EX-99.1 2 wes_wgpq32013exhibit991.htm EX-99.1 WES_WGP Third Quarter 2013 8K

EXHIBIT 99.1


WESTERN GAS ANNOUNCES
THIRD-QUARTER 2013 RESULTS

RAISES MIDPOINT OF 2013 ADJUSTED EBITDA(1) GUIDANCE RANGE

HOUSTON, November 6, 2013 – Western Gas Partners, LP (NYSE: WES) (“WES”) and Western Gas Equity Partners, LP (NYSE: WGP) (“WGP”) today announced third-quarter 2013 financial and operating results.
WESTERN GAS PARTNERS, LP
Net income available to limited partners for the third quarter of 2013 totaled $59.7 million, or $0.53 per common unit (diluted). For the third quarter of 2013, Adjusted EBITDA(1) was $125.2 million and Distributable cash flow(1) was $105.9 million, resulting in a Coverage ratio(1) of 1.26 times for the period.
Total throughput attributable to WES for the third quarter of 2013 averaged 3.3 Bcf/d, which was 5% above the prior quarter and 16% above the third quarter of 2012(2). Excluding acquisitions, capital expenditures attributable to WES on a cash basis totaled $127.6 million during the third quarter of 2013. Of this amount, maintenance capital expenditures were $7.4 million, or 6% of Adjusted EBITDA(1). Capital expenditures attributable to WES on an accrual basis and excluding acquisitions totaled $154.3 million during the third quarter of 2013.





                                                                                                                                                                                   
(1) Please see the tables at the end of this release for a reconciliation of non-GAAP to GAAP measures and calculation of the Coverage ratio.
(2) These results include the net throughput attributable to the 33.75% interest in certain third-party operated Marcellus gathering assets acquired from Anadarko (the “Non-Operated Marcellus Interest”) for all periods of comparison, throughput attributable to the additional Chipeta interest beginning in August 2012, and throughput attributable to the 33.75% interest in certain Anadarko-operated Marcellus gathering assets acquired from a third party (the “Anadarko-Operated Marcellus Interest”) beginning in March 2013.


“We are now realizing the returns on the significant capital program we began last year, which includes the organic growth projects that have contributed to our outstanding quarterly results,” said President and Chief Executive Officer, Don Sinclair. “The strong performance across our portfolio has enabled us to raise the midpoint of our Adjusted EBITDA guidance range for the full year.”
WES previously declared a quarterly distribution of $0.58 per unit for the third quarter of 2013, representing a 4% increase over the prior quarter and a 16% increase over the third-quarter 2012 distribution of $0.50 per unit. The distribution will be paid on November 12, 2013, to unitholders of record at the close of business on October 31, 2013. The third-quarter 2013 Coverage ratio(1) of 1.26 times is based on the quarterly distribution of $0.58 per unit.
REVISED 2013 WES OUTLOOK
Based on the current forecast, WES’s Adjusted EBITDA(1) for 2013 is now expected to be between $440 million and $450 million. Total cash basis capital expenditures, excluding acquisitions, are now expected to range from $670 million to $740 million, with maintenance capital expenditures expected to be between 7% and 10% of Adjusted EBITDA(1).
WESTERN GAS EQUITY PARTNERS, LP
As of September 30, 2013, WGP indirectly owned the 2% general partner interest and 100% of the incentive distribution rights in WES and 49,296,205 WES common units. Net income available to limited partners for the third quarter of 2013 totaled $44.3 million, or $0.20 per common unit (diluted).
WGP previously declared a quarterly distribution of $0.21375 per unit for the third quarter of 2013, representing an 8% increase over the distribution from the prior quarter. The distribution will be paid on November 21, 2013, to unitholders of record at the close of business on October 31, 2013. WGP will receive distributions from WES of $47.4 million attributable to the third quarter and will pay out $46.8 million in distributions for the same period.





                                                                                                                                                                                   
(1) Please see the tables at the end of this release for a reconciliation of non-GAAP to GAAP measures and calculation of the Coverage ratio.

