What changed in this filing

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Item 1. Financial Statements

2022-05-10 compared with 2021-11-09 · 139 added, 391 removed, 771 unchanged (41% of the section changed)

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

thousands except per-unit amounts 2022 2021

14 unchanged sentences

Long - lived asset and other impairments

1,594 34,640 29,198 200,575

Goodwill impairment — — — 441,017

Total operating expenses (2)

2 unchanged sentences

Operating income (loss) 404,824 292,336

Interest income – Anadarko note receivable — 3,286 — 11,736

Interest expense ( 85,455 ) ( 98,493 )

20 unchanged sentences

_________________________________________________________________________________________

(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.

(1) Total revenues and other includes related-party amounts of $ 428.7 million and $ 378.3 million for the three months ended March 31, 2022 and 2021, respectively.

(2) Total operating expenses includes related-party amounts of $( 17.6 ) million and $ 39.9 million for the three months ended March 31, 2022 and 2021, respectively.

(3) See Note 4.

See accompanying Notes to Consolidated Financial Statements.

WESTERN MIDSTREAM PARTNERS, LP

CONSOLIDATED BALANCE SHEETS

thousands except number of units September 30,

thousands except number of units March 31,

2022 December 31,

34 unchanged sentences

Equity and partners’ capital

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

Common units ( 403,333,810 and 402,993,919 units issued and outstanding at March 31, 2022, and December 31, 2021, respectively)

3,134,018 2,966,955

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

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

( 5,062 ) ( 8,882 )

4 unchanged sentences

________________________________________________________________________________________

(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.

(1) Other assets includes $ 14.6 million and $ 9.8 million of NGLs line - fill inventory as of March 31, 2022, and December 31, 2021, respectively.

Other assets also includes $ 51.9 million and $ 56.2 million of materials and supplies inventory as of March 31, 2022, and December 31, 2021, respectively.

(2) Total assets includes related - party amounts of $ 1.5 billion and $ 1.4 billion as of March 31, 2022, and December 31, 2021, respectively, which includes related - party Accounts receivable, net of $ 274.2 million and $ 180.2 million as of March 31, 2022, and December 31, 2021, respectively.

(3) Total liabilities includes related - party amounts of $ 275.7 million and $ 270.5 million as of March 31, 2022, and December 31, 2021, respectively.

See accompanying Notes to Consolidated Financial Statements.

20 unchanged sentences

Balance at March 31, 2022 $ 3,134,018 $ ( 5,062 ) $ 141,851 $ 3,270,807

Net income (loss) 226,295 4,964 7,018 238,277

Distributions to Chipeta noncontrolling interest owner — — ( 1,245 ) ( 1,245 )

Distributions to noncontrolling interest owner of WES Operating — — ( 2,741 ) ( 2,741 )

Distributions to Partnership unitholders ( 130,115 ) ( 2,854 ) — ( 132,969 )

Contributions of equity - based compensation from Occidental

_________________________________________________________________________________________

Equity - based compensation expense

4,746 — — 4,746

Net contributions from (distributions to) related parties 2,881 — — 2,881

Other ( 571 ) — — ( 571 )

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 4 .

See accompanying Notes to Consolidated Financial Statements.

WESTERN MIDSTREAM PARTNERS, LP

CONSOLIDATED STATEMENTS OF EQUITY AND PARTNERS’ CAPITAL

Partners’ Capital

8 unchanged sentences

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

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)

Unit repurchases (1)

( 16,241 ) — — ( 16,241 )

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

Equity-based compensation expense 2,115 — — 2,115

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

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

Unit exchange with Occidental (2)

3,210 — — 3,210

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

Equity - based compensation expense

3,524 — — 3,524

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

Other ( 2,355 ) — — ( 2,355 )

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

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

_________________________________________________________________________________________

(1) See Services Agreement within Note 6 .

(1) See Note 4 .

