Item 1. Financial Statements
Item 1. Financial Statements
WESTERN MIDSTREAM PARTNERS, LP
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
September 30, Nine Months Ended
September 30,
thousands except per-unit amounts
2024 2023 2024 2023
Revenues and other
Service revenues – fee based $ 814,319 $ 695,547 $ 2,389,366 $ 2,004,920
Service revenues – product based 49,115 48,446 177,321 142,212
Product sales 19,673 31,652 109,076 100,336
Other 255 368 957 800
Total revenues and other (1)
883,362 776,013 2,676,720 2,248,268
Equity income, net – related parties 23,977 35,494 84,227 116,839
Operating expenses
Cost of product 32,847 27,590 132,936 123,795
Operation and maintenance 231,066 204,434 649,324 562,104
General and administrative 64,726 55,050 195,498 159,572
Property and other taxes 12,635 14,583 43,984 39,961
Depreciation and amortization 166,015 147,363 487,438 435,481
Long - lived asset and other impairments (2)
4,651 245 6,204 52,880
Total operating expenses (3)
511,940 449,265 1,515,384 1,373,793
Gain (loss) on divestiture and other, net 467 ( 1,480 ) 299,426 ( 3,668 )
Operating income (loss) 395,866 360,762 1,544,989 987,646
Interest expense ( 94,149 ) ( 82,754 ) ( 279,177 ) ( 250,606 )
Gain (loss) on early extinguishment of debt — 8,565 5,403 15,378
Other income (expense), net 9,565 ( 1,270 ) 16,124 2,817
Income (loss) before income taxes 311,282 285,303 1,287,339 755,235
Income tax expense (benefit) 15,390 905 17,667 2,980
Net income (loss) 295,892 284,398 1,269,672 752,255
Net income (loss) attributable to noncontrolling interests 7,412 7,102 29,714 18,393
Net income (loss) attributable to Western Midstream Partners, LP $ 288,480 $ 277,296 $ 1,239,958 $ 733,862
Limited partners’ interest in net income (loss):
Net income (loss) attributable to Western Midstream Partners, LP $ 288,480 $ 277,296 $ 1,239,958 $ 733,862
General partner interest in net (income) loss ( 6,708 ) ( 6,453 ) ( 28,845 ) ( 16,960 )
Limited partners’ interest in net income (loss) (4)
281,772 270,843 1,211,113 716,902
Net income (loss) per common unit – basic (4)
$ 0.74 $ 0.71 $ 3.18 $ 1.87
Net income (loss) per common unit – diluted (4)
$ 0.74 $ 0.70 $ 3.17 $ 1.86
Weighted - average common units outstanding – basic (4)
380,513 383,561 380,343 384,211
Weighted - average common units outstanding – diluted (4)
382,620 384,772 382,189 385,344
_________________________________________________________________________________________
(1) Total revenues and other includes related-party amounts of $ 545.2 million and $ 1.6 billion for the three and nine months ended September 30, 2024, respectively, and $ 463.6 million and $ 1.4 billion for the three and nine months ended September 30, 2023, respectively. See Note 6 .
(2) See Note 8 .
(3) Total operating expenses includes related-party amounts of $( 12.1 ) million and $( 37.7 ) million for the three and nine months ended September 30, 2024, respectively, and $( 35.8 ) million and $( 53.0 ) million for the three and nine months ended September 30, 2023, respectively, all primarily related to changes in imbalance positions. See Note 6 .
(4) See Note 5.
See accompanying Notes to Consolidated Financial Statements.
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WESTERN MIDSTREAM PARTNERS, LP
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
thousands except number of units September 30,
2024 December 31,
2023
ASSETS
Current assets
Cash and cash equivalents $ 1,124,737 $ 272,787
Accounts receivable, net 671,635 666,637
Other current assets 36,316 52,986
Total current assets 1,832,688 992,410
Property, plant, and equipment
Cost 15,342,193 14,945,431
Less accumulated depreciation 5,646,602 5,290,415
Net property, plant, and equipment 9,695,591 9,655,016
Goodwill 4,783 4,783
Other intangible assets 657,657 681,408
Equity investments 535,172 904,535
Other assets (1)
255,333 233,455
Total assets (2)
$ 12,981,224 $ 12,471,607
LIABILITIES, EQUITY, AND PARTNERS’ CAPITAL
Current liabilities
Accounts and imbalance payables $ 387,158 $ 362,451
Short - term debt
1,008,018 617,748
Accrued ad valorem taxes 47,298 61,285
Accrued liabilities 203,721 262,572
Total current liabilities 1,646,195 1,304,056
Long-term liabilities
Long - term debt
6,929,212 7,283,556
Deferred income taxes 29,646 15,468
Asset retirement obligations 374,646 359,185
Other liabilities 624,008 480,212
Total long - term liabilities
7,957,512 8,138,421
Total liabilities (3)
9,603,707 9,442,477
Equity and partners’ capital
Common units ( 380,555,427 and 379,519,983 units issued and outstanding at September 30, 2024, and December 31, 2023, respectively)
3,225,855 2,894,231
General partner units ( 9,060,641 units issued and outstanding at September 30, 2024, and December 31, 2023)
10,972 3,193
Total partners’ capital 3,236,827 2,897,424
Noncontrolling interests 140,690 131,706
Total equity and partners’ capital 3,377,517 3,029,130
Total liabilities, equity, and partners’ capital $ 12,981,224 $ 12,471,607
________________________________________________________________________________________
(1) Other assets includes $ 3.9 million and $ 5.7 million of NGLs line - fill inventory as of September 30, 2024, and December 31, 2023, respectively. Other assets also includes $ 128.9 million and $ 96.3 million of materials and supplies inventory as of September 30, 2024, and December 31, 2023, respectively.
(2) Total assets includes related - party amounts of $ 972.9 million and $ 1.3 billion as of September 30, 2024, and December 31, 2023, respectively, which includes related - party Accounts receivable, net of $ 393.7 million and $ 358.1 million as of September 30, 2024, and December 31, 2023, respectively. See Note 6 .
(3) Total liabilities includes related - party amounts of $ 534.5 million and $ 378.8 million as of September 30, 2024, and December 31, 2023, respectively. See Note 6 .
See accompanying Notes to Consolidated Financial Statements.
