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Western Gas Partners Announces
Second-Quarter 2010 Results
Second-Quarter 2010 Results
Provides 2010 Guidance Update
HOUSTON, Aug. 4, 2010 — Western Gas Partners, LP (NYSE: WES) today announced second-quarter 2010 financial and operating results. Net income available to limited partners for the second quarter of 2010 totaled $22.9 million, or $0.35 per limited partner unit (diluted). The Partnership’s second-quarter Adjusted EBITDA(1) was $38.5 million and distributable cash flow(1) was $35.4 million, resulting in a coverage ratio(1) of 1.45 times for the period.
Total throughput attributable to Western Gas Partners, LP for the second quarter of 2010 averaged 1,364 MMcf/d, essentially flat compared to the prior quarter and approximately 8 percent below the second quarter of 2009. These results include the net throughput attributable to the acquired Chipeta and Granger assets for all periods of comparison.
Capital expenditures attributable to Western Gas Partners, LP totaled approximately $4.0 million during the second quarter of 2010. Of this amount, maintenance capital expenditures were approximately $3.7 million, or 10 percent of Adjusted EBITDA.
“Our operating results for the quarter reflect the continued improvement in our cost structure while maintaining relatively stable throughput year-to-date,” said Western Gas Partners’ President and Chief Executive Officer Don Sinclair. “We are pleased with the contribution of our Granger and Chipeta acquisitions to our portfolio’s distributable cash flow. These systems, which are situated in two key liquids-rich basins in the Rockies, continue to benefit from ongoing drilling activity due to favorable producer economics.”
The Partnership previously declared a quarterly distribution of $0.35 per unit for the second quarter of 2010, payable on August 13, 2010 to unitholders of record at the close of business on July 30, 2010, representing a 3-percent increase over the prior quarter and a 13-percent increase over the second-quarter 2009 distribution of $0.31 per unit. The second-quarter 2010 coverage ratio of 1.45 times is based on the quarterly distribution of $0.35 per unit.
(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. |
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Recent Acquisition And 2010 Guidance Update
On August 2, 2010, the Partnership closed the $498 million acquisition of the Wattenberg gathering system and related facilities. In connection with the acquisition, management has updated the Partnership’s 2010 guidance to reflect the contribution of the Wattenberg assets to its full-year results based on an effective date of July 1, 2010.
As a result, full-year 2010 guidance for Adjusted EBITDA has been increased by $30 million to a range of $160 to $180 million. Full-year 2010 guidance for total capital expenditures has also been increased by $12 to $13 million to a range of $40 to $45 million, which reflects an additional $18 million of post-acquisition capital expenditures for the Wattenberg assets, partially offset by a reduction in capital spending across the remainder of the portfolio of approximately $5 to $6 million for the balance of the year. Lastly, full-year 2010 guidance for maintenance capital expenditures as a percent of Adjusted EBITDA has been reduced to a range of 13% to 16%.
CONFERENCE CALL TOMORROW AT 11 A.M. CDT
The Partnership will host a conference call on August 5, at 11 a.m. Central Daylight Time (12 p.m. Eastern Daylight Time) to discuss second-quarter results. The dial-in number for the call is 888.680.0860 and the participant code is 54338427. 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 limited partnership formed by Anadarko Petroleum Corporation to own, operate, acquire and develop midstream energy assets. With midstream assets in East and West Texas, the Rocky Mountains and the Mid-Continent, the Partnership is engaged in the business of gathering, compressing, processing, treating and transporting natural gas for Anadarko and other producers and customers. For more information about Western Gas Partners, please visitwww.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 obtain new sources of natural gas supplies; the effect of fluctuations in commodity prices and the demand for natural gas and related products; and construction costs or capital expenditures exceeding estimated or budgeted costs or expenditures, as well as
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other factors described in the “Risk Factors” section of the Partnership’s 2009 Annual Report on 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.
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Western Gas Partners, LP Contact
Chris Campbell, CFA,chris.campbell@westerngas.com, 832.636.6012
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Reconciliation of GAAP to Non-GAAP Measures
Below are reconciliations of Distributable Cash Flow (non-GAAP) and Adjusted EBITDA (non-GAAP) to Net Income (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, such as operating income or cash flow 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, maintenance capital expenditures and income taxes.
