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Western Gas Partners Announces Third-Quarter 2012 Results



  Western Gas Partners Announces Third-Quarter 2012 Results

                Provides Distribution Growth Outlook for 2013

Business Wire

HOUSTON -- October 31, 2012

Western Gas Partners, LP (NYSE: WES) today announced third-quarter 2012
financial and operating results. Net income available to limited partners for
the third quarter totaled $31.5 million, or $0.33 per common unit (diluted).
The Partnership’s third-quarter Adjusted EBITDA ^(1) was $84.5 million and
Distributable cash flow ^(1) was $64.4 million, resulting in a Coverage ratio
^(1) of 1.14 times for the period.

Total throughput attributable to Western Gas Partners, LP for the third
quarter of 2012 averaged 2,461 MMcf/d, 3 percent higher than the prior quarter
and 10 percent above the third quarter of 2011. These results include the net
throughput attributable to the Mountain Gas Resources (“MGR”) and Bison assets
acquired from Anadarko Petroleum Corporation for all periods of comparison,
throughput attributable to the Platte Valley system beginning March 2011, and
throughput attributable to the recently acquired 24-percent interest in
Chipeta Processing LLC (“Chipeta”) beginning August 2012. Capital expenditures
attributable to Western Gas Partners, LP, excluding acquisitions, totaled
approximately $141.5 million during the third quarter of 2012. Of this amount,
maintenance capital expenditures were approximately $10.8 million, or 13
percent of Adjusted EBITDA.

“With recent compression additions in the rapidly expanding DJ Basin, our
business model is performing as expected while we continue to manage
downstream issues related to natural gas liquids,” said Western Gas Partners’
President and Chief Executive Officer Don Sinclair. “The stable performance of
our core portfolio combined with progress on our major capital projects
enables us to announce the goal of raising our quarterly distribution by a
minimum of 15 percent in 2013.”

The Partnership previously declared a quarterly distribution of $0.50 per unit
for the third quarter of 2012, payable on November 13, 2012, to unitholders of
record at the close of business on October 31, 2012, representing a 4-percent
increase over the prior quarter and a 19-percent increase over the
third-quarter 2011 distribution of $0.42 per unit.

CONFERENCE CALL TOMORROW AT 11 A.M. CDT

The Partnership will host a conference call on November 1, 2012, at 11 a.m.
Central Daylight Time (12 p.m. Eastern Daylight Time) to discuss third-quarter
results. To participate via telephone, please dial 877.621.4819 and enter
participant code 37619281. Please call in 10 minutes prior to the scheduled
start time. For complete instructions on how to participate in the conference
call, or to access the live audio webcast and slide presentation, please visit
www.westerngas.com. A replay of the call will also be available on the Web
site for approximately two weeks following the conference call.

Western Gas Partners, LP is a growth-oriented Delaware master limited
partnership formed by Anadarko Petroleum Corporation to own, operate, acquire
and develop midstream energy assets. With midstream assets in East, West and
South Texas, the Rocky Mountains and the Mid-Continent, the Partnership is
engaged in the business of gathering, processing, compressing, treating and
transporting natural gas, condensate, natural gas liquids and crude oil for
Anadarko and other producers and customers. For more information about Western
Gas Partners, please visit www.westerngas.com.

This news release contains forward-looking statements. Western Gas Partners
believes that its expectations are based on reasonable assumptions. No
assurance, however, can be given that such expectations will prove to have
been correct. A number of factors could cause actual results to differ
materially from the projections, anticipated results or other expectations
expressed in this news release. These factors include the ability to meet
financial guidance or distribution growth expectations; the ability to safely
and efficiently operate our assets; the ability to obtain new sources of
natural gas supplies; the effect of fluctuations in commodity prices and the
demand for natural gas and related products; the ability to meet projected
in-service dates for capital growth projects; and construction costs or
capital expenditures exceeding estimated or budgeted costs or expenditures, as
well as other factors described in the “Risk Factors” section of the
Partnership’s most recent Form 10-K filed with the Securities and Exchange
Commission and other public filings and press releases by Western Gas
Partners. Western Gas Partners undertakes no obligation to publicly update or
revise any forward-looking statements.