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WESTERN MIDSTREAM PARTNERS, LP
CONSOLIDATED STATEMENTS OF EQUITY AND PARTNERS’ CAPITAL
(UNAUDITED)
Partners’ Capital
thousands Common
Units General Partner
Units Noncontrolling
Interests Total
Balance at December 31, 2023 $ 2,894,231 $ 3,193 $ 131,706 $ 3,029,130
Net income (loss) 559,500 13,330 13,386 586,216
Distributions to Chipeta noncontrolling interest owner — — ( 1,085 ) ( 1,085 )
Distributions to noncontrolling interest owner of WES Operating — — ( 4,591 ) ( 4,591 )
Distributions to Partnership unitholders ( 218,228 ) ( 5,210 ) — ( 223,438 )
Equity - based compensation expense
9,423 — — 9,423
Other ( 19,364 ) — — ( 19,364 )
Balance at March 31, 2024 $ 3,225,562 $ 11,313 $ 139,416 $ 3,376,291
Net income (loss) 369,841 8,807 8,916 387,564
Distributions to Chipeta noncontrolling interest owner — — ( 593 ) ( 593 )
Distributions to noncontrolling interest owner of WES Operating — — ( 6,955 ) ( 6,955 )
Distributions to Partnership unitholders ( 332,930 ) ( 7,928 ) — ( 340,858 )
Equity - based compensation expense
10,391 — — 10,391
Other ( 1,831 ) — — ( 1,831 )
Balance at June 30, 2024 $ 3,271,033 $ 12,192 $ 140,784 $ 3,424,009
Net income (loss) 281,772 6,708 7,412 295,892
Distributions to Chipeta noncontrolling interest owner — — ( 550 ) ( 550 )
Distributions to noncontrolling interest owner of WES Operating — — ( 6,956 ) ( 6,956 )
Distributions to Partnership unitholders ( 332,931 ) ( 7,928 ) — ( 340,859 )
Equity - based compensation expense
8,759 — — 8,759
Other ( 2,778 ) — — ( 2,778 )
Balance at September 30, 2024 $ 3,225,855 $ 10,972 $ 140,690 $ 3,377,517
See accompanying Notes to Consolidated Financial Statements.
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WESTERN MIDSTREAM PARTNERS, LP
CONSOLIDATED STATEMENTS OF EQUITY AND PARTNERS’ CAPITAL
(UNAUDITED)
Partners’ Capital
thousands Common
Units General Partner
Units Noncontrolling
Interests Total
Balance at December 31, 2022 $ 2,969,604 $ 2,105 $ 136,406 $ 3,108,115
Net income (loss) 198,959 4,686 4,696 208,341
Distributions to Chipeta noncontrolling interest owner — — ( 2,240 ) ( 2,240 )
Distributions to noncontrolling interest owner of WES Operating — — ( 4,271 ) ( 4,271 )
Distributions to Partnership unitholders ( 192,039 ) ( 4,530 ) — ( 196,569 )
Unit repurchases (1)
( 7,061 ) — — ( 7,061 )
Equity - based compensation expense
7,199 — — 7,199
Other ( 11,950 ) — — ( 11,950 )
Balance at March 31, 2023 $ 2,964,712 $ 2,261 $ 134,591 $ 3,101,564
Net income (loss) 247,100 5,821 6,595 259,516
Distributions to Chipeta noncontrolling interest owner — — ( 1,230 ) ( 1,230 )
Distributions to noncontrolling interest owner of WES Operating — — ( 6,860 ) ( 6,860 )
Distributions to Partnership unitholders ( 329,227 ) ( 7,760 ) — ( 336,987 )
Unit repurchases (1)
( 41 ) — — ( 41 )
Equity - based compensation expense
7,665 — — 7,665
Other ( 1,464 ) — — ( 1,464 )
Balance at June 30, 2023 $ 2,888,745 $ 322 $ 133,096 $ 3,022,163
Net income (loss) 270,843 6,453 7,102 284,398
Distributions to Chipeta noncontrolling interest owner — — ( 1,613 ) ( 1,613 )
Distributions to noncontrolling interest owner of WES Operating — — ( 7,129 ) ( 7,129 )
Distributions to Partnership unitholders ( 216,345 ) ( 5,097 ) — ( 221,442 )
Unit repurchases (1)
( 127,500 ) — — ( 127,500 )
Equity - based compensation expense
7,171 — — 7,171
Other ( 956 ) — — ( 956 )
Balance at September 30, 2023 $ 2,821,958 $ 1,678 $ 131,456 $ 2,955,092
_________________________________________________________________________________________
(1) See Note 5 .
See accompanying Notes to Consolidated Financial Statements.
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WESTERN MIDSTREAM PARTNERS, LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
thousands 2024 2023
Cash flows from operating activities
Net income (loss) $ 1,269,672 $ 752,255
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 487,438 435,481
Long - lived asset and other impairments
6,204 52,880
Non - cash equity - based compensation expense
28,573 22,035
Deferred income taxes 14,178 954
Accretion and amortization of long - term obligations, net
6,884 5,977
Equity income, net – related parties ( 84,227 ) ( 116,839 )
Distributions from equity - investment earnings – related parties
83,091 115,897
(Gain) loss on divestiture and other, net ( 299,426 ) 3,668
(Gain) loss on early extinguishment of debt ( 5,403 ) ( 15,378 )
Other 239 371
Changes in assets and liabilities:
(Increase) decrease in accounts receivable, net ( 12,595 ) ( 60,573 )
Increase (decrease) in accounts and imbalance payables and accrued liabilities, net ( 78,884 ) ( 87,040 )
Change in other items, net 166,670 78,346
Net cash provided by operating activities 1,582,414 1,188,034
Cash flows from investing activities
Capital expenditures ( 595,087 ) ( 536,427 )
Acquisitions from third parties ( 443 ) —
Contributions to equity investments – related parties — ( 1,153 )
Distributions from equity investments in excess of cumulative earnings – related parties 27,560 31,715
Proceeds from the sale of assets to third parties 792,241 ( 60 )
(Increase) decrease in materials and supplies inventory and other ( 33,118 ) ( 32,659 )
Net cash provided by (used in) investing activities
191,153 ( 538,584 )
Cash flows from financing activities
Borrowings, net of debt issuance costs 789,193 1,801,011
Repayments of debt ( 143,852 ) ( 1,317,928 )
Commercial paper borrowings (repayments), net
( 610,312 ) —
Increase (decrease) in outstanding checks ( 2,282 ) ( 241 )
Distributions to Partnership unitholders (1)
( 905,155 ) ( 754,998 )
Distributions to Chipeta noncontrolling interest owner ( 2,228 ) ( 5,083 )
Distributions to noncontrolling interest owner of WES Operating ( 18,502 ) ( 18,260 )
Unit repurchases (1)
— ( 134,602 )
Other ( 28,479 ) ( 16,511 )
Net cash provided by (used in) financing activities ( 921,617 ) ( 446,612 )
Net increase (decrease) in cash and cash equivalents 851,950 202,838
Cash and cash equivalents at beginning of period 272,787 286,656
Cash and cash equivalents at end of period $ 1,124,737 $ 489,494
Supplemental disclosures
Interest paid, net of capitalized interest $ 307,049 $ 278,283
Income taxes paid (reimbursements received) — 1,271
Accrued capital expenditures 128,508 112,150
_________________________________________________________________________________________
(1) Includes related-party amounts. See Note 6 .
See accompanying Notes to Consolidated Financial Statements.
