EX-99.1 2 wes_wgpq22014exhibit991.htm WES WGP Q2 2014 JOINT PRESS RELEASE WES_WGP Q2 2014 EXHIBIT 991


EXHIBIT 99.1

WESTERN GAS ANNOUNCES
SECOND-QUARTER 2014 RESULTS

RAISES 2014 TOTAL CAPITAL EXPENDITURES GUIDANCE RANGE

HOUSTON, August 5, 2014 – Western Gas Partners, LP (NYSE: WES) (“WES” or the “Partnership”) and Western Gas Equity Partners, LP (NYSE: WGP) (“WGP”) today announced second-quarter 2014 financial and operating results.
WESTERN GAS PARTNERS, LP
Net income available to limited partners for the second quarter of 2014 totaled $67.0 million, or $0.57 per common unit (diluted). For the second quarter of 2014, Adjusted EBITDA(1) was $167.3 million and Distributable cash flow(1) was $137.0 million, resulting in a Coverage ratio(1) of 1.30 times for the period.
Total throughput attributable to WES for natural gas assets for the second quarter of 2014 averaged 3.6 Bcf/d, which was 5% above the prior quarter and 13% above the second quarter of 2013. Total throughput for crude/NGL assets for the second quarter of 2014 averaged 115 MBbls/d, which was 46% above the prior quarter.
Capital expenditures attributable to WES on a cash basis, including equity investments but excluding acquisitions, totaled $199.3 million during the second quarter of 2014. Of this amount, maintenance capital expenditures were $11.7 million, or 7% of Adjusted EBITDA(1). Capital expenditures attributable to WES on an accrual basis, including equity investments but excluding acquisitions, totaled $205.2 million during the second quarter of 2014.





















                                                                                                                                                                                    
(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.



“Our portfolio’s solid second-quarter performance was highlighted by the successful start-up of our Lancaster Plant in the DJ Basin complex, which is currently running at capacity,” said Chief Executive Officer, Don Sinclair. “Given the continued high activity level in the DJ Basin, as well as additional capital needed to repurpose a portion of our Haley system to handle rich gas from Anadarko’s West Texas drilling activity, we now believe our full-year 2014 total capital expenditures will be between $720 million and $770 million.”
WES previously declared a quarterly distribution of $0.650 per unit for the second quarter of 2014, representing a 4% increase over the prior quarter’s distribution and a 16% increase over the second-quarter 2013 distribution of $0.56 per unit. The distribution will be paid on August 13, 2014, to unitholders of record at the close of business on July 31, 2014. The second-quarter 2014 Coverage ratio(1) of 1.30 times is based on the quarterly distribution of $0.650 per unit.
WESTERN GAS EQUITY PARTNERS, LP
WGP indirectly owns the 2% general partner interest in WES, 100% of the incentive distribution rights in WES and 49,296,205 WES common units. Net income available to limited partners for the second quarter of 2014 totaled $55.3 million, or $0.25 per common unit (diluted).
WGP previously declared a quarterly distribution of $0.27125 per unit for the second quarter of 2014, representing a 9% increase over the prior quarter’s distribution and a 37% increase over the second-quarter 2013 distribution of $0.19750. The distribution will be paid on August 22, 2014, to unitholders of record at the close of business on July 31, 2014. WGP will receive distributions from WES of $60.3 million attributable to the second quarter and will pay out $59.4 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. CDT
WES and WGP will host a joint conference call on Wednesday, August 6, 2014, at 11:00 a.m. Central Daylight Time (12:00 p.m. Eastern Daylight Time) to discuss second-quarter 2014 results. To participate via telephone, please dial 877.621.4819 and enter participant code 53708569. 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 the Rocky Mountains, the Mid-Continent, north-central Pennsylvania and Texas, 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 (i) WES’s Distributable cash flow (non-GAAP) to net income attributable to Western Gas Partners, LP (GAAP), (ii) Adjusted EBITDA attributable to Western Gas Partners, LP (“Adjusted EBITDA”) (non-GAAP) to net income attributable to Western Gas Partners, LP (GAAP) and to net cash provided by operating activities (GAAP), and (iii) Adjusted gross margin attributable to Western Gas Partners, LP (“Adjusted gross margin”) (non-GAAP) to operating income (GAAP), as required under Regulation G of the Securities Exchange Act of 1934. Management believes that WES’s Distributable cash flow, Adjusted EBITDA, Adjusted gross margin, and Coverage ratio are widely accepted financial indicators of WES’s financial performance compared to other publicly traded partnerships and are useful in assessing its ability to incur and service debt, fund capital expenditures and make distributions. Distributable cash flow, Adjusted EBITDA, Adjusted gross margin and Coverage ratio, as defined by WES, may not be comparable to similarly titled measures used by other companies. Therefore, WES’s Distributable cash flow, Adjusted EBITDA, Adjusted gross margin, 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

