Delaware | 001-35753 | 46-0967367 |
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
(a) | Financial Statements of Businesses Acquired | ||
Financial Statements of Nuevo as of and for the year ended December 31, 2013, a copy of which is included as Exhibit 99.1 to this Current Report on Form 8-K/A, incorporated herein by reference. | |||
Unaudited Financial Statements of Nuevo as of and for the nine months ended September 30, 2014, a copy of which is included as Exhibit 99.2 to this Current Report on Form 8-K/A, incorporated herein by reference. | |||
(b) | Pro Forma Financial Information | ||
Unaudited Pro Forma Condensed Consolidated Financial Statements of WGP as of and for the nine months ended September 30, 2014, and for the twelve months ended December 31, 2013, copies of which are included as Exhibit 99.3 to this Current Report on Form 8-K/A, incorporated herein by reference. | |||
(d) | Exhibits | ||
23.1 | Consent of UHY LLP. | ||
99.1 | Audited Financial Statements of Nuevo as of and for the year ended December 31, 2013. | ||
99.2 | Unaudited Financial Statements of Nuevo as of and for the nine months ended September 30, 2014. | ||
99.3 | Unaudited Pro Forma Condensed Consolidated Financial Statements of WGP as of and for the nine months ended September 30, 2014, and for the twelve months ended December 31, 2013. |
WESTERN GAS EQUITY PARTNERS, LP | |||
By: | Western Gas Equity Holdings, LLC, its general partner | ||
Dated: | December 17, 2014 | By: | /s/ Benjamin M. Fink |
Benjamin M. Fink Senior Vice President, Chief Financial Officer and Treasurer |
Exhibit Number | Exhibit Title | |
23.1 | Consent of UHY LLP. | |
99.1 | Audited Financial Statements of Nuevo as of and for the year ended December 31, 2013. | |
99.2 | Unaudited Financial Statements of Nuevo as of and for the nine months ended September 30, 2014. | |
99.3 | Unaudited Pro Forma Condensed Consolidated Financial Statements of WGP as of and for the nine months ended September 30, 2014, and for the twelve months ended December 31, 2013. |
December 31, 2013 | ||||
Assets | ||||
Current assets | ||||
Cash and cash equivalents | $ | 6,833,495 | ||
Accounts receivable | 15,254,735 | |||
Due from affiliates | — | |||
Other current assets | 2,131,041 | |||
Total current assets | 24,219,271 | |||
Property and equipment, at cost | ||||
Gas pipelines and processing and treating equipment | 182,837,018 | |||
Fixed assets | 362,311 | |||
183,199,329 | ||||
Accumulated depreciation | (13,214,041 | ) | ||
169,985,288 | ||||
Construction in progress | 46,605,282 | |||
Total property and equipment | 216,590,570 | |||
Deferred finance costs and other | 696,474 | |||
Total Assets | $ | 241,506,315 | ||
Liabilities and Members’ Equity | ||||
Current liabilities | ||||
Accounts payable and accrued liabilities | $ | 20,531,464 | ||
Due to affiliates | — | |||
Current maturities of notes payable | 3,263,540 | |||
Total current liabilities | 23,795,004 | |||
Notes payable, net of current maturities | 27,837,581 | |||
Commitments and contingencies | ||||
Members’ equity: | ||||
Capital contributions | 200,068,850 | |||
Accumulated deficit | (8,287,461 | ) | ||
Total members’ equity | 191,781,389 | |||
Note receivable from management | (1,907,659 | ) | ||
Net members’ equity | 189,873,730 | |||
Total Liabilities and Members’ Equity | $ | 241,506,315 |
Year Ended | ||||
December 31, 2013 | ||||
Income | ||||
Natural gas and natural gas liquids revenue | $ | 62,720,467 | ||
Treating | 6,261,043 | |||
Reimbursables | — | |||
Compression | 2,927,720 | |||
Transportation | 3,493,796 | |||
Processing | 1,755,959 | |||
Fixed recovery gain (loss) | (146,488 | ) | ||
Gain on sale of assets | — | |||
Other | 108,013 | |||
Total Income | 77,120,510 | |||
Costs and Expenses | ||||
Cost of natural gas and natural gas liquids | 54,696,182 | |||