^(1) Please see the tables at the end of this release for a reconciliation of
non-GAAP to GAAP measures and calculation of the Coverage ratio.

                 Reconciliation of GAAP to Non-GAAP Measures

Below are reconciliations of Distributable cash flow (non-GAAP) to net income
attributable to Western Gas Partners, LP (GAAP) and Adjusted EBITDA (non-GAAP)
to net income attributable to Western Gas Partners, LP (GAAP) and net cash
provided by operating activities (GAAP), as required under Regulation G of the
Securities Exchange Act of 1934. Management believes that the presentation of
Distributable cash flow, Adjusted EBITDA and Coverage ratio are widely
accepted financial indicators of a company’s financial performance compared to
other publicly traded partnerships and are useful in assessing our ability to
incur and service debt, fund capital expenditures and make distributions.
Distributable cash flow, Adjusted EBITDA and Coverage ratio, as defined by the
Partnership, may not be comparable to similarly titled measures used by other
companies. Therefore, the Partnership’s consolidated Distributable cash flow,
Adjusted EBITDA and Coverage ratio should be considered in conjunction with
net income and other performance measures (as applicable), such as operating
income or cash flows from operating activities.

Distributable Cash Flow

The Partnership defines Distributable cash flow as Adjusted EBITDA, plus
interest income, less net cash paid for interest expense (including
amortization of deferred debt issuance costs originally paid in cash, offset
by non-cash capitalized interest), maintenance capital expenditures and income
taxes.

                                  Three Months Ended     Nine Months Ended
                                  September 30,          September 30,
thousands except Coverage ratio   2012       2011 ^(1)   2012        2011 ^(1)
Reconciliation of Net income attributable to Western Gas Partners, LP
  to Distributable cash flow and calculation of the Coverage ratio
Net income attributable to
  Western Gas Partners, LP        $ 39,517   $  45,306   $ 123,957   $ 134,229
Add:
  Distributions from equity         5,584       3,988      15,603      11,988
  investees
  Non-cash equity-based             9,417       2,389      16,407      6,235
  compensation expense
  Interest expense, net (non-cash   81          —          244         —
  settled)
  Income tax expense                72          4,668      699         15,564
  Depreciation, amortization and    27,084      28,215     79,514      76,282
  impairments ^(2)
  Other expense ^(2)                —           —          1,665       3,683
Less:
  Equity income, net                3,804       2,660      10,752      7,682
  Cash paid for maintenance         10,819      10,306     25,543      20,584
  capital expenditures ^(2) (3)
  Capitalized interest              2,224       121        3,827       134
  Cash paid for income taxes        423         190        495         190
  Other income ^ (2) (4)            125         7          187         1,761
  Interest income, net (non-cash    —           4,348      —           6,317
  settled)
Distributable cash flow           $ 64,360   $  66,934   $ 197,285   $ 211,313
                                                                        
Distributions declared ^ (5)
  Limited partners                $ 47,968               $ 135,699
  General partner                   8,378                  19,125   
  Total                           $ 56,346               $ 154,824  
Coverage ratio                      1.14   x               1.27    x

^(1) Financial information has been recast to include results attributable to
     the MGR assets.
     Includes the Partnership’s 51% share prior to August 1, 2012 and 75%
^(2) share after August 1, 2012, of depreciation, amortization and
     impairments; other expense; cash paid for maintenance capital
     expenditures; and other income attributable to Chipeta.
     Net of a prior period adjustment reclassifying approximately $0.7 million
^(3) from capital expenditures to operating expenses for the nine months ended
     September 30, 2012.
     Excludes income of $0.4 million and $1.2 million for the three and nine
     months ended September 30, 2012, respectively, and $0.2 million and $1.0
^(4) million for the three and nine months ended September 30, 2011,
     respectively, related to a component of a gas processing agreement
     accounted for as a capital lease.
^(5) Reflects distributions of $0.50 and $1.44 per unit declared for the three
     and nine months ended September 30, 2012, respectively.
      

