What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-02-22 compared with 2022-02-23 · 198 added, 326 removed, 1465 unchanged (26% of the section changed)

42 unchanged sentences

/s/ Michael P.

President, Chief Executive Officer and Chief Financial Officer

President and Chief Executive Officer

Western Midstream Holdings, LLC

(as general partner of Western Midstream Partners, LP)

/s/ Kristen S.

Senior Vice President and Chief Financial Officer

Western Midstream Holdings, LLC

(as general partner of Western Midstream Partners, LP)

WESTERN MIDSTREAM OPERATING, LP

/s/ Michael P.

President, Chief Executive Officer and Chief Financial Officer

President and Chief Executive Officer

Western Midstream Operating GP, LLC

(as general partner of Western Midstream Operating, LP)

/s/ Kristen S.

Senior Vice President and Chief Financial Officer

Western Midstream Operating GP, LLC

(as general partner of Western Midstream Operating, LP)

February 22, 2023

99 unchanged sentences

Other income (expense), net 1,603 ( 623 ) 1,025

( 623 ) 1,025 ( 123,785 )

Income (loss) before income taxes 1,255,643 934,192 522,850

5 unchanged sentences

Net income (loss) attributable to Western Midstream Partners, LP $ 1,217,103 $ 916,292 $ 527,012

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

General partner interest in net (income) loss ( 27,541 ) ( 19,815 ) ( 11,104 )

11 unchanged sentences

(1) Total revenues and other includes related - party amounts of $ 1.8 billion, $ 1.6 billion, and $ 1.8 billion for the years ended December 31, 2022, 2021, and 2020, respectively.

(2) See Note 7 and Note 9 .

(3) Total operating expenses includes related - party amounts of $( 18.0 ) million, $ 86.2 million, and $ 182.7 million for the years ended December 31, 2022, 2021, and 2020, respectively.

(3) Other income (expense), net includes losses associated with the interest-rate swap agreements for the year ended December 31, 2019.

(4) See Note 5.

See accompanying Notes to Consolidated Financial Statements.

54 unchanged sentences

Partners’ Capital

thousands Net

by Anadarko Common

thousands Common

Units General Partner

3 unchanged sentences

Net income (loss) 515,908 11,104 ( 10,160 ) 516,852

Cumulative impact of the Merger transactions (1)

— 3,169,800 — ( 3,169,800 ) —

Issuance of general partner units — 19,861 ( 19,861 ) — —

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

— 7,407 — — 7,407

WES Operating equity transactions, net (3)

— ( 755,197 ) — 755,197 —

Distributions to Chipeta noncontrolling interest owner — — ( 8,644 ) ( 8,644 )

Distributions to noncontrolling interest owners of WES Operating — — — ( 118,225 ) ( 118,225 )

Distributions to noncontrolling interest owner of WES Operating — — ( 15,434 ) ( 15,434 )

Distributions to Partnership unitholders ( 681,746 ) ( 14,088 ) — ( 695,834 )

Acquisitions from related parties (4)

Unit exchange with Occidental (1)

( 256,640 ) — ( 5,238 ) ( 261,878 )

Unit repurchases (2)

( 32,535 ) — — ( 32,535 )

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

Contributions of equity-based compensation from Occidental 14,604 — — 14,604

Net pre-acquisition contributions from (distributions to) related parties 458,819 — — — 458,819

Net contributions from (distributions to) related parties of other assets — ( 90 ) — — ( 90 )

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

Equity-based compensation expense 7,857 — — 7,857

Net contributions from (distributions to) related parties (3)

4,466 — 20,000 24,466

Other 465 — — 465

4 unchanged sentences

Distributions to Partnership unitholders ( 522,269 ) ( 11,489 ) — ( 533,758 )

Unit exchange with Occidental (2)

— ( 256,640 ) — ( 5,238 ) ( 261,878 )

Unit repurchases (2)

( 217,465 ) — — ( 217,465 )

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

Contributions of equity - based compensation from Occidental

10,087 — — 10,087

Equity - based compensation expense

Net contributions from (distributions to) related parties (6)

17,589 — — 17,589

Net contributions from (distributions to) related parties 8,533 — — 8,533

Other ( 4,336 ) — — ( 4,336 )

16 unchanged sentences

(2) See Note 5 .

(3) For the year ended December 31, 2019, the $ 755.2 million decrease to partners’ capital together with net income (loss) attributable to Western Midstream Partners, LP, totaled $( 58.0 ) million.

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

(5) See Note 5 .

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

(3) Includes a one-time cash contribution Occidental made to WES Operating in January 2020 for anticipated transition costs required to establish stand-alone human resources and information technology functions.

See accompanying Notes to Consolidated Financial Statements.

20 unchanged sentences

(Gain) loss on early extinguishment of debt ( 91 ) 24,944 ( 11,234 )

(Gain) loss on interest-rate swaps — — 125,334

Cash paid to settle interest-rate swaps — — ( 25,621 )

8 unchanged sentences

( 487,228 ) ( 313,674 ) ( 423,602 )

Acquisitions from related parties — — ( 2,007,501 )

Acquisitions from third parties ( 40,127 ) — —

1 unchanged sentence

Distributions from equity investments in excess of cumulative earnings – related parties 63,897 41,385 32,160

Proceeds from the sale of assets to related parties 200 — —

Proceeds from the sale of assets to third parties 264,121 8,102 20,333

5 unchanged sentences

Increase (decrease) in outstanding checks 2,206 ( 21,631 ) 20,699

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

Distributions to Partnership unitholders (1)

3 unchanged sentences

Net contributions from (distributions to) related parties 1,423 8,533 24,466

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

Finance lease payments (3)

( 6,513 ) ( 14,207 ) ( 508 )

Unit repurchases (1)

( 487,590 ) ( 217,465 ) ( 32,535 )

Other ( 4,336 ) — —

( 13,644 ) ( 10,849 ) ( 14,207 )

Net cash provided by (used in) financing activities ( 1,398,532 ) ( 1,752,237 ) ( 844,204 )

9 unchanged sentences

_________________________________________________________________________________________

(1) Includes purchases from related parties of $ 2.0 million and $ 0.4 million for the years ended December 31, 2021 and 2019, respectively.