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

thousands 2022 2021

4 unchanged sentences

Long - lived asset and other impairments

29,198 200,575

Goodwill impairment — 441,017

Non - cash equity - based compensation expense

20,834 16,527

Deferred income taxes 1,132 557

5 unchanged sentences

(Gain) loss on early extinguishment of debt — 289

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

Changes in assets and liabilities:

5 unchanged sentences

Capital expenditures (1)

Purchases from related parties ( 2,000 ) —

( 83,971 ) ( 61,783 )

Contributions to equity investments – related parties ( 2,070 ) ( 86 )

12 unchanged sentences

Net contributions from (distributions to) related parties 409 1,627

Finance lease payments (2)

( 5,295 ) ( 12,241 )

Unit repurchases ( 5,149 ) ( 16,241 )

5 unchanged sentences

Supplemental disclosures

Non-cash unit exchange with Occidental (1)

$ — $ ( 261,878 )

Interest paid, net of capitalized interest $ 149,289 $ 153,979

2 unchanged sentences

_________________________________________________________________________________________

(1) Includes purchases from related parties of $ 2.0 million for the three months ended March 31, 2021.

(2) See Note 5 .

(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

September 30, Nine Months Ended

September 30,

thousands 2022 2021

14 unchanged sentences

Long - lived asset and other impairments

1,594 34,640 29,198 200,575

Goodwill impairment — — — 441,017

Total operating expenses (2)

2 unchanged sentences

Operating income (loss) 405,565 293,222

Interest income – Anadarko note receivable — 3,286 — 11,736

Interest expense ( 85,455 ) ( 98,493 )

7 unchanged sentences

________________________________________________________________________________________

(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.

(1) Total revenues and other includes related - party amounts of $ 428.7 million and $ 378.3 million for the three months ended March 31, 2022 and 2021, respectively.

(2) Total operating expenses includes related - party amounts of $( 16.7 ) million and $ 40.4 million for the three months ended March 31, 2022 and 2021, 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,

2022 December 31,

34 unchanged sentences

Equity and partners’ capital

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

Common units ( 318,675,578 units issued and outstanding at March 31, 2022, and December 31, 2021)

3,246,865 3,063,289

4 unchanged sentences

_________________________________________________________________________________________

(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.

(1) Other assets includes $ 14.6 million and $ 9.8 million of NGLs line - fill inventory as of March 31, 2022, and December 31, 2021, respectively.

Other assets also includes $ 51.9 million and $ 56.2 million of materials and supplies inventory as of March 31, 2022, and December 31, 2021, respectively.

(3) Total liabilities includes related - party amounts of $ 292.3 million and $ 318.7 million as of March 31, 2022, and December 31, 2021, respectively.

See accompanying Notes to Consolidated Financial Statements.

14 unchanged sentences

Balance at March 31, 2022 $ 3,246,865 $ 30,029 $ 3,276,894

Net income (loss) 237,611 2,264 239,875

Distributions to Chipeta noncontrolling interest owner — ( 1,245 ) ( 1,245 )

Distributions to WES Operating unitholders ( 137,030 ) — ( 137,030 )

Contributions of equity - based compensation from Occidental

2,375 — 2,375

Contributions of equity - based compensation from WES

4,613 — 4,613

Net contributions from (distributions to) related parties 2,881 — 2,881

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

5 unchanged sentences

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 Services Agreement within Note 6 .

(2) See Note 6 .

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

See accompanying Notes to Consolidated Financial Statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

thousands 2022 2021

4 unchanged sentences

Long - lived asset and other impairments

29,198 200,575

Goodwill impairment — 441,017

Non - cash equity - based compensation expense

27,874 11,155

Deferred income taxes 1,132 557

5 unchanged sentences

(Gain) loss on early extinguishment of debt — 289

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

Changes in assets and liabilities:

5 unchanged sentences

Capital expenditures (1)

Purchases from related parties ( 2,000 ) —

( 83,971 ) ( 61,783 )

Contributions to equity investments – related parties ( 2,070 ) ( 86 )

11 unchanged sentences

Net contributions from (distributions to) related parties 409 1,627

Finance lease payments (2)

( 5,295 ) ( 12,241 )

Other ( 1,140 ) ( 1,816 )

Net cash provided by (used in) financing activities ( 149,885 ) ( 581,229 )

3 unchanged sentences

Supplemental disclosures

Non-cash unit exchange with Occidental (1)

$ — $ ( 261,878 )

Interest paid, net of capitalized interest $ 149,289 $ 153,979

2 unchanged sentences

________________________________________________________________________________________

(1) Includes purchases from related parties of $ 2.0 million for the three months ended March 31, 2021.

