Fitch Revises Western Gas Partners' Outlook to Stable; Affirms IDR at 'BBB-'

  Fitch Revises Western Gas Partners' Outlook to Stable; Affirms IDR at 'BBB-'

Business Wire

NEW YORK -- August 2, 2013

Fitch Ratings has affirmed the Issuer Default Rating (IDR) and senior
unsecured rating of Western Gas Partners, LP (WES) at 'BBB-'. The Rating
Outlook has been revised to Stable from Negative. Approximately $1.4 billion
of debt is affected by today's rating action.

WES' ratings reflect its conservative financial profile which is supported by
fee-based and fixed-priced contracts that limit commodity price exposure, as
well as the strong credit linkage with its ultimate sponsor and general
partner, Anadarko Petroleum Corporation (APC; IDR 'BBB-', Stable Outlook). WES
is a growth-oriented MLP formed by APC in 2008 to own, operate, acquire and
develop midstream energy assets, including gathering, processing, compressing,
treating, and transporting natural gas, condensate, natural gas liquids (NGL)
and crude. APC controls WES through its ownership and control of Western Gas
Equity Partners, LP (WGP) which owns WES' 2% general partner interest, all of
WES' incentive distribution rights and a 46% limited partner interest.

The revision in Outlook is reflective of the revision in Outlook for parent
APC to Stable from Negative. The revision in APC's Outlook reflects Fitch's
belief that resolution of the Tronox litigation will not significantly impact
Anadarko's credit profile. In addition, the company's improved asset and
liquidity position versus a few quarters ago would help insulate Anadarko's
credit profile in the unexpected scenario in which a judgment did exceed $5
billion. Anadarko's remaining potential liabilities from Macondo should be
relatively small and, as a result, be manageable for the company to handle
within the context of its current rating.

KEY RATINGS DRIVERS:

Close linkage to Anadarko: WES' management and operations are strongly tied to
APC, a large and diverse exploration and production company with a significant
inventory of midstream assets that are potentially available for future
dropdowns. APC volumes represent the majority of WES' throughput and are
generally under fee based and/or fixed price contracts. Additionally, Anadarko
acts as a hedging counterparty for non-APC volumes under percent of proceeds
(POP) and keep-whole contracts with third parties at formerly APC-owned
facilities.

Favorable Contract Mix and Managed Commodity Exposure: WES' contract mix is
largely fee-based/fixed priced or hedged providing significant gross margin
and cash flow stability. Unlike many of its competitors, WES is able to hedge
POP and keep-whole exposure with product specific hedges as opposed to proxy
hedges that many others use. This limits WES' exposure to breakdowns in the
correlations between gas, crude and NGLs. Volume risk is still a concern as
lower throughput can be driven by reduced drilling activity by producers in a
low commodity price environment and/or due to bypass of NGL processing
facilities when natural gas prices are very high.

Strategic Location of Assets: WES' assets are focused primarily within
liquids-rich basins which are strategic for APC and other producers given the
value of the NGLs in the current low gas price environment. WES' assets are
located in South, East and West Texas, the Rocky Mountains (Colorado, Utah and
Wyoming), north-central Pennsylvania, and the Mid-Continent (Kansas and
Oklahoma), and include gathering, processing, compressing, treating, and
transporting natural gas, condensate, NGLs and crude.

Conservative Financial Policies: WES' financial profile is fairly conservative
with a targeted 50/50 debt to equity capital structure. Fitch expects debt to
operating EBITDA between 3.0 to 3.5 times (x) and distribution coverage of
1.1x for 2013. Should leverage be forecast to exceed 4.5x on a sustained basis
Fitch would likely consider a negative ratings action. Similarly, if
distribution coverage should fall below 1.0x on a sustained basis Fitch would
consider a negative ratings action. Liquidity is adequate with $537 million in
availability under WES' $800 million revolver as of the end of 2Q 2013. WES is
in compliance with its revolver covenant which limits debt/EBITDA to 5.0x (or
5.5x following an acquisition). WES' debt/EBITDA as per its covenant
calculation was 3.45x.

RATINGS SENSITIVITIES

Positive: Future developments that may, individually or collectively, lead to
positive rating action include:

--Positive ratings action at APC.

Negative: Future developments that may, individually or collectively, lead to
negative rating action include:

--Negative ratings action at APC;

--Negative change in sponsor support, contract mix, or in hedging
arrangements;

--Debt/EBITDA on a sustained basis above 4.5x; distribution coverage below
1.0x.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology', Aug. 8, 2012;

--'Parent and Subsidiary Ratings Linkage', Aug. 8, 2012;

--'Tax Event Risk and MLPs: Assessing a Change in Tax Status for MLPs', April
18, 2013;

--'Top 10 Comparisons of REITs and MLPs', April 16, 2013;

--'The Top Ten Differences Between MLP and Corporate Issuers', Feb. 19, 2013;

--Impact of Lower NGL Prices on Midstream Processors', Aug. 27, 2012;

--'Eagle Ford Shale Report (Midstream and Pipeline Sector - Economics Driving
Growth)', Oct. 15, 2012.

Applicable Criteria and Related Research:

Corporate Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=684460

Parent and Subsidiary Rating Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=685552

Tax Event Risk and MLPs: Assessing a Change in Tax Status for MLPs

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=705496

Top 10 Comparisons of REITs and MLPs

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=705475

The Top Ten Differences Between MLP and Corporate Issuers

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=701812

Impact of Lower NGL Prices on Midstream Processors

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=687178

Eagle Ford Shale Report (Midstream and Pipeline Sector -- Economics Driving
Growth)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=690640

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=798575

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Contact:

Fitch Ratings
Primary Analyst
Peter Molica, +1-212-908-0288
Director
Fitch Ratings, Inc.
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New York, NY 10004
or
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Director
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