(2) See Note 6 .

(3) For the year ended December 31, 2020, includes related-party payments of $ 6.4 million.

(4) Includes unit repurchases from Occidental of $ 50.2 million for the year ended December 31, 2021.

(1) Includes related-party amounts.

See accompanying Notes to Consolidated Financial Statements.

72 unchanged sentences

Other income (expense), net 1,558 ( 634 ) 1,008

( 634 ) 1,008 ( 123,864 )

Income (loss) before income taxes 1,258,254 937,113 526,385

3 unchanged sentences

Net income (loss) attributable to Western Midstream Operating, LP $ 1,244,620 $ 937,987 $ 541,377

Limited partners’ interest in net income (loss):

Net income (loss) attributable to Western Midstream Operating, LP $ 937,987 $ 541,377 $ 807,590

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

Limited partners’ interest in net income (loss) 937,987 541,377 778,311

________________________________________________________________________________________

(1) Total revenues and other includes related - party amounts of $ 1.8 billion, $ 1.6 billion, and $ 1.8 billion for the years ended December 31, 2022, 2021, and 2020, respectively.

(2) See Note 7 and Note 9 .

(3) Total operating expenses includes related - party amounts of $( 15.0 ) million, $ 89.0 million, and $ 184.0 million for the years ended December 31, 2022, 2021, and 2020, respectively.

(3) Other income (expense), net includes losses associated with the interest-rate swap agreements for the year ended December 31, 2019.

See Note 13 .

See accompanying Notes to Consolidated Financial Statements.

51 unchanged sentences

CONSOLIDATED STATEMENTS OF EQUITY AND PARTNERS’ CAPITAL

Partners’ Capital

thousands Net

by Anadarko Common

Units Class C

Units General

thousands Common

Units Noncontrolling

2 unchanged sentences

Net income (loss) 541,377 ( 20,990 ) 520,387

Cumulative impact of the Merger transactions (1)

— 926,236 ( 802,588 ) ( 123,648 ) — —

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

— 7,407 — — — 7,407

Amortization of beneficial conversion feature of Class C units — ( 542 ) 542 — — —

Distributions to Chipeta noncontrolling interest owner — ( 8,644 ) ( 8,644 )

1 unchanged sentence

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

( 2,149,218 ) 141,717 — — — ( 2,007,501 )

Contributions of equity-based compensation from Occidental 14,604 — 14,604

Net pre-acquisition contributions from (distributions to) related parties 458,819 — — — — 458,819

Net contributions from (distributions to) related parties of other assets — ( 90 ) — — — ( 90 )

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

Unit exchange with Occidental (1)

( 261,878 ) — ( 261,878 )

Net contributions from (distributions to) related parties (2)

24,466 — 24,466

Other 1,543 — 1,543

3 unchanged sentences

Distributions to WES Operating unitholders ( 749,018 ) — ( 749,018 )

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

Contributions of equity - based compensation from Occidental

Unit exchange with Occidental (4)

10,087 — 10,087

Net contributions from (distributions to) related parties (5)

Contributions of equity - based compensation from WES

24,501 — 24,501

Other — 1,543 — — — 1,543

Net contributions from (distributions to) related parties 8,533 — 8,533

Balance at December 31, 2021 $ 3,063,289 $ 29,377 $ 3,092,666

10 unchanged sentences

(1) See Note 5 .

(2) See Note 6 .

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

(4) See Note 5 .

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

(2) Includes a one-time cash contribution Occidental made to WES Operating in January 2020 for anticipated transition costs required to establish stand-alone human resources and information technology functions.

See accompanying Notes to Consolidated Financial Statements.

20 unchanged sentences

(Gain) loss on early extinguishment of debt ( 91 ) 24,944 ( 11,234 )

(Gain) loss on interest-rate swaps — — 125,334

Cash paid to settle interest-rate swaps — — ( 25,621 )

8 unchanged sentences

( 487,228 ) ( 313,674 ) ( 423,602 )

Acquisitions from related parties — — ( 2,007,501 )

Acquisitions from third parties ( 40,127 ) — —

1 unchanged sentence

Distributions from equity investments in excess of cumulative earnings – related parties 63,897 41,385 32,160

Proceeds from the sale of assets to related parties 200 — —

Proceeds from the sale of assets to third parties 264,121 8,102 20,333

9 unchanged sentences

Net contributions from (distributions to) related parties 1,423 8,533 24,466

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

Finance lease payments (3)

( 6,513 ) ( 14,207 ) ( 508 )

Other ( 4,318 ) ( 6,513 ) ( 14,207 )

Net cash provided by (used in) financing activities ( 1,385,393 ) ( 1,730,780 ) ( 871,982 )

9 unchanged sentences

________________________________________________________________________________________

(1) Includes purchases from related parties of $ 2.0 million and $ 0.4 million for the years ended December 31, 2021 and 2019, respectively.

(2) See Note 6.

(3) For the year ended December 31, 2020, includes related-party payments of $ 6.4 million.

(1) Includes related-party amounts.

See accompanying Notes to Consolidated Financial Statements.

35 unchanged sentences

All significant intercompany transactions have been eliminated.

