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Item 8. Financial Statements and Supplementary Data

2024-02-21 compared with 2023-02-22 · 224 added, 213 removed, 1450 unchanged (23% of the section changed)

31 unchanged sentences

Commitments and Contingencies

Subsequent Events

MANAGEMENT’S ASSESSMENT OF INTERNAL CONTROL OVER FINANCIAL REPORTING

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Based on our assessment using the COSO criteria, we concluded the Partnership’s and WES Operating’s internal control over financial reporting was effective as of December 31, 2023.

The Partnership acquired Meritage Midstream Services II, LLC, in October 2023 and management excluded from its assessment of the effectiveness of the Partnership’s internal control over financial reporting as of December 31, 2023, Meritage Midstream Services II, LLC’s internal control over financial reporting associated with total assets of $1.01 billion and total revenues of $41.4 million included in the consolidated financial statements of Western Midstream Partners, LP and subsidiaries as of and for the year ended December 31, 2023.

KPMG LLP, the Partnership’s independent registered public accounting firm, has issued an attestation report on the effectiveness of the Partnership’s internal control over financial reporting as of December 31, 2023.

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Partnership as of December 31, 2023 and 2022, the related consolidated statements of operations, equity and partners’ capital, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements), and our report dated February 21, 2024 expressed an unqualified opinion on those consolidated financial statements.

The Partnership acquired Meritage Midstream Services II, LLC during 2023, and management excluded from its assessment of the effectiveness of the Partnership’s internal control over financial reporting as of December 31, 2023, Meritage Midstream Services II, LLC’s internal control over financial reporting associated with total assets of $1.01 billion and total revenues of $41.4 million included in the consolidated financial statements of the Partnership as of and for the year ended December 31, 2023.

Our audit of internal control over financial reporting of the Partnership also excluded an evaluation of the internal control over financial reporting of Meritage Midstream Services II, LLC.

Basis for Opinion

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52,884 20,585 30,543

Goodwill impairment — — 441,017

Total operating expenses (3)

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Operating income (loss) 1,379,563 1,587,888 1,336,271

Interest income – Anadarko note receivable — — 11,736

Interest expense ( 348,228 ) ( 333,939 ) ( 376,512 )

22 unchanged sentences

(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) Total operating expenses includes related-party amounts of $( 68.0 ) million, $( 18.0 ) million, and $ 86.2 million for the years ended December 31, 2023, 2022, and 2021, respectively, all primarily related to changes in imbalance positions.

(4) See Note 5.

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General partner units ( 9,060,641 units issued and outstanding at December 31, 2023 and 2022)

2,105 ( 8,882 )

Total partners’ capital 2,897,424 2,971,709

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Other assets also includes $ 96.3 million and $ 60.4 million of materials and supplies inventory as of December 31, 2023 and 2022, respectively.

(2) Total assets includes related - party amounts of $ 1.3 billion and $ 1.4 billion as of December 31, 2022 and 2021, respectively, which includes related - party Accounts receivable, net of $ 313.9 million and $ 180.2 million as of December 31, 2022 and 2021, respectively.

(2) Total assets includes related - party amounts of $ 1.3 billion as of December 31, 2023 and 2022, which includes related - party Accounts receivable, net of $ 358.1 million and $ 313.9 million as of December 31, 2023 and 2022, respectively.

(3) Total liabilities includes related - party amounts of $ 378.8 million and $ 312.3 million as of December 31, 2023 and 2022, respectively.

12 unchanged sentences

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

Unit exchange with Occidental (1)

( 256,640 ) — ( 5,238 ) ( 261,878 )

Unit repurchases (1)

( 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 (3)

17,589 — — 17,589

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

Other ( 4,336 ) — — ( 4,336 )

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( 134,602 ) — — ( 134,602 )

Contributions of equity - based compensation from Occidental

2,277 — — 2,277

Equity - based compensation expense

32,005 — — 32,005

Net contributions from (distributions to) related parties 1,423 — — 1,423

Other ( 15,474 ) — — ( 15,474 )

2 unchanged sentences

(1) See Note 5 .

(2) See Note 5 .

(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.

9 unchanged sentences

52,884 20,585 30,543

Goodwill impairment — — 441,017

Non - cash equity - based compensation expense

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(Gain) loss on early extinguishment of debt ( 15,378 ) ( 91 ) 24,944

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

Other 442 510 260

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Capital expenditures ( 735,080 ) ( 487,228 ) ( 313,674 )

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

Acquisitions from third parties ( 877,746 ) ( 40,127 ) —

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Repayments of debt ( 1,967,928 ) ( 1,518,548 ) ( 1,432,966 )

Commercial paper borrowings (repayments), net

Increase (decrease) in outstanding checks 3,516 2,206 ( 21,631 )

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( 134,602 ) ( 487,590 ) ( 217,465 )

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

Other ( 18,626 ) ( 13,644 ) ( 10,849 )

Net cash provided by (used in) financing activities ( 67,912 ) ( 1,398,532 ) ( 1,752,237 )

3 unchanged sentences

Supplemental disclosures

Non-cash unit exchange with Occidental (1)

$ — $ — $ ( 261,878 )

Interest paid, net of capitalized interest $ 326,948 $ 355,363 $ 375,007

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Western Midstream Holdings, LLC (as general partner of Western Midstream Partners, LP)

Western Midstream Operating, LP:

Opinion on the Consolidated Financial Statements

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52,884 20,585 30,543

Goodwill impairment — — 441,017

Total operating expenses (3)

2 unchanged sentences

Operating income (loss) 1,382,506 1,590,544 1,339,203

Interest income – Anadarko note receivable — — 11,736

Interest expense ( 348,228 ) ( 333,939 ) ( 376,512 )

7 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.