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WESTERN MIDSTREAM OPERATING, LP
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
September 30, Nine Months Ended
September 30,
thousands 2024 2023 2024 2023
Revenues and other
Service revenues – fee based $ 814,319 $ 695,547 $ 2,389,366 $ 2,004,920
Service revenues – product based 49,115 48,446 177,321 142,212
Product sales 19,673 31,652 109,076 100,336
Other 255 368 957 800
Total revenues and other (1)
883,362 776,013 2,676,720 2,248,268
Equity income, net – related parties 23,977 35,494 84,227 116,839
Operating expenses
Cost of product 32,847 27,590 132,936 123,795
Operation and maintenance 231,066 204,434 649,324 562,104
General and administrative 64,017 54,541 193,497 157,645
Property and other taxes 12,635 14,583 43,984 39,961
Depreciation and amortization 166,015 147,363 487,438 435,481
Long - lived asset and other impairments (2)
4,651 245 6,204 52,880
Total operating expenses (3)
511,231 448,756 1,513,383 1,371,866
Gain (loss) on divestiture and other, net 467 ( 1,480 ) 299,426 ( 3,668 )
Operating income (loss) 396,575 361,271 1,546,990 989,573
Interest expense ( 94,149 ) ( 82,754 ) ( 279,177 ) ( 250,606 )
Gain (loss) on early extinguishment of debt — 8,565 5,403 15,378
Other income (expense), net 9,498 ( 1,330 ) 15,930 2,603
Income (loss) before income taxes 311,924 285,752 1,289,146 756,948
Income tax expense (benefit) 15,390 905 17,667 2,980
Net income (loss) 296,534 284,847 1,271,479 753,968
Net income (loss) attributable to noncontrolling interest 1,509 1,432 4,364 3,377
Net income (loss) attributable to Western Midstream Operating, LP $ 295,025 $ 283,415 $ 1,267,115 $ 750,591
________________________________________________________________________________________
(1) Total revenues and other includes related-party amounts of $ 545.2 million and $ 1.6 billion for the three and nine months ended September 30, 2024, respectively, and $ 463.6 million and $ 1.4 billion for the three and nine months ended September 30, 2023, respectively. See Note 6 .
(2) See Note 8 .
(3) Total operating expenses includes related-party amounts of $( 11.2 ) million and $( 34.7 ) million for the three and nine months ended September 30, 2024, respectively, and $( 35.1 ) million and $( 50.5 ) million for the three and nine months ended September 30, 2023, respectively, all primarily related to changes in imbalance positions. See Note 6 .
See accompanying Notes to Consolidated Financial Statements.
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WESTERN MIDSTREAM OPERATING, LP
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
thousands except number of units September 30,
2024 December 31,
2023
ASSETS
Current assets
Cash and cash equivalents $ 1,117,848 $ 268,184
Accounts receivable, net 674,798 666,615
Other current assets 35,477 50,468
Total current assets 1,828,123 985,267
Property, plant, and equipment
Cost 15,342,193 14,945,431
Less accumulated depreciation 5,646,602 5,290,415
Net property, plant, and equipment 9,695,591 9,655,016
Goodwill 4,783 4,783
Other intangible assets 657,657 681,408
Equity investments 535,172 904,535
Other assets (1)
252,078 231,644
Total assets (2)
$ 12,973,404 $ 12,462,653
LIABILITIES, EQUITY, AND PARTNERS’ CAPITAL
Current liabilities
Accounts and imbalance payables $ 387,135 $ 392,752
Short - term debt
1,008,018 617,748
Accrued ad valorem taxes 47,298 61,285
Accrued liabilities 151,750 203,461
Total current liabilities 1,594,201 1,275,246
Long-term liabilities
Long - term debt
6,929,212 7,283,556
Deferred income taxes 29,646 15,468
Asset retirement obligations 374,646 359,185
Other liabilities 620,752 476,844
Total long - term liabilities
7,954,256 8,135,053
Total liabilities (3)
9,548,457 9,410,299
Equity and partners’ capital
Common units ( 318,675,578 units issued and outstanding at September 30, 2024, and December 31, 2023)
3,397,488 3,027,031
Total partners’ capital 3,397,488 3,027,031
Noncontrolling interest 27,459 25,323
Total equity and partners’ capital 3,424,947 3,052,354
Total liabilities, equity, and partners’ capital $ 12,973,404 $ 12,462,653
_________________________________________________________________________________________
(1) Other assets includes $ 3.9 million and $ 5.7 million of NGLs line - fill inventory as of September 30, 2024, and December 31, 2023, respectively. Other assets also includes $ 128.9 million and $ 96.3 million of materials and supplies inventory as of September 30, 2024, and December 31, 2023, respectively.
(2) Total assets includes related - party amounts of $ 972.5 million and $ 1.3 billion as of September 30, 2024, and December 31, 2023, respectively, which includes related - party Accounts receivable, net of $ 396.9 million and $ 358.1 million as of September 30, 2024, and December 31, 2023, respectively. See Note 6 .
(3) Total liabilities includes related - party amounts of $ 534.2 million and $ 409.5 million as of September 30, 2024, and December 31, 2023, respectively. See Note 6 .
See accompanying Notes to Consolidated Financial Statements.
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WESTERN MIDSTREAM OPERATING, LP
CONSOLIDATED STATEMENTS OF EQUITY AND PARTNERS’ CAPITAL
(UNAUDITED)
thousands Common
Units Noncontrolling
Interest Total
Balance at December 31, 2023 $ 3,027,031 $ 25,323 $ 3,052,354
Net income (loss) 584,831 1,686 586,517
Distributions to Chipeta noncontrolling interest owner — ( 1,085 ) ( 1,085 )
Distributions to WES Operating unitholders ( 229,446 ) — ( 229,446 )
Contributions of equity - based compensation from WES
9,278 — 9,278
Balance at March 31, 2024 $ 3,391,694 $ 25,924 $ 3,417,618
Net income (loss) 387,259 1,169 388,428
Distributions to Chipeta noncontrolling interest owner — ( 593 ) ( 593 )
Distributions to WES Operating unitholders ( 347,675 ) — ( 347,675 )
Contributions of equity - based compensation from WES
10,247 — 10,247
Balance at June 30, 2024 $ 3,441,525 $ 26,500 $ 3,468,025
Net income (loss) 295,025 1,509 296,534
Distributions to Chipeta noncontrolling interest owner — ( 550 ) ( 550 )
Distributions to WES Operating unitholders ( 347,675 ) — ( 347,675 )
Contributions of equity - based compensation from WES
8,613 — 8,613
Balance at September 30, 2024 $ 3,397,488 $ 27,459 $ 3,424,947
thousands Common
Units Noncontrolling
Interest Total
Balance at December 31, 2022 $ 3,092,012 $ 28,095 $ 3,120,107
Net income (loss) 208,013 535 208,548
Distributions to Chipeta noncontrolling interest owner — ( 2,240 ) ( 2,240 )
Distributions to WES Operating unitholders ( 213,513 ) — ( 213,513 )
Contributions of equity - based compensation from WES
7,058 — 7,058
Balance at March 31, 2023 $ 3,093,570 $ 26,390 $ 3,119,960
Net income (loss) 259,163 1,410 260,573
Distributions to Chipeta noncontrolling interest owner — ( 1,230 ) ( 1,230 )
Distributions to WES Operating unitholders ( 342,895 ) — ( 342,895 )
Contributions of equity - based compensation from WES
7,519 — 7,519
Balance at June 30, 2023 $ 3,017,357 $ 26,570 $ 3,043,927
Net income (loss) 283,415 1,432 284,847
Distributions to Chipeta noncontrolling interest owner — ( 1,613 ) ( 1,613 )
Distributions to WES Operating unitholders ( 356,362 ) — ( 356,362 )
Contributions of equity - based compensation from WES
7,024 — 7,024
Balance at September 30, 2023 $ 2,951,434 $ 26,389 $ 2,977,823
See accompanying Notes to Consolidated Financial Statements.