The following table outlines the ownership interests and the accounting method of consolidation used in the consolidated financial statements for entities not wholly owned:

The following table outlines the ownership interests and the accounting method of consolidation used in the consolidated financial statements for entities not wholly owned (see Note 3 and Note 7) :

Percentage Interest

5 unchanged sentences

Mi Vida JV LLC (“Mi Vida”) 50.00 %

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

Front Range Pipeline LLC (“FRP”) 33.33 %

6 unchanged sentences

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

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

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

8 unchanged sentences

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

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

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

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

11 unchanged sentences

Noncontrolling interests.

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

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

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

December 2019 Agreements.

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

• Exchange Agreement.

Western Gas Resources, Inc.

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

• Services, Secondment, and Employee Transfer Agreement.

Occidental, Anadarko, and WES Operating GP entered into an amended and restated Services, Secondment, and Employee Transfer Agreement (the “Services Agreement”), pursuant to which Occidental, Anadarko, and their subsidiaries, among other things agreed to (i) continue to provide certain administrative and operational services to the Partnership for up to a two-year transition period, and (ii) transfer certain Occidental employees to the Partnership, with the Partnership assuming liabilities relating to those employees at the time of their transfer.

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.

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.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

• RCF amendment.

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

See Note 13 .

• Termination of debt-indemnification agreements.

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

• Termination of omnibus agreements.

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

Merger transactions .

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

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

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

The fair-value-measurement standard defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

31 unchanged sentences

The allowance for expected credit losses was immaterial at December 31, 2022 and 2021.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

The consolidated balance sheets include imbalance receivables and payables resulting from differences in volumes received into the Partnership’s systems and volumes delivered by the Partnership to customers.

4 unchanged sentences

Net changes in imbalance receivables and payables are reported in Cost of product in the consolidated statements of operations.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

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

5 unchanged sentences

Property, plant, and equipment and other intangible assets are stated at historical cost less accumulated depreciation or amortization, or fair value if impaired.

Because prior long-lived asset acquisitions from Anadarko were transfers of net assets between entities under common control, the assets acquired were initially recorded at Anadarko’s historic carrying value.

Prior long-lived asset acquisitions from Anadarko were transfers of net assets between entities under common control;

therefore, the assets acquired were initially recorded at Anadarko’s historic carrying value.

The difference between the carrying value of net assets acquired from Anadarko and the consideration paid has been recorded as an adjustment to partners’ capital.

63 unchanged sentences

Accordingly, the Partnership no longer recognizes revenue and the equivalent cost of product expense for the marketing services performed by Occidental.

The Partnership also receives Service revenues – fee based from contracts that have minimum-volume-commitment demand fees and fees that require periodic rate redeterminations based on the related facility cost of service.

These fees include fixed and variable consideration that are recognized on a consistent per-unit rate over the term of the contract.

Annual adjustments are made to the cost-of-service rates charged to customers, and a cumulative catch-up revenue adjustment related to services already provided to the minimum volumes under the contract may be recorded in future periods, with revenues for the remaining term of the contract recognized on a consistent per-unit rate based on the total expected variable consideration under the contract.

The Partnership also receives Service revenues – fee based from contracts that have fees that require periodic rate redeterminations based on the related facility cost of service.

The cost-of-service rates are calculated using a contractually specified rate of return and estimates including long-term assumptions for capital invested, receipt volumes, and operating and maintenance expenses.

Certain of these cost-of-service agreements also have minimum-volume-commitment demand fees and guaranteed minimum revenues, in addition to cost-of-service rates.

Such contracts include fixed and variable consideration that are recognized on a consistent per-unit rate over the term of the contract.

If the Partnership determines it is probable that a significant reversal in the cumulative catch-up revenue adjustment could occur, the variable consideration may be constrained up to the amount of the probable significant reversal.

Service revenues – product based includes service revenues from percent-of-proceeds gathering and processing contracts that are recognized net of the cost of product for purchases from the Partnership’s customers since it is acting as the agent in the product sale.

Keep-whole and percent-of-product agreements result in Service revenues – product based being recognized when the natural gas and/or NGLs are received from the customer as non-cash consideration for the services provided.

Keep-whole agreements, percent-of-product agreements, and certain fee-based contracts that have a fixed-recovery component result in Service revenues – product based being recognized when the natural gas and/or NGLs are received from the customer as non-cash consideration for the services provided.

Non-cash consideration for these services is valued at the time the services are provided.

10 unchanged sentences

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.

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 $ 23.7 million and $ 12.5 million for the years ended December 31, 2021 and 2020, respectively.

The Partnership recognized expense related to the plan of $ 21.8 million, $ 23.7 million, and $ 12.5 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Partnership income taxes.

40 unchanged sentences

When the non-lease component is determined to be the predominant component, the combined components are accounted for under Revenue from Contracts with Customers (Topic 606) .

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

REVENUE FROM CONTRACTS WITH CUSTOMERS

10 unchanged sentences

— 179,251 223,643

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

Other 953 789 1,341

3 unchanged sentences

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.

Beginning on December 31, 2020, 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.

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

The Partnership has resolved the legal proceedings and commercial negotiations with the contract counterparties as of December 31, 2021.

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 $ 545.0 million and $ 424.6 million as of December 31, 2022 and 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.

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

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

12 unchanged sentences

Total contract assets from contracts with customers $ 22,561 $ 22,557

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:

12 unchanged sentences

Total contract liabilities from contracts with customers $ 369,285 $ 313,146

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.

4 unchanged sentences

2024 1,107,224

2025 1,024,386

Thereafter 1,825,720

Total $ 6,703,438

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ACQUISITIONS AND DIVESTITURES

In November 2022, the Partnership sold its 15.00 % interest in Cactus II to two third parties for $ 264.8 million, which includes a $ 1.8 million pro-rata distribution through closing.

Total proceeds were received during the fourth quarter of 2022, resulting in a net gain on sale of $ 109.9 million that was recorded as Gain (loss) on divestiture and other, net in the consolidated statements of operations.