WES 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 
 June 30,
 
Six Months Ended 
 June 30,
thousands except Coverage ratio
 
2014
 
2013 (1)
 
2014
 
2013 (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
 
$
95,032

 
$
60,016

 
$
182,467

 
$
110,730

Add:
 
 
 
 
 
 
 
 
Distributions from equity investees
 
24,328

 
6,026

 
36,641

 
11,032

Non-cash equity-based compensation expense
 
1,056

 
824

 
2,153

 
1,701

Income tax (benefit) expense
 
226

 
53

 
(2
)
 
4,219

Depreciation, amortization and impairments (2)
 
43,103

 
35,857

 
83,078

 
67,681

Less:
 
 
 
 
 
 
 
 
Equity income, net
 
13,008

 
3,456

 
22,259

 
7,424

Cash paid for maintenance capital expenditures (2)
 
11,698

 
6,174

 
20,540

 
12,206

Capitalized interest
 
2,007

 
3,260

 
5,447

 
6,441

Cash paid for (reimbursement of) income taxes
 
—

 
—

 
(340
)
 
—

Other income (2) (3)
 
79

 
103

 
157

 
380

Distributable cash flow
 
$
136,953

 
$
89,783

 
$
256,274

 
$
168,912

Distributions declared (4)
 
 
 
 
 
 
 
 
Limited partners
 
$
77,396

 
 
 
$
151,103

 
 
General partner
 
28,259

 
 
 
53,301

 
 
Total
 
$
105,655

 
 
 
$
204,404

 
 
Coverage ratio
 
1.30

x
 
 
1.25

x
 

(1) 
Financial information has been recast to include the financial position and results attributable to the 20% interest in each of Texas Express Pipeline LLC (“TEP”) and Texas Express Gathering LLC (“TEG”) and a 33.33% interest in Front Range Pipeline LLC (“FRP”) acquired from Anadarko (collectively, the “TEFR Interests”).
(2) 
Includes WES’s 75% share of depreciation, amortization and impairments; cash paid for maintenance capital expenditures; and other income attributable to Chipeta.
(3) 
Excludes income of $0.1 million and $0.4 million for the three months ended June 30, 2014 and 2013, respectively, and $0.5 million and $0.8 million for the six months ended June 30, 2014 and 2013, respectively, related to a component of a gas processing agreement accounted for as a capital lease.
(4) 
Reflects distributions of $0.650 and $1.275 per unit declared for the three and six months ended June 30, 2014, respectively.

4


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

Adjusted EBITDA Attributable to Western Gas Partners, LP

WES defines Adjusted EBITDA as net income (loss) 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 
 June 30,
 
Six Months Ended 
 June 30,
thousands
 
2014
 
2013 (1)
 
2014
 
2013 (1)
Reconciliation of Net income attributable to Western Gas Partners, LP to Adjusted EBITDA attributable to Western Gas Partners, LP
 
 
 
 
 
 
 
 
Net income attributable to Western Gas Partners, LP
 
$
95,032

 
$
60,016

 
$
182,467

 
$
110,730

Add:
 
 
 
 
 
 
 
 
Distributions from equity investees
 
24,328

 
6,026

 
36,641

 
11,032

Non-cash equity-based compensation expense
 
1,057

 
824

 
2,154

 
1,701

Interest expense
 
20,864

 
12,654

 
34,825

 
24,465

Income tax expense
 
226

 
53

 
226

 
4,219

Depreciation, amortization and impairments (2)
 
43,103

 
35,857

 
83,078

 
67,681

Less:
 
 
 
 
 
 
 