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2010 | 2009(1) | 2010 | 2009 (1) | |||||||||||||
(in thousands, except coverage ratio) | ||||||||||||||||
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 | $ | 23,411 | $ | 25,403 | $ | 46,325 | $ | 45,988 | ||||||||
Add: | ||||||||||||||||
Distributions from equity investee | 1,038 | 1,459 | 2,148 | 2,570 | ||||||||||||
Non-cash share-based compensation expense | 680 | 942 | 1,248 | 1,789 | ||||||||||||
Income tax expense | 17 | 2,087 | 973 | 2,353 | ||||||||||||
Depreciation and amortization (2) | 12,849 | 12,235 | 25,832 | 23,945 | ||||||||||||
Other expense, net(2) | 2,395 | — | 2,376 | — | ||||||||||||
Less: | ||||||||||||||||
Equity income, net | 1,258 | 1,985 | 2,597 | 3,535 | ||||||||||||
Cash paid for maintenance capital expenditures(2) | 3,742 | 5,357 | 7,633 | 11,090 | ||||||||||||
Interest income, net (non-cash settled) | — | 132 | — | 369 | ||||||||||||
Other income, net (2) | — | 9 | — | 15 | ||||||||||||
Distributable cash flow | $ | 35,390 | $ | 34,643 | $ | 68,672 | $ | 61,636 | ||||||||
Distribution declared for the three months ended June 30, 2010 (3) | ||||||||||||||||
Limited partners | $ | 23,838 | ||||||||||||||
General partner | 540 | |||||||||||||||
Total | $ | 24,378 | ||||||||||||||
Coverage ratio | 1.45 | x | ||||||||||||||
(1) | Financial information for 2009 has been revised to include results attributable to the Chipeta and Granger assets. | |
(2) | Includes the Partnership’s 51% share of depreciation and amortization, other expense, net, cash paid for maintenance capital expenditures and other income, net attributable to Chipeta Processing LLC. | |
(3) | Reflects distribution of $0.35 per unit payable in August 2010. |
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Reconciliation of GAAP to Non-GAAP Measures, continued
Adjusted EBITDA attributable to Western Gas Partners, LP
The Partnership defines Adjusted EBITDA as Net Income (loss) attributable to Western Gas Partners, LP, plus distributions from equity investee, non-cash share-based compensation expense, expenses in excess of the omnibus cap, interest expense, income tax expense and depreciation, amortization and impairment, less income from equity investment, interest income, income tax benefit, other income and other nonrecurring adjustments that are not settled in cash.
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2010 | 2009(1) | 2010 | 2009(1) | |||||||||||||
(in thousands) | ||||||||||||||||
Reconciliation of net income attributable to Western Gas Partners, LP to Adjusted EBITDA | ||||||||||||||||
Net income attributable to Western Gas Partners, LP | $ | 23,411 | $ | 25,403 | $ | 46,325 | $ | 45,988 | ||||||||
Add: | ||||||||||||||||
Distributions from equity investee | 1,038 | 1,459 | 2,148 | 2,570 | ||||||||||||
Non-cash share-based compensation expense | 680 | 942 | 1,248 | 1,789 | ||||||||||||
Interest expense, net | 3,598 | 1,786 | 7,126 | 3,571 | ||||||||||||
Income tax expense | 17 | 2,087 | 973 | 2,353 | ||||||||||||
Depreciation and amortization(2) | 12,849 | 12,235 | 25,832 | 23,945 | ||||||||||||
Other expense, net(2) | 2,395 | — | 2,376 | — | ||||||||||||
Less: | ||||||||||||||||
Equity income | 1,258 | 1,985 | 2,597 | 3,535 | ||||||||||||
Interest income, net — affiliates | 4,225 | 4,357 | 8,450 | 8,819 | ||||||||||||
Other income, net(2) | — | 9 | — | 15 | ||||||||||||
Adjusted EBITDA | $ | 38,505 | $ | 37,561 | $ | 74,981 | $ | 67,847 | ||||||||
(1) | Financial information for 2009 has been revised to include results attributable to the Chipeta and Granger assets. | |