(1) Total revenues and other includes $ 1.8 billion, $ 1.8 billion, and $ 1.6 billion for the years ended December 31, 2023, 2022, and 2021, 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) Total operating expenses includes related-party amounts of $( 64.7 ) million, $( 15.0 ) million, and $ 89.0 million for the years ended December 31, 2023, 2022, and 2021, respectively, all primarily related to changes in imbalance positions.

See accompanying Notes to Consolidated Financial Statements.

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Other assets also includes $ 96.3 million and $ 60.4 million of materials and supplies inventory as of December 31, 2023 and 2022, respectively.

(3) Total liabilities includes related - party amounts of $ 409.5 million and $ 356.0 million as of December 31, 2023 and 2022, respectively.

9 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 (1)

10,087 — 10,087

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

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

11 unchanged sentences

Distributions to WES Operating unitholders ( 1,142,217 ) — ( 1,142,217 )

Contributions of equity - based compensation from Occidental

2,277 — 2,277

Contributions of equity - based compensation from WES

31,424 — 31,424

Net contributions from (distributions to) related parties 1,423 — 1,423

Balance at December 31, 2023

$ 3,027,031 $ 25,323 $ 3,052,354

(1) See Note 5 .

(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.

9 unchanged sentences

52,884 20,585 30,543

Goodwill impairment — — 441,017

Non - cash equity - based compensation expense

8 unchanged sentences

(Gain) loss on early extinguishment of debt ( 15,378 ) ( 91 ) 24,944

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

Other 442 510 260

6 unchanged sentences

Capital expenditures ( 735,080 ) ( 487,228 ) ( 313,674 )

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

Acquisitions from third parties ( 877,746 ) ( 40,127 ) —

8 unchanged sentences

Repayments of debt ( 1,967,928 ) ( 1,518,548 ) ( 1,432,966 )

Commercial paper borrowings (repayments), net

Increase (decrease) in outstanding checks 3,464 2,309 ( 21,699 )

9 unchanged sentences

Supplemental disclosures

Non-cash unit exchange with Occidental (1)

$ — $ — $ ( 261,878 )

Interest paid, net of capitalized interest $ 326,948 $ 355,363 $ 375,007

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and gathering and disposing of produced water.

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.

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

As of December 31, 2023, the Partnership’s assets and investments consisted of the following:

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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 (see Note 3 and Note 7) :

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 7) :

Percentage Interest

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

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

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

Noncontrolling interests.

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Level 3 – Inputs that are not observable from objective sources, such as management’s internally developed assumptions used in pricing an asset or liability (for example, an estimate of future cash flows used in management’s internally developed present value of future cash flows model that underlies the fair value measurement).

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

In determining fair value, management uses observable market data when available, or models that incorporate observable market data.

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However, the assumptions used reflect a market participant’s view of long-term revenues, costs, and other factors, and are consistent with assumptions used in the Partnership’s business plans and investment decisions.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

Management uses relevant observable inputs available for the valuation technique employed to estimate fair value.

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The fair value of debt reflects any premium or discount for the difference between the stated interest rate and the quarter-end market interest rate and is based on quoted market prices for identical instruments, if available, or based on valuations of similar debt instruments.

See Note 13 .

The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable reported on the consolidated balance sheets approximate fair value due to the short-term nature of these items.

As such, debt fair values as presented in Note 13 use Level-2 inputs.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and outstanding borrowings on the revolving credit facility and commercial paper program reported on the consolidated balance sheets approximate fair value due to the short-term nature of these items.

Cash equivalents.

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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.

Volumes owed to or by the Partnership that are subject to monthly cash settlement are valued according to the terms of the contract as of the balance sheet dates and reflect market index prices.

Volumes owed to or by the Partnership that are subject to monthly cash settlement are valued according to the terms of the contract as of the balance sheet dates and generally reflect market index prices.

Other volumes owed to or by the Partnership are valued at the Partnership’s weighted-average cost as of the balance sheet dates and are settled in-kind.

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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.

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Materials and supplies inventory is reported in Other assets on the consolidated balance sheets.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

Property, plant, and equipment and other intangible assets.

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and gather and dispose of produced water in the United States.

In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.” The standard improves reportable segment disclosure requirements for public business entities primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit (referred to as the “significant expense principle”).