Ranch Westex.

In September 2022, the Partnership acquired the remaining 50 % interest in Ranch Westex JV LLC (“Ranch Westex”) from a third party for $ 40.1 million.

Subsequent to the acquisition, (i) the Partnership is the sole owner and operator of the asset, (ii) Ranch Westex is no longer accounted for under the equity method of accounting, and (iii) the Ranch Westex processing plant is included as part of the operations of the West Texas complex.

Fort Union and Bison facilities.

3 unchanged sentences

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.

AMA acquisition.

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

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

(iii) the Wamsutter pipeline located in Wyoming;

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

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

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

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

Red Bluff Express acquisition.

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

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

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

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PARTNERSHIP DISTRIBUTIONS

7 unchanged sentences

Cash Distribution Distribution

March 31 $ 0.61000 $ 276,324 May 2019

June 30 0.61800 279,959 August 2019

September 30 0.62000 280,880 November 2019

December 31 0.62200 281,786 February 2020

March 31 $ 0.31100 $ 140,893 May 2020

June 30 0.31100 140,900 August 2020

September 30 0.31100 132,255 November 2020

December 31 0.31100 131,265 February 2021

March 31 $ 0.31500 $ 132,969 May 2021

June 30 0.31900 134,662 August 2021

September 30 0.32300 134,862 November 2021

December 31 (1)

0.32700 134,749 February 2022

_________________________________________________________________________________________

(1) The Board declared a cash distribution to the Partnership’s unitholders for the fourth quarter of 2021 of $ 0.32700 per unit, or $ 134.7 million in aggregate.

The cash distribution was paid on February 14, 2022, to unitholders of record at the close of business on January 31, 2022, including the general partner units.

March 31 $ 0.31100 $ 140,893 May 14, 2020 May 1, 2020

June 30 0.31100 140,900 August 13, 2020 July 31, 2020

September 30 0.31100 132,255 November 13, 2020 October 30, 2020

December 31 0.31100 131,265 February 12, 2021 February 1, 2021

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

June 30 0.50000 197,744 August 12, 2022 August 1, 2022

September 30 0.50000 197,065 November 14, 2022 October 31, 2022

December 31 0.50000 196,569 February 13, 2023 February 1, 2023

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PARTNERSHIP DISTRIBUTIONS

Available cash.

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) reserves to fund future capital expenditures;

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

2 unchanged sentences

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

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PARTNERSHIP DISTRIBUTIONS

WES Operating partnership distributions.

WES Operating makes quarterly cash distributions to the Partnership and WGRAH, a subsidiary of Occidental, in proportion to their share of limited partner interests in WES Operating.

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

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

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

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EQUITY AND PARTNERS’ CAPITAL

6 unchanged sentences

The units were canceled by the Partnership immediately upon receipt.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EQUITY AND PARTNERS’ CAPITAL

Partnership equity repurchases.

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 “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.

In November 2022, the Board authorized an increase in the program to $ 1.25 billion (the “$1.25 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 year ended December 31, 2022, the Partnership repurchased 19,532,305 common units, which includes 10,000,000 common units repurchased from Occidental, for an aggregate purchase price of $ 487.6 million.

The units were canceled immediately upon receipt.

As of December 31, 2022, the Partnership had an authorized amount of $ 762.4 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.

5 unchanged sentences

As of December 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 ).

WES Operating Class C units.

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

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

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

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

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

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

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:

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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

13 unchanged sentences

Cost of product (2)

( 25,447 ) 42,805 92,884

Operation and maintenance 5,081 27,805 49,533

4 unchanged sentences

Interest income – Anadarko note receivable — — 11,736

Interest expense — ( 6 ) ( 1,970 )

_________________________________________________________________________________________

(1) See Note 7 .

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

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

(3) Includes equity - based compensation expense allocated to the Partnership by Occidental, which is not reimbursed to Occidental and is reflected as a contribution to partners’ capital in the consolidated statements of equity and partners’ capital (see Incentive Plans within this Note 6 ).

Balances for the years ended December 31, 2021 and 2020, also include amounts charged by Occidental pursuant to the shared services agreement (see Services Agreement within this Note 6 ).

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED-PARTY TRANSACTIONS

Consolidated balance sheets

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(1) See Note 7 .

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED-PARTY TRANSACTIONS

Consolidated statements of cash flows

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Capital expenditures ( 470 ) ( 2,000 ) —

Acquisitions from related parties — — ( 2,007,501 )

Contributions to equity investments – related parties ( 9,632 ) ( 4,435 ) ( 19,388 )

Distributions from equity investments in excess of cumulative earnings – related parties 63,897 41,385 32,160

APCWH Note Payable borrowings — — 11,000

Repayment of APCWH Note Payable — — ( 439,595 )

Distributions to Partnership unitholders (1)

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Net contributions from (distributions to) related parties 1,423 8,533 24,466

Above-market component of swap agreements with Anadarko — — 7,407

Proceeds from the sale of assets to related parties 200 — —

Finance lease payments (3)

— — ( 6,382 )

Unit repurchases from Occidental (4)

1 unchanged sentence

_________________________________________________________________________________________

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

(1) Represents common and general partner unit distributions paid to Occidental pursuant to the partnership agreement of the Partnership (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 4 and Note 5 ).

(3) The Partnership repurchased 2.5 million common units from Occidental during the year ended December 31, 2021 (see Note 5 ).

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:

(3) Included in Other cash flows from financing activities in the consolidated statements of cash flows.

(4) Represents common units repurchased from Occidental (see Note 5 ).