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WESTERN MIDSTREAM OPERATING, LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
thousands 2024 2023
Cash flows from operating activities
Net income (loss) $ 1,271,479 $ 753,968
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 487,438 435,481
Long - lived asset and other impairments
6,204 52,880
Non - cash equity - based compensation expense
28,138 21,601
Deferred income taxes 14,178 954
Accretion and amortization of long - term obligations, net
6,884 5,977
Equity income, net – related parties ( 84,227 ) ( 116,839 )
Distributions from equity - investment earnings – related parties
83,091 115,897
(Gain) loss on divestiture and other, net ( 299,426 ) 3,668
(Gain) loss on early extinguishment of debt ( 5,403 ) ( 15,378 )
Other 239 371
Changes in assets and liabilities:
(Increase) decrease in accounts receivable, net ( 15,780 ) ( 60,553 )
Increase (decrease) in accounts and imbalance payables and accrued liabilities, net ( 102,104 ) ( 102,048 )
Change in other items, net 166,545 78,111
Net cash provided by operating activities 1,557,256 1,174,090
Cash flows from investing activities
Capital expenditures ( 595,087 ) ( 536,427 )
Acquisitions from third parties ( 443 ) —
Contributions to equity investments – related parties — ( 1,153 )
Distributions from equity investments in excess of cumulative earnings – related parties 27,560 31,715
Proceeds from the sale of assets to third parties 792,241 ( 60 )
(Increase) decrease in materials and supplies inventory and other ( 33,118 ) ( 32,659 )
Net cash provided by (used in) investing activities
191,153 ( 538,584 )
Cash flows from financing activities
Borrowings, net of debt issuance costs 789,193 1,801,011
Repayments of debt ( 143,852 ) ( 1,317,928 )
Commercial paper borrowings (repayments), net
( 610,312 ) —
Increase (decrease) in outstanding checks ( 2,245 ) ( 244 )
Distributions to WES Operating unitholders (1)
( 924,796 ) ( 912,770 )
Distributions to Chipeta noncontrolling interest owner ( 2,228 ) ( 5,083 )
Other ( 4,505 ) ( 2,140 )
Net cash provided by (used in) financing activities ( 898,745 ) ( 437,154 )
Net increase (decrease) in cash and cash equivalents 849,664 198,352
Cash and cash equivalents at beginning of period 268,184 286,101
Cash and cash equivalents at end of period $ 1,117,848 $ 484,453
Supplemental disclosures
Interest paid, net of capitalized interest $ 307,049 $ 278,283
Income taxes paid (reimbursements received) — 1,271
Accrued capital expenditures 128,508 112,150
________________________________________________________________________________________
(1) Includes related-party amounts. See Note 6.
See accompanying Notes to Consolidated Financial Statements.
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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
General. Western Midstream Partners, LP is a Delaware master limited partnership formed in September 2012. Western Midstream Operating, LP (together with its subsidiaries, “WES Operating”) is a Delaware limited partnership formed in 2007 to acquire, own, develop, and operate midstream assets. Western Midstream Partners, LP owns, directly and indirectly, a 98.0 % limited partner interest in WES Operating, and directly owns all of the outstanding equity interests of Western Midstream Operating GP, LLC, which holds the entire non - economic general partner interest in WES Operating.
For purposes of these consolidated financial statements, the “Partnership” refers to Western Midstream Partners, LP in its individual capacity or to Western Midstream Partners, LP and its subsidiaries, including Western Midstream Operating GP, LLC and WES Operating, as the context requires. “WES Operating GP” refers to Western Midstream Operating GP, LLC, individually as the general partner of WES Operating. The Partnership’s general partner, Western Midstream Holdings, LLC (the “general partner”), is a wholly owned subsidiary of Occidental Petroleum Corporation. “Occidental” refers to Occidental Petroleum Corporation, as the context requires, and its subsidiaries, excluding the general partner. “Anadarko” refers to Anadarko Petroleum Corporation and its subsidiaries, excluding Western Midstream Holdings, LLC. Anadarko became a wholly owned subsidiary of Occidental as a result of Occidental’s acquisition by merger of Anadarko on August 8, 2019. “Related parties” refers to Occidental (see Note 6 ), the Partnership’s investments accounted for under the equity method of accounting (see Note 7 ), and the Partnership and WES Operating for transactions that eliminate upon consolidation (see Note 6 ).
The Partnership is engaged in the business of gathering, compressing, treating, processing, and transporting natural gas; gathering, stabilizing, and transporting condensate, natural - gas liquids (“NGLs”), and crude oil; 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 its customers under certain contracts. As of September 30, 2024, the Partnership’s assets and investments consisted of the following:
Wholly
Owned and
Operated Operated
Interests Equity
Interests
Gathering systems (1)
18 2 1
Treating facilities 39 3 —
Natural - gas processing plants/trains
26 3 1
NGLs pipelines 3 — 4
Natural - gas pipelines
6 — 1
Crude - oil pipelines
2 1 1
_________________________________________________________________________________________
(1) Includes the DBM water systems.
These assets and investments are located in Texas, New Mexico, and the Rocky Mountains (Colorado, Utah, and Wyoming).
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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Basis of presentation. The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and include the accounts of the Partnership and entities in which it holds a controlling financial interest, including WES Operating, WES Operating GP, proportionately consolidated interests, and equity investments (see table below). All significant intercompany transactions have been eliminated.
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
Full consolidation
Chipeta (1)
75.00 %
Proportionate consolidation (2)
Springfield system 50.10 %
Equity investments (3)
Mi Vida JV LLC (“Mi Vida”) 50.00 %
Front Range Pipeline LLC (“FRP”) 33.33 %
Red Bluff Express Pipeline, LLC (“Red Bluff Express”) 30.00 %
Rendezvous Gas Services, LLC (“Rendezvous”) 22.00 %
Texas Express Pipeline LLC (“TEP”) 20.00 %
Texas Express Gathering LLC (“TEG”) 20.00 %
White Cliffs Pipeline, LLC (“White Cliffs”) 10.00 %
_________________________________________________________________________________________
(1) The 25 % third - party interest in Chipeta Processing LLC (“Chipeta”) is reflected within noncontrolling interests in the consolidated financial statements. See Noncontrolling interests below.
(2) The Partnership proportionately consolidates its associated share of the assets, liabilities, revenues, and expenses attributable to this asset.
(3) Investments in non - controlled entities over which the Partnership exercises significant influence are accounted for under the equity method of accounting. “Equity - investment throughput” refers to the Partnership’s share of average throughput for these investments.
Certain information and note disclosures commonly included in annual financial statements have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, the accompanying consolidated financial statements and notes should be read in conjunction with the Partnership’s 2023 Form 10-K, as filed with the SEC on February 21, 2024. Management believes that the disclosures made are adequate to make the information not misleading.
The consolidated financial results of WES Operating are included in the Partnership’s consolidated financial statements. Throughout these notes to consolidated financial statements, and to the extent material, any differences between the consolidated financial results of the Partnership and WES Operating are discussed separately. The Partnership’s consolidated financial statements differ from those of WES Operating primarily as a result of (i) the presentation of noncontrolling interest ownership (see Noncontrolling interests below), (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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Presentation of the Partnership’s assets. The Partnership’s assets include assets owned and ownership interests accounted for by the Partnership under the equity method of accounting, through its 98.0 % partnership interest in WES Operating, as of September 30, 2024 (see Note 7 ). The Partnership also owns and controls the entire non - economic general partner interest in WES Operating GP, and the Partnership’s general partner is owned by Occidental.