Operating | 12,193,144 | |||
General and administrative | 3,045,134 | |||
Depreciation | 10,105,771 | |||
Interest expense | 597,902 | |||
Total Costs and Expenses | 80,638,133 | |||
Net Loss | $ | (3,517,623 | ) |
Total | ||||
Balance at December 31, 2012 | $ | 135,299,012 | ||
Cash contributions | 60,000,000 | |||
Net loss | (3,517,623 | ) | ||
Assignment of interests | — | |||
Note receivable from management | (1,907,659 | ) | ||
Balance at December 31, 2013 | $ | 189,873,730 |
Year Ended | ||||
December 31, 2013 | ||||
Cash Flows from Operating Activities | ||||
Net loss | $ | (3,517,623 | ) | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||
Depreciation | 10,105,771 | |||
Amortization of deferred finance costs | 44,004 | |||
Accrued interest on notes receivable from management | (107,659 | ) | ||
Gain on sale of assets | — | |||
Changes in operating assets and liabilities: | ||||
Accounts receivable | (8,984,845 | ) | ||
Due to affiliates | 2,074,565 | |||
Other assets | (1,855,276 | ) | ||
Accounts payable and accrued liabilities | 12,319,182 | |||
Net Cash Provided by (Used In) Operating Activities | 10,078,119 | |||
Cash Flows from Investing Activities | ||||
Proceeds from sale of assets | — | |||
Investment in gas pipelines and processing equipment | (107,600,408 | ) | ||
Investment in fixed assets | (261,730 | ) | ||
Net Cash Used in Investing Activities | (107,862,138 | ) | ||
Cash Flows from Financing Activities | ||||
Proceeds from notes payable | 33,054,161 | |||
Repayment of notes payable | (1,953,040 | ) | ||
Capital contributions | 60,000,000 | |||
Loans to management | (1,800,000 | ) | ||
Financing costs | (704,063 | ) | ||
Net Cash Provided by Financing Activities | 88,597,058 | |||
Net decrease in cash and cash equivalents | (9,186,961 | ) | ||
Cash and cash equivalents, beginning of the year | 16,020,456 | |||
Cash and cash equivalents, end of the year | $ | 6,833,495 | ||
Supplemental disclosure of cash flow information | ||||
Cash paid during the year for interest | $ | 507,136 |
Year Ending December 31, | ||||
2014 | $ | 3,263,540 | ||
2015 | 3,263,540 | |||
2016 | 3,263,540 | |||
2017 | 21,310,501 | |||
$ | 31,101,121 |
September 30, 2014 | December 31, 2013 | |||||||
ASSETS | (Unaudited) | |||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 9,021,312 | $ | 6,833,495 | ||||
Accounts receivable | 18,960,111 | 15,254,735 | ||||||
Other current assets | 4,250,549 | 2,131,041 | ||||||
TOTAL CURRENT ASSETS | 32,231,972 | 24,219,271 | ||||||
PROPERTY AND EQUIPMENT, at cost | ||||||||
Gas pipelines and processing and treating equipment | 277,944,223 | 182,837,018 | ||||||
Fixed assets | 877,719 | 362,311 | ||||||
278,821,942 | 183,199,329 | |||||||
Accumulated depreciation | (25,634,012 | ) | (13,214,041 | ) | ||||
253,187,930 | 169,985,288 | |||||||
Construction in progress | 20,872,193 | 46,605,282 | ||||||
TOTAL PROPERTY AND EQUIPMENT, net | 274,060,123 | 216,590,570 | ||||||
DEFERRED FINANCE COSTS AND OTHER | 944,332 | 696,474 | ||||||
TOTAL ASSETS | $ | 307,236,427 | $ | 241,506,315 | ||||
LIABILITIES AND MEMBERS’ EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable and accrued liabilities | $ | 21,073,323 | $ | 20,531,464 | ||||
Current maturities of notes payable | 3,804,616 | 3,263,540 | ||||||
Current maturities of lease obligations | 133,588 | — | ||||||
TOTAL CURRENT LIABILITIES | 25,011,527 | 23,795,004 | ||||||
NOTES PAYABLE, net of current maturities | 71,389,926 | 27,837,581 | ||||||
LEASE OBLIGATIONS, net of current maturities | 142,690 | — | ||||||
TOTAL LIABILITIES | 96,544,143 | 51,632,585 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
MEMBERS’ EQUITY | ||||||||
Capital contributions | 220,068,850 | 200,068,850 | ||||||
Accumulated deficit | (7,351,462 | ) | (8,287,461 | ) | ||||
Total members’ equity | 212,717,388 | 191,781,389 | ||||||
