01—Abstract
Summary
Summary of the 8-K filed February 21, 2024. Cited figures are marked; the original filing is the authoritative source.
Western Midstream Partners, LP (NYSE: WES) reported fourth-quarter 2023 net income attributable to limited partners of $281.6 milliona ($0.74 per common unit, diluted) and Adjusted EBITDA of $570.7 million, including approximately $20.4 million of positive revenue recognition adjustments tied to cost-of-service agreements.
For full-year 2023, net income attributable to limited partners was $998.5 millionb ($2.60 per diluted unit), Adjusted EBITDA was $2.069 billion, exceeding the revised range of $1.950 billion to $2.050 billion, and Free cash flow was $964.2 million, within the $900.0 million to $1.000 billion guidance range. Full-year operating cash flow was $1.661 billion and capital expenditures were $739.1 million. Throughput grew across the system, with record annual natural-gas throughput of 4.4 Bcf/d, crude oil and NGLs of 652 MBbls/d, and produced water of 1,009 MBbls/d, driven by the Delaware Basin and the Meritage acquisition in the Powder River Basin.
The company also announced agreements to divest its remaining interest in the Marcellus Interest gathering system, Saddlehorn Pipeline Company, Whitethorn Pipeline Company, Panola Pipeline Company, and Enterprise EF78 LLC for aggregate proceeds of $790 millionc, a stated multiple of approximately 9.6 times 2023 Adjusted EBITDA. The Enterprise EF78 and Whitethorn sales closed on February 16, 2024, and the remaining sales are expected to close in the first or second quarters of 2024. For 2024, WES guided to Adjusted EBITDA of $2.200 billion to $2.400 billion, total capital expenditures of $700.0 million to $850.0 million, and Free cash flow of $1.050 billion to $1.250 billion, all including the divestitures.
Management plans to recommend a quarterly Base Distribution increase of $0.30 per unit, to $0.875d per unit starting in the first quarter of 2024, a 52-percent increase, with full-year 2024 Base Distribution guidance of at least $3.20 per unit. Board action on the increase will be requested in April 2024.
02—Key points
Key Highlights
- Q4 2023 net income attributable to limited partners of $281.6 million ($0.74 per diluted unit) and Adjusted EBITDA of $570.7 million, including about $20.4 million of positive revenue recognition adjustments
- Full-year 2023 Adjusted EBITDA of $2.069 billion, above the revised $1.950 billion to $2.050 billion range; Free cash flow of $964.2 million, within the $900.0 million to $1.000 billion guidance
- Record annual throughput: natural gas 4.4 Bcf/d, crude oil and NGLs 652 MBbls/d, and produced water 1,009 MBbls/d, with Delaware Basin throughput growth of 11%, 8%, and 21% for natural gas, crude oil and NGLs, and produced water
- Announced agreements to divest non-core interests for aggregate proceeds of $790 million, at about 9.6 times 2023 Adjusted EBITDA; two sales closed February 16, 2024
- 2024 guidance: Adjusted EBITDA of $2.200 billion to $2.400 billion, total capital expenditures of $700.0 million to $850.0 million, and Free cash flow of $1.050 billion to $1.250 billion
- Management plans to recommend a Base Distribution increase to $0.875 per unit starting Q1 2024, a 52-percent increase, with 2024 Base Distribution guidance of at least $3.20 per unit
- Returned $978.4 million in distributions and $134.6 million in unit repurchases during 2023, and obtained full investment-grade ratings in May 2023
03—Questions
Frequently Asked Questions
How did Western Midstream perform financially in the fourth quarter and full year of 2023?
Fourth-quarter 2023 net income attributable to limited partners was $281.6 million, or $0.74 per diluted unit, with Adjusted EBITDA of $570.7 million and operating cash flow of $473.3 million. For full-year 2023, net income attributable to limited partners was $998.5 million, or $2.60 per diluted unit, Adjusted EBITDA was $2.069 billion, and operating cash flow was $1.661 billion.
What are the main drivers of WES's throughput growth?
The company attributed growth primarily to the Delaware Basin, where throughput rose across all three products, and to the Meritage acquisition in the Powder River Basin. Management also cited the sanctioning of the 250 MMcf/d North Loving processing plant and construction of the 300 MMcf/d Mentone III processing train.
What are the non-core asset divestitures and how will they affect the business?
WES agreed to sell its interests in the Marcellus Interest gathering system, Saddlehorn Pipeline Company, Whitethorn Pipeline Company, Panola Pipeline Company, and Enterprise EF78 LLC for aggregate proceeds of $790 million. Management said the proceeds would be redeployed into the operated asset base and would help reduce net leverage toward a long-term goal of 3.0 times.
What does the 2024 guidance and distribution increase mean for unitholders?
WES guided to 2024 Adjusted EBITDA of $2.200 billion to $2.400 billion and Free cash flow of $1.050 billion to $1.250 billion. Management plans to recommend raising the quarterly Base Distribution by $0.30 per unit to $0.875, an annual rate of $3.50 per unit, with 2024 Base Distribution guidance of at least $3.20 per unit, subject to Board approval expected in April 2024.
What capital return and balance sheet actions did WES take in 2023?
WES returned $978.4 million in distributions and $134.6 million through unit repurchases in 2023, which represents about 15 percent of its unaffected common unit count since 2020. It also obtained full investment-grade ratings in May 2023 and raised $1.350 billion through two bond offerings to partly fund the Meritage acquisition and refinance borrowings.
04—Continue