The standard will become effective for the Partnership for the fiscal year 2024 annual financial statements and interim financial statements thereafter and will be applied retrospectively for all prior periods presented in the financial statements, with early adoption permitted.

The Partnership plans to adopt the standard when it becomes effective beginning with the fiscal year 2024 annual financial statements.

The Partnership is currently evaluating the impact this guidance will have on disclosures in the Notes to Consolidated Financial Statements.

This standard will have no impact to the Partnership’s financial statements, but will result in additional disclosure.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

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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 through a charge to Goodwill impairment.

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

See Note 10 .

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Timing differences between amounts recognized in Service revenues – fee based and the amounts billed to customer are recognized as contract assets or contract liabilities, and are amortized over the related contract period.

Prior to April 1, 2020, the Partnership also recognized revenue and cost of product expense from marketing services performed on behalf of its customers by Occidental.

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

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 fees that require periodic rate redeterminations based on the related facility cost of service.

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Lease revenue (1)

— 179,251 223,643

Other 968 953 789

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

See Operating leases within Note 6.

See Note 6 and Note 14.

Contract balances.

Receivables from customers, which are included in Accounts receivable, net on the consolidated balance sheets were $ 661.6 million and $ 545.0 million as of December 31, 2023 and 2022, respectively.

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.

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

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

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Cumulative catch-up adjustment for change in estimated consideration ( 4,363 ) 1,200

Amounts acquired with the acquisition of Meritage (1)

Contract liabilities balance at end of year

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Total contract liabilities from contracts with customers $ 445,499 $ 369,285

_________________________________________________________________________________________

(1) See Note 3.

Transaction price allocated to remaining performance obligations.

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ACQUISITIONS AND DIVESTITURES

On October 13, 2023, the Partnership closed on the acquisition of Meritage Midstream Services II, LLC (“Meritage”) for $ 885.0 million (subject to certain customary post-closing adjustments) funded with cash, including proceeds from the Partnership’s $ 600.0 million senior note issuance in September 2023 (see Note 13) and borrowings on the senior unsecured revolving credit facility (“RCF”).

The $ 877.7 million included as Acquisitions from third parties in the consolidated statements of cash flows includes the cash purchase price adjusted for working capital and certain customary post-closing adjustments, and reduced by the $ 38.4 million of cash acquired (as presented in the table below).

The assets acquired, located in Converse, Campbell, and Johnson counties, Wyoming, include approximately 1,500 miles of high- and low-pressure natural-gas gathering pipelines, approximately 380 MMcf/d of natural-gas processing capacity, and the Thunder Creek NGL pipeline, which is a 120 mile, 38 MBbls/d FERC-regulated NGL pipeline that connects to the processing facility.

The acquisition expands the Partnership’s existing Powder River Basin asset base, increasing total natural-gas processing capacity in that region to 440 MMcf/d.

The Meritage acquisition has been accounted for under the acquisition method of accounting.

The assets acquired and liabilities assumed in the Meritage acquisition were recorded in the consolidated balance sheet at their estimated fair values as of the acquisition date.

Results of operations attributable to the Meritage acquisition were included in the Partnership’s consolidated statements of operations beginning on the acquisition date in the fourth quarter of 2023.

For the year ended December 31, 2023, acquisition-related transaction costs of $ 6.1 million, consisting primarily of third-party consulting and legal fees, are included in General and administrative expenses in the consolidated statements of operations.

The following is the preliminary acquisition-date fair value as of December 31, 2023, for the assets acquired and liabilities assumed in the Meritage acquisition.

The preliminary fair values are subject to change within the measurement period (up to one year from the acquisition date), pending a final determination of the fair value of certain customary post-closing working capital adjustments.

Assets acquired:

Cash and cash equivalents $ 38,412

Accounts receivable, net 34,060

Other current assets 1,980

Property, plant, and equipment 925,905

Other assets 6,498

Total assets acquired 1,006,855

Liabilities assumed:

Accounts payable and accrued liabilities

Other current liabilities 5,451

Asset retirement obligation 22,156

Other liabilities 28,356

Total liabilities assumed

Net assets acquired $ 916,159

The acquisition-date fair values are based on an assessment of the fair value of the assets acquired and liabilities assumed in the Meritage acquisition using inputs that are not observable in the market and thus represent Level 3 inputs.

The fair values of the processing plants, gathering system, and related facilities and equipment are based on market and cost approaches.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ACQUISITIONS AND DIVESTITURES

The following table presents pro forma condensed financial information of the Partnership as if the Meritage acquisition had occurred on January 1, 2022:

Year Ended December 31,

Revenues and other $ 3,239,035 $ 3,408,767

Net income (loss) attributable to Western Midstream Partners, LP 1,003,204 1,213,106

The following table presents pro forma condensed financial information of WES Operating (which are included in the Partnership’s pro forma condensed financial information) as if the Meritage acquisition had occurred on January 1, 2022:

Year Ended December 31,

Revenues and other $ 3,239,035 $ 3,408,767

Net income (loss) attributable to Western Midstream Operating, LP 1,026,800 1,240,623

The pro forma information is presented for illustration purposes only and is not necessarily indicative of the operating results that would have occurred had the Meritage acquisition been completed at the assumed date, nor is it necessarily indicative of future operating results of the combined entity.