(2) See Note 5 .

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

As of March 31, 2022, 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 September 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.

4 unchanged sentences

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.

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.

Noncontrolling interests.

5 unchanged sentences

Equity-based compensation.

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 LTIP became effective on April 27, 2021.

During the three months ended March 31, 2022, the Partnership issued 565,246 common units under its long-term incentive plans.

Compensation expense was $ 5.8 million and $ 3.5 million for the three months ended March 31, 2022 and 2021, respectively.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Defined-contribution plan.

Beginning in the first quarter of 2020, employees of the Partnership are eligible to participate in the Western Midstream Savings Plan, a defined - contribution benefit plan maintained by the Partnership.

All regular employees may participate in the plan by making elective contributions that are matched by the Partnership, subject to certain limitations.

The Partnership also makes other contributions based on plan guidelines.

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

September 30, Nine Months Ended

September 30,

thousands 2022 2021

6 unchanged sentences

Lease revenue (1)

44,515 53,797 133,755 174,449

Other 243 242

3 unchanged sentences

See Operating leases within Note 5.

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 the 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.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

REVENUE FROM CONTRACTS WITH CUSTOMERS

Contract balances.

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.

Receivables from customers, which are included in Accounts receivable, net on the consolidated balance sheets were $ 589.5 million and $ 424.6 million as of March 31, 2022 and December 31, 2021, 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.

3 unchanged sentences

Additional estimated revenues recognized 6,553

Contract assets balance at September 30, 2021

Contract assets at September 30, 2021

Contract assets balance at March 31, 2022

Contract assets at March 31, 2022

Other current assets $ 10,897

1 unchanged sentence

Total contract assets from contracts with customers $ 28,902

_________________________________________________________________________________________

(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.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

REVENUE FROM CONTRACTS WITH CUSTOMERS

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

2 unchanged sentences

Revenues recognized that were included in the contract liability balance at the beginning of the period ( 11,241 )

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

Contract liabilities balance at September 30, 2021

Contract liabilities at September 30, 2021

Contract liabilities balance at March 31, 2022

Contract liabilities at March 31, 2022

Accrued liabilities $ 8,924

1 unchanged sentence

Total contract liabilities from contracts with customers $ 310,150

_________________________________________________________________________________________

(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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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, 2021, are presented in the following table.

Revenues expected to be recognized from certain performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2022, 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.

5 unchanged sentences

Total $ 6,816,731

ACQUISITIONS AND DIVESTITURES

Fort Union and Bison facilities.

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.

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 the sale closed.

The Partnership received total proceeds of $ 8.0 million, $ 7.0 million in the fourth quarter of 2020 and $ 1.0 million when the sale closed in the second quarter of 2021, resulting in a net gain on sale of $ 5.4 million that was recorded as Gain (loss) on divestiture and other, net in the consolidated statements of operations.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

3 unchanged sentences

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:

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

thousands except per-unit amounts

3 unchanged sentences

Cash Distribution Distribution

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

March 31 $ 0.31500 $ 132,969 May 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 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.

March 31 $ 0.31500 $ 132,969 May 14, 2021 April 30, 2021

June 30 0.31900 134,662 August 13, 2021 July 30, 2021

September 30 0.32300 134,862 November 12, 2021 November 1, 2021

December 31 0.32700 134,749 February 14, 2022 January 31, 2022

March 31 $ 0.50000 $ 206,197 May 13, 2022 May 2, 2022

Available cash.

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.

The amount of available cash (beyond proper reserves 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 (i) to fund future capital expenditures;

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

or (iii) 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 and are intended to be repaid or refinanced within 12 months.

5 unchanged sentences

Total Quarterly

Cash Distribution

March 31 $ 143,404

June 30 143,404

September 30 143,404

December 31 127,470

March 31 $ 137,030

June 30 140,217

September 30 140,217

Cash Distribution Distribution

March 31 $ 137,030 May 2021

June 30 140,217 August 2021

September 30 140,217 November 2021

December 31 140,217 February 2022

March 31 $ 213,513 May 2022

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 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 Partnership’s common units are listed on the New York Stock Exchange under the ticker symbol “WES.” As of March 31, 2022, Occidental held 200,281,578 common units, representing a 48.6 % 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 203,052,232 common units, representing a 49.2 % 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.

