Debt and Interest Expense | 11. DEBT AND INTEREST EXPENSE WES Operating is the borrower for all outstanding debt and is expected to be the borrower for all future debt issuances. The following table presents the outstanding debt: March 31, 2020 December 31, 2019 thousands Principal Carrying Value Fair Value (1) Principal Carrying Value Fair Value (1) Short-term debt Finance lease liabilities (2) $ 11,184 $ 11,184 $ 11,184 $ 7,873 $ 7,873 $ 7,873 Total short-term debt $ 11,184 $ 11,184 $ 11,184 $ 7,873 $ 7,873 $ 7,873 Long-term debt 5.375% Senior Notes due 2021 $ 438,631 $ 437,300 $ 352,437 $ 500,000 $ 498,168 $ 515,042 4.000% Senior Notes due 2022 631,369 630,790 408,183 670,000 669,322 689,784 Floating-Rate Senior Notes due 2023 300,000 298,118 158,400 — — — 3.100% Senior Notes due 2025 1,000,000 991,713 509,618 — — — 3.950% Senior Notes due 2025 500,000 494,086 254,103 500,000 493,830 504,968 4.650% Senior Notes due 2026 500,000 496,323 258,950 500,000 496,197 513,393 4.500% Senior Notes due 2028 400,000 395,236 191,693 400,000 395,113 390,920 4.750% Senior Notes due 2028 400,000 396,280 189,498 400,000 396,190 400,962 4.050% Senior Notes due 2030 1,200,000 1,188,718 500,911 — — — 5.450% Senior Notes due 2044 600,000 593,501 224,905 600,000 593,470 533,710 5.300% Senior Notes due 2048 700,000 686,893 277,851 700,000 686,843 610,841 5.500% Senior Notes due 2048 350,000 342,459 132,332 350,000 342,432 310,198 5.250% Senior Notes due 2050 1,000,000 983,354 413,544 — — — RCF 125,000 125,000 125,000 380,000 380,000 380,000 Term loan facility — — — 3,000,000 3,000,000 3,000,000 Finance lease liabilities 28,990 28,990 28,990 — — — Total long-term debt $ 8,173,990 $ 8,088,761 $ 4,026,415 $ 8,000,000 $ 7,951,565 $ 7,849,818 (1) Fair value is measured using the market approach and Level-2 fair value inputs. (2) Includes related-party amounts of $2.6 million and $7.9 million as of March 31, 2020 , and December 31, 2019 , respectively. 11. DEBT AND INTEREST EXPENSE (CONTINUED) Debt activity. The following table presents the debt activity for the three months ended March 31, 2020 : thousands Carrying Value Balance at December 31, 2019 $ 7,959,438 RCF borrowings 125,000 Issuance of Floating-Rate Senior Notes due 2023 300,000 Issuance of 3.100% Senior Notes due 2025 1,000,000 Issuance of 4.050% Senior Notes due 2030 1,200,000 Issuance of 5.250% Senior Notes due 2050 1,000,000 Finance lease liabilities 32,300 Repayments of RCF borrowings (380,000 ) Repayment of Term loan facility borrowings (3,000,000 ) Repayment of 5.375% Senior Notes due 2021 (61,369 ) Repayment of 4.000% Senior Notes due 2022 (38,631 ) Other (36,793 ) Balance at March 31, 2020 $ 8,099,945 WES Operating Senior Notes. In January 2020, WES Operating issued the following notes: • 3.100% Senior Notes due 2025, 4.050% Senior Notes due 2030, and 5.250% Senior Notes due 2050, offered to the public at prices of 99.962% , 99.900% , and 99.442% , respectively, of the face amount (collectively referred to as the “Senior Notes”). Including the effects of the issuance and underwriting discounts, the effective interest rates of the Senior Notes due 2025, 2030, and 2050, are 3.287% , 4.168% , and 5.362% , respectively. Interest is paid on each such series semi-annually on February 1 and August 1 of each year, beginning August 1, 2020; and • Floating-Rate Senior Notes due 2023 (the “Floating-Rate Notes”). As of March 31, 2020 , the interest rate on the Floating-Rate Notes was 2.69% . Interest is paid quarterly in arrears on January 13, April 13, July 13, and October 13 of each year, beginning April 13, 2020. Interest will accrue from January 13, 2020 at a benchmark rate (which will initially be a three-month London Interbank Offered Rate) on the interest determination date plus 0.85% . Net proceeds from the Senior Notes and Floating-Rate Notes were used to repay the $3.0 billion outstanding borrowings under the Term loan facility and outstanding amounts under the RCF, and for general partnership purposes. The interest payable on each of the Senior Notes and Floating-Rate Notes are subject to adjustment from time to time if the credit rating assigned to such notes declines below certain specified levels or if credit-rating downgrades are subsequently followed by credit-rating upgrades. In March 2020, Fitch Ratings (“Fitch”) and Standard and Poor’s (“S&P”) downgraded WES Operating’s long-term debt from “BBB-” to “BB+.” As a result of these downgrades, the annualized borrowing costs will increase by $17.5 million . During the first quarter of 2020, WES Operating purchased and retired $61.4 million of the 5.375% Senior Notes due 2021 and $38.6 million of the 4.000% Senior Notes due 2022 via open-market repurchases. For the three months ended March 31, 2020 , a gain of $9.6 million was recognized for the early retirement of these notes. At March 31, 2020 , WES Operating was in compliance with all covenants under the relevant governing indentures. WGP RCF. The WGP RCF, which previously was available to purchase WES Operating common units and for general partnership purposes, matured in March 2019 and the $28.0 million of outstanding borrowings were repaid. 