The pro forma adjustments reflect pre-acquisition results of the Meritage acquisition including (i) adjustments of $ 105.0 million and $ 221.6 million for the years ended December 31, 2023 and 2022, respectively, to decrease revenues and cost of product to apply the Partnership’s revenue recognition policy to record revenue and cost of product on a net basis within revenues for certain contracts;

(ii) adjustments of $ 5.0 million and $ 2.1 million for the years ended December 31, 2023 and 2022, respectively, to decrease depreciation and amortization expense based on the acquisition-date fair value of property, plant, and equipment and estimated useful lives;

and (iii) adjustments of $ 1.8 million to decrease interest expense and $ 20.9 million to increase interest expense for the years ended December 31, 2023 and 2022, respectively, related to the $ 600.0 million senior note issuance in September 2023 and borrowings on the RCF to finance the Meritage acquisition.

The pro forma adjustments include estimates and assumptions based on currently available information.

Management believes the estimates and assumptions are reasonable, and the relative effects of the transaction are properly reflected.

The pro forma information reflects recurring adjustments, but does not reflect any cost savings or other synergies anticipated as a result of the Meritage acquisition, nor any future acquisition-related expenses.

The pro forma information in the table above includes $ 41.4 million of revenues and $ 24.6 million of operating expenses attributable to the assets acquired as part of the Meritage acquisition that are included in the Partnership’s and WES Operating’s consolidated statements of operations for the year ended December 31, 2023.

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.

5 unchanged sentences

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PARTNERSHIP DISTRIBUTIONS

Partnership distributions.

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.

Under its partnership agreement, the Partnership distributes all of its available cash to unitholders of record on the applicable record date within 55 days following each quarter’s end.

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.

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

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

4 unchanged sentences

Cash Distribution Distribution

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 $ 0.315 $ 132,969 May 14, 2021 April 30, 2021

6 unchanged sentences

December 31 0.500 196,569 February 13, 2023 February 1, 2023

$ 0.856 $ 336,987 May 15, 2023 May 1, 2023

June 30 0.5625 221,442 August 14, 2023 July 31, 2023

September 30 0.575 223,432 November 13, 2023 November 1, 2023

December 31 0.575 223,438 February 13, 2024 February 1, 2024

_________________________________________________________________________________________

(1) Includes the regular quarterly distribution of $ 0.500 per unit, or $ 196.8 million, as well as the Enhanced Distribution of $ 0.356 per unit discussed below.

To facilitate the distribution of available cash, during 2022 the Partnership adopted a financial policy that provided for an additional distribution (“Enhanced Distribution”) to be paid in conjunction with the regular first-quarter distribution of the following year (beginning in 2023), in a target amount equal to Free cash flow generated in the prior year after subtracting Free cash flow used for the prior year’s debt repayments, regular-quarter distributions, and unit repurchases.

This Enhanced Distribution is subject to Board discretion, the establishment of cash reserves for the proper conduct of the Partnership’s business and is also contingent on the attainment of prior year-end net leverage thresholds (the ratio of total principal debt outstanding less total cash on hand as of the end of such period, as compared to trailing-twelve-months Adjusted EBITDA), after taking the Enhanced Distribution for such prior year into effect.

Free cash flow and Adjusted EBITDA are defined under the caption Reconciliation of Non-GAAP Financial Measures within Part II, Item 7 of this Form 10-K.

In April 2023, the Board approved an Enhanced Distribution of $ 0.356 per unit, or $ 140.1 million, related to the Partnership’s 2022 performance, which was paid in conjunction with the regular first-quarter 2023 distribution on May 15, 2023.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

1 unchanged sentence

PARTNERSHIP DISTRIBUTIONS

Available cash.

(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.

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

WES Operating partnership distributions.

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:

WES Operating made and/or declared the following cash distributions to its limited partners for the periods presented:

Quarters Ended

9 unchanged sentences

December 31 213,513 February 2023

March 31 $ 213,513 May 2022

$ 342,895 May 2023

June 30 226,260 August 2023

1 unchanged sentence

December 31 229,446 February 2024

_________________________________________________________________________________________

(1) Includes amounts related to the Enhanced Distribution discussed above.

In addition to the distributions above, during the years ended December 31, 2023 and 2022, WES Operating made distributions of $ 130.1 million and $ 463.8 million, respectively, to the Partnership and WGRAH.

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

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

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

6 unchanged sentences

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 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”).

In 2022, the Board authorized the Partnership to buy back up to $ 1.25 billion of the Partnership’s common units through December 31, 2024 (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, 2023, the Partnership repurchased 5,387,322 common units, which includes 5,100,000 common units repurchased from Occidental, for an aggregate purchase price of $ 134.6 million.

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, on the open market for an aggregate purchase price of $ 487.6 million.

The units were canceled immediately upon receipt.

As of December 31, 2023, the Partnership had an authorized amount of $ 627.8 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”).

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”).

