01—Abstract
Summary
Summary of the 10-K filed February 21, 2024. Cited figures are marked; the original filing is the authoritative source.
Western Midstream Partners, LP (NYSE: WES) reported fiscal 2023 results in this Form 10-K filed February 21, 2024.
Total revenues and other were $3,106,476 thousanda ($3.11 billion) versus $3,251,721 thousand in 2022, while net income attributable to Western Midstream Partners, LP was $1,022,216 thousand versus $1,217,103 thousand. Adjusted EBITDA was $2,068,633 thousand compared with $2,127,973 thousand, and Free cash flow was $964,205 thousand compared with $1,268,463 thousand. Operating cash flow was $1,661,334 thousand.
Growth came mainly from the October 2023 acquisition of Meritage Midstream Services II, LLC for $885.0 millionb, which expanded the Powder River Basin complex, alongside higher natural-gas and produced-water throughput. Crude-oil and NGLs throughput declined 4%. The balance sheet carried total debt of $7.9 billion at December 31, 2023, with a $311.6 million working capital deficit attributed mainly to commercial paper classified as short-term debt.
Fitch upgraded WES Operating's long-term debt to BBB-, and the company's senior unsecured ratings are now investment grade at S&P, Moody's and Fitch. Occidental Petroleum owns the general partner and held 48.8% of outstanding common units. Management declared a fourth-quarter 2023 distribution of $0.575c per unit, and $627.8 million remained authorized under the $1.25 billion unit repurchase program.
Subsequent to year end, on February 21, 2024, the Partnership announced agreements to divest its 33.75% Marcellus Interest, 15% Panola, 25% Mont Belvieu JV, 20% Whitethorn LLC and 20% Saddlehorn interests for combined proceeds of $790.0 milliond and an estimated net gain of approximately $300.0 million. The Mont Belvieu JV and Whitethorn sales closed on February 16, 2024 and resolved related lawsuits. The remaining sales are expected to close in the first or second quarter of 2024.
02—Key points
Key Highlights
- Revenue and profitability eased: total revenues and other were $3.11 billion versus $3.25 billion in 2022, and net income attributable to the Partnership was $1.02 billion versus $1.22 billion.
- Adjusted EBITDA was $2,068,633 thousand versus $2,127,973 thousand, and Free cash flow fell to $964,205 thousand from $1,268,463 thousand, driven partly by a $735.1 million capital expenditure level.
- Meritage Midstream acquisition for $885.0 million, closed October 13, 2023, expanded the Powder River Basin complex and contributed $41.4 million of revenue in the period.
- Produced-water throughput rose 21% to 1,009 MBbls/d and natural-gas throughput rose 5% to 4,432 MMcf/d, while crude-oil and NGLs throughput fell 4% to 652 MBbls/d.
- Credit profile improved: WES Operating's senior unsecured debt is now investment grade at S&P, Moody's and Fitch, and total debt was $7.9 billion at year end.
- Planned divestments announced February 21, 2024 total $790.0 million in proceeds with an estimated net gain of about $300.0 million, including the Mont Belvieu JV and Whitethorn interests that closed February 16, 2024.
- Occidental owns the general partner and held 48.8% of common units, and 59% of total revenues and other were attributable to Occidental-owned or controlled production.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 21, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $3.11B$3.25B | −4.5% |
| Operating Expenses | $1.87B$1.95B | −4.2% |
| Operating Income | $1.38B$1.59B | −13.1% |
| Interest Expense | $348.23M$333.94M | +4.3% |
| Net Income | $1.02B$1.22B | −16.0% |
| EPS (Basic) | $2.61$3.01 | −13.3% |
| EPS (Diluted) | $2.60$3.00 | −13.3% |
05—Questions
Frequently Asked Questions
How did Western Midstream perform financially in 2023?
Total revenues and other were $3,106,476 thousand, down from $3,251,721 thousand in 2022. Net income attributable to Western Midstream Partners, LP was $1,022,216 thousand, compared with $1,217,103 thousand. Adjusted EBITDA was $2,068,633 thousand versus $2,127,973 thousand, and Free cash flow was $964,205 thousand versus $1,268,463 thousand. The decline reflects lower cost-of-product and gain comparisons, a $108.0 million rise in operation and maintenance expense, and higher interest expense.
What drove the throughput changes?
Natural-gas throughput attributable to WES increased 5% to 4,432 MMcf/d, mainly from the West Texas complex, Meritage-acquired Powder River Basin volumes and Springfield system growth. Produced-water throughput increased 21% to 1,009 MBbls/d on higher production and new third-party connections. Crude-oil and NGLs throughput decreased 4% to 652 MBbls/d, mainly due to the 2022 sale of Cactus II and DJ Basin oil system production declines.
How is the Partnership funding its capital program and distributions?
Operating cash flow was $1,661,334 thousand in 2023. Capital expenditures were $735,080 thousand, and the Partnership used $877.7 million for the Meritage acquisition. Financing included $1,120.0 million of RCF borrowings, $609.9 million of net commercial paper borrowings and $1,350 million of senior notes, while distributions to unitholders totaled $978,430 thousand. The company expects 2024 capital expenditures of $700.0 million to $850.0 million and reported $1.4 billion of effective RCF borrowing capacity at year end.
What are the main risks tied to Occidental?
Occidental accounted for 59% of total revenues and other, and its production represented 34% of natural-gas throughput, 86% of crude-oil and NGLs throughput and 78% of produced-water throughput, excluding equity-investment volumes. Occidental is under no contractual obligation to maintain volumes dedicated to the Partnership, and it owns the general partner, which creates potential conflicts of interest. The filing also notes that Occidental is not restricted from competing with the Partnership.
What happened after year end?
On February 21, 2024 the Partnership announced definitive agreements to sell its 33.75% Marcellus Interest, 15% Panola, 25% Mont Belvieu JV, 20% Whitethorn LLC and 20% Saddlehorn interests, with combined proceeds of $790.0 million and an estimated net gain of approximately $300.0 million. The Mont Belvieu JV and Whitethorn sales closed February 16, 2024 and settled related legal proceedings. The Marcellus, Panola and Saddlehorn sales are expected to close in the first or second quarter of 2024.
06—Continue