2

CONFERENCE CALL TOMORROW AT 11 A.M. CST
WES and WGP will host a joint conference call on Thursday, November 7, 2013, at 11:00 a.m. Central Standard Time (12:00 p.m. Eastern Standard Time) to discuss third-quarter 2013 results. To participate via telephone, please dial 877.621.4819 and enter participant code 75029606. Please call in 10 minutes prior to the scheduled start time. To access the live audio webcast of the conference call and slide presentation, please visit www.westerngas.com. A replay of the call will also be available on the website for approximately two weeks following the conference call.

Western Gas Partners, LP (“WES”) is a growth-oriented Delaware master limited partnership formed by Anadarko Petroleum Corporation to own, operate, acquire and develop midstream energy assets. With midstream assets in East, West and South Texas, the Rocky Mountains, north-central Pennsylvania and the Mid-Continent, WES is engaged in the business of gathering, processing, compressing, treating and transporting natural gas, condensate, natural gas liquids and crude oil for Anadarko and other producers and customers.
Western Gas Equity Partners, LP (“WGP”) is a Delaware master limited partnership formed by Anadarko to own the following types of interests in WES: (i) the 2.0% general partner interest and all of the incentive distribution rights in WES, both owned through WGP’s 100% ownership of WES’s general partner, and (ii) a significant limited partner interest in WES.

For more information about Western Gas Partners, LP and Western Gas Equity Partners, LP, please visit www.westerngas.com.

This news release contains forward-looking statements. Western Gas Partners and Western Gas Equity Partners believe that their expectations are based on reasonable assumptions. No assurance, however, can be given that such expectations will prove to have been correct. A number of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this news release. These factors include the ability to meet financial guidance or distribution growth expectations; the ability to safely and efficiently operate WES’s assets; the ability to obtain new sources of natural gas supplies; the effect of fluctuations in commodity prices and the demand for natural gas and related products; the ability to meet projected in-service dates for capital growth projects; construction costs or capital expenditures exceeding estimated or budgeted costs or expenditures; and the other factors described in the “Risk Factors” sections of WES’s and WGP’s most recent Forms 10-K filed with the Securities and Exchange Commission and in their other public filings and press releases. Western Gas Partners and Western Gas Equity Partners undertake no obligation to publicly update or revise any forward-looking statements.
      
# # #

WESTERN GAS CONTACT
Benjamin Fink, CFA
SVP, Chief Financial Officer and Treasurer
832.636.6010
benjamin.fink@westerngas.com


3

Western Gas Partners, LP Reconciliation of GAAP to Non-GAAP Measures

Below are reconciliations of the Partnership’s Distributable cash flow (non-GAAP) to net income attributable to Western Gas Partners, LP (GAAP) and Adjusted EBITDA (non-GAAP) to net income attributable to Western Gas Partners, LP (GAAP) and net cash provided by operating activities (GAAP), as required under Regulation G of the Securities Exchange Act of 1934. Management believes that the Partnership’s Distributable cash flow, Adjusted EBITDA and Coverage ratio are widely accepted financial indicators of the Partnership’s financial performance compared to other publicly traded partnerships and are useful in assessing the Partnership’s ability to incur and service debt, fund capital expenditures and make distributions. Distributable cash flow, Adjusted EBITDA and Coverage ratio, as defined by the Partnership, may not be comparable to similarly titled measures used by other companies. Therefore, the Partnership’s Distributable cash flow, Adjusted EBITDA and Coverage ratio should be considered in conjunction with net income and other applicable performance measures, such as operating income or cash flows from operating activities.

Distributable Cash Flow

The Partnership defines Distributable cash flow as Adjusted EBITDA, plus interest income, less net cash paid for interest expense (including amortization of deferred debt issuance costs originally paid in cash, offset by non-cash capitalized interest), maintenance capital expenditures, and income taxes.
 