Use of estimates. In preparing financial statements in accordance with GAAP, management makes informed judgments and estimates that affect the reported amounts of assets, liabilities, revenues, and expenses. Management evaluates its estimates and related assumptions regularly, using historical experience and other reasonable methods. Changes in facts and circumstances or additional information may result in revised estimates, and actual results may differ from these estimates. 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.
Noncontrolling interests. 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. See Note 5.
Segments. The Partnership’s operations continue to be organized into a single operating segment, the assets of which gather, compress, treat, process, and transport natural gas; gather, stabilize, and transport condensate, NGLs, and crude oil; 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 on the Partnership’s financial statements, but will result in additional disclosure.
Equity-based compensation. During the nine months ended September 30, 2024 and 2023, the Partnership issued 1,035,444 and 832,707 common units, respectively, under its long-term incentive plans. Compensation expense was $ 8.8 million and $ 28.6 million for the three and nine months ended September 30, 2024, respectively, and $ 7.2 million and $ 22.0 million for the three and nine months ended September 30, 2023, respectively.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
2. REVENUE FROM CONTRACTS WITH CUSTOMERS
The following table summarizes revenue from contracts with customers:
Three Months Ended
September 30, Nine Months Ended
September 30,
thousands 2024 2023 2024 2023
Revenue from customers
Service revenues – fee based $ 814,319 $ 695,547 $ 2,389,366 $ 2,004,920
Service revenues – product based 49,115 48,446 177,321 142,212
Product sales 19,673 31,652 109,076 100,336
Total revenue from customers 883,107 775,645 2,675,763 2,247,468
Revenue from other than customers
Other 255 368 957 800
Total revenues and other $ 883,362 $ 776,013 $ 2,676,720 $ 2,248,268
Contract balances. Receivables from customers, which are included in Accounts receivable, net on the consolidated balance sheets were $ 664.0 million and $ 661.6 million as of September 30, 2024, and December 31, 2023, respectively.
Contract assets primarily relate to (i) revenue accrued but not yet billed under cost - of - service contracts with fixed and variable fees and (ii) accrued deficiency fees the Partnership expects to charge customers once the related performance periods are completed. The following table summarizes activity related to contract assets from contracts with customers:
thousands
Contract assets balance at December 31, 2023
$ 39,292
Amounts transferred to Accounts receivable, net that were included in the contract assets balance at the beginning of the period (1)
( 5,683 )
Additional estimated revenues recognized (2)
5,567
Contract assets balance at September 30, 2024
$ 39,176
Contract assets at September 30, 2024
Other current assets $ 11,931
Other assets 27,245
Total contract assets from contracts with customers $ 39,176
_________________________________________________________________________________________
(1) Includes $( 1.8 ) million for the three months ended September 30, 2024.
(2) Includes $ 1.8 million for the three months ended September 30, 2024.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
2. 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:
thousands
Contract liabilities balance at December 31, 2023
$ 445,499
Cash received or receivable, excluding revenues recognized during the period (1)
158,282
Revenues recognized that were included in the contract liability balance at the beginning of the period (2)
( 22,388 )
Contract liabilities balance at September 30, 2024
$ 581,393
Contract liabilities at September 30, 2024
Accrued liabilities $ 10,076
Other liabilities 571,317
Total contract liabilities from contracts with customers $ 581,393
_________________________________________________________________________________________
(1) Includes $ 34.7 million for the three months ended September 30, 2024.
(2) Includes $( 6.5 ) million for the three months ended September 30, 2024.
Transaction price allocated to remaining performance obligations. Revenues expected to be recognized from certain performance obligations that are unsatisfied (or partially unsatisfied) as of September 30, 2024, are presented in the table below. The Partnership applies the optional exemptions in Revenue from Contracts with Customers (Topic 606) and does not disclose consideration for remaining performance obligations with an original expected duration of one year or less or for variable consideration related to unsatisfied (or partially unsatisfied) performance obligations. Therefore, the following table represents only a portion of expected future revenues from existing contracts as most future revenues from customers are dependent on future variable customer volumes and, in some cases, variable commodity prices for those volumes.
thousands
Remainder of 2024
$ 296,754
2025 1,111,497
2026 1,049,918
2027 949,426
2028 773,160
Thereafter 2,076,819
Total $ 6,257,574
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
3. ACQUISITIONS AND DIVESTITURES
Marcellus Interest systems. During the second quarter of 2024, the Partnership closed on the sale of its 33.75 % interest in the Marcellus Interest systems for proceeds of $ 206.2 million, resulting in a net gain on sale of $ 63.9 million that was recorded as Gain (loss) on divestiture and other, net in the consolidated statement of operations.
Mont Belvieu JV, Whitethorn LLC, Panola, and Saddlehorn. During the first quarter of 2024, the Partnership closed on the sale of the following equity investments to third parties: (i) the 25.00 % interest in Enterprise EF78 LLC (the “Mont Belvieu JV”), (ii) the 20.00 % interest in Whitethorn Pipeline Company LLC (“Whitethorn LLC”), (iii) the 15.00 % interest in Panola Pipeline Company, LLC (“Panola”), and (iv) the 20.00 % interest in Saddlehorn Pipeline Company, LLC (“Saddlehorn”). The combined proceeds received in the first quarter of 2024 of $ 588.6 million includes $ 5.9 million in pro-rata distributions through closing, resulting in a net gain on sale of $ 239.7 million that was recorded as Gain (loss) on divestiture and other, net in the consolidated statement of operations.
Meritage. 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 10) and borrowings on the senior unsecured revolving credit facility (“RCF”). 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), was $ 878.2 million.
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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
3. ACQUISITIONS AND DIVESTITURES
The following is the final acquisition-date fair value for the assets acquired and liabilities assumed in the Meritage acquisition on October 13, 2023.
thousands
Assets acquired:
Cash and cash equivalents $ 38,412
Accounts receivable, net 34,060
Other current assets 1,980
Property, plant, and equipment 926,347
Other assets 6,498
Total assets acquired 1,007,297
Liabilities assumed:
Accounts payable and accrued liabilities
34,733
Other current liabilities 5,451
Asset retirement obligation 22,156
Other liabilities 28,356
Total liabilities assumed
90,696
Net assets acquired $ 916,601
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.
4. PARTNERSHIP DISTRIBUTIONS
Partnership distributions. 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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
4. PARTNERSHIP 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:
thousands except per-unit amounts
Quarters Ended
Total Quarterly
Per-unit
Distribution Total Quarterly
Cash Distribution Distribution
Date Record
Date
2023
March 31 (1)
$ 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
2024
March 31 $ 0.875 $ 340,858 May 15, 2024 May 1, 2024
June 30 0.875 340,859 August 14, 2024 August 1, 2024
September 30 0.875 340,914 November 14, 2024 November 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. 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.
