01—Abstract
Summary
Summary of the 10-K filed February 27, 2020. Cited figures are marked; the original filing is the authoritative source.
Western Midstream Partners, LP (NYSE: WES) reported a 2019 year in which it completed the Merger with Western Midstream Operating, LP on February 28, 2019, and acquired the Anadarko Midstream Assets (AMA) in February 2019 for approximately $2.0 billiona in cash, following the August 2019 acquisition of Anadarko by Occidental Petroleum.
Total revenues and other were $2,746.2 millionb in 2019 versus $2,299.7 million in 2018, operating income was $1,231.3 million versus $861.3 million, and net income attributable to Western Midstream Partners, LP was $697.2 million versus $551.6 million. Adjusted EBITDA rose to $1,719.1 million from $1,466.4 million, and distributable cash flow was $1,325.4 million, giving a coverage ratio of 1.18x for distributions declared for 2019. The partnership's business remains heavily dependent on Occidental, which accounted for 59% of total revenues and other and over 50% of revenues related to the volumes it gathers, treats, processes, transports and disposes; 93% of wellhead natural-gas volume and 100% of crude-oil, NGLs and produced-water throughput (excluding equity investments) were under fee-based contracts.
Net cash provided by operating activities was $1,324.1 millionc, versus $1,348.2 million in 2018, reflecting cash payments of $107.7 million to settle interest-rate swaps. Capital expenditures totaled $1,188.8 million, and total debt principal was $8.0 billion at year-end, with $1.6 billion available under the $2.0 billion revolving credit facility.
At year-end 2019, the quarterly distribution was $0.62200d per unit, or $281.8 million in aggregate, and the company stated that it expects 2020 total capital expenditures of $875.0 million to $950.0 million. In late 2019, the December 2019 Agreements with Occidental terminated the omnibus agreements, established a Services Agreement, and amended debt agreements; in January 2020 the company issued $2.2 billion of senior notes and $300.0 million of floating rate notes to repay its $3.0 billion term loan.
02—Key points
Key Highlights
- Total revenues and other rose to $2,746.2 million in 2019 from $2,299.7 million in 2018; operating income increased to $1,231.3 million from $861.3 million.
- Adjusted EBITDA was $1,719.1 million in 2019 versus $1,466.4 million in 2018, and distributable cash flow was $1,325.4 million, supporting a 1.18x coverage ratio.
- Net income attributable to Western Midstream Partners, LP was $697.2 million, or $1.59 per common unit, compared with $551.6 million in 2018.
- Occidental accounted for 59% of total revenues and other in 2019 and holds a 53.4% limited partner interest; the company disclosed that it depends on Occidental for over 50% of related revenues.
- Crude-oil, NGLs and produced-water throughput attributable to WES rose 57% and natural-gas throughput attributable to WES rose 9% compared with 2018.
- The company acquired AMA from Anadarko in February 2019 for $2.0 billion of cash in the consolidated cash flow statement and entered into the December 2019 Agreements with Occidental.
- Total debt principal was $8.0 billion at December 31, 2019, and the partnership expects 2020 total capital expenditures of $875.0 million to $950.0 million.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 27, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $2.75B$2.30B | +19.4% |
| Operating Expenses | $1.75B$1.64B | +7.1% |
| Operating Income | $1.23B$861.28M | +43.0% |
| Interest Expense | $303.29M$183.83M | +65.0% |
| Net Income | $697.24M$551.57M | +26.4% |
| EPS (Basic) | $1.59— | — |
| EPS (Diluted) | $1.59— | — |
05—Questions
Frequently Asked Questions
How did WES's profitability change in 2019?
Operating income increased to $1,231.3 million from $861.3 million, and net income attributable to Western Midstream Partners, LP increased to $697.2 million from $551.6 million. Adjusted EBITDA increased to $1,719.1 million from $1,466.4 million. The filing attributes the gains primarily to higher throughput at the West Texas and DJ Basin complexes, new water-disposal systems and the acquisition of an interest in Whitethorn LLC.
How concentrated is WES's customer base?
Concentration is high. Occidental accounted for 59% of total revenues and other in 2019, 38% of natural-gas throughput (excluding equity investments) and 83% of crude-oil, NGLs and produced-water throughput (excluding equity investments). The filing notes that Occidental is under no contractual obligation to maintain its production volumes dedicated to WES.
What distributions does WES pay and how well are they covered?
The board declared a fourth-quarter 2019 distribution of $0.62200 per unit, or $281.8 million in aggregate, paid February 13, 2020. Distributions declared for 2019 totaled $2.47 per unit, and the filing reports a coverage ratio of 1.18x based on distributable cash flow.
How is WES's balance sheet and liquidity positioned?
Total debt principal was $8.0 billion at December 31, 2019, including $3.0 billion under the term loan facility and $380.0 million under the RCF. The company had $1.6 billion of available borrowing capacity under the RCF. In January 2020 it issued $2.2 billion of senior notes and $300.0 million of floating rate notes and used the proceeds to repay the term loan and RCF borrowings. The filing also reports a $83.5 million working capital deficit at year-end.
What are the main growth and capital plans?
Capital expenditures were $1,188.8 million in 2019, including $1,064.3 million of expansion capital, primarily for the West Texas and DJ Basin complexes and the DBM systems. For 2020 the company estimates total capital expenditures of $875.0 million to $950.0 million, excluding acquisitions, and maintenance capital expenditures of $125.0 million to $135.0 million. Latham Train II commenced operation in February 2020 with 200 MMcf/d of capacity.
06—Continue