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
thousands except Coverage ratio
 
2013
 
2012  (1)
 
2013
 
2012  (1)
Reconciliation of Net income attributable to Western Gas Partners, LP to Distributable cash flow and calculation of the Coverage ratio
 
 
 
 
 
 
 
 
Net income attributable to Western Gas Partners, LP
 
$
78,400

 
$
46,579

 
$
189,257

 
$
143,539

Add:
 
 
 
 
 
 
 
 
 
Distributions from equity investees
 
4,531

 
5,584

 
15,563

 
15,603

 
Non-cash equity-based compensation expense
 
962

 
9,417

 
2,663

 
16,407

 
Interest expense, net (non-cash settled)
 
—

 
81

 
—

 
244

 
Income tax expense
 
58

 
5,080

 
4,431

 
14,588

 
Depreciation, amortization and impairments  (2)
 
36,970

 
28,011

 
104,651

 
81,507

 
Other expense  (2)
 
—

 
—

 
—

 
1,665

Less:
 
 
 
 
 
 
 
 
 
Equity income, net
 
4,501

 
3,804

 
12,205

 
10,752

 
Cash paid for maintenance capital expenditures  (2) (4)
 
7,389

 
13,398

 
19,595

 
28,863

 
Capitalized interest
 
3,111

 
2,224

 
9,552

 
3,827

 
Cash paid for income taxes
 
—

 
423

 
—

 
495

 
Other income (2) (3)
 
39

 
125

 
419

 
187

Distributable cash flow
 
$
105,881

 
$
74,778

 
$
274,794

 
$
229,429

 
 
 
 
 
 
 
 
 
Distributions declared (5)
 
 
 
 
 
 
 
 
 
Limited partners
 
$
65,181

 
 
 
$
184,734

 
 
 
General partner
 
18,805

 
 
 
48,710

 
 
 
Total
 
$
83,986

 
 
 
$
233,444

 
 
Coverage ratio
 
1.26

x
 
 
1.18

x
 

(1) 
Financial information has been recast to include the financial position and results attributable to the Non-Operated Marcellus Interest.
(2) 
Includes the Partnership’s 51% share prior to August 1, 2012, and its 75% share after August 1, 2012, of depreciation, amortization and impairments; other expense; cash paid for maintenance capital expenditures; and other income attributable to Chipeta.
(3) 
Excludes income of $0.4 million and $1.2 million for each of the three and nine months ended September 30, 2013 and 2012, respectively, related to a component of a gas processing agreement accounted for as a capital lease.
(4) 
Net of a prior period adjustment reclassifying $0.7 million from capital expenditures to operating expenses for the nine months ended September 30, 2012.
(5) 
Reflects distributions of $0.58 and $1.68 per unit declared for the three and nine months ended September 30, 2013, respectively.

4


Western Gas Partners, LP Reconciliation of GAAP to Non-GAAP Measures, continued

Adjusted EBITDA    

The Partnership defines Adjusted EBITDA as net income attributable to Western Gas Partners, LP, plus distributions from equity investees, non-cash equity-based compensation expense, interest expense, income tax expense, depreciation, amortization and impairments, and other expense, less income from equity investments, interest income, income tax benefit, and other income.
 
 
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
thousands
 
2013
 
2012  (1)
 
2013
 
2012  (1)
Reconciliation of Net income attributable to Western Gas Partners, LP to Adjusted EBITDA
 
 
 
 
 
 
 
 
Net income attributable to Western Gas Partners, LP
 
$
78,400

 
$
46,579

 
$
189,257

 
$
143,539

Add:
 
 
 
 
 
 
 
 
 
Distributions from equity investees
 
4,531

 
5,584

 
15,563

 
15,603

 
Non-cash equity-based compensation expense
 
962

 
9,417

 
2,663

 
16,407

 
Interest expense
 
13,018

 
10,977

 
37,483

 
30,118

 
Income tax expense
 
58

 
5,080

 
4,431

 
14,588

 
Depreciation, amortization and impairments  (2)
 