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. See Note 5 . WES Operating made and/or declared the following cash distributions to its limited partners for the periods presented:
thousands
Quarters Ended
Total Quarterly
Cash Distribution Distribution
Date
2023
March 31 (1)
$ 342,895 May 2023
June 30 226,260 August 2023
September 30 229,446 November 2023
December 31 229,446 February 2024
2024
March 31 $ 347,675 May 2024
June 30 347,675 August 2024
September 30 347,356 November 2024
_________________________________________________________________________________________
(1) Includes amounts related to the Enhanced Distribution discussed above.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
5. EQUITY AND PARTNERS’ CAPITAL
Holdings of Partnership equity. The Partnership’s common units are listed on the New York Stock Exchange under the ticker symbol “WES.” As of September 30, 2024, Occidental held 165,681,578 common units, representing a 42.5 % limited partner interest in the Partnership, and through its ownership of the general partner, Occidental indirectly held 9,060,641 general partner units, representing a 2.3 % general partner interest in the Partnership. The public held 214,873,849 common units, representing a 55.2 % limited partner interest in the Partnership.
In August 2024, affiliates of Occidental sold 19,500,000 of the Partnership’s common units it held through an underwritten offering. The Partnership did not receive any proceeds from the public offering.
Partnership equity repurchases. 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 nine months ended September 30, 2024, there were no common units repurchased. During the nine months ended September 30, 2023, the Partnership repurchased 5,387,322 common units, which included 5,100,000 common units repurchased from Occidental, for an aggregate purchase price of $ 134.6 million. The units were canceled immediately upon receipt. As of September 30, 2024, the Partnership had an authorized amount of $ 627.8 million remaining under the program.
Holdings of WES Operating equity. As of September 30, 2024, (i) the Partnership, directly and indirectly through its ownership of WES Operating GP, owned a 98.0 % limited partner interest and the entire non - economic general partner interest in WES Operating and (ii) Occidental, through its ownership of WGRAH, owned a 2.0 % limited partner interest in WES Operating, which is reflected as a noncontrolling interest within the consolidated financial statements of the Partnership (see Note 1 ).
Partnership’s net income (loss) per common unit. The common and general partner unitholders’ allocation of net income (loss) attributable to the Partnership was equal to their cash distributions plus their respective allocations of undistributed earnings or losses in accordance with their weighted - average ownership percentage during each period using the two - class method.
The Partnership’s basic net income (loss) per common unit is calculated by dividing the limited partners’ interest in net income (loss) by the weighted - average number of common units outstanding during the period. Diluted net income (loss) per common unit includes the effect of outstanding units issued under the Partnership’s long-term incentive plans.
The following table provides a reconciliation between basic and diluted net income (loss) per common unit:
Three Months Ended
September 30, Nine Months Ended
September 30,
thousands except per-unit amounts 2024 2023 2024 2023
Net income (loss)
Limited partners’ interest in net income (loss) $ 281,772 $ 270,843 $ 1,211,113 $ 716,902
Weighted-average common units outstanding
Basic 380,513 383,561 380,343 384,211
Dilutive effect of non-vested phantom units 2,107 1,211 1,846 1,133
Diluted 382,620 384,772 382,189 385,344
Excluded due to anti-dilutive effect — 143 2,054 123
Net income (loss) per common unit
Basic $ 0.74 $ 0.71 $ 3.18 $ 1.87
Diluted $ 0.74 $ 0.70 $ 3.17 $ 1.86
WES Operating’s net income (loss) per common unit. Net income (loss) per common unit for WES Operating is not calculated because it has no publicly traded units.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
6. RELATED-PARTY TRANSACTIONS
Summary of related-party transactions. The following tables summarize material related - party transactions included in the Partnership’s consolidated financial statements:
Statements of operations
Three Months Ended
September 30, Nine Months Ended
September 30,
thousands 2024 2023 2024 2023
Revenues and other
Service revenues – fee based $ 530,434 $ 454,039 $ 1,533,251 $ 1,300,870
Service revenues – product based 13,664 ( 234 ) 44,214 14,524
Product sales 1,109 9,818 1,642 38,597
Total revenues and other 545,207 463,623 1,579,107 1,353,991
Equity income, net – related parties (1)
23,977 35,494 84,227 116,839
Operating expenses
Cost of product (2)
( 14,638 ) ( 37,083 ) ( 46,685 ) ( 56,214 )
Operation and maintenance 2,523 843 8,665 2,493
General and administrative 45 414 299 698
Total operating expenses ( 12,070 ) ( 35,826 ) ( 37,721 ) ( 53,023 )
_________________________________________________________________________________________
(1) See Note 7 .
(2) Includes related-party natural - gas and NGLs imbalances.
Balance sheets
thousands September 30,
2024 December 31,
2023
Assets
Accounts receivable, net $ 393,740 $ 358,141
Other current assets 3,140 1,260
Equity investments (1)
535,172 904,535
Other assets 40,871 43,216
Total assets 972,923 1,307,152
Liabilities
Accounts and imbalance payables 57,414 38,541
Accrued liabilities 5,029 4,979
Other liabilities (2)
472,075 335,320
Total liabilities 534,518 378,840
_________________________________________________________________________________________
(1) See Note 7 .
(2) Includes contract liabilities from contracts with customers. See Note 2 .
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
6. RELATED-PARTY TRANSACTIONS
Statements of cash flows
Nine Months Ended
September 30,
thousands 2024 2023
Distributions from equity - investment earnings – related parties
$ 83,091 $ 115,897
Contributions to equity investments – related parties — ( 1,153 )
Distributions from equity investments in excess of cumulative earnings – related parties 27,560 31,715
Distributions to Partnership unitholders (1)
( 451,613 ) ( 382,438 )
Distributions to WES Operating unitholders (2)
( 18,502 ) ( 18,260 )
Unit repurchases from Occidental (3)
— ( 127,500 )
_________________________________________________________________________________________
(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) Represents common units repurchased from Occidental. 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 materially from the Partnership’s consolidated financial statements:
Statements of operations
Three Months Ended
September 30, Nine Months Ended
September 30,
thousands 2024 2023 2024 2023
General and administrative (1)
$ 944 $ 1,137 $ 3,292 $ 3,271
_________________________________________________________________________________________
(1) Includes an intercompany service fee between the Partnership and WES Operating.
Balance sheets
thousands September 30,
2024 December 31,
2023
Accounts receivable, net (1)
$ 396,943 $ 358,141
Other current assets 2,722 1,235
Other assets 37,616 41,405
Accounts and imbalance payables (1)
57,414 69,472
Accrued liabilities 4,713 4,662
_________________________________________________________________________________________
(1) Includes balances related to transactions between the Partnership and WES Operating.
Statements of cash flows
Nine Months Ended
September 30,
thousands 2024 2023
Distributions to WES Operating unitholders (1)
$ ( 924,796 ) $ ( 912,770 )
_________________________________________________________________________________________
(1) Represents distributions paid to the Partnership and Occidental, through its ownership of WGRAH, pursuant to WES Operating’s partnership agreement. See Note 4 and Note 5.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
6. RELATED-PARTY TRANSACTIONS
Related-party revenues. Related - party revenues include amounts earned by the Partnership from services provided to Occidental and from the sale of natural gas, condensate, and NGLs to Occidental.