11. DEBT AND INTEREST EXPENSE (CONTINUED) Revolving credit facility. In December 2019, WES Operating entered into an amendment to the RCF, which is expandable to a maximum of $2.5 billion , to, among other things, exercise the final one-year extension option to extend the maturity date of the RCF from February 2024 to February 2025, for each extending lender. The maturity date with respect to each non-extending lender, whose commitments represent $100.0 million out of $2.0 billion of total commitments from all lenders, remains February 2024. See Note 1 . As of March 31, 2020 , there were $125.0 million of outstanding borrowings and $6.5 million of outstanding letters of credit, resulting in $1.9 billion of available borrowing capacity under the RCF. As of March 31, 2020 and 2019 , the interest rate on any outstanding RCF borrowings was 2.13% and 3.79% , respectively. The facility-fee rate was 0.20% at March 31, 2020 and 2019 . At March 31, 2020 , WES Operating was in compliance with all covenants under the RCF. As a result of credit-rating downgrades received from Fitch and S&P (see WES Operating Senior Notes above), beginning in the second quarter of 2020, the interest rate on outstanding RCF borrowings will increase by 0.20% and the RCF facility-fee rate will increase by 0.05% , from 0.20% to 0.25% . Term loan facility. In December 2018, WES Operating entered into the Term loan facility, the proceeds from which were used to fund substantially all of the cash portion of the consideration under the Merger Agreement and the payment of related transaction costs (see Note 1 ). As of March 31, 2019 , the interest rate on the outstanding borrowings was 3.87% . In January 2020, WES Operating repaid the outstanding borrowings with proceeds from the issuance of the Senior Notes and Floating-Rate Notes and terminated the Term loan facility (see WES Operating Senior Notes above). For the three months ended March 31, 2020 , a loss of $2.3 million was recognized for the early termination of the Term loan facility. Finance lease liabilities. The Partnership has subleased equipment from Occidental via finance leases extending through April 2020, with future lease payments of $2.6 million as of March 31, 2020 . During the first quarter of 2020, the Partnership entered into finance leases with third parties for equipment and vehicles extending through 2029, with future lease payments of $43.5 million as of March 31, 2020 . APCWH Note Payable. In June 2017, in connection with funding the construction of the APC water systems that were acquired as part of the AMA acquisition, APCWH entered into an eight-year note payable agreement with Anadarko. This note payable had a maximum borrowing limit of $500.0 million , including accrued interest. The APCWH Note Payable was repaid at Merger completion. See Note 1 . Interest-rate swaps. In December 2018 and March 2019, WES Operating entered into interest-rate swap agreements with an aggregate notional principal amount of $750.0 million and $375.0 million , respectively, to manage interest-rate risk associated with anticipated debt issuances. In November and December 2019, WES Operating entered into additional interest-rate swap agreements with an aggregate notional principal amount of $1,125.0 million , effectively offsetting the swap agreements entered into in December 2018 and March 2019. In December 2019, all outstanding interest-rate swap agreements were cash-settled. As part of the settlement, WES Operating made cash payments of $107.7 million and recorded an accrued liability of $25.6 million to be paid quarterly in 2020. These cash payments were classified as cash flows from operating activities in the consolidated statements of cash flows. The Partnership did not apply hedge accounting and, therefore, gains and losses associated with the interest-rate swap agreements were recognized in earnings. For the three months ended March 31, 2019 , a non-cash loss of $35.6 million was recognized, which is included in Other income (expense), net in the consolidated statements of operations. 11. DEBT AND INTEREST EXPENSE (CONTINUED) Interest expense. The following table summarizes the amounts included in interest expense: Three Months Ended thousands 2020 2019 Third parties Long-term and short-term debt $ (89,769 ) $ (67,096 ) Finance lease liabilities (405 ) — Amortization of debt issuance costs and commitment fees (3,127 ) (3,152 ) Capitalized interest 4,758 6,205 Total interest expense – third parties (88,543 ) (64,043 ) Related parties APCWH Note Payable — (1,833 ) Finance lease liabilities (43 ) — Total interest expense – related parties (43 ) (1,833 ) Interest expense $ (88,586 ) $ (65,876 ) |