Note receivable from management | (2,025,104 | ) | (1,907,659 | ) | ||||
NET MEMBERS’ EQUITY | 210,692,284 | 189,873,730 | ||||||
TOTAL LIABILITIES AND MEMBERS’ EQUITY | $ | 307,236,427 | $ | 241,506,315 |
Nine Months Ended September 30, | ||||||||
2014 | 2013 | |||||||
INCOME (LOSS) | ||||||||
Natural gas and natural gas liquids revenue | $ | 80,079,980 | $ | 38,558,351 | ||||
Treating | 5,470,708 | 4,140,471 | ||||||
Compression | 2,882,151 | 2,039,482 | ||||||
Transportation | 4,813,012 | 2,346,594 | ||||||
Processing | 6,270,422 | 1,027,690 | ||||||
Fixed recovery loss | (290,219 | ) | — | |||||
Other | 117,444 | 70,256 | ||||||
TOTAL INCOME | 99,343,498 | 48,182,844 | ||||||
COSTS AND EXPENSES | ||||||||
Cost of natural gas and natural gas liquids | 68,503,316 | 33,490,427 | ||||||
Operating | 13,405,024 | 8,832,886 | ||||||
General and administrative | 2,551,042 | 1,868,952 | ||||||
Depreciation and amortization | 12,504,500 | 7,057,006 | ||||||
Interest expense | 1,443,617 | 285,178 | ||||||
TOTAL COSTS AND EXPENSES | 98,407,499 | 51,534,449 | ||||||
NET INCOME (LOSS) | $ | 935,999 | $ | (3,351,605 | ) |
Nine Months Ended September 30, | ||||||||
2014 | 2013 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income (loss) | $ | 935,999 | $ | (3,351,605 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Depreciation | 12,504,500 | 7,057,006 | ||||||
Amortization of deferred finance costs | 153,342 | — | ||||||
Accrued interest on notes receivable from management | (117,445 | ) | (69,903 | ) | ||||
Loss on disposal of assets | 155,940 | — | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (3,705,376 | ) | (9,392,480 | ) | ||||
Due to/from affiliates | — | 2,074,565 | ||||||
Other assets | (1,459,808 | ) | (2,076,679 | ) | ||||
Accounts payable and accrued liabilities | 541,859 | 18,126,354 | ||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 9,009,011 | 12,367,258 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Proceeds from sale of assets | 654,543 | — | ||||||
Investment in gas pipelines and processing equipment | (70,269,128 | ) | (84,290,966 | ) | ||||
Investment in fixed assets | (144,721 | ) | (48,786 | ) | ||||
NET CASH USED IN INVESTING ACTIVITIES | (69,759,306 | ) | (84,339,752 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from notes payable | 46,000,000 | 13,054,161 | ||||||
Repayment of notes payable | (2,566,279 | ) | (1,236,394 | ) | ||||
Payment of capital lease obligations | (94,409 | ) | — | |||||
Capital contributions | 20,000,000 | 60,000,000 | ||||||
Loans to management | — | (1,800,000 | ) | |||||
Financing costs | (401,200 | ) | (487,956 | ) | ||||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 62,938,112 | 69,529,811 | ||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 2,187,817 | (2,442,683 | ) | |||||
CASH AND CASH EQUIVALENTS, beginning of period | 6,833,495 | 16,020,456 | ||||||
CASH AND CASH EQUIVALENTS, end of period | $ | 9,021,312 | $ | 13,577,773 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
Cash paid during the year for interest | $ | 1,231,151 | $ | 223,681 | ||||
NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
Prepaid insurance financed by notes payable | $ | 659,700 | $ | — | ||||
Property and equipment financed through capital leases | $ | 370,687 | $ | — |
Twelve Months Ending September 30, | ||||
2015 | $ | 3,804,616 | ||
2016 | 3,263,540 | |||
2017 | 68,126,386 | |||
$ | 75,194,542 |
Vehicles | $ | 370,687 | ||
Accumulated amortization | (97,305 | ) | ||
$ | 273,382 |
Twelve Months Ending September 30, | ||||
2015 | $ | 133,588 | ||
2016 | 82,062 | |||
2017 | 46,998 | |||
2018 | 13,630 | |||
Net minimum lease payments | 276,278 | |||
Amount representing interest | (12,210 | ) | ||
Present value of net minimum lease payments | $ | 264,068 |
Page | |
Introduction | |