 
Equity income, net
 
13,008

 
3,456

 
22,259

 
7,424

Interest income, net – affiliates
 
4,225

 
4,225

 
8,450

 
8,450

Other income (2) (3)
 
79

 
103

 
157

 
380

Income tax benefit
 
—

 
—

 
228

 
—

Adjusted EBITDA attributable to Western Gas Partners, LP
 
$
167,298

 
$
107,646

 
$
308,297

 
$
203,574

 
Reconciliation of Adjusted EBITDA attributable to Western Gas Partners, LP to Net cash provided by operating activities
 
 
 
 
 
 
 
 
Adjusted EBITDA attributable to Western Gas Partners, LP
 
$
167,298

 
$
107,646

 
$
308,297

 
$
203,574

Adjusted EBITDA attributable to noncontrolling interest
 
4,090

 
2,499

 
8,416

 
5,345

Interest income (expense), net
 
(16,639
)
 
(8,429
)
 
(26,375
)
 
(16,015
)
Non-cash equity-based compensation expense
 
(20
)
 
54

 
33

 
(19
)
Debt-related amortization and other items, net
 
678

 
566

 
1,358

 
1,126

Current income tax (expense) benefit
 
(53
)
 
10,032

 
465

 
15,136

Other income (expense), net (3)
 
82

 
103

 
163

 
381

Distributions from equity investments in excess of cumulative earnings
 
(7,804
)
 
—

 
(9,848
)
 
—

Changes in operating working capital:
 
 
 
 
 
 
 
 
Accounts receivable, net
 
(12,371
)
 
(48,468
)
 
(23,353
)
 
(26,807
)
Accounts and natural gas imbalance payables and accrued liabilities, net
 
2,521

 
(20,951
)
 
794

 
336

Other
 
2,369

 
2,070

 
4,247

 
235

Net cash provided by operating activities
 
$
140,151

 
$
45,122

 
$
264,197

 
$
183,292

Cash flow information of Western Gas Partners, LP
 
 
 
 
 
 
 
 
Net cash provided by operating activities
 
 
 
 
 
$
264,197

 
$
183,292

Net cash used in investing activities
 
 
 
 
 
$
(770,776
)
 
$
(1,182,682
)
Net cash provided by financing activities
 
 
 
 
 
$
516,480

 
$
653,589


(1) 
Financial information has been recast to include the financial position and results attributable to the TEFR Interests.
(2) 
Includes WES’s 75% share of depreciation, amortization and impairments and other income attributable to Chipeta.
(3) 
Excludes income of $0.1 million and $0.4 million for the three months ended June 30, 2014 and 2013, respectively, and $0.5 million and $0.8 million for the six months ended June 30, 2014 and 2013, respectively, related to a component of a gas processing agreement accounted for as a capital lease.

5


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

Adjusted gross margin attributable to Western Gas Partners, LP

WES defines Adjusted gross margin as total revenues less cost of product, plus distributions from equity investees and excluding the noncontrolling interest owner’s proportionate share of revenue and cost of product.
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
thousands
 
2014
 
2013 (1)
 
2014
 
2013 (1)
Reconciliation of Adjusted gross margin attributable to Western Gas Partners, LP to Operating income
 
 
 
 
 
 
 
 
Adjusted gross margin attributable to Western Gas Partners, LP for natural gas assets
 
$
209,745

 
$
157,084

 
$
393,682

 
$
297,479

Adjusted gross margin for crude/NGL assets
 
21,507

 
3,374

 
32,296

 
6,965

Adjusted gross margin attributable to Western Gas Partners, LP
 
$
231,252

 
$
160,458

 
$
425,978

 
$
304,444

Adjusted gross margin attributable to noncontrolling interest
 
$
4,935

 
$
3,510

 
$
10,029

 
$
7,213

Equity income, net
 
13,008

 
3,456

 
22,259

 
7,424

Less:
 
 
 
 
 
 
 
 
Distributions from equity investees
 
24,328

 
6,026

 
36,641

 
11,032

Operation and maintenance
 
50,875

 
41,669

 
91,407

 
78,408

General and administrative
 
8,000

 
7,288

 
16,415

 
14,952

Property and other taxes
 
7,113

 
6,086

 
14,154

 
11,871

Depreciation, amortization and impairments
 
43,746

 
36,496

 
84,358

 
68,936

Operating income
 
$
115,133


$
69,859


$
215,291


$
133,882


(1) 
Financial information has been recast to include the financial position and results attributable to the TEFR Interests.