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 materially from the Partnership’s consolidated financial statements:

Consolidated statements of operations

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_________________________________________________________________________________________

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

(1) Includes (i) an intercompany service fee between the Partnership and WES Operating and (ii) equity - based compensation expense allocated to WES Operating by Occidental, which is not reimbursed to Occidental and is reflected as a contribution to partners’ capital in the consolidated statements of equity and partners’ capital (see Incentive Plans within this Note 6 ).

Balances for the years ended December 31, 2021 and 2020, also include amounts charged by Occidental pursuant to the shared services agreement (see Services Agreement within this Note 6 ).

Consolidated balance sheets

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Accounts receivable, net $ 313,937 $ 180,205

Other current assets 1,487 12,490

Other assets 28,459 45,494

Accounts and imbalance payables (1)

76,131 97,749

(1) As of December 31, 2021, includes balances related to transactions between the Partnership and WES Operating.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED-PARTY TRANSACTIONS

Accrued liabilities 11,439 13,597

_________________________________________________________________________________________

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

Consolidated statements of cash flows

5 unchanged sentences

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

Includes distributions made from WES Operating to the Partnership during the years ended December 31, 2021 and 2020, that were used by the Partnership to repurchase common units.

Includes distributions made from WES Operating to the Partnership that were used by the Partnership to repurchase common units.

See Note 4 and Note 5 .

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Produced - water throughput attributable to production owned or controlled by Occidental was 80 %, 87 %, and 87 % for the years ended December 31, 2022, 2021, and 2020, respectively.

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

If such dispute is resolved in a manner adverse to the Partnership, such resolution could have a negative impact on 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

The Partnership is currently discussing varying interpretations of certain contractual provisions 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 discussions are 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.

4 unchanged sentences

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

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

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED-PARTY TRANSACTIONS

This contingent payment obligation ended as of September 30, 2022.

Commodity purchase and sale agreements.

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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 II, Item 7 of this Form 10-K).

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 Reconciliation of Non-GAAP Financial Measures under Part II, Item 7 of this Form 10-K).

Marketing Transition Services Agreement.

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

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

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

During the year ended December 31, 2020, Occidental provided marketing-related services to certain of the Partnership’s subsidiaries (the “Marketing Transition Services Agreement”).

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

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 ROU asset, included in Other assets on the consolidated balance sheets, was recognized during the first quarter of 2021.

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

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

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.

The ROU asset is being 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 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.

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

See Note 14 .

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED-PARTY TRANSACTIONS

Related-party expenses.

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

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED-PARTY TRANSACTIONS

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”).

Prior to December 31, 2019, the Partnership and WES Operating had separate omnibus agreements with Occidental that were terminated as part of the December 2019 Agreements.

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.

3 unchanged sentences

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

As of December 31, 2021, $ 2.2 million of estimated unrecognized compensation expense attributable to the Incentive Plans will be allocated to the Partnership over a weighted-average period of 0.5 years.

December 2019 Agreements.

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

Merger transactions.

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

Construction reimbursement agreements and purchases from related parties .

As of December 31, 2022, there is no unrecognized compensation expense attributable to the Incentive Plans.

Construction reimbursement agreements and purchases and sales with 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.

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

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

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.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED-PARTY TRANSACTIONS

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 (see Note 5 ).

APCWH Note Payable.

In June 2017, in connection with funding the construction of the APC water systems that were acquired as part of the AMA acquisition, APC Water Holdings 1, LLC (“APCWH”) entered into an eight-year note payable agreement with Anadarko.

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

The APCWH Note Payable was repaid at Merger completion (see Note 1 ).

Commodity-price swap agreements.

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

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

For the year ended December 31, 2019, net gains (losses) on commodity-price swap agreements were $( 0.7 ) million (due to settlement of 2018 activity in 2019) and the capital contribution from Anadarko was $ 7.4 million.

Customer concentration.

6 unchanged sentences

income, net Contributions Distributions Distributions

Divestitures Balance at December 31, 2020

Fort Union $ ( 610 ) $ — $ ( 544 ) $ — $ — $ — $ 1,154 $ —

Balance at December 31, 2021

White Cliffs $ 45,623 $ — $ 780 $ — $ ( 199 ) $ ( 5,451 ) $ 40,753

12 unchanged sentences

Total $ 1,224,813 $ ( 11,805 ) $ 204,645 $ 4,435 $ ( 213,516 ) $ ( 41,385 ) $ 1,167,187

_________________________________________________________________________________________

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

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

thousands Balance at December 31, 2021 Other-than-temporary

income, net Contributions Distributions Distributions

Balance at December 31, 2021

Acquisitions and Divestitures Balance at December 31, 2022

White Cliffs $ 40,753 $ ( 19,883 ) $ ( 1,086 ) $ — $ ( 32 ) $ ( 3,657 ) $ — $ 16,095

18 unchanged sentences

EQUITY INVESTMENTS

The investment balance in White Cliffs at December 31, 2021, is $ 4.6 million less than the Partnership’s underlying equity in White Cliffs’ net assets, primarily due to the Partnership recording the acquisition of its initial 0.4 % interest in White Cliffs at Anadarko’s historic carrying value.

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

The investment balance in Rendezvous at December 31, 2021, includes $ 27.2 million for the purchase price allocated to the investment in Rendezvous in excess of the historic cost basis of WGRI, the entity that previously owned the interest in Rendezvous, which Anadarko acquired in August 2006.

The investment balance in White Cliffs at December 31, 2022, is $ 23.9 million less than the Partnership’s underlying equity in White Cliffs’ net assets.

During the year ended December 31, 2022, the Partnership recognized an impairment loss of $ 19.9 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 $ 16.1 million, using the income approach and Level-3 fair value inputs, due to a reduction in estimated future cash flows resulting from lower forecasted producer throughput.

The investment balance in Rendezvous at December 31, 2022, includes $ 23.9 million for the purchase price allocated to the investment in Rendezvous in excess of the historic cost basis of Western Gas Resources, Inc.