In March 2021, an affiliate of Occidental sold 11,500,000 of the Partnership’s common units it held 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”).

In February 2022, the Board authorized the Partnership to buy back up to $ 1.0 billion of the Partnership’s common units through December 31, 2024 (the “$ 1.0 billion 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 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.

During the three months ended March 31, 2022, the Partnership repurchased 225,355 common units on the open market for an aggregate purchase price of $ 5.1 million.

The units were canceled immediately upon receipt.

As of March 31, 2022, the Partnership had an authorized amount of $ 994.9 million remaining under the program.

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

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

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

As of December 31, 2021, the entire $ 250.0 million authorized program had been fulfilled.

Holdings of WES Operating equity.

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 ).

As of March 31, 2022, (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.

7 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

thousands except per-unit amounts 2022 2021

11 unchanged sentences

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 2022 2021

8 unchanged sentences

Cost of product (2)

( 19,543 ) 17,647

Operation and maintenance ( 59 ) 18,122

General and administrative (3)

1,808 7,607 13,003 40,456

Total operating expenses ( 17,627 ) 39,862

Interest income – Anadarko note receivable — 3,286 — 11,736

_________________________________________________________________________________________

(1) See Note 6 .

(2) Includes related-party natural - gas and NGLs imbalances.

(3) Includes (i) amounts charged by Occidental pursuant to the shared services agreement (see Services Agreement within this Note 5 ) 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 5 ).

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED-PARTY TRANSACTIONS

Consolidated balance sheets

thousands September 30,

thousands March 31,

2022 December 31,

11 unchanged sentences

(1) See Note 6 .

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED-PARTY TRANSACTIONS

Consolidated statements of cash flows

Nine Months Ended

September 30,

Three Months Ended

thousands 2022 2021

1 unchanged sentence

$ 45,870 $ 49,048

Purchases from related parties ( 2,000 ) —

Capital expenditures — ( 2,000 )

Contributions to equity investments – related parties ( 2,070 ) ( 86 )

5 unchanged sentences

Net contributions from (distributions to) related parties 409 1,627

Finance lease payments — ( 6,382 )

_________________________________________________________________________________________

(1) Represents distributions paid to Occidental pursuant to the partnership agreement of the Partnership (see Note 3 and Note 4 ).

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

(2) Represents distributions paid to Occidental, through its ownership of WGRAH, pursuant to WES Operating’s partnership agreement (see Note 3 and Note 4 ).

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 2022 2021

4 unchanged sentences

Consolidated balance sheets

thousands September 30,

thousands March 31,

2022 December 31,

Accounts receivable, net $ 289,402 $ 246,083

Other assets $ 45,619 $ 45,494

Accounts and imbalance payables (1)

64,211 97,749

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

Accrued liabilities 4,159 13,597

_________________________________________________________________________________________

(1) Includes balances related to transactions between the Partnership and WES Operating.

Consolidated statements of cash flows

Nine Months Ended

September 30,

Three Months Ended

thousands 2022 2021

2 unchanged sentences

_________________________________________________________________________________________

(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.

(1) Represents distributions paid to the Partnership and Occidental, through its ownership of WGRAH, pursuant to WES Operating’s partnership agreement.

See Note 3 and Note 4 .

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED-PARTY TRANSACTIONS

Related-party revenues.

Related - party revenues include (i) amounts earned by the Partnership from services provided to Occidental and from the sale of natural gas, condensate, and NGLs to Occidental and (ii) income from the Partnership’s investments accounted for under the equity method of accounting (see Note 7 ).

Related - party revenues include amounts earned by the Partnership from services provided to Occidental and from the sale of natural gas, condensate, and NGLs to Occidental.

Gathering and processing agreements.

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

The Partnership has significant gathering, processing, and produced-water disposal arrangements with affiliates of Occidental on most of its systems.

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 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.

Natural-gas throughput (excluding equity-investment throughput) attributable to production owned or controlled by Occidental was 36 % and 35 % for the three months ended March 31, 2022 and 2021, respectively.

Crude-oil and NGLs throughput (excluding equity-investment throughput) attributable to production owned or controlled by Occidental was 89 % and 88 % for the three months ended March 31, 2022 and 2021, respectively.