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

The Partnership repurchased 8,707,869 and 2,368,711 common units on the open market during the years ended December 31, 2021 and 2020, respectively, for an aggregate purchase price of $ 167.2 million and $ 32.5 million, respectively.

The Partnership repurchased 8,707,869 common units on the open market during the years ended December 31, 2021, for an aggregate purchase price of $ 167.2 million.

In addition, the Partnership repurchased 2,500,000 common units from Occidental during the year ended December 31, 2021, for an aggregate purchase price of $ 50.2 million.

46 unchanged sentences

Gain (loss) on divestiture and other, net — ( 1,756 ) 420

Interest income – Anadarko note receivable — — 11,736

_________________________________________________________________________________________

1 unchanged sentence

(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 ).

(3) Balances for the years ended December 31, 2022 and 2021, include 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 ).

The balance for the year ended December 31, 2021, also includes 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

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Other liabilities (2)

335,320 268,399

Total liabilities 378,840 312,305

1 unchanged sentence

(1) See Note 7 .

(2) Includes contract liabilities from contracts with customers.

Consolidated statements of cash flows

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Capital expenditures — ( 470 ) ( 2,000 )

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

Contributions to equity investments – related parties ( 1,153 ) ( 9,632 ) ( 4,435 )

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

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

Finance lease payments (3)

— — ( 6,382 )

Unit repurchases from Occidental (3)

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

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

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_________________________________________________________________________________________

(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 ).

(1) Includes an intercompany service fee between the Partnership and WES Operating.

Balances for the years ended December 31, 2022 and 2021, include 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 ).

The balance for the year ended December 31, 2021, also includes amounts charged by Occidental pursuant to the shared services agreement (see Services Agreement within this Note 6 ).

Consolidated balance sheets

thousands 2023 2022

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

Other current assets $ 1,235 $ 1,487

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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.

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

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.

For this reason, Anadarko is not liable for any obligations under the Brasada gas processing agreement after June 30, 2023.

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

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

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

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

Marketing Transition Services Agreement.

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Operating leases.

As a result of the surface - use and salt - water disposal agreements being amended under the CUA (see Related-party commercial agreement below), these agreements are now classified as operating leases and a $ 30.0 million right-of-use (“ROU”) asset, included in Other assets on the consolidated balance sheets, was recognized during the first quarter of 2021.

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

Certain surface - use and salt - water disposal agreements between an affiliate of Occidental and certain wholly owned subsidiaries of the Partnership are classified as operating leases (see Related-party commercial agreement below).

In addition, the Partnership has entered into operating leases for corporate and shared field offices with Occidental as the lessor.

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.

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See Note 14 .

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED-PARTY TRANSACTIONS

Related-party expenses.

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

Operation and maintenance expense includes amounts accrued for or paid to related parties for field - related costs, shared field offices, and easements (see Related-party commercial agreement below) supporting the Partnership’s operations at certain assets.

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

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

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

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

See Marketing Transition Services Agreement in the section above.

Related - party expenses bear no direct relationship to related - party revenues, and third - party expenses bear no 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”).

Occidental performed certain centralized corporate functions for the Partnership and WES Operating pursuant to the agreement dated as of December 31, 2019, by and among Occidental, Anadarko, and WES Operating GP (“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.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RELATED-PARTY TRANSACTIONS

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 costs related to the Incentive Plans of $ 2.3 million, $ 10.1 million, and $ 14.6 million for the years ended December 31, 2022, 2021, and 2020, respectively.

General and administrative expense for the years ended December 31, 2022 and 2021, 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 costs related to the Incentive Plans of $ 2.3 million and $ 10.1 million for the years ended December 31, 2022 and 2021, respectively.

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

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 .

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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 (see Note 5 ).

Also, as a result of the amendments under the CUA, these agreements are 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 through 2038, the remaining term of the agreements.

Customer concentration.

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EQUITY INVESTMENTS

The following tables present the financial statement impact of the Partnership’s equity investments for the years ended December 31, 2021 and 2022:

The following tables present the financial statement impact of the Partnership’s equity investments:

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

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(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

thousands Balance at December 31, 2022 Equity

income, net Contributions Distributions Distributions

Acquisitions and Divestitures Balance at December 31, 2022

Balance at December 31, 2023

White Cliffs $ 16,095 $ 2,094 $ — $ ( 1,720 ) $ ( 3,221 ) $ 13,248

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Whitethorn LLC 146,595 ( 6,870 ) 132 6,398 ( 1,456 ) 144,799

Cactus II 171,294 — 11,696 — ( 11,835 ) ( 18,085 ) ( 153,070 ) —

Saddlehorn 104,191 24,003 — ( 23,545 ) ( 2,889 ) 101,760

1 unchanged sentence

Mi Vida 48,862 9,135 — ( 8,215 ) ( 4,358 ) 45,424

Ranch Westex 979 — 3,392 — ( 3,392 ) ( 8,376 ) 7,397 —

Red Bluff Express 108,959 14,324 321 ( 14,324 ) ( 2,358 ) 106,922

1 unchanged sentence

_________________________________________________________________________________________

(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.