Gathering and processing agreements. The Partnership has significant gathering, processing, and produced-water disposal arrangements with affiliates of Occidental on most of its systems. While Occidental is the contracting counterparty of the Partnership, these arrangements with Occidental include not just Occidental - produced volumes, but also, in some instances, the volumes of other working - interest owners of Occidental who rely on the Partnership’s facilities and infrastructure to bring their volumes to market. Natural-gas throughput (excluding equity-investment throughput) attributable to production owned or controlled by Occidental was 36 % and 34 % for the three and nine months ended September 30, 2024, respectively, and 34 % for both the three and nine months ended September 30, 2023. Crude-oil and NGLs throughput (excluding equity-investment throughput) attributable to production owned or controlled by Occidental was 92 % and 90 % for the three and nine months ended September 30, 2024, respectively, and 87 % for both the three and nine months ended September 30, 2023. Produced-water throughput attributable to production owned or controlled by Occidental was 78 % and 77 % for the three and nine months ended September 30, 2024, respectively, and 77 % and 78 % for the three and nine months ended September 30, 2023, respectively.
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.
Marketing Services. Prior to January 1, 2021, Occidental provided marketing-related services to certain of the Partnership’s subsidiaries. While the Partnership now markets and sells substantially all of its crude oil, residue gas, and NGLs directly to third parties, it does still have some marketing agreements with affiliates of Occidental, the activity for which is reflected in the related-party statements of operations above.
Related-party expenses. 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. General and administrative expense includes amounts accrued for or paid to Occidental for certain reimbursed expenses pursuant to the 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 Marketing Services 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. 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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
6. RELATED-PARTY TRANSACTIONS
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 and sells equipment, inventory, and other miscellaneous assets from or to Occidental or its affiliates.
Related-party commercial agreement. During the first quarter of 2021, an affiliate of Occidental and certain wholly owned subsidiaries of the Partnership entered into a Commercial Understanding Agreement (“CUA”). Under the CUA, certain West Texas surface - use and salt - water disposal agreements were amended to reduce usage fees owed by the Partnership in exchange for the forgiveness of certain deficiency fees owed by Occidental and other unrelated contractual amendments. The present value of the reduced usage fees under the CUA was $ 30.0 million at the time the agreement was executed. 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. Occidental was the only customer from which revenues exceeded 10% of consolidated revenues for all periods presented in the consolidated statements of operations.
7. EQUITY INVESTMENTS
The following table presents the financial statement impact of the Partnership’s equity investments for the nine months ended September 30, 2024:
thousands Balance at December 31, 2023 Equity
income, net Distributions Distributions
in excess of
cumulative
earnings (1)
Acquisitions and Divestitures (2)
Balance at September 30, 2024
White Cliffs $ 13,248 $ 3,256 $ ( 3,256 ) $ ( 2,558 ) $ — $ 10,690
Rendezvous 10,815 ( 1,682 ) ( 1,021 ) ( 1,240 ) — 6,872
Mont Belvieu JV 88,556 51 ( 442 ) ( 6,047 ) ( 82,118 ) —
TEG 15,185 622 ( 639 ) ( 461 ) — 14,707
TEP 172,559 19,900 ( 20,089 ) ( 2,093 ) — 170,277
FRP 186,551 35,823 ( 34,996 ) ( 4,741 ) — 182,637
Whitethorn LLC 144,799 1,185 3,326 ( 4,924 ) ( 144,386 ) —
Saddlehorn 101,760 4,200 ( 4,124 ) ( 3,096 ) ( 98,740 ) —
Panola 18,716 74 ( 74 ) ( 1,021 ) ( 17,695 ) —
Mi Vida 45,424 6,862 ( 7,840 ) — — 44,446
Red Bluff Express 106,922 13,936 ( 13,936 ) ( 1,379 ) — 105,543
Total $ 904,535 $ 84,227 $ ( 83,091 ) $ ( 27,560 ) $ ( 342,939 ) $ 535,172
_________________________________________________________________________________________
(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.
(2) See Note 3 .
During the first quarter of 2024, the Partnership closed on the sale of the following equity investments to third parties: (i) the 25.00 % interest in Mont Belvieu JV, (ii) the 20.00 % interest in Whitethorn LLC, (iii) the 15.00 % interest in Panola, and (iv) the 20.00 % interest in Saddlehorn. See Note 3 .
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
8. PROPERTY, PLANT, AND EQUIPMENT
A summary of the historical cost of property, plant, and equipment is as follows:
thousands Estimated Useful Life September 30,
2024 December 31,
2023
Land N/A $ 12,550 $ 12,504
Gathering systems – pipelines 30 years 5,833,706 5,890,607
Gathering systems – compressors 15 years 2,645,117 2,553,602
Processing complexes and treating facilities 25 years 4,048,496 3,745,332
Transportation pipeline and equipment 3 to 48 years
257,936 259,314
Produced - water disposal systems
20 years 1,179,217 1,098,616
Assets under construction N/A 424,670 479,368
Other 3 to 40 years
940,501 906,088
Total property, plant, and equipment 15,342,193 14,945,431
Less accumulated depreciation 5,646,602 5,290,415
Net property, plant, and equipment $ 9,695,591 $ 9,655,016
“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 nine months ended September 30, 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.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
9. SELECTED COMPONENTS OF WORKING CAPITAL
A summary of accounts receivable, net is as follows:
The Partnership WES Operating
thousands September 30,
2024 December 31,
2023 September 30,
2024 December 31,
2023
Trade receivables, net $ 670,613 $ 665,892 $ 673,816 $ 665,892
Other receivables, net 1,022 745 982 723
Total accounts receivable, net $ 671,635 $ 666,637 $ 674,798 $ 666,615
A summary of other current assets is as follows:
The Partnership WES Operating
thousands September 30,
2024 December 31,
2023 September 30,
2024 December 31,
2023
NGLs inventory $ 1,892 $ 2,557 $ 1,892 $ 2,557
Imbalance receivables 5,341 5,056 5,341 5,056
Prepaid insurance 3,477 21,065 3,056 18,571
Contract assets 11,931 9,595 11,931 9,595
Other 13,675 14,713 13,257 14,689
Total other current assets $ 36,316 $ 52,986 $ 35,477 $ 50,468
A summary of accrued liabilities is as follows:
The Partnership WES Operating
thousands September 30,
2024 December 31,
2023 September 30,
2024 December 31,
2023
Accrued interest expense $ 90,181 $ 124,937 $ 90,181 $ 124,937
Short - term asset retirement obligations
9,864 7,606 9,864 7,606
Short - term remediation and reclamation obligations
1,243 5,490 1,243 5,490
Income taxes payable 6,397 2,908 6,397 2,908
Contract liabilities 10,076 16,866 10,076 16,866
Accrued payroll and benefits 50,721 55,237 — 2,243
Other 35,239 49,528 33,989 43,411
Total accrued liabilities $ 203,721 $ 262,572 $ 151,750 $ 203,461
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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
10. DEBT AND INTEREST EXPENSE
WES Operating is the borrower for all outstanding debt and is expected to be the borrower for all future debt issuances. The following table presents the outstanding debt:
September 30, 2024 December 31, 2023
thousands Principal Carrying
Value Fair
Value (1)
Principal Carrying
Value Fair
Value (1)
Short - term debt
Commercial paper $ — $ — $ — $ 613,885 $ 610,312 $ 610,312