36,970

 
28,011

 
104,651

 
81,507

 
Other expense  (2)
 
—

 
—

 
—

 
1,665

Less:
 
 
 
 
 
 
 
 
 
Equity income, net
 
4,501

 
3,804

 
12,205

 
10,752

 
Interest income, net – affiliates
 
4,225

 
4,225

 
12,675

 
12,675

 
Other income (2) (3)
 
39

 
125

 
419

 
187

Adjusted EBITDA
 
$
125,174

 
$
97,494

 
$
328,749

 
$
279,813

 
Reconciliation of Adjusted EBITDA to Net cash provided by operating activities
Adjusted EBITDA attributable to Western Gas Partners, LP
 
$
125,174

 
$
97,494

 
$
328,749

 
$
279,813

Adjusted EBITDA attributable to noncontrolling interests
 
4,017

 
3,866

 
9,362

 
13,709

 
Interest income (expense), net
 
(8,793
)
 
(6,752
)
 
(24,808
)
 
(17,443
)
 
Non-cash equity based compensation expense
 
(80
)
 
(8,482
)
 
(99
)
 
(13,638
)
 
Debt-related amortization and other items, net
 
630

 
698

 
1,756

 
1,728

 
Current income tax expense
 
(80
)
 
646

 
(3,224
)
 
6,977

 
Other income (expense), net  (3)
 
43

 
126

 
424

 
(1,475
)
 
Distributions from equity investees less than (in excess of) equity income, net
(30
)
 
(1,780
)
 
(3,358
)
 
(4,851
)
 
Changes in operating working capital:
 
 
 
 
 
 
 
 
 
 
Accounts receivable and natural gas imbalance receivable
 
(1,304
)
 
34,817

 
(28,425
)
 
47,403

 
 
Accounts payable, accrued liabilities and natural gas imbalance payable
 
6,482

 
39,209

 
6,818

 
29,261

 
 
Other
 
(2,003
)
 
(2,441
)
 
1,874

 
2,103

Net cash provided by operating activities
 
$
124,056

 
$
157,401

 
$
289,069

 
$
343,587

 
 
 
 
 
 
 
 
 
 
 
Cash flow information of Western Gas Partners, LP
 
 
 
 
 
 
 
 
Net cash provided by operating activities
 
 
 
 
 
$
289,069

 
$
343,587

Net cash used in investing activities
 
 
 
 
 
$
(1,226,404
)
 
$
(1,009,296
)
Net cash provided by financing activities
 
 
 
 
 
$
555,718

 
$
486,644


(1) 
Financial information has been recast to include the financial position and results attributable to the Non-Operated Marcellus Interest.
(2) 
Includes the Partnership’s 51% share prior to August 1, 2012, and its 75% share after August 1, 2012, of depreciation, amortization and impairments; other expense; and other income attributable to Chipeta.
(3) 
Excludes income of $0.4 million and $1.2 million for each of the three and nine months ended September 30, 2013 and 2012, respectively, related to a component of a gas processing agreement accounted for as a capital lease.

5

Western Gas Partners, LP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

 
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
thousands except unit and per-unit amounts
 
2013
 
2012  (1)
 
2013
 
2012  (1)
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
Gathering, processing and transportation of natural gas and natural gas liquids
 
$
130,781

 
$
93,933

 
$
343,471

 
$
278,966

Natural gas, natural gas liquids and condensate sales
 
141,326

 
136,106

 
402,616

 
386,818

Equity income and other, net
 
5,894

 
4,695

 
16,787

 
13,936

Total revenues
 
278,001

 
234,734

 
762,874

 
679,720

Operating expenses
 
 
 
 
 
 
 