(“WGRI”), the entity that previously owned the interest in Rendezvous, which Anadarko acquired in August 2006.

This excess balance is attributable to the difference between the fair value and book value of such gathering and treating facilities (at the time WGRI was acquired by Anadarko) and will be amortized to Equity income, net – related parties in the consolidated statements of operations over the remaining estimated useful life of those facilities.

3 unchanged sentences

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

The investment balance in Ranch Westex at December 31, 2021, was $ 36.1 million less than the Partnership’s underlying equity in Ranch Westex’s net assets.

During the year ended December 31, 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.

During the year ended December 31, 2020, the Partnership recognized an impairment loss of $ 29.4 million that resulted from a decline in value below the carrying value, which was determined to be other than temporary in nature.

In September 2022, the Partnership acquired the remaining 50 % interest in Ranch Westex from a third party.

Subsequent to the acquisition, the Partnership is the sole owner and operator of the asset and Ranch Westex is no longer accounted for under the equity method of accounting.

During the years ended December 31, 2021 and 2020, the Partnership recognized impairment losses of $ 11.8 million and $ 29.4 million, respectively, that resulted from a decline in value below the carrying value, which was determined to be other than temporary in nature.

In November 2022, the Partnership sold its 15.00 % interest in Cactus II to two third parties.

Management evaluates its equity investments for impairment whenever events or changes in circumstances indicate that the carrying value of such investments may have experienced a decline in value that is other than temporary.

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federal income tax purposes;

therefore, our federal statutory rate is zero percent.

therefore, the federal statutory rate is zero percent.

However, income apportionable to Texas is subject to Texas margin tax.

Income attributable to the AMA assets prior to and including February 2019 was subject to federal and state income tax.

Income earned on the AMA assets for periods subsequent to February 2019 was subject only to Texas margin tax on income apportionable to Texas.

For the year ended December 31, 2021, the variance from the federal statutory rate was primarily impacted by a state margin rate reduction associated with Occidental’s settlement of state audit matters and our Texas margin tax liability.

For the year ended December 31, 2020, the variance from the federal statutory rate was primarily due to our Texas margin tax liability.

For the year ended December 31, 2019, the variance from the federal statutory rate primarily was due to federal and state taxes on pre-acquisition income attributable to assets previously acquired from Anadarko, and our share of applicable Texas margin tax.

For the years ended December 31, 2022 and 2020, the variance from the federal statutory rate was primarily due to the Texas margin tax liability.

The components of income tax expense (benefit) are as follows:

1 unchanged sentence

thousands 2022 2021 2020

Current income tax expense (benefit)

Federal income tax expense (benefit) $ — $ — $ 5,550

State income tax expense (benefit) ( 37 ) 2,702 313

Total current income tax expense (benefit) ( 37 ) 2,702 5,863

Deferred income tax expense (benefit)

Federal income tax expense (benefit) — — 2,782

State income tax expense (benefit) ( 9,770 ) 3,296 4,827

Total deferred income tax expense (benefit) ( 9,770 ) 3,296 7,609

Current state income tax expense (benefit) $ 2,188 $ ( 37 ) $ 2,702

Deferred state income tax expense (benefit) 1,999 ( 9,770 ) 3,296

Total income tax expense (benefit) $ 4,187 $ ( 9,807 ) $ 5,998

9 unchanged sentences

Adjustments resulting from:

Federal taxes on pre-acquisition income attributable to assets acquired from Anadarko — — 8,332

Texas margin tax expense (benefit) (1)

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

Long-lived asset and other impairments.

During the year ended December 31, 2021, the Partnership recognized impairments of $ 30.5 million, primarily attributable to (i) $ 14.2 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 year ended December 31, 2020, the Partnership recognized impairments of $ 203.9 million, primarily due to $ 150.2 million of impairments for assets located in Wyoming and Utah.

Long-lived asset impairments.

During the year ended December 31, 2021, the Partnership recognized a long-lived asset impairment of $ 14.2 million at the DJ Basin complex due to cancellation of projects.

During the year ended December 31, 2020, the Partnership recognized a long-lived asset impairment of $ 150.2 million 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.

Long-lived asset and other impairments on the consolidated statements of operations also includes a $ 29.4 million other-than-temporary impairment for the year ended December 31, 2020, of the Partnership’s investment in Ranch Westex.

The remaining impairments of $ 24.3 million were primarily at the DJ Basin complex and DBM oil system due to the cancellation of projects and impairments of rights - of - way.

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

Potential future long-lived asset impairments.

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

The remaining long-lived asset impairments of $ 24.3 million were primarily at the DJ Basin complex and DBM oil system due to the cancellation of projects and impairments of rights - of - way.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

67 unchanged sentences

Contract liabilities 20,903 27,763 20,903 27,763

Accrued payroll and benefits 44,855 41,311 — 20

Other 60,092 44,094 47,596 32,829

12 unchanged sentences

Carrying amount of asset retirement obligations at end of year $ 300,514 $ 308,209

Revisions in estimated liabilities for the year ended December 31, 2020, primarily related to a reduction in expected settlement costs across several of the Partnership’s assets, with the largest decreases at the Third Creek gathering system, DJ Basin complex, Hilight system, and West Texas complex.