6


Western Gas Partners, LP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
thousands except per-unit amounts
 
2014
 
2013 (1)
 
2014
 
2013 (1)
Revenues
 
 
 
 
 
 
 
 
Gathering, processing and transportation of natural gas and natural gas liquids
 
$
161,250

 
$
109,800

 
$
302,699

 
$
212,690

Natural gas, natural gas liquids and condensate sales
 
166,654

 
139,561

 
303,092

 
261,290

Other, net
 
2,040

 
2,041

 
3,610

 
3,188

Total revenues
 
329,944

 
251,402

 
609,401

 
477,168

Equity income, net
 
13,008

 
3,456

 
22,259

 
7,424

Operating expenses
 
 
 
 
 
 
 
 
Cost of product
 
118,085

 
93,460

 
210,035

 
176,543

Operation and maintenance
 
50,875

 
41,669

 
91,407

 
78,408

General and administrative
 
8,000

 
7,288

 
16,415

 
14,952

Property and other taxes
 
7,113

 
6,086

 
14,154

 
11,871

Depreciation, amortization and impairments
 
43,746

 
36,496

 
84,358

 
68,936

Total operating expenses
 
227,819

 
184,999

 
416,369

 
350,710

Operating income
 
115,133


69,859


215,291


133,882

Interest income, net – affiliates
 
4,225

 
4,225

 
8,450

 
8,450

Interest expense
 
(20,864
)
 
(12,654
)
 
(34,825
)
 
(24,465
)
Other income
 
214

 
499

 
691

 
1,173

Income before income taxes
 
98,708

 
61,929

 
189,607

 
119,040

Income tax (benefit) expense
 
226

 
53

 
(2
)
 
4,219

Net income
 
98,482

 
61,876

 
189,609

 
114,821

Net income attributable to noncontrolling interest
 
3,450

 
1,860

 
7,142

 
4,091

Net income attributable to Western Gas Partners, LP
 
$
95,032

 
$
60,016

 
$
182,467

 
$
110,730

Limited partners’ interest in net income:
 
 
 
 
 
 
 
 
Net income attributable to Western Gas Partners, LP
 
$
95,032

 
$
60,016

 
$
182,467

 
$
110,730

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

 
948

 
956

 
(4,510
)
General partner interest in net (income) loss
 
(28,047
)
 
(16,154
)
 
(52,881
)
 
(29,040
)
Limited partners’ interest in net income
 
$
66,985

 
$
44,810

 
$
130,542

 
$
77,180

Net income per common unit – basic and diluted
 
$
0.57

 
$
0.41

 
$
1.11

 
$
0.72

Weighted average common units outstanding – basic and diluted
 
118,177

 
108,736

 
117,948

 
106,784


(1) 
Financial information has been recast to include the financial position and results attributable to the TEFR Interests.



7


Western Gas Partners, LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
thousands except number of units
 
June 30,
2014
 
December 31,
2013 (1)
Current assets
 
$
224,203

 
$
194,810

Note receivable – Anadarko
 
260,000

 
260,000

Net property, plant and equipment
 
3,655,367

 
3,383,255

Other assets
 
825,242

 
779,743

Total assets
 
$
4,964,812

 
$
4,617,808

Current liabilities
 
$
176,658

 
$
190,460

Long-term debt
 
2,022,876

 
1,418,169

Asset retirement obligations and other
 
82,528

 
117,143

Total liabilities
 
$
2,282,062

 
$
1,725,772

Equity and partners’ capital
 
 
 
 
Common units (118,971,307 and 117,322,812 units issued and outstanding at June 30, 2014, and December 31, 2013, respectively)
 
$
2,528,069

 
$
2,431,193

General partner units (2,408,699 and 2,394,345 units issued and outstanding at June 30, 2014, and December 31, 2013, respectively)
 
84,894

 
78,157

Net investment by Anadarko
 
—

 
312,092

Noncontrolling interest
 
69,787

 
70,594

Total liabilities, equity and partners’ capital
 
$
4,964,812

 
$
4,617,808

 
(1) 
Financial information has been recast to include the financial position and results attributable to the TEFR Interests.


