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Western Midstream Partners Third Quarter 2020 Results

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   |    Monday,November 09,2020

Western Midstream Partners, LP reported its Q3 2020 results.

Net income (loss) available to limited partners for the third quarter of 2020 totaled $241.5 million, or $0.55 per common unit (diluted), with third-quarter 2020 Adjusted EBITDA(1) totaling $518.4 million, third-quarter 2020 Cash flows from operating activities totaling $392.9 million, and third-quarter 2020 Free cash flow(1) totaling $339.2 million.


  • Commenced operations of Loving ROTF Train IV on the DBM oil system, adding 30 MBbls/d of treating capacity; completed project ahead of schedule for approximately 35% less than our previous North Loving Trains
  • Exchanged WES's interest in the $260 million note receivable from Anadarko Petroleum Corporation, a wholly owned subsidiary of Occidental Petroleum Corporation (NYSE: OXY) ("Occidental"), for 27.855 million WES common units owned by Occidental
  • Executed open-market repurchases for $29.0 million of Senior Notes due 2022 and 2023 for an aggregate repurchase price of $27.2 million
  • In October 2020, WES completed the sale of its 14.81% equity interest in Fort Union Gas Gathering, LLC and entered into an option agreement to sell the Partnership's Bison treating facility during the first quarter of 2021 for upfront consideration of $27.0 million

In October 2020, WES announced its third-quarter 2020 per-unit distribution of $0.3110, which is unchanged from WES's second-quarter 2020 per-unit distribution. Third-quarter 2020 Free cash flow after distributions totaled $198.3 million.

President, Chief Executive Officer, and Chief Financial Officer, Michael Ure said: "As evidenced by our outstanding third-quarter and year-to-date financial and operational results, the WES team continues to surpass expectations as we adapt and respond to market challenges. Producer outperformance, the pursuit of operational efficiencies and sustainable cost savings, and continued commercial achievements contributed to the highest quarterly Adjusted EBITDA in WES's history. As a result of the incredible outperformance achieved thus far and anticipated continued success, we expect full-year Adjusted EBITDA above the high-end of our originally issued guidance range of $1.875 billion to $1.975 billion and capital expenditures meaningfully below the low-end of our previously updated 2020 guidance range of $400 million to $450 million.

Ure continued, "The establishment of WES as a stand-alone midstream business has generated improved efficiencies between our commercial, engineering, and operations teams, enabling our organization to maximize the operability of our assets and realize operating and capital savings. Notwithstanding the significant challenges faced this year, we expect to realize approximately $175 million in sustainable annual operating cost and G&A savings compared to our originally issued guidance."

As a result of depressed upstream investment, our third-quarter 2020 volumes declined as expected. Third-quarter 2020 total natural-gas throughput(1) averaged 4.3 Bcf/d, representing a 4-percent sequential-quarter decrease and a 1-percent increase from third-quarter 2019. Third-quarter 2020 total throughput for crude-oil and NGLs assets(1) averaged 689 MBbls/d, representing a 4-percent sequential-quarter decrease and an 11-percent increase from third-quarter 2019. Third-quarter 2020 total throughput for produced-water assets(1) averaged 673 MBbls/d, representing an 11-percent sequential-quarter decrease and an 18-percent increase from third-quarter 2019.

Preliminary 2021 Guidance

Based on current production-forecast information from our customers, WES is providing preliminary 2021 guidance as follows:

  • Adjusted EBITDA(1) between $1.825 billion and $1.925 billion
  • Total capital expenditures(2) between $275 million and $375 million, which represents a $100 million reduction from the midpoint of our previously updated 2020 guidance
  • Debt to Trailing Twelve Month ("TTM") Adjusted EBITDA at or below 4.0 times at year-end 2021
  • Full-year 2021 distributions of at least $1.24 per unit(3)
  • Repay 2021 debt maturity with free cash flow

$250MM Buyback

The board of directors of the Partnership's general partner has authorized the Partnership to commence a buyback program of up to $250 million of the Partnership's common units through December 31, 2021 (the "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. The timing and amount of purchases under the program will be determined based on ongoing assessments of capital needs, WES's financial performance, the market price of the common units and other factors, including organic growth and acquisition opportunities and general market conditions. The Purchase Program does not obligate the Partnership to purchase any specific dollar amount or number of units and may be suspended or discontinued at any time.

"Over the last year, we have reexamined each aspect of our operations and discovered ways to operate in a more cost-effective manner to generate incremental free cash flow and increase stakeholder value," said Michael Ure. "This year, following our third-quarter distribution, we will have returned over $1.15 billion, approximately 10% of our enterprise value, to stakeholders through debt repurchases, cash distributions, and units acquired through the Anadarko note exchange. Additionally, by prioritizing leverage reduction with Debt-to-TTM Adjusted EBITDA currently at 4.0 times, we have already exceeded our year-end 2020 target of at or below 4.5 times and met our year-end 2021 target of at or below 4.0 times. We expect to achieve strong 2021 financial results with minimal capital by further refining and enhancing our business model while continuing to operate safely, deliver exceptional customer service, and return cash to stakeholders."

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