            Reconciliation of GAAP to Non-GAAP Measures, continued

Adjusted EBITDA attributable to Western Gas Partners, LP (“Adjusted EBITDA”)

The Partnership defines Adjusted EBITDA as net income (loss) attributable to
Western Gas Partners, LP, plus distributions from equity investees, non-cash
equity-based compensation expense, expense in excess of the expense
reimbursement cap provided in the omnibus agreement (which cap is no longer
effective), interest expense, income tax expense, depreciation, amortization
and impairments, and other expense, less income from equity investments,
interest income, income tax benefit, and other income.

                       Three Months Ended          Nine Months Ended
                       September 30,               September 30,
thousands              2012          2011 ^(1)     2012           2011 ^(1)
Reconciliation of Net income attributable to
    Western Gas Partners, LP to Adjusted EBITDA
Net income
attributable to        $ 39,517      $  45,306     $ 123,957      $ 134,229
Western Gas
Partners, LP
Add:
    Distributions
    from equity          5,584          3,988        15,603         11,988
    investees
    Non-cash
    equity-based         9,417          2,389        16,407         6,235
    compensation
    expense
    Interest expense     10,977         8,930        30,118         21,738
    Income tax           72             4,668        699            15,564
    expense
    Depreciation,
    amortization and     27,084         28,215       79,514         76,282
    impairments ^(2)
    Other expense        —              —            1,665          3,683
    ^(2)
Less:
    Equity income,       3,804          2,660        10,752         7,682
    net
    Interest income,     4,225          8,573        12,675         18,992
    net – affiliates
    Other income ^       125            7            187            1,761     
    (2) (3)
Adjusted EBITDA        $ 84,497      $  82,256     $ 244,349      $ 241,284   
                                                                     
Reconciliation of Adjusted EBITDA to
    Net cash provided by operating activities
Adjusted EBITDA
attributable to        $ 84,497      $  82,256     $ 244,349      $ 241,284
Western Gas
Partners, LP
Adjusted EBITDA
attributable to          3,866          4,593        13,709         11,793
noncontrolling
interests
Interest income          (6,752  )      (357   )     (17,443  )     (2,746   )
(expense), net
Non-cash
equity-based             (9,417  )      (2,389 )     (16,407  )     (6,235   )
compensation expense
Current income tax       (60     )      (5,477 )     (185     )     (10,882  )
expense
Other income             126            7            (1,475   )     (1,919   )
(expense), net ^(3)
Distributions from
equity investees
less than (in excess     (1,780  )      (1,328 )     (4,851   )     (4,306   )
of) equity income,
net
Changes in operating
working capital:
    Accounts
    receivable and
    natural gas          (604    )      1,891        5,062          (18,925  )
    imbalance
    receivable
    Accounts
    payable, accrued
    liabilities and      62,600         16,301       71,420         30,359
    natural gas
    imbalance
    payable
    Other                (3,766  )      (334   )     621            4,978     
Net cash provided by   $ 128,710     $  95,163     $ 294,800      $ 243,401   
operating activities
                                                                     
Cash flow
information of
Western Gas
Partners, LP
Net cash provided by                               $ 294,800      $ 243,401
operating activities
Net cash used in                                   $ (899,943 )   $ (405,241 )
investing activities
Net cash provided by                               $ 426,078      $ 386,223
financing activities

^(1) Financial information has been recast to include results attributable to
     the MGR assets.
     Includes the Partnership’s 51% share prior to August 1, 2012 and 75%
^(2) share after August 1, 2012, of depreciation, amortization and
     impairments; other expense; and other income attributable to Chipeta.
     Excludes income of $0.4 million and $1.2 million for the three and nine
     months ended September 30, 2012, respectively, and $0.2 million and $1.0
^(3) million for the three and nine months ended September 30, 2011,
     respectively, related to a component of a gas processing agreement
     accounted for as a capital lease.
      