8


Western Gas Partners, LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 
Six Months Ended 
 June 30,
thousands
 
2014
 
2013 (1)
Cash flows from operating activities
 
 
 
 
Net income
 
$
189,609

 
$
114,821

Adjustments to reconcile net income to net cash provided by operating activities and changes in working capital:
 
 
 
 
Depreciation, amortization and impairments
 
84,358

 
68,936

Change in other items, net
 
(9,770
)
 
(465
)
Net cash provided by operating activities
 
$
264,197

 
$
183,292

Cash flows from investing activities
 
 
 
 
Capital expenditures
 
$
(359,752
)
 
$
(339,756
)
Contributions in aid of construction costs from affiliates
 
182

 
—

Acquisitions from affiliates
 
(360,952
)
 
(466,936
)
Acquisitions from third parties
 
—

 
(212,674
)
Investments in equity affiliates
 
(59,245
)
 
(156,217
)
Distributions from equity investments in excess of cumulative earnings
 
9,848

 
—

Proceeds from the sale of assets to affiliates
 
—

 
82

Proceeds from the sale of assets to third parties
 
—

 
14

Capitalized interest on equity investments
 
(857
)
 
(7,195
)
Net cash used in investing activities
 
$
(770,776
)
 
$
(1,182,682
)
Cash flows from financing activities
 
 
 
 
Borrowings, net of debt issuance costs
 
$
1,076,895

 
$
494,948

Repayments of debt
 
(480,000
)
 
(245,000
)
Increase (decrease) in outstanding checks
 
2,517

 
(1,809
)
Proceeds from the issuance of common and general partner units, net of offering expenses
 
92,588

 
425,386

Distributions to unitholders
 
(191,359
)
 
(135,801
)
Contributions from noncontrolling interest owner
 
—

 
1,097

Distributions to noncontrolling interest owner
 
(7,949
)
 
(4,660
)
Net contributions from Anadarko
 
23,788

 
119,428

Net cash provided by financing activities
 
$
516,480

 
$
653,589

Net increase (decrease) in cash and cash equivalents
 
$
9,901

 
$
(345,801
)
Cash and cash equivalents at beginning of period
 
100,728

 
419,981

Cash and cash equivalents at end of period
 
$
110,629

 
$
74,180


(1) 
Financial information has been recast to include the financial position and results attributable to the TEFR Interests.



9


Western Gas Partners, LP
OPERATING STATISTICS
(Unaudited)
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
MMcf/d except throughput measured in barrels and per-unit amounts
 
2014
 
2013 (1)
 
2014
 
2013 (1)
 
 
 
 
 
 
 
 
 
Throughput for natural gas assets
 
 
 
 
 
 
 
 
Gathering, treating and transportation (2)
 
1,608

 
1,370

 
1,600

 
1,311

Processing (2)
 
1,971

 
1,725

 
1,885

 
1,667

Equity investment (3)
 
153

 
211

 
170

 
206

Total throughput for natural gas assets
 
3,732

 
3,306

 
3,655

 
3,184

Throughput attributable to noncontrolling interest for natural gas assets
 
171

 
167

 
172

 
161

Total throughput attributable to Western Gas Partners, LP for natural gas assets (4)
 
3,561

 
3,139

 
3,483

 
3,023

Total throughput (MBbls/d) for crude/NGL assets (5)
 
115

 
26

 
97

 
26

Adjusted gross margin per Mcf attributable to Western Gas Partners, LP for natural gas assets (6)
 
$
0.65

 
$
0.55

 
$
0.62

 
$
0.54

Adjusted gross margin per Bbl for crude/NGL assets (7)
 