3.100 % Senior Notes due 2025
663,831 663,418 658,879 — — —
3.950 % Senior Notes due 2025
336,758 336,145 334,236 — — —
Finance lease liabilities 8,455 8,455 8,455 7,436 7,436 7,436
Total short - term debt
$ 1,009,044 $ 1,008,018 $ 1,001,570 $ 621,321 $ 617,748 $ 617,748
Long - term debt
3.100 % Senior Notes due 2025
$ — $ — $ — $ 666,481 $ 665,145 $ 650,765
3.950 % Senior Notes due 2025
— — — 349,163 347,938 341,415
4.650 % Senior Notes due 2026
440,505 439,499 440,646 467,204 465,705 459,617
4.500 % Senior Notes due 2028
342,935 340,991 339,955 357,094 354,665 346,121
4.750 % Senior Notes due 2028
336,260 334,658 336,179 382,888 380,747 374,767
6.350 % Senior Notes due 2029
600,000 593,964 637,500 600,000 593,069 626,994
4.050 % Senior Notes due 2030
1,057,134 1,051,190 1,018,157 1,104,593 1,097,609 1,036,097
6.150 % Senior Notes due 2033
750,000 741,668 793,103 750,000 741,125 780,203
5.450 % Senior Notes due 2034
800,000 790,331 802,608 — — —
5.450 % Senior Notes due 2044
600,000 594,151 568,686 600,000 594,031 545,154
5.300 % Senior Notes due 2048
700,000 687,925 636,440 700,000 687,735 614,082
5.500 % Senior Notes due 2048
350,000 343,016 325,073 350,000 342,913 312,365
5.250 % Senior Notes due 2050
1,000,000 984,421 908,480 1,000,000 984,206 895,440
Finance lease liabilities 27,398 27,398 27,398 28,668 28,668 28,668
Total long - term debt
$ 7,004,232 $ 6,929,212 $ 6,834,225 $ 7,356,091 $ 7,283,556 $ 7,011,688
_________________________________________________________________________________________
(1) Fair value is measured using the market approach and Level - 2 fair value inputs.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
10. DEBT AND INTEREST EXPENSE
Debt activity. The following table presents the debt activity for the nine months ended September 30, 2024:
thousands Carrying Value
Balance at December 31, 2023 $ 7,901,304
Commercial paper borrowings (repayments), net (1)
( 610,312 )
Issuance of 5.450 % Senior Notes due 2034
800,000
Repayment of 3.100 % Senior Notes due 2025
( 2,650 )
Repayment of 3.950 % Senior Notes due 2025
( 12,405 )
Repayment of 4.650 % Senior Notes due 2026
( 26,699 )
Repayment of 4.500 % Senior Notes due 2028
( 14,159 )
Repayment of 4.750 % Senior Notes due 2028
( 46,628 )
Repayment of 4.050 % Senior Notes due 2030
( 47,459 )
Finance lease liabilities ( 251 )
Other ( 3,511 )
Balance at September 30, 2024 $ 7,937,230
________________________________________________________________________________________
(1) Net of borrowings and repayments related to commercial paper notes with original maturities of 90 days or less.
WES Operating 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 September 30, 2024 and 2023. The effective interest rate of these notes is subject to adjustment from time to time due to a change in credit rating.
During the third quarter of 2024, WES Operating completed the public offering of $ 800.0 million in aggregate principal amount of 5.450 % Senior Notes due 2034. Interest is payable semi-annually on May 15th and November 15th of each year, with the initial interest payment being due on May 15, 2025. Net proceeds from the offering will be used to repay a portion of the maturing 3.100 % Senior Notes due 2025 and 3.950 % Senior Notes due 2025 and for general partnership purposes, including the funding of capital expenditures.
During the nine months ended September 30, 2024, WES Operating purchased and retired $ 150.0 million of certain of its senior notes via open-market repurchases with cash from operations (see Debt activity above) and a gain of $ 5.4 million was recognized for the early retirement of portions of these notes. As of September 30, 2024, the 3.100 % Senior Notes due 2025 and 3.950 % Senior Notes due 2025 were classified as short-term debt on the consolidated balance sheet.
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. 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. Net proceeds from the offering were used to repay borrowings under the RCF and for general partnership purposes. In addition, during 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. For the three and nine months ended September 30, 2023, a gain of $ 8.6 million and $ 15.4 million, respectively, was recognized for the early retirement of portions of these notes.
As of September 30, 2024, WES Operating was in compliance with all covenants under the relevant governing indentures.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
10. DEBT AND INTEREST EXPENSE
Revolving credit facility. In May 2024, WES Operating entered into an amendment to the RCF to exercise an option to extend the maturity date of the RCF from April 2028 to April 2029, for each extending lender. The non - extending lender’s commitments mature in April 2028 and represent $ 120.0 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.
As of September 30, 2024, there were no outstanding borrowings and no outstanding letters of credit, resulting in $ 2.0 billion in effective borrowing capacity under the RCF. Any outstanding commercial paper borrowings (see below) reduce the effective borrowing capacity under the RCF as WES Operating maintains availability under the RCF as support for its commercial paper program. As of September 30, 2024 and 2023, the interest rate on any outstanding RCF borrowings was 6.15 % and 6.62 %, respectively. The facility - fee rate was 0.20 % at September 30, 2024 and 2023. As of September 30, 2024, 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 September 30, 2024, there were no outstanding borrowings under the commercial paper program.
Interest expense. The following table summarizes the amounts included in interest expense:
Three Months Ended
September 30, Nine Months Ended
September 30,
thousands 2024 2023 2024 2023
Long - term and short - term debt
$ ( 93,555 ) $ ( 83,177 ) $ ( 278,361 ) $ ( 249,416 )
Finance lease liabilities ( 632 ) ( 223 ) ( 1,964 ) ( 616 )
Commitment fees and amortization of debt-related costs ( 3,244 ) ( 2,904 ) ( 9,929 ) ( 9,199 )
Capitalized interest 3,282 3,550 11,077 8,625
Interest expense $ ( 94,149 ) $ ( 82,754 ) $ ( 279,177 ) $ ( 250,606 )
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
11. COMMITMENTS AND CONTINGENCIES
Environmental obligations. The Partnership is subject to various environmental-remediation obligations arising from federal, state, and local regulations regarding air and water quality, hazardous and solid waste disposal, and other environmental matters. As of September 30, 2024 and December 31, 2023, the consolidated balance sheets included $ 2.3 million and $ 7.3 million, respectively, of liabilities for remediation and reclamation obligations. The current portion of these amounts is included in Accrued liabilities , and the long-term portion of these amounts is included in Other liabilities. The majority of payments related to these obligations are expected to be made over the next year. See Note 9 .
Litigation and legal proceedings. From time to time, the Partnership is involved in legal, tax, regulatory, and other proceedings in various forums regarding performance, contracts, and other matters that arise in the ordinary course of business. Management is not aware of any such proceeding for which the final disposition could have a material adverse effect on the Partnership’s financial condition, results of operations, or cash flows.
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 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 expansion, construction, and asset - integrity projects at the West Texas complex, Powder River Basin complex, DBM water systems, DJ Basin complex, and DBM oil system.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.