Produced-water throughput attributable to production owned or controlled by Occidental was 84 % and 86 % for the three months ended March 31, 2022 and 2021, 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 the Partnership’s 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

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.

In December 2021, the Brasada gas processing agreement was assigned from Anadarko to Mesquite effective July 1, 2023.

For this reason, Anadarko continues to be liable under the Brasada gas processing agreement until June 30, 2023, 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.

1 unchanged sentence

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

Commodity purchase and sale agreements.

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”), a marketing affiliate of Occidental.

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.

Where AESC sold natural gas and NGLs on the Partnership’s customers’ behalf, the Partnership recognized associated service revenues and cost of product expense for the marketing services performed by AESC.

When product sales were on the Partnership’s behalf, the Partnership recognized product sales revenues based on Occidental’s sales price to the third party and recorded the associated cost of product expense associated with the marketing activities provided by AESC.

Effective April 1, 2020, changes to marketing - contract terms with AESC terminated AESC’s prior status as an agent of the Partnership for third - party sales and established AESC as a customer of the Partnership.

Accordingly, the Partnership no longer recognizes service revenues and/or product sales revenues and the equivalent cost of product expense for the marketing services performed by AESC.

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).

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED-PARTY TRANSACTIONS

Marketing Transition Services Agreement.

5 unchanged sentences

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.

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 provided 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 included (i) fixed consideration, which was measured as the minimum - volume commitment for both gathering and treating, and (ii) variable consideration, which consisted of all volumes above the minimum - volume commitment.

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 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.

For the three months ended March 31, 2021, the Partnership recognized fixed-lease revenue of $ 43.9 million and variable-lease revenue of $( 1.1 ) million related to these agreements, with such amounts included in Service revenues – fee based in the consolidated statements of operations.

Related-party expenses.

2 unchanged sentences

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.

See 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.

Services Agreement.

General and administrative expense includes costs incurred pursuant to the agreement dated as of December 31, 2019, by and among Occidental, Anadarko, and WES Operating GP, under which Occidental has performed certain centralized corporate functions for the Partnership and WES Operating (“Services Agreement”).

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 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.

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.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

1 unchanged sentence

RELATED-PARTY TRANSACTIONS

Services Agreement.

Most of the administrative and operational services previously provided by Occidental fully transitioned to the Partnership by December 31, 2021, with certain limited transition services remaining in place pursuant to the terms of the Services Agreement.

Incentive Plans.

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 $ 2.3 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.

General and administrative expense includes costs related to the Incentive Plans of $ 1.9 million and $ 3.2 million for the three months ended March 31, 2022 and 2021, respectively.

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

3 unchanged sentences

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.

2 unchanged sentences

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.

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.

Customer concentration.

3 unchanged sentences

EQUITY INVESTMENTS

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

The following table presents the financial statement impact of the Partnership’s equity investments for the three months ended March 31, 2022:

thousands Balance at December 31, 2021 Equity

income, net Contributions Distributions Distributions

Balance at September 30, 2021

Balance at March 31, 2022

White Cliffs $ 40,753 $ 231 $ — $ ( 86 ) $ ( 899 ) $ 39,999

13 unchanged sentences

_________________________________________________________________________________________

(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.

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.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

2 unchanged sentences

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,

2022 December 31,

16 unchanged sentences

Long-lived asset and other impairments.

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.

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.

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 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 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.

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.

Goodwill also includes the allocated historic carrying value of midstream goodwill attributed to the Partnership’s assets previously acquired from Anadarko.

The Partnership’s goodwill has been allocated to two reporting units:

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

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 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.

The Partnership primarily used the market approach and Level - 3 inputs to estimate the fair value of its two reporting units.

The market approach was based on multiples of EBITDA and the Partnership’s projected future EBITDA.

The EBITDA multiples were based on current and historic multiples for comparable midstream companies of similar size and business profit to the Partnership.

The EBITDA projections require significant assumptions including, among others, future throughput volumes based on current expectations of producer activity and operating costs.

The reasonableness of the market approach was tested against an income approach that was based on a discounted cash - flow analysis.

Key assumptions in this analysis include the use of an appropriate discount rate, terminal - year multiples, and estimated future cash flows, including estimates of throughput, capital expenditures, operating, and general and administrative costs.