Western Gas Partners, LP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
                                                                  
                         Three Months Ended          Nine Months Ended
                         September 30,               September 30,
thousands except         2012          2011 ^(1)     2012          2011 ^(1)
per-unit amounts
                                                                      
Revenues
Gathering, processing
and transportation of    $ 78,219      $ 75,686      $ 235,849     $ 222,432
natural gas and
natural gas liquids
Natural gas, natural
gas liquids and            136,106       137,860       386,818       371,800
condensate sales
Equity income and          4,695         4,000         13,936        13,836   
other, net
Total revenues             219,020       217,546       636,603       608,068  
Operating expenses
Cost of product            89,107        89,666        254,719       240,765
Operation and              33,261        31,773        97,041        87,859
maintenance
General and                14,554        8,597         34,233        24,630
administrative
Property and other         5,328         4,629         14,998        13,302
taxes
Depreciation,
amortization and           27,528        28,935        81,270        78,413   
impairments
Total operating            169,778       163,600       482,261       444,969  
expenses
Operating income           49,242        53,946        154,342       163,099
Interest income, net –     4,225         8,573         12,675        18,992
affiliates
Interest expense           (10,977 )     (8,930  )     (30,118 )     (21,738 )
Other income               522           258           (287    )     (895    )
(expense), net
Income before income       43,012        53,847        136,612       159,458
taxes
Income tax expense         72            4,668         699           15,564   
Net income                 42,940        49,179        135,913       143,894
Net income
attributable to            3,423         3,873         11,956        9,665    
noncontrolling
interests
Net income
attributable to          $ 39,517      $ 45,306      $ 123,957     $ 134,229
Western Gas Partners,
LP
Limited partners'
interest in net
income:
Net income
attributable to          $ 39,517      $ 45,306      $ 123,957     $ 134,229
Western Gas Partners,
LP
Pre-acquisition net
(income) loss              —             (8,497  )     —             (28,497 )
allocated to Anadarko
General partner
interest in net            (8,042  )     (2,394  )     (18,508 )     (5,684  )
(income) loss
Limited partners'        $ 31,475      $ 34,415      $ 105,449     $ 100,048
interest in net income
                                                                      
Net income per unit –
basic and diluted
       Common units      $ 0.33        $ 0.41        $ 1.14        $ 1.32
       Subordinated      $ —           $ —           $ —           $ 0.96
       units ^ (2)
Weighted average units
outstanding – basic
and diluted
       Common units        95,883        84,667        92,627        59,647
       Subordinated        —             —             —             21,968   
       units ^ (2)

^(1) Financial information has been recast to include results attributable to
     the MGR assets.
     All subordinated units were converted to common units on a one-for-one
^(2) basis on August 15, 2011. For purposes of calculating net income per
     common and subordinated unit, the conversion of the subordinated units is
     deemed to have occurred on July 1, 2011.
      

Western Gas Partners, LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
                                                                 
                                                  September 30,   December 31,
thousands except number of units                  2012            2011
                                                                      
Current assets                                    $  78,239       $  256,448
Note receivable – Anadarko                           260,000         260,000
Net property, plant and equipment                    2,342,923       2,052,224
Other assets                                         272,782         268,954
Total assets                                      $  2,953,944    $  2,837,626
                                                                      
Current liabilities                               $  210,081      $  76,596
Long-term debt                                       1,010,435       669,178
Asset retirement obligations and other               71,109          174,546
Total liabilities                                 $  1,291,625    $  920,320
                                                                      
Equity and partners’ capital
Common units (95,934,351 and 90,140,999 units
issued and outstanding at September 30, 2012,     $  1,552,399    $  1,495,253
and December 31, 2011, respectively)
General partner units (1,957,845 and 1,839,613
units issued and outstanding at September 30,        41,416          31,729
2012, and December 31, 2011, respectively)
Net investment by Anadarko                           —               269,600
Noncontrolling interests                             68,504          120,724
Total liabilities, equity and partners' capital   $  2,953,944    $  2,837,626
                                                                      

Western Gas Partners, LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
                                                                
                                                  Nine Months Ended
                                                  September 30,
thousands                                         2012           2011 ^(1)
                                                   
