occidental was 38 % and 36 % for the three and nine months ended September 30, 2021, respectively, and 41 % and 42 % for the three and nine months ended September 30, 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 and nine months ended September 30, 2021, respectively, and 87 % and 88 % for the three and nine months ended September 30, 2020, respectively.

Produced - water throughput attributable to production owned or controlled by Occidental was 89 % and 87 % for the three and nine months ended September 30, 2021, respectively, and 87 % and 88 % for the three and nine months ended September 30, 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.

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

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.

19 unchanged sentences

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.

Operating leases.

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 right-of-use (“ROU”) asset, included in Other assets on the consolidated balance sheets, was recognized during the first quarter of 2021.

4 unchanged sentences

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

For the three and six months ended June 30, 2021, the Partnership recognized fixed - lease revenue of $ 44.0 million and $ 87.9 million, respectively, and variable - lease revenue of $ 2.4 million and $ 1.3 million, respectively, related to these agreements.

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

For the three and nine months ended September 30, 2021, the Partnership recognized fixed - lease revenue of $ 43.9 million and $ 131.9 million, respectively, and variable - lease revenue of $ 0.6 million and $ 1.9 million, respectively, related to these agreements.

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

Related-party expenses.

16 unchanged sentences

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 $ 2.4 million and $ 5.6 million for the three and six months ended June 30, 2021, respectively, and $ 3.6 million and $ 7.7 million for the three and six months ended June 30, 2020, respectively.

General and administrative expense includes allocated expense related to the Incentive Plans of $ 2.3 million and $ 7.9 million for the three and nine months ended September 30, 2021, respectively, and $ 3.5 million and $ 11.2 million for the three and nine months ended September 30, 2020, respectively.

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

Construction Reimbursement Agreements .

Construction reimbursement agreements and Purchases from related parties .

From time to time, the Partnership enters into construction reimbursement agreements with Occidental providing that the Partnership will manage the construction of certain midstream infrastructure for Occidental in the Partnership’s areas of operation.

Such arrangements generally provide for a reimbursement of costs incurred by the Partnership on a cost or cost-plus basis.

Additionally, from time to time, in support of the Partnership’s business, the Partnership purchases equipment, inventory, and other miscellaneous assets, from Occidental or its affiliates.

These amounts are included in Purchases from related parties in the consolidated statements of cash flows.

Related-party commercial agreement.

1 unchanged sentence

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.

The present value of the reduced usage fees under the CUA was $ 30.0 million at the time the agreement was executed.

Anadarko note receivable.

1 unchanged sentence

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 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.

Customer concentration.

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

2 unchanged sentences

EQUITY INVESTMENTS

The following table presents the financial statement impact of the Partnership’s equity investments for the six months ended June 30, 2021:

The following table presents the financial statement impact of the Partnership’s equity investments for the nine months ended September 30, 2021:

thousands Balance at December 31, 2020 Other-than-temporary

income, net Contributions Distributions Distributions

Balance at June 30, 2021

Balance at September 30, 2021

White Cliffs $ 45,623 $ — $ 701 $ — $ ( 266 ) $ ( 4,583 ) $ 41,475

15 unchanged sentences

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

The investment balance in Ranch Westex at June 30, 2021, was $ 37.1 million less than the Partnership’s underlying equity in Ranch Westex’s net assets.

During the second quarter of 2021, the Partnership recognized an impairment loss of $ 11.6 million that resulted from a decline in value below the carrying value, which was determined to be other than temporary in nature.

The investment balance in Ranch Westex at September 30, 2021, was $ 37.1 million less than the Partnership’s underlying equity in Ranch Westex’s net assets.

During the nine months ended September 30, 2021, the Partnership recognized an impairment loss of $ 11.8 million that 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 $ 2.9 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.

3 unchanged sentences

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

thousands Estimated Useful Life June 30,

thousands Estimated Useful Life September 30,

2021 December 31,

16 unchanged sentences

Long-lived asset and other impairments.

During the six months ended June 30, 2021, the Partnership recognized impairments of $ 27.6 million, primarily attributable to (i) $ 14.0 million of impairments at the DJ Basin complex due to cancellation of projects and (ii) an $ 11.6 million other-than-temporary impairment of the Partnership’s investment in Ranch Westex (see Note 7 ).

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

During the nine months ended September 30, 2021, the Partnership recognized impairments of $ 29.2 million, primarily attributable to (i) $ 14.1 million of impairments at the DJ Basin complex due to cancellation of projects and (ii) an $ 11.8 million other-than-temporary impairment of the Partnership’s investment in Ranch Westex (see Note 7 ).

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

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

3 unchanged sentences

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

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

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

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PROPERTY, PLANT, AND EQUIPMENT

Potential future long-lived asset impairments.

As of June 30, 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.

As of September 30, 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, was seeking 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

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.

22 unchanged sentences

The Partnership WES Operating

thousands June 30,

thousands September 30,

2021 December 31,

2020 June 30,

2020 September 30,

2021 December 31,

4 unchanged sentences

The Partnership WES Operating

thousands June 30,

thousands September 30,

2021 December 31,

2020 June 30,

2020 September 30,

2021 December 31,

7 unchanged sentences

The Partnership WES Operating

thousands June 30,

thousands September 30,

2021 December 31,

2020 June 30,

2020 September 30,

2021 December 31,

13 unchanged sentences

The following table presents the outstanding debt:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

thousands Principal Carrying

5 unchanged sentences

— — — 431,081 430,606 436,241

RCF 220,000 220,000 220,000 — — —

Finance lease liabilities 4,343 4,343 4,343 8,264 8,264 8,264

35 unchanged sentences

Debt activity.