Unaudited Pro Forma Condensed Consolidated Statement of Income for the year ended December 31, 2013 | |
Unaudited Pro Forma Condensed Consolidated Statement of Income for the nine months ended September 30, 2014 | |
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2014 | |
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements |
• | WES’s use of $275.0 million of cash on hand, including the net proceeds from WES’s November 2014 equity offering, to fund a portion of the cash consideration paid for the acquisition of Nuevo; |
• | WES’s borrowing of $475.0 million under the WES revolving credit facility to fund a portion of the cash consideration paid for the acquisition of Nuevo; and |
• | WES’s issuance of 10,913,853 Class C units to APC Midstream Holdings LLC (“AMH”), an indirect wholly owned subsidiary of Anadarko, at a price of $68.72 per unit, pursuant to a Unit Purchase Agreement (“UPA”) with Anadarko and AMH, for a total of $750.0 million. |
• | the UPA with Anadarko and AMH, pursuant to which WES issued 10,913,853 Class C units to AMH; |
• | the Agreement and Plan of Merger by and among WES, Maguire Midstream, LLC, an indirect wholly owned subsidiary of WES, Nuevo and the other parties thereto; and |
• | Amendment No. 12 to the First Amended and Restated Agreement of Limited Partnership of Western Gas Partners, LP establishing the terms of the WES Class C units. |
thousands except per-unit amounts | WGP Historical | Nuevo Midstream Historical | Pro Forma Adjustments | WGP Pro Forma | ||||||||||||
Revenues – affiliates | ||||||||||||||||
Gathering, processing and transportation of natural gas and natural gas liquids | $ | 306,810 | $ | — | $ | — | $ | 306,810 | ||||||||
Natural gas, natural gas liquids and condensate sales | 496,848 | — | — | 496,848 | ||||||||||||
Other, net | 1,868 | — | — | 1,868 | ||||||||||||
Total revenues – affiliates | 805,526 | — | — | 805,526 | ||||||||||||
Revenues – third parties | ||||||||||||||||
Gathering, processing and transportation of natural gas and natural gas liquids | 175,732 | 14,439 | — | 190,171 | ||||||||||||
Natural gas, natural gas liquids and condensate sales | 44,396 | 62,720 | — | 107,116 | ||||||||||||
Other, net | 4,109 | 108 | — | 4,217 | ||||||||||||
Total revenues – third parties | 224,237 | 77,267 | — | 301,504 | ||||||||||||
Total revenues | 1,029,763 | 77,267 | — | 1,107,030 | ||||||||||||
Equity income, net (1) | 22,948 | — | — | 22,948 | ||||||||||||
Operating expenses | ||||||||||||||||
Cost of product (2) | 364,285 | 54,843 | — | 419,128 | ||||||||||||
Operation and maintenance (2) | 168,657 | 12,022 | — | 180,679 | ||||||||||||
General and administrative (2) | 33,464 | 3,045 | — | 36,509 | ||||||||||||
Property and other taxes | 23,244 | 171 | — | 23,415 | ||||||||||||
Depreciation, amortization and impairments | 145,916 | 10,106 | 29,314 | (f) | 185,336 | |||||||||||
Total operating expenses | 735,566 | 80,187 | 29,314 | 845,067 | ||||||||||||
Operating income (loss) | 317,145 | (2,920 | ) | (29,314 | ) | 284,911 | ||||||||||
Interest income, net – affiliates | 16,900 | — | — | 16,900 | ||||||||||||
Interest expense | (51,797 | ) | (598 | ) | (6,935 | ) | (a) | (58,732 | ) | |||||||
598 | (g) | |||||||||||||||
Other income (expense), net | 1,935 | — | — | 1,935 | ||||||||||||
Income (loss) before income taxes | 284,183 | (3,518 | ) | (35,651 | ) | 245,014 | ||||||||||
Income tax expense | 2,305 | — | 370 | (b) | 2,675 | |||||||||||
Net income (loss) | 281,878 | (3,518 | ) | (36,021 | ) | 242,339 | ||||||||||
Net income (loss) attributable to noncontrolling interests | 122,173 | — | (16,339 | ) | (h) | 105,834 | ||||||||||
Net income (loss) attributable to Western Gas Equity Partners, LP | $ | 159,705 | $ | (3,518 | ) | $ | (19,682 | ) | $ | 136,505 | ||||||
Limited partners’ interest in net income (loss): | ||||||||||||||||