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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.

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

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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Net property, plant, and equipment $ 9,655,016 $ 8,541,600

The cost of property classified as “Assets under construction” is excluded from capitalized costs being depreciated.

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

“Assets under construction” represents property that is not yet placed into productive service as of the respective balance sheet date and is excluded from capitalized costs being depreciated.

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.

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.

During the year ended December 31, 2023, the Partnership recognized a long-lived asset impairment of $ 52.1 million for assets located in the Rockies due to a reduction in estimated future cash flows resulting from a contract termination notice received in the first quarter of 2023.

This asset was impaired to its estimated fair value of $ 22.8 million.

The fair value was measured using the income approach and Level-3 fair value inputs.

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

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

The remaining 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.

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.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

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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:

The Partnership’s goodwill had 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.

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, and 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.

The Partnership’s annual qualitative goodwill impairment assessment as of October 1, 2022, indicated no further impairment.

Qualitative factors also were assessed in the fourth quarter of 2022 to review any changes in circumstances subsequent to the annual test.

This assessment also indicated no impairment.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

GOODWILL AND OTHER INTANGIBLES

As of December 31, 2023, the carrying value of goodwill for the gathering and processing reporting unit was zero and goodwill allocated to the transportation reporting unit was $ 4.8 million.

The Partnership’s annual goodwill impairment assessment indicated no impairment for the year ended December 31, 2023.

Other intangible assets.

The other intangible assets balance on the consolidated balance sheets includes the fair value, net of amortization, primarily related to (i) contracts assumed in connection with processing plant acquisitions in 2011 that are part of the DJ Basin complex, which are being amortized on a straight-line basis over 38 years and (ii) contracts assumed in connection with the DBM acquisition in November 2014, which are being amortized on a straight-line basis over 30 years.

The Partnership assesses other intangible assets for impairment together with related underlying long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

The Partnership assesses other intangible assets for impairment together with the related underlying long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

See Property, plant, and equipment and other intangible assets in Note 1 for further discussion of management’s process to evaluate potential impairment of long-lived assets.

4 unchanged sentences

Other intangible assets $ 681,408 $ 713,075

Amortization expense for intangible assets was $ 31.7 million, $ 31.7 million, and $ 33.0 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Amortization expense for intangible assets was $ 31.7 million for each of the years ended December 31, 2023, 2022, and 2021.

Intangible asset amortization to be recorded in each of the next five years is estimated to be $ 31.7 million per year.

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Carrying amount of asset retirement obligations at end of year $ 366,791 $ 300,514

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.

Liabilities incurred for the year ended December 31, 2023, primarily related to the acquisition of Meritage and expansion activity in West Texas.

Revisions in estimated liabilities for the year ended December 31, 2023, primarily related to an increase in expected settlement costs across all areas of operations.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

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

4.000 % Senior Notes due 2022

— — — 502,246 502,138 505,153

Commercial paper 613,885 610,312 610,312 — — —

Finance lease liabilities 7,436 7,436 7,436 2,659 2,659 2,659

2 unchanged sentences

Long - term debt

Floating - Rate Senior Notes due 2023

3.100 % Senior Notes due 2025

$ 666,481 $ 665,145 $ 650,765 $ 730,706 $ 727,953 $ 692,491

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350,000 342,913 312,365 350,000 342,783 291,194

5.250 % Senior Notes due 2050

1,000,000 984,206 895,440 1,000,000 983,945 829,804

RCF — — — 375,000 375,000 375,000

8 unchanged sentences

Debt activity.

The following table presents the debt activity for the years ended December 31, 2022 and 2021:

The following table summarizes debt activity for the periods presented:

thousands Carrying Value

4 unchanged sentences

Repayment of 3.100 % Senior Notes due 2025

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 1,493

1 unchanged sentence

RCF borrowings 1,120,000

Commercial paper borrowings (1)

Repayments of RCF borrowings ( 1,495,000 )

Issuance of 6.350 % Senior Notes due 2029

Issuance of 6.150 % Senior Notes due 2033

Repayment of Floating-Rate Senior Notes due 2023 ( 213,138 )

Repayment of 3.100 % Senior Notes due 2025

Repayment of 3.950 % Senior Notes due 2025

Repayment of 4.650 % Senior Notes due 2026

Repayment of 4.500 % Senior Notes due 2028

Repayment of 4.750 % Senior Notes due 2028

Repayment of 4.050 % Senior Notes due 2030

Finance lease liabilities 29,285

Other ( 8,829 )

Balance at December 31, 2023 $ 7,901,304

________________________________________________________________________________________

(1) Net of repayments related to commercial paper notes with maturities of 90 days or less.

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”).

WES Operating issued the Fixed - Rate 3.100 % Senior Notes due 2025, 4.050 % Senior Notes due 2030, 5.250 % Senior Notes due 2050, and the Floating - Rate Senior Notes due 2023 in January 2020.

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 3.290 %, 4.169 %, and 5.363 %, respectively, at December 31, 2023, and were 3.790 %, 4.671 %, and 5.869 %, respectively, at December 31, 2022.