Revisions in estimated liabilities for the year ended December 31, 2022, primarily related to a reduction in expected settlement costs at the West Texas and Brasada complexes, as well as the DBM oil and DBM water systems, partially offset by an increase in expected settlement costs at the Red Desert, Granger, and DJ Basin complexes, and at the Highlight system.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

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Short - term debt

4.000 % Senior Notes due 2022

Floating - Rate Senior Notes due 2023

$ 213,138 $ 213,121 $ 214,823 $ — $ — $ —

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Long - term debt

4.000 % Senior Notes due 2022

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

Floating - Rate Senior Notes due 2023

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1,000,000 983,945 829,804 1,000,000 983,709 1,183,514

RCF 375,000 375,000 375,000 — — —

Finance lease liabilities 4,160 4,160 4,160 1,533 1,533 1,533

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RCF borrowings 480,000

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

Issuance of 3.100 % Senior Notes due 2025

Issuance of 4.050 % Senior Notes due 2030

Issuance of 5.250 % Senior Notes due 2050

Finance lease liabilities 24,035

Repayments of RCF borrowings ( 480,000 )

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

Repayment of 5.375 % Senior Notes due 2021

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

Other ( 30,747 )

Balance at December 31, 2020 $ 7,854,702

RCF borrowings 480,000

Repayments of RCF borrowings ( 480,000 )

Repayment of 3.100 % Senior Notes due 2025

Repayment of 3.950 % Senior Notes due 2025

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

Repayment of 4.650 % Senior Notes due 2026

Finance lease liabilities ( 26,582 )

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

RCF borrowings 1,390,000

Repayments of RCF borrowings ( 1,015,000 )

Repayment of 4.000 % Senior Notes due 2022

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

During the second quarter of 2022, WES Operating (i) redeemed the total principal amount outstanding of the 4.000 % Senior Notes due 2022 at par value and (ii) purchased and retired $ 1.4 million of the 3.100 % Senior Notes due 2025 via open-market repurchases.

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).

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.

During the year ended December 31, 2021, losses of $ 24.9 million were recognized for the retirement of these notes.

During the year ended December 31, 2020, WES Operating purchased and retired $ 218.0 million of certain of its senior notes and Floating-Rate Senior Notes via open-market repurchases, and gains of $ 13.5 million were recognized for the early retirement of these notes.

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

For the year ended December 31, 2021, losses of $ 24.9 million were recognized for the early retirement of these notes.

As of December 31, 2022, the Floating-Rate Senior Notes were classified as short-term debt on the consolidated balance sheet, and in January 2023, WES Operating redeemed the total principal amount outstanding at par value with cash on hand.

As of December 31, 2022, WES Operating was in compliance with all covenants under the relevant governing indentures.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

1 unchanged sentence

DEBT AND INTEREST EXPENSE

As of December 31, 2021, the 4.000 % Senior Notes due 2022 were classified as short-term debt on the consolidated balance sheet.

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

Revolving credit facility.

WES Operating’s $ 2.0 billion RCF is expandable to a maximum of $ 2.5 billion, and matures in February 2025 for each extending lender (see Note 1) .

In June 2022, WES Operating entered into an amendment to its $ 2.0 billion senior unsecured revolving credit facility (“RCF”), which is expandable to a maximum of $ 2.5 billion, to, among other things, (i) extend the maturity date applicable to the loans and commitments of certain lenders totaling $ 1.6 billion to February 2026, (ii) provide for the ability of WES Operating to extend the maturity date by one year on up to two additional occasions, (iii) provide that loans under the RCF with a fixed interest rate for a specified period bear interest based on the Secured Overnight Financing Rate (“SOFR”) instead of the London Interbank Offered Rate (“LIBOR”), and (iv) include an additional level of pricing if WES Operating’s senior unsecured debt rating is less than or equal to BB/Ba2/BB (Standard and Poor’s / Moody’s Investors Service / Fitch Ratings).

The non - extending lender’s commitments mature in February 2025 and represent $ 400.0 million out of $ 2.0 billion of total commitments from all lenders.

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

The RCF bears interest at an Adjusted Term SOFR (as defined in the RCF amendment), plus applicable margins ranging from 1.00 % to 1.70 %, or an alternate base rate equal to the greatest of (a) the Prime Rate, (b) the Federal Funds Effective Rate plus 0.50 %, or (c) Adjusted Term SOFR for a one-month tenor in effect on such day plus 1.00 %, in each case plus applicable margins currently ranging from zero to 0.70 %, based on WES Operating’s senior unsecured debt rating.

A required quarterly facility fee is paid ranging from 0.125 % to 0.300 % of the commitment amount (whether drawn or undrawn), which also is based on the senior unsecured debt rating.

As of December 31, 2022, there were $ 375.0 million of outstanding borrowings and $ 5.1 million of outstanding letters of credit, resulting in $ 1.6 billion of available borrowing capacity under the RCF.

As of December 31, 2022 and 2021, the interest rate on any outstanding RCF borrowings was 5.92 % and 1.60 %, respectively.

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

The RCF bears interest at the London Interbank Offered Rate (“LIBOR”), plus applicable margins ranging from 1.00 % to 1.50 %, or an alternate base rate equal to the greatest of (a) the Prime Rate, (b) the Federal Funds Effective Rate plus 0.50 %, or (c) LIBOR plus 1.00 %, in each case plus applicable margins currently ranging from zero to 0.50 %, based on WES Operating’s senior unsecured debt rating.

A required quarterly facility fee is paid ranging from 0.125 % to 0.250 % of the commitment amount (whether drawn or undrawn), which also is based on the senior unsecured debt rating.

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

As of December 31, 2022, the outstanding borrowings under the RCF were classified as long-term debt on the consolidated balance sheet and WES Operating was in compliance with all covenants under the RCF.

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.

Interest-rate swaps.

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

Pursuant to these swap agreements, WES Operating received a floating interest rate indexed to the three-month LIBOR and paid a fixed interest rate.

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

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

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

For the year ended December 31, 2020, WES Operating made cash payments of $ 25.6 million.

For the year ended December 31, 2020, WES Operating made cash payments totaling $ 25.6 million to settle interest rate swaps that were entered into in 2018 and 2019.