(2) | Includes the Partnership’s 51% share of depreciation and amortization, other expense, net, and other income, net attributable to Chipeta Processing LLC. |
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Western Gas Partners, LP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2010 | 2009(1) | 2010 | 2009(1) | |||||||||||||
(in thousands except per-unit amounts) | ||||||||||||||||
Revenues | ||||||||||||||||
Gathering, processing and transportation of natural gas | $ | 42,150 | $ | 43,529 | $ | 85,509 | $ | 86,863 | ||||||||
Natural gas, natural gas liquids and condensate sales | 43,408 | 47,402 | 92,260 | 91,034 | ||||||||||||
Equity income and other | 2,410 | 2,829 | 4,518 | 5,023 | ||||||||||||
Total revenues | $ | 87,968 | $ | 93,760 | $ | 182,287 | $ | 182,920 | ||||||||
Operating expenses | ||||||||||||||||
Cost of product | $ | 24,955 | $ | 28,732 | $ | 57,532 | $ | 62,377 | ||||||||
Operation and maintenance | 13,735 | 15,689 | 28,903 | 29,775 | ||||||||||||
General and administrative | 4,358 | 5,367 | 9,433 | 11,653 | ||||||||||||
Property and other taxes | 2,800 | 2,808 | 5,568 | 5,629 | ||||||||||||
Depreciation and amortization | 13,555 | 12,839 | 27,238 | 24,855 | ||||||||||||
Total operating expenses | $ | 59,403 | $ | 65,435 | $ | 128,674 | $ | 134,289 | ||||||||
Operating income | $ | 28,565 | $ | 28,325 | $ | 53,613 | $ | 48,631 | ||||||||
Interest income, net | 627 | 2,571 | 1,324 | 5,248 | ||||||||||||
Other income (expense), net | (2,394 | ) | 9 | (2,374 | ) | 16 | ||||||||||
Income before income taxes | $ | 26,798 | $ | 30,905 | $ | 52,563 | $ | 53,895 | ||||||||
Income tax expense | 17 | 2,087 | 973 | 2,353 | ||||||||||||
Net income | $ | 26,781 | $ | 28,818 | $ | 51,590 | $ | 51,542 | ||||||||
Net income attributable to noncontrolling interests | 3,370 | 3,415 | 5,265 | 5,554 | ||||||||||||
Net income attributable to Western Gas Partners, LP | $ | 23,411 | $ | 25,403 | $ | 46,325 | $ | 45,988 | ||||||||
Limited partner interest in net income: | ||||||||||||||||
Net income | $ | 23,411 | $ | 25,403 | $ | 46,325 | $ | 45,988 | ||||||||
Less predecessor interest in net (income) loss | — | (7,279 | ) | 1,218 | (10,907 | ) | ||||||||||
Less general partner interest in net income | (519 | ) | (362 | ) | (1,002 | ) | (701 | ) | ||||||||
Limited partner interest in net income | $ | 22,892 | $ | 17,762 | $ | 46,541 | $ | 34,380 | ||||||||
Net income per common unit — basic and diluted | $ | 0.35 | $ | 0.32 | $ | 0.72 | $ | 0.62 | ||||||||
Net income per subordinated unit — basic and diluted | $ | 0.35 | $ | 0.32 | $ | 0.72 | $ | 0.62 | ||||||||
Weighted average limited partner units outstanding — basic and diluted | 65,653 | 55,645 | 64,502 | 55,637 |
(1) | Financial information for 2009 has been revised to include results attributable to the Chipeta and Granger assets. |
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Western Gas Partners, LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, | December 31, | |||||||
2010 | 2009 | |||||||
(in thousands, including number of units) | ||||||||
Current assets | $ | 80,686 | $ | 80,264 | ||||
Note receivable — Anadarko | 260,000 | 260,000 | ||||||
Net property, plant and equipment | 983,420 | 993,377 | ||||||
Other assets | 54,265 | 54,282 | ||||||
Total assets | $ | 1,378,371 | $ | 1,387,923 | ||||
Current liabilities | $ | 28,198 | $ | 26,256 | ||||
Long-term debt | 285,000 | 175,000 | ||||||
Other long-term liabilities | 16,025 | 107,968 | ||||||
Total liabilities | $ | 329,223 | $ | 309,224 | ||||
Common unit partner capital (41,574 and 36,375 units issued and outstanding at June 30, 2010 and December 31, 2009, respectively) | $ | 662,262 | $ | 497,230 | ||||