Cash flows from operating activities
Net income                                        $ 135,913      $ 143,894
Adjustments to reconcile net income to net cash
provided by operating activities:
          Depreciation, amortization and            81,270         78,413
          impairments
          Change in other items, net                77,617         21,094     
Net cash provided by operating activities         $ 294,800      $ 243,401    
                                                                    
Cash flows from investing activities
Capital expenditures                              $ (294,596 )   $ (78,573   )
Acquisitions from affiliates                        (605,960 )     (25,000   )
Acquisitions from third parties                     —              (301,957  )
Investments in equity affiliates                    (147     )     (93       )
Proceeds from sale of assets to affiliates          760            382        
Net cash used in investing activities             $ (899,943 )   $ (405,241  )
                                                                    
Cash flows from financing activities
Borrowings, net of debt issuance costs            $ 885,291      $ 1,055,939
Repayments of debt                                  (549,000 )     (869,000  )
Proceeds from issuance of common and general        216,462        335,348
partner units, net of offering expenses
Distributions to unitholders                        (141,505 )     (99,795   )
Contributions from noncontrolling interest          26,888         16,876
owners
Distributions to noncontrolling interest owners     (14,303  )     (10,219   )
Net contributions from (distributions to)           2,245          (42,926   )
Anadarko
Net cash provided by financing activities         $ 426,078      $ 386,223    
                                                                    
Net increase (decrease) in cash and cash          $ (179,065 )   $ 224,383
equivalents
Cash and cash equivalents at beginning of           226,559        27,074     
period
Cash and cash equivalents at end of period        $ 47,494       $ 251,457    

^(1) Financial information has been recast to include results attributable to
     the MGR assets.
      

Western Gas Partners, LP
OPERATING STATISTICS
(Unaudited)
                                                                    
                                     Three Months Ended    Nine Months Ended
                                     September 30,         September 30,
MMcf/d except per-unit amounts       2012      2011 ^(1)   2012      2011 ^(1)
                                                                        
Throughput
    Gathering, treating and            1,201     1,274       1,255     1,327
    transportation ^ (2)
    Processing ^(3)                    1,228     1,012       1,182     940
    Equity investment ^ (4)            236       212         236       191    
             Total throughput ^(5)     2,665     2,498       2,673     2,458  
    Throughput attributable to         204       258         254       237    
    noncontrolling interests
    Total throughput attributable      2,461     2,240       2,419     2,221  
    to Western Gas Partners, LP
Gross margin per Mcf attributable    $ 0.55    $ 0.59      $ 0.55    $ 0.58   
to Western Gas Partners, LP ^(6)

^(1) Throughput has been recast to include volumes attributable to the MGR
     assets.
     Excludes average NGL pipeline volumes from the Chipeta assets of 22
^(2) MBbls/d and 25 MBbls/d for the three months ended September 30, 2012 and
     2011, respectively, and 25 MBbls/d and 23 MBbls/d for the nine months
     ended September 30, 2012 and 2011, respectively.
     Consists of 100% of Chipeta, Granger, Hilight and Red Desert complex
^(3) volumes, and 50% of Newcastle system volumes for all periods presented,
     as well as throughput beginning March 2011 attributable to the Platte
     Valley system.
     Represents our 14.81% share of Fort Union and 22% share of Rendezvous
     gross volumes, and excludes our 10% share of average White Cliffs
^(4) pipeline volumes consisting of 6 MBbls/d and 4 MBbls/d for the three
     months ended September 30, 2012 and 2011, respectively, and 6 MBbls/d and
     3 MBbls/d for the nine months ended September 30, 2012 and 2011,
     respectively.
^(5) Includes affiliate, third-party and equity-investment volumes.
     Average for period. Calculated as gross margin, excluding the
     noncontrolling interest owners’ proportionate share of revenues and cost
^(6) of product, divided by total throughput attributable to the Partnership.
     Calculation includes income attributable to our investments in Fort
     Union, White Cliffs and Rendezvous and volumes attributable to our
     investments in Fort Union and Rendezvous.

Contact:

Western Gas Partners, LP
Benjamin Fink, CFA
SVP, Chief Financial Officer and Treasurer
832.636.6010
benjamin.fink@westerngas.com
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