The following table presents the debt activity for the six months ended June 30, 2021:

The following table presents the debt activity for the nine months ended September 30, 2021:

thousands Carrying Value

3 unchanged sentences

Repayment of 5.375 % Senior Notes due 2021

Repayment of 4.000 % Senior Notes due 2022

Repayment of Floating-Rate Senior Notes due 2023 ( 26,840 )

Repayment of 3.100 % Senior Notes due 2025

Repayment of 3.950 % Senior Notes due 2025

Repayment of 4.650 % Senior Notes due 2026

Finance lease liabilities ( 25,364 )

Balance at June 30, 2021 $ 7,424,211

Balance at September 30, 2021 $ 7,126,303

WES Operating Senior Notes.

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 June 30, 2021, and were 3.287 %, 4.168 %, and 5.362 %, respectively, at June 30, 2020.

The interest rate on the Floating - Rate Senior Notes was 2.29 % and 2.66 % at June 30, 2021 and 2020, respectively.

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 September 30, 2021, and were 4.291 %, 5.173 %, and 6.375 %, respectively, at September 30, 2020.

The interest rate on the Floating - Rate Senior Notes was 2.23 % and 2.12 % at September 30, 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 third quarter of 2021, WES Operating purchased and retired $ 500.0 million of certain of its senior notes via a tender offer (see Debt activity above).

For the three months ended September 30, 2021, losses of $ 24.7 million were recognized for the early retirement of these notes.

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.

As of June 30, 2021, the 4.000 % Senior Notes due 2022 were classified as short-term debt on the consolidated balance sheet due to management’s intent to retire the notes within the next twelve months.

At June 30, 2021, WES Operating was in compliance with all covenants under the relevant governing indentures.

As of September 30, 2021, the 4.000 % Senior Notes due 2022 were classified as short-term debt on the consolidated balance sheet.

At September 30, 2021, WES Operating was in compliance with all covenants under the relevant governing indentures.

Revolving credit facility.

1 unchanged sentence

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 June 30, 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 June 30, 2021 and 2020, the interest rate on any outstanding RCF borrowings was 1.60 % and 1.66 %, respectively.

The facility - fee rate was 0.25 % at June 30, 2021 and 2020.

At June 30, 2021, WES Operating was in compliance with all covenants under the RCF.

As of September 30, 2021, there were $ 220.0 million of outstanding borrowings and $ 5.1 million of outstanding letters of credit, resulting in $ 1.8 billion of available borrowing capacity under the RCF.

As of September 30, 2021 and 2020, the interest rate on any outstanding RCF borrowings was 1.58 % and 1.65 %, respectively.

The facility - fee rate was 0.25 % at September 30, 2021 and 2020.

At September 30, 2021, WES Operating was in compliance with all covenants under the RCF.

Any outstanding RCF borrowings are classified as short-term debt on the consolidated balance sheet due to management’s intent to repay within the next twelve months.

Term loan facility.

1 unchanged sentence

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

Finance lease liabilities.

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 $ 33.1 million as of June 30, 2021.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

1 unchanged sentence

DEBT AND INTEREST EXPENSE

Finance lease liabilities.

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.

Certain equipment leases were amended during the third quarter of 2021 requiring reassessment of lease classification.

As a result, these leases are now classified as operating leases resulting in a reduction of $ 19.6 million in Net property, plant, and equipment and $ 20.3 million in Short-term and Long-term debt.

The operating leases resulted in additions of $ 4.8 million in Other assets, $ 3.1 million in Accrued liabilities, and $ 2.4 million in Other liabilities, on the consolidated balance sheet.

The Partnership has future payments for its finance leases of $ 6.7 million as of September 30, 2021.

Interest expense.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

thousands 2021 2020 2021 2020

3 unchanged sentences

Finance lease liabilities ( 218 ) ( 369 ) ( 808 ) ( 1,162 )

Amortization of debt issuance costs and commitment fees ( 3,179 ) ( 3,462 ) ( 6,517 ) ( 6,589 )

Commitment fees and amortization of debt-related costs ( 3,147 ) ( 3,463 ) ( 9,664 ) ( 10,052 )

Capitalized interest 1,021 2,462 2,554 6,066

7 unchanged sentences

The Partnership is subject to various environmental-remediation obligations arising from federal, state, and local regulations regarding air and water quality, hazardous and solid waste disposal, and other environmental matters.

As of June 30, 2021, and December 31, 2020, the consolidated balance sheets included $ 11.3 million and $ 8.2 million, respectively, of liabilities for remediation and reclamation obligations.

As of September 30, 2021, and December 31, 2020, the consolidated balance sheets included $ 12.0 million and $ 8.2 million, respectively, of liabilities for remediation and reclamation obligations.

The current portion of these amounts is included in Accrued liabilities, and the long-term portion of these amounts is included in Other liabilities.

The recorded obligations do not include any anticipated insurance recoveries.

The majority of payments related to these obligations are expected to be made over the next five years.

6 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements