Western Gas Announces Second-Quarter 2013 Results

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Western Gas Announces Second-Quarter 2013 Results

HOUSTON--(BUSINESS WIRE)-- Western Gas Partners, LP (NYS: WES) ("WES") and Western Gas Equity Partners, LP (NYS: WGP) ("WGP") today announced second-quarter 2013 financial and operating results.

WESTERN GAS PARTNERS, LP


Net income available to limited partners for the second quarter of 2013, totaled $44.8 million, or $0.41 per common unit (diluted). For the second quarter of 2013, Adjusted EBITDA (1) was $107.6 million and Distributable cash flow (1) was $89.8 million, resulting in a Coverage ratio (1) of 1.13 times for the period.

Total throughput attributable to WES for the second quarter of 2013 averaged 3.1 Bcf/d, which was 8% above the prior quarter and 15% above the second quarter of 2012 (2). Excluding acquisitions, capital expenditures attributable to WES on a cash basis totaled $169.5 million during the second quarter of 2013. Of this amount, maintenance capital expenditures were $6.2 million, or 6% of Adjusted EBITDA (1). Capital expenditures attributable to WES on an accrual basis and excluding acquisitions totaled $135.5 million during the second quarter of 2013.

"Our second quarter fully met our expectations," said President and Chief Executive Officer, Don Sinclair. "With strong sequential throughput growth in our liquids-rich areas, as well as the Marcellus, the start-up of our Brasada plant in June, and the commencement of our recently-announced capital projects, 2013 is shaping up to be a very exciting year. We continue to maintain the full-year 2013 EBITDA guidance that we released in February, while we will be revising the total capital expenditure guidance to reflect the new projects."

WES previously declared a quarterly distribution of $0.56 per unit for the second quarter of 2013, representing a 4% increase over the prior quarter and a 17% increase over the second-quarter 2012 distribution of $0.48 per unit. The distribution will be paid on August 12, 2013, to unitholders of record at the close of business on July 31, 2013. The second-quarter 2013 Coverage ratio (1) of 1.13 times is based on the quarterly distribution of $0.56 per unit.

WESTERN GAS EQUITY PARTNERS, LP

As of June 30, 2013, WGP indirectly owned the 2% general partner interest and 100% of the incentive distribution rights in WES and 49,296,205 WES common units. Net income available to limited partners for the second quarter of 2013, totaled $35.5 million, or $0.16 per common unit (diluted).

WGP previously declared a quarterly distribution of $0.1975 per unit for the second quarter of 2013, representing a 10% increase over the distribution from the prior quarter. The distribution will be paid on August 21, 2013, to unitholders of record at the close of business on July 31, 2013. WGP will receive distributions from WES of $44.1 million attributable to the second quarter and will pay out $43.2 million in distributions for the same period.

CONFERENCE CALL TOMORROW AT 11 A.M. CDT

Western Gas Partners and Western Gas Equity Partners will host a joint conference call on Thursday, August 1, 2013, at 11 a.m. Central Daylight Time (12 p.m. Eastern Daylight Time) to discuss second-quarter 2013 results. To participate via telephone, please dial 877.621.4819 and enter participant code 17109076. Please call in 10 minutes prior to the scheduled start time. To access the live audio webcast of the conference call and slide presentation, please visit www.westerngas.com. A replay of the call will also be available on the website for approximately two weeks following the conference call.

Western Gas Partners, LP ("WES") 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, north-central Pennsylvania and the Mid-Continent, WES 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.

Western Gas Equity Partners, LP ("WGP") is a Delaware master limited partnership formed by Anadarko to own the following types of interests in WES: (i) the 2.0% general partner interest and all of the incentive distribution rights in WES, both owned through WGP's 100% ownership of WES's general partner and (ii) a significant limited partner interest in WES.

For more information about Western Gas Partners, LP and Western Gas Equity Partners, LP, please visit www.westerngas.com.

This news release contains forward-looking statements. Western Gas Partners and Western Gas Equity Partners believe 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 WES's 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" sections of WES's and WGP's most recent Forms 10-K filed with the Securities and Exchange Commission and other public filings and press releases by Western Gas Partners and Western Gas Equity Partners. Western Gas Partners and Western Gas Equity Partners undertake 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.
(2)These results include the net throughput attributable to the 33.75% interest in certain third-party operated Marcellus gathering assets acquired from Anadarko (the "Non-Operated Marcellus Interest") for all periods of comparison, throughput attributable to the additional Chipeta interest beginning in August 2012, and throughput attributable to the 33.75% interest in certain Anadarko-operated Marcellus gathering assets acquired from a third-party (the "Anadarko-Operated Marcellus Interest") beginning in March 2013.

Western Gas Partners, LP Reconciliation of GAAP to Non-GAAP Measures

Below are reconciliations of the Partnership's 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 Partnership's Distributable cash flow, Adjusted EBITDA and Coverage ratio are widely accepted financial indicators of the Partnership's financial performance compared to other publicly traded partnerships and are useful in assessing the Partnership's 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 Distributable cash flow, Adjusted EBITDA and Coverage ratio should be considered in conjunction with net income and other applicable performance measures, 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 EndedSix Months Ended
June 30,June 30,
thousands except Coverage ratio 

 

2013

  

 

 

2012 (1)

  

 

2013

  

 

2012 (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

$60,200$43,309$110,857$96,960
Add:
Distributions from equity investees6,0265,57811,03210,019
Non-cash equity-based compensation expense8242,9241,7016,990
Interest expense, net (non-cash settled)

-

82

-

163
Income tax expense1375,0794,3739,508
Depreciation, amortization and impairments (2)35,85727,08467,68153,496
Other expense (2)

-

1,665

-

1,665
Less:
Equity income, net3,7243,3357,7046,948
Cash paid for maintenance capital expenditures (2) (4)6,1749,15012,20615,465
Capitalized interest3,2609466,4411,603
Cash paid for income taxes

-

-

-

72

Other income (2) (3)

  103    

-

   380   62
Distributable cash flow $89,783  $ 72,290  $168,913  $154,651
 
Distributions declared (5)
Limited partners$62,794$119,553
General partner  16,521        29,905 
Total $79,315       $149,458 
Coverage ratio  1.13x       1.13x
(1) Financial information has been recast to include results attributable to the Non-Operated Marcellus Interest.
(2)Includes the Partnership's 51% share for the three and six months ended June 30, 2012, and its 75% share for the three and six months ended June 30, 2013, of depreciation, amortization and impairments; other expense; cash paid for maintenance capital expenditures; and other income attributable to Chipeta.
(3)Excludes income of $0.4 million and $0.8 million for each of the three and six months ended June 30, 2013 and 2012, respectively, related to a component of a gas processing agreement accounted for as a capital lease.
(4)Net of a prior period adjustment reclassifying $0.7 million from capital expenditures to operating expenses for the three and six months ended June 30, 2012.
(5)Reflects distributions of $0.56 and $1.10 per unit declared for the three and six months ended June 30, 2013, respectively.

Western Gas Partners, LP Reconciliation of GAAP to Non-GAAP Measures, continued

Adjusted EBITDA

The Partnership defines Adjusted EBITDA as net income attributable to Western Gas Partners, LP, plus distributions from equity investees, non-cash equity-based compensation expense, 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  Six Months Ended
June 30,June 30,
thousands 

2013

  

2012 (1)

  

2013

   

2012 (1)

Reconciliation of Net income attributable to
Western Gas Partners, LP to Adjusted EBITDA

    
Net income attributable to Western Gas Partners, LP$60,200$43,309$110,857$96,960
Add:
Distributions from equity investees6,0265,57811,03210,019
Non-cash equity-based compensation expense8242,9241,7016,990
Interest expense12,6549,56024,46519,141
Income tax expense1375,0794,3739,508
Depreciation, amortization and impairments (2)35,85727,08467,68153,496
Other expense (2)

-

1,665

-

1,665
Less:
Equity income, net3,7243,3357,7046,948
Interest income, net - affiliates4,2254,2258,4508,450

Other income (2) (3)

  103    

-

    380    62 
Adjusted EBITDA $107,646   $87,639   $203,575   $182,319 
 

Reconciliation of Adjusted EBITDA
to Net cash provided by operating activities

Adjusted EBITDA attributable to Western Gas Partners, LP$107,646$87,639$203,575$182,319
Adjusted EBITDA attributable to noncontrolling interests2,4994,9455,3459,843
Interest income (expense), net(8,429)(5,335)(16,015)(10,691)
Non-cash equity based compensation expense54(2,004)(19)(5,156)
Debt-related amortization and other items, net5665191,1261,030
Current income tax expense(32)(1,452)(3,144)6,331
Other income (expense), net (3)103(1,663)381(1,601)

Distributions from equity investees less than
(in excess of) equity income, net

(2,302)(2,243)(3,328)(3,071)
Changes in operating working capital:
Accounts receivable and natural gas imbalance receivable(47,875)(20,241)(27,121)12,586
Accounts payable, accrued liabilities and natural gas imbalance payable(20,951)3,717336(9,948)
Other  3,779    3,583    3,877    4,544 
Net cash provided by operating activities $35,058   $67,465   $165,013   $186,186 
 
Cash flow information of Western Gas Partners, LP
Net cash provided by operating activities$165,013$186,186
Net cash used in investing activities$(1,049,490)$(658,549)
Net cash provided by financing activities      ?
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