The interest rate on the Floating - Rate Senior Notes was 5.04 % and 1.97 % at December 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 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.

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.

During the third quarter of 2023, WES Operating completed the public offering of $ 600.0 million in aggregate principal amount of 6.350 % Senior Notes due 2029.

Interest is payable semi-annually on January 15th and July 15th of each year, with the initial interest payment being due on January 15, 2024.

Net proceeds from the offering were used to fund a portion of the aggregate purchase price for the Meritage acquisition (see Note 3 ), to pay related costs and expenses, and for general partnership purposes.

During the second quarter of 2023, WES Operating completed the public offering of $ 750.0 million in aggregate principal amount of 6.150 % Senior Notes due 2033.

Interest is payable semi-annually on April 1st and October 1st of each year, with the initial interest payment being due on October 1, 2023.

Net proceeds from the offering were used to repay borrowings under the RCF and for general partnership purposes.

During the year ended December 31, 2023, WES Operating purchased and retired $ 276.7 million of certain of its senior notes via open-market repurchases and redeemed the total principal amount outstanding on the Floating-Rate Senior Notes due 2023 at par value with cash on hand (see Debt activity above).

For the year ended December 31, 2023, a gain of $ 15.4 million was recognized for the early retirement of portions of these notes.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

1 unchanged sentence

DEBT AND INTEREST EXPENSE

As of December 31, 2023, WES Operating was in compliance with all covenants under the relevant governing indentures.

Revolving credit facility.

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.

In April 2023, WES Operating (i) repaid all then-outstanding borrowings under its RCF with proceeds from the 6.150 % Senior Notes due 2033 offering, and (ii) entered into an amendment to its RCF to, among other things, extend the maturity date to April 2028 and provide for a maximum borrowing capacity up to $ 2.0 billion, expandable to a maximum of $ 2.5 billion, through the maturity date.

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.

The RCF contains certain covenants that limit, among other things, WES Operating’s ability, and that of certain of its subsidiaries, to incur additional indebtedness, grant certain liens, merge, consolidate, or allow any material change in the character of its business, enter into certain related - party transactions and use proceeds other than for partnership purposes.

The RCF also contains various customary covenants, certain events of default, and a maximum consolidated leverage ratio as of the end of each fiscal quarter (which is defined as the ratio of consolidated indebtedness as of the last day of a fiscal quarter to Consolidated EBITDA, as defined in the RCF agreement, for the most - recent four - consecutive fiscal quarters ending on such day) of 5.0 to 1.0, or a consolidated leverage ratio of 5.5 to 1.0 with respect to quarters ending in the 270 - day period immediately following certain acquisitions.

As a result of certain covenants contained in the RCF, our capacity to borrow under the RCF may be limited.

As of December 31, 2023, there were no outstanding borrowings and $ 5.1 million of outstanding letters of credit, resulting in $ 1.4 billion in effective borrowing capacity, after taking into account the $ 613.9 million of outstanding commercial paper borrowings (see below), for which we maintain availability under the RCF as support for WES Operating’s commercial paper program.

As of December 31, 2023 and 2022, the interest rate on any outstanding RCF borrowings was 6.65 % and 5.92 %, respectively.

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

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”).

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.

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.

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.

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.

See Note 14—Leases .

The facility - fee rate was 0.20 % and 0.25 % at December 31, 2023 and 2022, respectively.

As of December 31, 2023, WES Operating was in compliance with all covenants under the RCF.

Commercial paper program.

In November 2023, WES operating entered into an unsecured commercial paper program under which it may issue (and have outstanding at any one time) an aggregate principal amount up to $ 2.0 billion.

WES Operating intends to maintain a minimum aggregate available borrowing capacity under the RCF equal to the aggregate amount of outstanding commercial paper borrowings.

The maturities of the notes may vary, but may not exceed 397 days.

As of December 31, 2023, there were $ 613.9 million aggregate principal amount of short-term notes outstanding under the commercial paper program at a weighted-average interest rate of 6.23 % and weighted-average maturity of 34 days.

Interest expense.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Partnership adopted ASU 2016-02, Leases (Topic 842) on January 1, 2019, using the modified retrospective method applied to all leases in existence on January 1, 2019.

The Partnership elected not to reassess contracts that commenced prior to adoption, to continue applying its current accounting policy for existing or expired land easements, and not to recognize ROU assets or lease liabilities for short-term leases.

The Partnership has entered into operating leases for corporate offices, shared field offices, easements, and equipment supporting the Partnership’s operations, with both Occidental and third parties as lessors.

The Partnership also had subleased equipment from Occidental via finance leases that extended through April 2020.

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 also entered into finance leases with third parties for equipment, vehicles, and an NGL pipeline in Wyoming.

The following table summarizes information related to the Partnership’s leases:

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________________________________________________________________________________________

(1) For the years ended December 31, 2022 and 2021, includes additions to ROU assets of $ 8.3 million and $ 44.9 million, respectively, and additions to lease liabilities of $ 8.3 million and $ 14.9 million, respectively, related to operating leases.