$
2.06

 
$
1.43

 
$
1.84

 
$
1.45


(1) 
Throughput has been recast to include throughput attributable to the TEFR Interests.
(2) 
The combination of WES’s Wattenberg and Platte Valley systems in the first quarter of 2014 into the entity now referred to as the “DJ Basin complex” (also includes the Lancaster plant) resulted in the following: (i) the Wattenberg system volumes previously reported as “Gathering, treating and transportation” are now reported as “Processing” for all periods presented, and (ii) beginning with the first quarter of 2014, volumes both gathered and processed by the two systems are no longer separately reported.
(3) 
Represents WES’s 14.81% share of average Fort Union and 22% share of average Rendezvous throughput. Excludes equity investment throughput measured in barrels (captured in “Total throughput (MBbls/d) for crude/NGL assets” as noted below).
(4) 
Includes affiliate, third-party and equity investment throughput (as equity investment throughput is defined in the above footnote), excluding the noncontrolling interest owner’s proportionate share of throughput.
(5) 
Represents total throughput measured in barrels, consisting of throughput from our Chipeta NGL pipeline, our 10% share of average White Cliffs throughput, our 25% share of average Mont Belvieu JV throughput, our 20% share of average TEG and TEP throughput and our 33.33% share of average FRP throughput.
(6) 
Average for period. Calculated as Adjusted gross margin attributable to Western Gas Partners, LP for natural gas assets (total revenues for natural gas assets less cost of product for natural gas assets plus distributions from our equity investments in Fort Union and Rendezvous, which are measured in Mcf) divided by total throughput (MMcf/d) attributable to Western Gas Partners, LP for natural gas assets.
(7) 
Average for period. Calculated as Adjusted gross margin for crude/NGL assets (total revenues for crude/NGL assets less cost of product for crude/NGL assets plus distributions from our equity investments in White Cliffs, the Mont Belvieu JV, TEG, TEP and FRP, which are measured in barrels), divided by total throughput (MBbls/d) for crude/NGL assets.


10


Western Gas Equity Partners, LP
CALCULATION OF CASH AVAILABLE FOR DISTRIBUTION
(Unaudited)
 
Three Months Ended
thousands except per-unit amount and Coverage ratio
June 30, 2014
Distributions declared by Western Gas Partners, LP:
 
General partner interest
$
2,113

Incentive distribution rights
26,146

Common units held by WGP
32,043

Less:
 
Public company general and administrative expense
728

Cash available for distribution
$
59,574

 
 
Declared distribution per common unit
$
0.27125

 
 
Distributions declared by Western Gas Equity Partners, LP
$
59,378

 
 
Coverage ratio
1.00
x


11


Western Gas Equity Partners, LP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
thousands except per-unit amounts
 
2014
 
2013 (1)
 
2014
 
2013 (1)
Revenues
 
 
 
 
 
 
 
 
Gathering, processing and transportation of natural gas and natural gas liquids
 
$
161,250

 
$
109,800

 
$
302,699

 
$
212,690

Natural gas, natural gas liquids and condensate sales
 
166,654

 
139,561

 
303,092

 
261,290

Other, net
 
2,040

 
2,041

 
3,610

 
3,188

Total revenues
 
329,944

 
251,402

 
609,401

 
477,168

Equity income, net
 
13,008

 
3,456

 
22,259

 
7,424

Operating expenses
 
 
 
 
 
 
 
 
Cost of product
 
118,085

 
93,460

 
210,035

 
176,543

Operation and maintenance
 
50,875

 
41,669

 
91,407

 
78,408

General and administrative
 
8,757

 
8,209

 
18,143

 
17,138

Property and other taxes
 
7,113

 
6,086

 
14,154

 
11,871

Depreciation, amortization and impairments
 
43,746

 
36,496

 
84,358

 
68,936

Total operating expenses
 
228,576

 
185,920

 
418,097

 
352,896

Operating income
 
114,376


68,938


213,563


131,696

Interest income, net – affiliates
 
4,225

 
4,225

 
8,450

 
8,450

Interest expense
 
(20,864
)
 
(12,654
)
 
(34,825
)
 
(24,465
)
Other income
 
235

 
493

 
731

 
1,220

Income before income taxes
 
97,972

 
61,002

 
187,919

 
116,901

Income tax (benefit) expense
 
226

 
53

 
(2
)
 
4,219

Net income
 
97,746

 
60,949

 
187,921

 
112,682

Net income attributable to noncontrolling interests
 
42,492

 
26,422

 
83,126

 
45,783

Net income attributable to Western Gas Equity Partners, LP
 
$
55,254

 
$
34,527

 
$
104,795

 
$
66,899

Limited partners’ interest in net income: 
 
 
 
 
 
 
 
 
Net income attributable to Western Gas Equity Partners, LP
 
$
55,254

 
$
34,527

 
$
104,795

 
$
66,899

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

 
948

 
956

 
(4,510
)
Limited partners’ interest in net income
 
$
55,254

 
$
35,475

 
$
105,751

 
$
62,389

Net income per common unit – basic and diluted
 
$
0.25

 
$
0.16

 
$
0.48

 
$
0.29

Weighted average number of common units outstanding – basic and diluted
 
218,903

 
218,896

 
218,903

 
218,896


(1) 
Financial information has been recast to include the financial position and results attributable to the TEFR Interests.