 
Cost of product
 
93,516

 
89,107

 
270,059

 
254,719

Operation and maintenance
 
42,757

 
35,493

 
121,165

 
103,304

General and administrative
 
7,276

 
15,039

 
22,228

 
35,623

Property and other taxes
 
6,649

 
5,328

 
18,520

 
14,998

Depreciation, amortization and impairments
 
37,615

 
28,455

 
106,551

 
83,263

Total operating expenses
 
187,813

 
173,422

 
538,523

 
491,907

Operating income
 
90,188

 
61,312

 
224,351

 
187,813

Interest income, net – affiliates
 
4,225

 
4,225

 
12,675

 
12,675

Interest expense
 
(13,018
)
 
(10,977
)
 
(37,483
)
 
(30,118
)
Other income (expense), net
 
439

 
522

 
1,612

 
(287
)
Income before income taxes
 
81,834

 
55,082

 
201,155

 
170,083

Income tax expense
 
58

 
5,080

 
4,431

 
14,588

Net income
 
81,776

 
50,002

 
196,724

 
155,495

Net income attributable to noncontrolling interests
 
3,376

 
3,423

 
7,467

 
11,956

Net income attributable to Western Gas Partners, LP
 
$
78,400

 
$
46,579

 
$
189,257

 
$
143,539

Limited partners’ interest in net income:
 
 
 
 
 
 
 
 
Net income attributable to Western Gas Partners, LP
 
$
78,400

 
$
46,579

 
$
189,257

 
$
143,539

Pre-acquisition net (income) loss allocated to Anadarko
 
—

 
(7,062
)
 
(4,637
)
 
(19,582
)
General partner interest in net (income) loss
 
(18,693
)
 
(8,042
)
 
(47,733
)
 
(18,508
)
Limited partners’ interest in net income
 
$
59,707

 
$
31,475

 
$
136,887

 
$
105,449

 
 
 
 
 
 
 
 
 
 
Net income per common unit – basic and diluted
 
$
0.53

 
$
0.33

 
$
1.26

 
$
1.14

Weighted average common units outstanding – basic and diluted
 
112,143

 
95,883

 
108,540

 
92,627


(1) 
Financial information has been recast to include the financial position and results attributable to the Non-Operated Marcellus Interest.

6

Western Gas Partners, LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

thousands except number of units
 
September 30,
2013
 
December 31,
2012 (1)
 
 
 
 
 
 
 
Current assets
 
$
122,915

 
$
477,212

Note receivable – Anadarko
 
260,000

 
260,000

Net property, plant and equipment
 
3,243,900

 
2,717,956

Other assets
 
415,416

 
294,754

Total assets
 
$
4,042,231

 
$
3,749,922

 
 
 
 
 
Current liabilities
 
$
177,959

 
$
185,306

Long-term debt
 
1,518,110

 
1,168,278

Asset retirement obligations and other
 
78,166

 
115,902

Total liabilities
 
$
1,774,235

 
$
1,469,486

 
 
 
 
 
 
 
Equity and partners’ capital
 
 
 
 
Common units (112,174,911 and 104,660,553 units issued and outstanding at September 30, 2013, and December 31, 2012, respectively)
 
$
2,127,040

 
$
1,957,066

General partner units (2,288,573 and 2,135,930 units issued and outstanding at September 30, 2013, and December 31, 2012, respectively)
 
68,585

 
52,752

Net investment by Anadarko
 
—

 
199,960

Noncontrolling interests
 
72,371

 
70,658

Total liabilities, equity and partners’ capital
 
$
4,042,231

 
$
3,749,922


(1) 
Financial information has been recast to include the financial position and results attributable to the Non-Operated Marcellus Interest.