The Partnership also reviewed the reasonableness of the total fair value of both reporting units to the market capitalization as of March 31, 2020, and the reasonableness of an implied acquisition premium.

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 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.

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.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

3 unchanged sentences

The Partnership WES Operating

thousands September 30,

thousands March 31,

2022 December 31,

2020 September 30,

2021 March 31,

2022 December 31,

4 unchanged sentences

The Partnership WES Operating

thousands September 30,

thousands March 31,

2022 December 31,

2020 September 30,

2021 March 31,

2022 December 31,

7 unchanged sentences

The Partnership WES Operating

thousands September 30,

thousands March 31,

2022 December 31,

2020 September 30,

2021 March 31,

2022 December 31,

13 unchanged sentences

The following table presents the outstanding debt:

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

thousands Principal Carrying

3 unchanged sentences

$ 502,246 $ 502,192 $ 502,250 $ 502,246 $ 502,138 $ 505,153

5.375 % Senior Notes due 2021

Floating - Rate Senior Notes due 2023

213,138 212,760 212,425 — — —

RCF 220,000 220,000 220,000 — — —

Finance lease liabilities 3,201 3,201 3,201 3,794 3,794 3,794

2 unchanged sentences

Long - term debt

4.000 % Senior Notes due 2022

$ — $ — $ — $ 580,917 $ 580,555 $ 597,568

Floating - Rate Senior Notes due 2023

29 unchanged sentences

Debt activity.

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

The following table presents the debt activity for the three months ended March 31, 2022:

thousands Carrying Value

Balance at December 31, 2021 $ 6,906,548

RCF borrowings 400,000

Repayments of RCF borrowings ( 180,000 )

Repayment of 5.375 % Senior Notes due 2021

Repayment of 4.000 % Senior Notes due 2022

Repayment of Floating-Rate Senior Notes due 2023 ( 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 ( 1,135 )

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

Balance at March 31, 2022 $ 6,906,903

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 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.

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 3.790 %, 4.671 %, and 5.869 %, respectively, at March 31, 2022, and were 4.542 %, 5.424 %, and 6.629 %, respectively, at March 31, 2021.

The interest rate on the Floating - Rate Senior Notes was 1.84 % and 2.33 % at March 31, 2022 and 2021, 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 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.

As of March 31, 2022, the 4.000 % Senior Notes due 2022 and the Floating-Rate Senior Notes were classified as short-term debt on the consolidated balance sheet.

Subsequent to March 31, 2022, WES Operating redeemed the 4.000% Senior Notes due 2022 at par value on April 1, 2022, pursuant to the optional redemption terms in WES Operating’s indenture.

At March 31, 2022, 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 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.

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.

As of March 31, 2022, 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, 2022 and 2021, the interest rate on any outstanding RCF borrowings was 1.95 % and 1.61 %, respectively.

The facility - fee rate was 0.25 % at March 31, 2022 and 2021.

At March 31, 2022, WES Operating was in compliance with all covenants under the RCF.

Finance lease liabilities.

During the first quarter of 2020, the Partnership entered into finance leases with third parties for equipment and vehicles.

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

As a result, these leases were classified as operating leases.

The Partnership has future payments for its finance leases of $ 4.3 million as of March 31, 2022.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

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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

September 30, Nine Months Ended

September 30,

thousands 2022 2021

Third parties

Long - term and short - term debt

3 unchanged sentences

Capitalized interest 1,047 865

Total interest expense – third parties ( 93,257 ) ( 95,571 ) ( 287,040 ) ( 278,768 )

Related parties

Finance lease liabilities — — — ( 43 )

Total interest expense – related parties — — — ( 43 )

Interest expense $ ( 85,455 ) $ ( 98,493 )

2 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 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.

As of March 31, 2022 and December 31, 2021, the consolidated balance sheets included $ 9.8 million and $ 10.1 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 majority of payments related to these obligations are expected to be made over the next five years.

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

Litigation and legal proceedings.

3 unchanged sentences

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.

The payment obligations related to the Partnership’s capital spending programs, the majority of which is expected to be paid in the next 12 months, primarily relate to construction, expansion, and asset - integrity projects at the West Texas complex, DBM water systems, DBM oil system, and DJ Basin complex.

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