Subordinated unit partner capital (26,536 units issued and outstanding at June 30, 2010 and December 31, 2009) | 277,953 | 276,571 | ||||||
General partner capital (1,390 and 1,284 units issued and outstanding at June 30, 2010 and December 31, 2009, respectively) | 17,372 | 13,726 | ||||||
Parent net investment | — | 200,250 | ||||||
Noncontrolling interests | 91,561 | 90,922 | ||||||
Total liabilities, equity and partners’ capital | $ | 1,378,371 | $ | 1,387,923 | ||||
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Western Gas Partners, LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30, | ||||||||
2010 | 2009 (1) | |||||||
(in thousands) | ||||||||
Cash flows from operating activities | ||||||||
Net income | $ | 51,590 | $ | 51,542 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 27,238 | 24,855 | ||||||
Change in other items, net | 4,106 | (6,418 | ) | |||||
Net cash provided by operating activities | $ | 82,934 | $ | 69,979 | ||||
Cash flows from investing activities | ||||||||
Granger acquisition | $ | (241,680 | ) | $ | — | |||
Capital expenditures | (9,591 | ) | (39,895 | ) | ||||
Investment in equity affiliate | (309 | ) | (263 | ) | ||||
Net cash used in investing activities | $ | (251,580 | ) | $ | (40,158 | ) | ||
Cash flows from financing activities | ||||||||
Borrowings under revolving credit facility, net of issuance costs | $ | 109,987 | $ | — | ||||
Proceeds from issuance of common units | 99,311 | — | ||||||
Contributions from noncontrolling interest owners and Parent | 2,053 | 9,584 | ||||||
Distributions to unitholders | (43,435 | ) | (34,059 | ) | ||||
Distributions to noncontrolling interest owners | (6,383 | ) | (2,811 | ) | ||||
Net pre-acquisition contributions from Parent | 1,531 | 3,556 | ||||||
Net cash provided by (used in) financing activities | $ | 163,064 | $ | (23,730 | ) | |||
Net (decrease) increase in cash and cash equivalents | $ | (5,582 | ) | $ | 6,091 | |||
Cash and cash equivalents at beginning of period | 69,984 | 36,074 | ||||||
Cash and cash equivalents at end of period | $ | 64,402 | $ | 42,165 | ||||
(1) | Financial information for 2009 has been revised to include results attributable to the Chipeta and Granger assets. |
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Western Gas Partners, LP
OPERATING STATISTICS
(Unaudited)
OPERATING STATISTICS
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009(1) | 2010 | 2009(1) | |||||||||||||
Throughput (MMcf/d) | ||||||||||||||||
Gathering and transportation | 784 | 910 | 796 | 911 | ||||||||||||
Processing(2) | 664 | 623 | 650 | 629 | ||||||||||||
Equity investment(3) | 114 | 119 | 117 | 121 | ||||||||||||
Total throughput | 1,562 | 1,652 | 1,563 | 1,661 | ||||||||||||
Throughput attributable to noncontrolling interests | 198 | 177 | 194 | 176 | ||||||||||||
Total throughput attributable to Western Gas Partners, LP | 1,364 | 1,475 | 1,369 | 1,485 | ||||||||||||
Gross margin per Mcf attributable to Western Gas Partners, LP(4) | $ | 0.47 | $ | 0.45 | $ | 0.47 | $ | 0.42 |
(1) | Information for 2009 has been revised to include amounts attributable to the Chipeta and Granger assets. | |
(2) | Includes 100% of Chipeta system volumes and 50% of Newcastle system volumes. | |
(3) | Represents the Partnership’s proportionate share of volumes attributable to its 14.81% interest in Fort Union. | |
(4) | Average for period. Calculated as gross margin (total revenues less cost of product), excluding the noncontrolling interest owners’ proportionate share of Chipeta’s revenues and cost of product, divided by total throughput attributable to Western Gas Partners, LP. |
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