01—Abstract
Summary
Summary of the 10-K filed February 22, 2023. Cited figures are marked; the original filing is the authoritative source.
Western Midstream Partners, LP (NYSE: WES) reported full-year 2022 results in this Form 10-K filed February 22, 2023.
Total revenues and other were $3,251,721 thousanda for 2022, up from $2,877,155 thousand in 2021, and net income attributable to Western Midstream Partners, LP was $1,217,103 thousand, compared with $916,292 thousand in 2021. Adjusted EBITDA was $2,127,973 thousand, and Free cash flow was $1,268,463 thousand, down from $1,490,128 thousand in 2021. Management highlighted that 93% of wellhead natural-gas volume and 100% of crude-oil and produced-water throughput (excluding equity investments) were served under fee-based contracts in 2022.
The partnership repurchased 19,532,305 common units for $487.6 millionb during 2022, including 10,000,000 units bought from Occidental Petroleum, which owns the general partner and 48.4% of common units. The Board raised the unit repurchase authorization from $1.0 billion to $1.25 billion in November 2022, with $762.4 million remaining at year-end. The quarterly distribution was held at $0.50 per unit for the fourth quarter of 2022, and the filing notes that an Enhanced Distribution tied to prior-year Free cash flow is planned for 2023 onward, subject to Board discretion and leverage targets.
Balance-sheet and portfolio actions included the sale of the 15% Cactus II interest for $264.8 millionc (net gain of $109.9 million), the acquisition of the remaining 50% of Ranch Westex for $40.1 million, and the redemption of $502.2 million of 4.000% senior notes due 2022. Carrying value of outstanding debt was $6.8 billion at year-end, the RCF had $1.6 billion of available capacity, and the filing states that S&P upgraded WES Operating's long-term debt to BBB- in January 2022. Occidental remains the dominant customer, accounting for 55% of total revenues and other.
02—Key points
Key Highlights
- Total revenues and other rose to $3,251,721 thousand in 2022 from $2,877,155 thousand in 2021; net income attributable to the partnership was $1,217,103 thousand versus $916,292 thousand.
- Adjusted EBITDA was $2,127,973 thousand in 2022 versus $1,946,690 thousand in 2021, while Free cash flow was $1,268,463 thousand versus $1,490,128 thousand.
- Approximately 93% of wellhead natural-gas volume and 100% of crude-oil and produced-water throughput (excluding equity investments) were served under fee-based contracts in 2022.
- The partnership repurchased 19,532,305 common units for $487.6 million in 2022; the buyback authorization was increased to $1.25 billion, with $762.4 million remaining at December 31, 2022.
- The quarterly distribution was $0.50 per unit for each 2022 quarter, totaling $2.00 per unit per year; the filing describes an Enhanced Distribution to be paid with the first-quarter distribution beginning in 2023.
- Occidental accounted for 55% of total revenues and other and holds 48.4% of the common units, creating significant customer and conflict-of-interest exposure.
- Portfolio changes included the $264.8 million sale of the 15% Cactus II interest (gain of $109.9 million) and the $40.1 million acquisition of the remaining 50% of Ranch Westex; $502.2 million of 4.000% senior notes due 2022 were redeemed.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 22, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $3.25B$2.88B | +13.0% |
| Operating Expenses | $1.95B$1.75B | +11.8% |
| Operating Income | $1.59B$1.34B | +18.8% |
| Interest Expense | $333.94M$376.51M | −11.3% |
| Net Income | $1.22B$916.29M | +32.8% |
| EPS (Basic) | $3.01$2.18 | +38.1% |
| EPS (Diluted) | $3.00$2.18 | +37.6% |
05—Questions
Frequently Asked Questions
How much of WES's revenue is exposed to commodity-price risk?
The filing states that 93% of wellhead natural-gas volume (excluding equity investments) and 100% of crude-oil and produced-water throughput (excluding equity investments) were serviced under fee-based contracts for 2022. Exposure remains through retained drip condensate, actual-versus-contractual NGL recoveries under certain processing agreements, and settlement of imbalances.
How dependent is WES on Occidental Petroleum?
For 2022, 55% of total revenues and other, 35% of natural-gas throughput (excluding equity investments), 89% of crude-oil and NGLs throughput, and 80% of produced-water throughput were attributable to production owned or controlled by Occidental. Occidental also owns the general partner and held 48.4% of common units as of December 31, 2022, and the filing notes it is under no contractual obligation to maintain its production volumes dedicated to WES.
What did WES do with its capital in 2022?
WES made capital expenditures of $487,228 thousand, acquired Ranch Westex for $40,127 thousand, and received $264,121 thousand of proceeds from asset sales, including Cactus II. It repurchased $487.6 million of common units and paid $735.8 million in distributions to unitholders. The filing estimates 2023 capital expenditures of $575.0 million to $675.0 million.
What is WES's debt position at year-end 2022?
Outstanding debt carrying value was $6.8 billion at December 31, 2022, and the company had $375.0 million of RCF borrowings with $1.6 billion of available capacity under its $2.0 billion revolving credit facility. The Floating-Rate Senior Notes due 2023 were classified as short-term and were redeemed in January 2023 with cash on hand. The filing reports the company was in compliance with all covenants.
What is the difference between WES and WES Operating in this filing?
This is a combined filing for Western Midstream Partners, LP and Western Midstream Operating, LP. WES owns a 98.0% limited partner interest in WES Operating. Differences include WES's separate general and administrative expenses, net income of $1,217,103 thousand for the partnership versus $1,244,620 thousand attributable to WES Operating, and the inclusion of partnership-level equity and distributions in WES's statements. The filing notes that WES's results do not differ materially from WES Operating's.
06—Continue