Net income (loss) attributable to Western Gas Equity Partners, LP | $ | 159,705 | $ | (3,518 | ) | $ | (19,682 | ) | $ | 136,505 | ||||||
Results attributable to the pre-IPO period | (49 | ) | (49 | ) | ||||||||||||
Pre-acquisition net (income) loss allocated to Anadarko | (4,128 | ) | (4,128 | ) | ||||||||||||
Limited partners’ interest in net income (3) | $ | 155,528 | $ | 132,328 | ||||||||||||
Net income per common unit – basic and diluted | $ | 0.71 | $ | 0.60 | ||||||||||||
Weighted average common units outstanding – basic and diluted | 218,896 | 218,896 |
(1) | Income earned from equity investments is classified as affiliate. |
(2) | As it relates to the “WGP Historical” column, cost of product includes product purchases from Anadarko (as defined in the Introduction) of $129.0 million, operation and maintenance includes charges from Anadarko of $56.4 million, general and administrative includes charges from Anadarko of $24.2 million. |
(3) | Represents net income earned on and subsequent to the date of acquisition of the WES assets (as defined in Note 3). |
thousands except per-unit amounts | WGP Historical | Nuevo Midstream Historical | Pro Forma Adjustments | WGP Pro Forma | ||||||||||||
Revenues – affiliates | ||||||||||||||||
Gathering, processing and transportation of natural gas and natural gas liquids | $ | 288,392 | $ | — | $ | — | $ | 288,392 | ||||||||
Natural gas, natural gas liquids and condensate sales | 415,715 | — | — | 415,715 | ||||||||||||
Other, net | 4,349 | — | — | 4,349 | ||||||||||||
Total revenues – affiliates | 708,456 | — | — | 708,456 | ||||||||||||
Revenues – third parties | ||||||||||||||||
Gathering, processing and transportation of natural gas and natural gas liquids | 182,663 | 19,437 | — | 202,100 | ||||||||||||
Natural gas, natural gas liquids and condensate sales | 37,471 | 80,080 | — | 117,551 | ||||||||||||
Other, net | 7,276 | 117 | — | 7,393 | ||||||||||||
Total revenues – third parties | 227,410 | 99,634 | — | 327,044 | ||||||||||||
Total revenues | 935,866 | 99,634 | — | 1,035,500 | ||||||||||||
Equity income, net (1) | 41,322 | — | — | 41,322 | ||||||||||||
Operating expenses | ||||||||||||||||
Cost of product (2) | 318,428 | 68,794 | — | 387,222 | ||||||||||||
Operation and maintenance (2) | 145,064 | 11,315 | — | 156,379 | ||||||||||||
General and administrative (2) | 26,809 | 2,551 | — | 29,360 | ||||||||||||
Property and other taxes | 20,718 | 2,090 | — | 22,808 | ||||||||||||
Depreciation, amortization and impairments | 130,009 | 12,504 | 17,089 | (f) | 159,602 | |||||||||||
Total operating expenses | 641,028 | 97,254 | 17,089 | 755,371 | ||||||||||||
Operating income (loss) | 336,160 | 2,380 | (17,089 | ) | 321,451 | |||||||||||
Interest income, net – affiliates | 12,675 | — | — | 12,675 | ||||||||||||
Interest expense | (55,703 | ) | (1,444 | ) | (5,201 | ) | (a) | (60,904 | ) | |||||||
1,444 | (g) | |||||||||||||||
Other income (expense), net | 849 | — | — | 849 | ||||||||||||
Income (loss) before income taxes | 293,981 | 936 | (20,846 | ) | 274,071 | |||||||||||
Income tax (benefit) expense | 276 | — | 280 | (b) | 556 | |||||||||||
Net income (loss) | 293,705 | 936 | (21,126 | ) | 273,515 | |||||||||||
Net income (loss) attributable to noncontrolling interest | 128,958 | — | (8,712 | ) | (h) | 120,246 | ||||||||||
Net income (loss) attributable to Western Gas Equity Partners, LP | $ | 164,747 | $ | 936 | $ | (12,414 | ) | $ | 153,269 | |||||||
Limited partners’ interest in net income (loss): | ||||||||||||||||
Net income (loss) attributable to Western Gas Equity Partners, LP | $ | 164,747 | $ | 936 | $ | (12,414 | ) | $ | 153,269 | |||||||
Pre-acquisition net (income) loss allocated to Anadarko | 956 | 956 | ||||||||||||||
Limited partners’ interest in net income (3) | 165,703 | 154,225 | ||||||||||||||