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

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

For the year ended December 31, 2019, non-cash losses of $ 125.3 million were recognized, which are included in Other income (expense), net in the consolidated statements of operations.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DEBT AND INTEREST EXPENSE

Finance lease liabilities.

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thousands 2022 2021 2020

Third parties

Long - term and short - term debt

3 unchanged sentences

Capitalized interest 5,636 3,624 4,774

Total interest expense – third parties ( 376,512 ) ( 380,052 ) ( 301,316 )

Related parties

APCWH Note Payable — — ( 1,833 )

Finance lease liabilities — ( 6 ) ( 137 )

Total interest expense – related parties — ( 6 ) ( 1,970 )

Interest expense $ ( 333,939 ) $ ( 376,512 ) $ ( 380,058 )

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EQUITY-BASED COMPENSATION

The general partner has the authority to grant equity compensation awards to its independent directors, executive officers, and employees under the (i) Western Gas Equity Partners, LP 2012 Long-Term Incentive Plan (the “2012 LTIP”), (ii) the Western Gas Partners, LP 2017 Long-Term Incentive Plan (the “2017 LTIP,” assumed by the Partnership in connection with the Merger), and (iii) the Western Midstream Partners, LP 2021 Long - Term Incentive Plan (the “2021 LTIP”).

These plans are collectively referred to as the “WES LTIPs.” The 2012 LTIP, the 2017 LTIP, and the 2021 LTIP permit the issuance of up to 3,000,000 , 3,431,251 , and 9,500,000 units, respectively, of which 484,909 , 2,308,578 , and 9,500,000 units, respectively, remained available for future issuance as of December 31, 2021.

The general partner has the authority to grant equity compensation awards to its outside directors, executive officers, and employees under the Western Gas Partners, LP 2017 Long-Term Incentive Plan (the “2017 LTIP”) and the Western Midstream Partners, LP 2021 Long - Term Incentive Plan (the “2021 LTIP”).

These plans are collectively referred to as the “WES LTIPs.” The 2017 LTIP and the 2021 LTIP permit the issuance of up to 3,431,251 and 9,500,000 units, respectively, of which 1,928,415 and 9,500,000 units, respectively, remained available for future issuance as of December 31, 2022.

The Western Gas Equity Partners, LP 2012 Long-Term Incentive Plan expired during the year ended December 31, 2022.

On March 22, 2021, the Board approved the 2021 LTIP.

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The Board awards phantom units (the “Awards”) to the Partnership’s executive officers under the WES LTIPs.

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

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

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

2 unchanged sentences

During the years ended December 31, 2022, 2021, and 2020, the Partnership issued 13,754 , 21,681 , and 48,070 common units, respectively, as in-kind distributions under such Awards.

Prior to vesting, the Time-Based Awards granted in 2021 pay cash distributions ratably.

The TUR and ROA Awards granted in 2021 pay cash distributions at vesting based on actual performance.

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

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

Prior to vesting, the Time-Based Awards granted in 2021 and 2022 pay distribution equivalents in cash ratably.

The TUR and ROA Awards granted in 2021 and 2022 pay cash distributions at vesting based on actual performance.

In addition, time-vested phantom units may be awarded under the WES LTIPs to non-executive employees and outside directors of the Partnership, which vest ratably over a period of three years and one year from the grant date, respectively.

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

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

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

The fair value of the ROA awards is adjusted quarterly based on the estimated performance rating at vesting.

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

The fair value of the ROA Awards is based on the observable market price of the Partnership’s units on the grant date of the award and compensation expense is adjusted quarterly based on the estimated performance rating at vesting.

The total fair value of phantom units vested was $ 21.7 million, $ 8.5 million, and $ 0.5 million for the years ended December 31, 2022, 2021, and 2020, respectively, based on the market price at the vesting date.

11 unchanged sentences

Forfeited 21.12 ( 160,175 ) 16.83 ( 75,921 ) 16.27 ( 81,664 )

Converted (1)

— — — — 33.46 12,232

Non-vested units at end of year 21.33 1,689,030 16.97 1,775,672 15.69 1,307,606

________________________________________________________________________________________

(1) At closing of the Merger, 8,020 WES Operating phantom units awarded under the 2017 LTIP converted into phantom units of the Partnership under the 2012 LTIP.

The following table summarizes TUR Awards activity under the WES LTIPs for the years ended December 31, 2022, 2021, and 2020:

Weighted-Average Grant-Date Fair Value Units Weighted-Average Grant-Date Fair Value Units

2022 2021 2020

Weighted-Average Grant-Date Fair Value Units Weighted-Average Grant-Date Fair Value Units Weighted-Average Grant-Date Fair Value Units

Non-vested units at beginning of year $ 21.17 325,217 $ 17.79 108,481 $ — —

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The following table summarizes ROA Awards activity under the WES LTIPs for the years ended December 31, 2022, 2021, and 2020:

Weighted-Average Grant-Date Fair Value Units Weighted-Average Grant-Date Fair Value Units

2022 2021 2020

Weighted-Average Grant-Date Fair Value Units Weighted-Average Grant-Date Fair Value Units Weighted-Average Grant-Date Fair Value Units

Non-vested units at beginning of year $ 16.01 325,217 $ 16.27 108,481 $ — —

9 unchanged sentences

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.

Management regularly monitors the remediation and reclamation process and the liabilities recorded and believes its environmental obligations are adequate to fund remedial actions required to comply with present laws and regulations, and that the ultimate liability for these matters, if any, will not differ materially from recorded amounts nor materially affect the overall results of operations, cash flows, or financial condition.

5 unchanged sentences

Other commitments.

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 12 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 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 and offload 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 12 months, primarily relate to construction, expansion, and asset - integrity projects at the West Texas complex, DBM oil system, DBM water systems, and DJ Basin complex.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data