12


Western Gas Equity Partners, LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
thousands except number of units
 
June 30,
2014
 
December 31,
2013 (1)
Current assets
 
$
235,865

 
$
207,827

Note receivable – Anadarko
 
260,000

 
260,000

Net property, plant and equipment
 
3,655,367

 
3,383,255

Other assets
 
825,242

 
779,743

Total assets
 
$
4,976,474

 
$
4,630,825

Current liabilities
 
$
176,735

 
$
191,483

Long-term debt
 
2,022,876

 
1,418,169

Asset retirement obligations and other
 
82,528

 
117,143

Total liabilities
 
$
2,282,139

 
$
1,726,795

Equity and partners’ capital
 
 
 
 
Common units (218,903,498 and 218,895,515 units issued and outstanding at June 30, 2014, and December 31, 2013, respectively)
 
$
941,814

 
$
905,082

Net investment by Anadarko
 
—

 
312,092

Noncontrolling interests
 
1,752,521

 
1,686,856

Total liabilities, equity and partners’ capital
 
$
4,976,474

 
$
4,630,825


(1) 
Financial information has been recast to include the financial position and results attributable to the TEFR Interests.


13


Western Gas Equity Partners, LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 
Six Months Ended 
 June 30,
thousands
 
2014
 
2013 (1)
Cash flows from operating activities
 
 
 
 
Net income
 
$
187,921

 
$
112,682

Adjustments to reconcile net income to net cash provided by operating activities and changes in working capital:
 
 
 
 
Depreciation, amortization and impairments
 
84,358

 
68,936

Change in other items, net
 
(10,146
)
 
(927
)
Net cash provided by operating activities
 
$
262,133

 
$
180,691

Cash flows from investing activities
 
 
 
 
Capital expenditures
 
$
(359,752
)
 
$
(339,756
)
Contributions in aid of construction costs from affiliates
 
182

 
—

Acquisitions from affiliates
 
(360,952
)
 
(466,936
)
Acquisitions from third parties
 
—

 
(212,674
)
Investments in equity affiliates
 
(59,245
)
 
(156,217
)
Distributions from equity investments in excess of cumulative earnings
 
9,848

 
—

Proceeds from the sale of assets to affiliates
 
—

 
82

Proceeds from the sale of assets to third parties
 
—

 
14

Capitalized interest on equity investments
 
(857
)
 
(7,195
)
Net cash used in investing activities
 
$
(770,776
)
 
$
(1,182,682
)
Cash flows from financing activities
 
 
 
 
Borrowings, net of debt issuance costs
 
$
1,076,895

 
$
494,948

Repayments of debt
 
(480,000
)
 
(245,000
)
Increase (decrease) in outstanding checks
 
2,517

 
(1,809
)
Offering expenses from the issuance of WGP common units
 
—

 
(2,367
)
Proceeds from the issuance of WES common units, net of offering expenses
 
91,690

 
416,119

Distributions to WGP unitholders
 
(105,347
)
 
(46,980
)
Contributions received from Chipeta noncontrolling interest owner
 
—

 
1,097

Distributions to Chipeta noncontrolling interest owner
 
(7,949
)
 
(4,660
)
Distributions to noncontrolling interest owners of WES
 
(83,894
)
 
(58,929
)
Net contributions from Anadarko
 
23,788

 
119,428

Net cash provided by financing activities
 
$
517,700

 
$
671,847

Net increase (decrease) in cash and cash equivalents
 
$
9,057

 
$
(330,144
)
Cash and cash equivalents at beginning of period
 
113,085

 
422,556

Cash and cash equivalents at end of period
 
$
122,142

 
$
92,412


(1) 
Financial information has been recast to include the financial position and results attributable to the TEFR Interests.



14