7

Western Gas Partners, LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 
 
Nine Months Ended 
 September 30,
thousands
 
2013
 
2012  (1)
 
 
 
 
 
 
Cash flows from operating activities
 
 
 
 
Net income
 
$
196,724

 
$
155,495

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
Depreciation, amortization and impairments
 
106,551

 
83,263

 
Change in other items, net
 
(14,206
)
 
104,829

Net cash provided by operating activities
 
$
289,069

 
$
343,587

 
 
 
 
 
 
Cash flows from investing activities
 
 
 
 
Capital expenditures
 
$
(469,678
)
 
$
(403,949
)
Acquisitions from affiliates
 
(469,884
)
 
(605,960
)
Acquisitions from third parties
 
(240,274
)
 
—

Investments in equity affiliates
 
(45,126
)
 
(147
)
Proceeds from the sale of assets to affiliates
 
82

 
760

Other
 
(1,524
)
 
—

Net cash used in investing activities
 
$
(1,226,404
)
 
$
(1,009,296
)
 
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
Borrowings, net of debt issuance costs
 
$
842,566

 
$
885,291

Repayments of debt
 
(495,000
)
 
(549,000
)
Increase (decrease) in outstanding checks
 
(3,335
)
 
2,534

Proceeds from the issuance of common and general partner units, net of offering expenses
 
427,848

 
216,462

Distributions to unitholders
 
(215,115
)
 
(141,505
)
Contributions from noncontrolling interest owners
 
2,247

 
26,888

Distributions to noncontrolling interest owners
 
(8,001
)
 
(14,303
)
Net contributions from (distributions to) Anadarko
 
4,508

 
60,277

Net cash provided by financing activities
 
$
555,718

 
$
486,644

 
 
 
 
 
 
Net increase (decrease) in cash and cash equivalents
 
$
(381,617
)
 
$
(179,065
)
Cash and cash equivalents at beginning of period
 
419,981

 
226,559

Cash and cash equivalents at end of period
 
$
38,364

 
$
47,494


(1) 
Financial information has been recast to include the financial position and results attributable to the Non-Operated Marcellus Interest.


8

Western Gas Partners, LP
OPERATING STATISTICS
(Unaudited)

 
 
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
MMcf/d except per-unit amounts
 
2013
 
2012  (1)
 
2013
 
2012  (1)
 
 
 
 
 
 
 
 
 
 
 
Throughput
 
 
 
 
 
 
 
 
 
Gathering, treating and transportation (2)
 
1,844

 
1,576

 
1,746

 
1,598

 
Processing  (3)
 
1,397

 
1,228

 
1,320

 
1,182

 
Equity investment (4)
 
221

 
236

 
211

 
236

 
 
Total throughput (5)
 
3,462

 
3,040

 
3,277

 
3,016

 
Throughput attributable to noncontrolling interests
 
177

 
204

 
166

 
254

 
Total throughput attributable to Western Gas Partners, LP
 
3,285

 
2,836

 
3,111

 
2,762

Gross margin per Mcf attributable to Western Gas Partners, LP  (6)
 
$
0.59

 
$
0.54

 
$
0.57

 
$
0.54


(1) 
Throughput has been recast to include volumes attributable to the Non-Operated Marcellus Interest.
(2) 
Excludes average NGL pipeline volumes of 25 MBbls/d and 22 MBbls/d for the three and nine months ended September 30, 2013, respectively, and 22 MBbls/d and 25 MBbls/d for the three and nine months ended September 30, 2012, respectively. Includes 100% of Wattenberg system volumes for all periods presented, and throughput beginning March 2013 attributable to the Anadarko-Operated Marcellus Interest.
(3) 
Consists of 100% of Chipeta, Hilight and Platte Valley system volumes, 100% of the Granger and Red Desert complex volumes, and 50% of Newcastle volumes.
(4) 
Represents our 14.81% share of Fort Union and 22% share of Rendezvous gross volumes, and excludes our 10% share of average White Cliffs pipeline volumes consisting of 6 MBbls/d and 7 MBbls/d for the three and nine months ended September 30, 2013, respectively, and 6 MBbls/d for both the three and nine months ended September 30, 2012.
(5) 
Includes affiliate, third-party and equity-investment volumes.
(6) 
Average for period. Calculated as gross margin, excluding the noncontrolling interest owners’ proportionate share of revenues and cost of product, divided by total throughput attributable to the Partnership (excluding throughput measured in barrels). Calculation includes gross margin attributable to our NGL pipelines and income attributable to our investments in Fort Union, White Cliffs and Rendezvous and volumes attributable to our investments in Fort Union and Rendezvous.