(1) Includes additions to ROU assets and lease liabilities of $ 33.1 million and $ 8.3 million related to operating leases for the years ended December 31, 2023 and 2022, respectively.

Includes additions to ROU assets and lease liabilities of $ 32.6 million and $ 7.1 million related to finance leases for the years ended December 31, 2023 and 2022, respectively.

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The following table reconciles the undiscounted cash flows to the operating and finance lease liabilities at December 31, 2023:

thousands Operating Leases Finance Leases

Operating Leases Finance Leases

2024 $ 11,593 $ 7,670

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2027 7,849 5,814

2028 7,993 5,659

Thereafter 34,020 3,795

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Total lease liabilities $ 59,718 $ 36,104

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.

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

For the years ended December 31, 2021 and 2020, the Partnership recognized fixed-lease revenue of $ 175.8 million and $ 175.8 million, respectively, and variable-lease revenue of $ 3.5 million and $ 47.9 million, respectively, related to these agreements, with such amounts included in Service revenues – fee based in the consolidated statements of operations.

The agreement and underlying contracts included (i) fixed consideration 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.

For the year ended December 31, 2021, the Partnership recognized fixed-lease revenue of $ 175.8 million and variable-lease revenue of $ 3.5 million related to these agreements, with such amounts included in Service revenues – fee based in the consolidated statements of operations.

In December 2021, one of the Partnership’s processing agreements was amended.

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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.

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

The Board awards phantom units (the “Awards”) to certain members of the leadership team of the Partnership 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-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”).

1 unchanged sentence

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

Prior to vesting, the Awards granted in 2020 pay in-kind distributions in the form of Partnership common units.

Prior to vesting, the Awards granted in 2020 paid in-kind distributions in the form of Partnership common units.

During the years ended December 31, 2023, 2022, and 2021, the Partnership issued 3,253 , 13,754 , and 21,681 common units, respectively, as in-kind distributions under such Awards.

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.

Prior to vesting, the Time-Based Awards granted after 2020 pay distribution equivalents in cash ratably.

The TUR and ROA Awards granted after 2020 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.

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EQUITY-BASED COMPENSATION

The following table summarizes time-vested award activity under the WES LTIPs for the years ended December 31, 2022, 2021, and 2020:

The following table summarizes time-vested award activity under the WES LTIPs:

2023 2022 2021

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Non-vested units at end of year 26.24 1,736,702 21.33 1,689,030 16.97 1,775,672

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

The following table summarizes TUR Awards activity under the WES LTIPs:

2023 2022 2021

2 unchanged sentences

Granted 40.44 231,395 37.80 94,173 22.77 237,720

Vested 17.79 ( 155,052 ) — — — —

Forfeited 40.22 ( 1,631 ) 28.54 ( 30,573 ) 21.78 ( 20,984 )

Non-vested units at end of year 32.22 463,529 24.62 388,817 21.17 325,217

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

The following table summarizes ROA Awards activity under the WES LTIPs:

2023 2022 2021

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Granted 28.48 245,143 25.95 94,173 15.88 237,720

Vested 16.27 ( 168,800 ) — — — —

Forfeited 28.38 ( 1,631 ) 19.74 ( 30,573 ) 15.96 ( 20,984 )

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

See Note 11 .

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.

There can be no assurance, however, that current regulatory requirements will not change, or past non-compliance with environmental issues will not be discovered.

See Note 11 .

Litigation and legal proceedings.

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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.

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 expansion, construction, and asset - integrity projects at the West Texas complex, DBM water systems, DJ Basin complex, and DBM oil system.

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUBSEQUENT EVENTS

On February 21, 2024, the Partnership announced its entry into definitive agreements for the divestment of the following assets:

(i) the 33.75 % interest in the Marcellus Interest systems, (ii) the 15.00 % interest in Panola Pipeline Company, LLC (“Panola”), (iii) the 25.00 % interest in Enterprise EF78 LLC (the “Mont Belvieu JV”), (iv) the 20.00 % interest in Whitethorn Pipeline Company LLC (“Whitethorn LLC”), and (v) the 20.00 % interest in Saddlehorn Pipeline Company LLC (“Saddlehorn”).

As disclosed in Note 1—Summary of Significant Accounting Policies and Basis of Presentation within this Form 10-K, the interest in the Marcellus Interest systems is proportionately consolidated, while the interests in Panola, the Mont Belvieu JV, Whitethorn LLC, and Saddlehorn are accounted for under the equity method of accounting.

The sale of the interests in the Mont Belvieu JV and Whitethorn LLC on February 16, 2024, also resolved outstanding legal proceedings associated with those assets.

The sale of the Marcellus Interest systems, Panola, and Saddlehorn are expected to close in the first or second quarters of 2024, subject to customary closing conditions.

The divestments are expected to result in combined proceeds of $ 790.0 million for an estimated aggregate net gain on sale of approximately $ 300.0 million.

The proceeds payable under each transaction will be subject to customary adjustments calculated at closing.

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