9

Western Gas Partners, LP
UPDATED GUIDANCE
(Unaudited)

millions except percentages
Previously
Announced
 
Current
 
Variance
Adjusted EBITDA
$410
-
$450
 
$440
-
$450
 
$15
Maintenance capital expenditures as a percentage of Adjusted EBITDA
9%
-
12%
 
7%
-
10%
 
(2)%
Total capital expenditures (1)
$670
-
$740
 
$670
-
$740
 
none
Minimum WES distribution growth
15%
 
16%
 
1%
Minimum WGP distribution growth
33%
 
37%
 
4%
    
(1) 
Does not include acquisitions or equity investments.


10

Western Gas Equity Partners, LP
CALCULATION OF CASH AVAILABLE FOR DISTRIBUTION
(Unaudited)

thousands except per-unit amount and Coverage ratio
Three Months Ended 
 September 30, 2013
 
Distributions declared by Western Gas Partners, LP:
 
 
 
General partner interest
$
1,680

 
 
Incentive distribution rights
17,126

 
 
Common units held by WGP
28,592

 
Less:
 
 
 
Public company general and administrative expense
603

 
Cash available for distribution
$
46,795

 
 
 
 
 
Declared distribution per common unit
$
0.21375

 
 
 
 
 
Distributions declared by Western Gas Equity Partners, LP
$
46,789

 
 
 
 
 
 
 
 
 
Coverage ratio
1.00

x


11

Western Gas Equity Partners, LP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

 
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
thousands except unit and per-unit amounts
 
2013
 
2012  (1)
 
2013
 
2012  (1)
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
Gathering, processing and transportation of natural gas and natural gas liquids
 
$
130,781

 
$
93,933

 
$
343,471

 
$
278,966

Natural gas, natural gas liquids and condensate sales
 
141,326

 
136,106

 
402,616

 
386,818

Equity income and other, net
 
5,894

 
4,695

 
16,787

 
13,936

Total revenues
 
278,001

 
234,734

 
762,874

 
679,720

Operating expenses
 
 
 
 
 
 
 
 
Cost of product
 
93,516

 
89,107

 
270,059

 
254,719

Operation and maintenance
 
42,757

 
35,493

 
121,165

 
103,304

General and administrative
 
7,962

 
15,039

 
25,100

 
35,623

Property and other taxes
 
6,649

 
5,328

 
18,520

 
14,998

Depreciation, amortization and impairments
 
37,615

 
28,455

 
106,551

 
83,263

Total operating expenses
 
188,499

 
173,422

 
541,395

 
491,907

Operating income
 
89,502

 
61,312

 
221,479

 
187,813

Interest income, net – affiliates
 
4,225

 
4,225

 
12,675

 
12,675

Interest expense
 
(13,018
)
 
(10,977
)
 
(37,483
)
 
(30,118
)
Other income (expense), net
 
466

 
522

 
1,686

 
(287
)
Income before income taxes
 
81,175

 
55,082

 
198,357

 
170,083

Income tax expense
 
58

 
14,166

 
4,431

 
43,790

Net income
 
81,117

 
40,916

 
193,926

 
126,293

Net income attributable to noncontrolling interests
 
36,779

 
21,605

 
82,562

 
71,258

Net income attributable to Western Gas Equity Partners, LP
 
$
44,338

 
$
19,311

 
$
111,364

 
$
55,035

Limited partners’ interest in net income: (2)
 
 
 
 
 
 
 
 
Net income attributable to Western Gas Equity Partners, LP
 
$
44,338

 
 
 
$
111,364

 
 
Pre-acquisition net (income) loss allocated to Anadarko
 
—

 
 
 
(4,637
)
 
 
Limited partners’ interest in net income
 
$
44,338

 
 
 
$
106,727

 
 
Net income per common unit – basic and diluted (2)
 
$
0.20

 
 
 
$
0.49

 
 
Weighted average number of common units outstanding – basic and diluted (2)
 
218,896

 
 
 
218,896

 
 

(1) 
Financial information has been recast to include the financial position and results attributable to the Non-Operated Marcellus Interest.
(2) 
Amounts not applicable prior to WGP’s IPO on December 12, 2012.

12

Western Gas Equity Partners, LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

thousands except number of units
 
September 30,
2013
 
December 31,
2012  (1)
 
 
 
 
 
 
 
Current assets
 
$
141,690

 
$
478,104

Note receivable – Anadarko
 
260,000

 
260,000

Net property, plant and equipment
 
3,243,900

 
2,717,956

Other assets
 
415,416

 
294,754

Total assets
 
$
4,061,006

 
$
3,750,814

 
 
 
 
 
Current liabilities
 
$
178,116

 
$
186,255

Long-term debt
 
1,518,110

 
1,168,278

Asset retirement obligations and other
 
78,166

 
115,902

Total liabilities
 
$
1,774,392

 
$
1,470,435

 
 
 
 
 
 
 
Equity and partners’ capital
 
 
 
 
Common units (218,895,515 issued and outstanding at September 30, 2013, and December 31, 2012)
 
$
825,074

 
$
912,376

Net investment by Anadarko
 
—

 
199,960

Noncontrolling interests
 
1,461,540

 
1,168,043

Total liabilities, equity and partners’ capital
 
$
4,061,006

 
$
3,750,814


(1) 
Financial information has been recast to include the financial position and results attributable to the Non-Operated Marcellus Interest.

13

Western Gas Equity Partners, LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
    
 
 
Nine Months Ended 
 September 30,
thousands
 
2013
 
2012  (1)
 
 
 
 
 
 
Cash flows from operating activities
 
 
 
 
Net income
 
$
193,926

 
$
126,293

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
Depreciation, amortization and impairments
 
106,551

 
83,263

 
Change in other items, net
 
(14,406
)
 
72,000

Net cash provided by operating activities
 
$
286,071

 
$
281,556

 
 
 
 
 
 
Cash flows from investing activities
 
 
 
 
Capital expenditures
 
$
(469,678
)
 
$
(403,949
)
Acquisitions from affiliates
 
(469,884
)
 
(605,960
)
Acquisitions from third parties
 
(240,274
)
 
—

Investments in equity affiliates
 
(45,126
)
 
(147
)
Proceeds from the sale of assets to affiliates
 
82

 
760

Other
 
(1,524
)
 
—

Net cash used in investing activities
 
$
(1,226,404
)
 
$
(1,009,296
)
 
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
Borrowings, net of debt issuance costs
 
$
842,566

 
$
885,291

Repayments of debt
 
(495,000
)
 
(549,000
)
Increase (decrease) in outstanding checks
 
(3,335
)
 
2,534

Proceeds from the issuance of WES common units, net of offering expenses
 
418,570

 
211,965

Offering expenses from issuance of WGP common units
 
(2,367
)
 
—

Contributions received from Chipeta noncontrolling interest owners (including Anadarko)
 
2,247

 
26,888

Distributions to Chipeta noncontrolling interest owners (including Anadarko)
 
(8,001
)
 
(14,303
)
Distributions to WES common unitholders
 
(94,117
)
 
(71,890
)
Distributions to WGP unitholders
 
(90,211
)
 
—

Net contributions from (distributions to) Anadarko
 
4,508

 
57,190

Net cash provided by financing activities
 
$
574,860

 
$
548,675

 
 
 
 
 
 
Net increase (decrease) in cash and cash equivalents
 
$
(365,473
)
 
$
(179,065
)
Cash and cash equivalents at beginning of period
 
422,556

 
226,559

Cash and cash equivalents at end of period
 
$
57,083

 
$
47,494


(1) 
Financial information has been recast to include the financial position and results attributable to the Non-Operated Marcellus Interest.


14