Net income per common unit – basic and diluted | $ | 0.76 | $ | 0.70 | ||||||||||||
Weighted average common units outstanding – basic and diluted | 218,903 | 218,903 |
(1) | Income earned from equity investments is classified as affiliate. |
(2) | As it relates to the “WGP Historical” column, cost of product includes product purchases from Anadarko (as defined in the Introduction) of $74.6 million, operation and maintenance includes charges from Anadarko of $42.5 million, and general and administrative includes charges from Anadarko of $20.4 million. |
(3) | Represents net income earned on and subsequent to the date of acquisition of the WES assets (as defined in Note 3). |
thousands | WGP Historical | Nuevo Midstream Historical | Pro Forma Adjustments | WGP Pro Forma | ||||||||||||
ASSETS | ||||||||||||||||
Current assets | ||||||||||||||||
Cash and cash equivalents | $ | 78,219 | $ | 9,021 | $ | 475,000 | (c) | $ | 382,813 | |||||||
1,352,921 | (d) | |||||||||||||||
(1,553,959 | ) | (e) | ||||||||||||||
21,611 | (e) | |||||||||||||||
Accounts receivable, net (1) | 126,250 | 18,960 | (8,468 | ) | (e) | 136,742 | ||||||||||
Other current assets (2) | 6,915 | 4,251 | 683 | (e) | 11,849 | |||||||||||
Total current assets | 211,384 | 32,232 | 287,788 | 531,404 | ||||||||||||
Note receivable – Anadarko | 260,000 | — | — | 260,000 | ||||||||||||
Property, plant and equipment | ||||||||||||||||
Cost | 4,754,279 | 299,694 | 104,764 | (e) | 5,158,737 | |||||||||||
Less accumulated depreciation | 986,692 | 25,634 | (25,634 | ) | (e) | 986,692 | ||||||||||
Net property, plant and equipment | 3,767,587 | 274,060 | 130,398 | 4,172,045 | ||||||||||||
Goodwill | 105,336 | — | 460,557 | (b), (e) | 565,893 | |||||||||||
Other intangible assets | 52,561 | — | 700,000 | (e) | 752,561 | |||||||||||
Equity investments | 639,191 | — | — | 639,191 | ||||||||||||
Other assets | 28,910 | 944 | (944 | ) | (e) | 28,910 | ||||||||||
Total assets | $ | 5,064,969 | $ | 307,236 | $ | 1,577,799 | $ | 6,950,004 | ||||||||
LIABILITIES, EQUITY AND PARTNERS’ CAPITAL | ||||||||||||||||
Current liabilities | ||||||||||||||||
Accounts and natural gas imbalance payables (3) | $ | 27,011 | $ | 3,610 | $ | 9,454 | (e) | $ | 40,075 | |||||||
Accrued ad valorem taxes | 21,083 | — | — | 21,083 | ||||||||||||
Income taxes payable | 258 | — | — | 258 | ||||||||||||
Accrued liabilities | 153,061 | 17,463 | 7,361 | (e) | 177,885 | |||||||||||
Current maturities of long-term debt | — | 3,938 | (3,938 | ) | (e) | — | ||||||||||
Total current liabilities | 201,413 | 25,011 | 12,877 | 239,301 | ||||||||||||
Long-term debt | 2,082,914 | 71,533 | 475,000 | (c) | 2,558,179 | |||||||||||
(71,533 | ) | (e) | ||||||||||||||
265 | (e) | |||||||||||||||
Deferred income taxes | 780 | — | 1,321 | (b) | 2,101 | |||||||||||
Asset retirement obligations and other | 85,903 | — | 17,640 | (e) | 103,543 | |||||||||||
Total long-term liabilities | 2,169,597 | 71,533 | 422,693 | 2,663,823 | ||||||||||||
Total liabilities | 2,371,010 | 96,544 | 435,570 | 2,903,124 | ||||||||||||
Equity and partners’ capital | ||||||||||||||||
Common units | 938,225 | — | — | 938,225 | ||||||||||||
Class A & B Members | — | 210,692 | (210,692 | ) | (e) | — | ||||||||||
Total partners’ capital | 938,225 | 210,692 | (210,692 | ) | 938,225 | |||||||||||
Noncontrolling interests | 1,755,734 | — | 1,352,921 | (d) | 3,108,655 | |||||||||||
Total equity and partners’ capital | 2,693,959 | 210,692 | 1,142,229 | 4,046,880 | ||||||||||||
Total liabilities, equity and partners’ capital | $ | 5,064,969 | $ | 307,236 | $ | 1,577,799 | $ | 6,950,004 |
(1) | As it relates to the “WGP Historical” column, accounts receivable, net includes amounts receivable from affiliates (as defined in the Introduction) of $87.2 million. |
(2) | As it relates to the “WGP Historical” column, other current assets includes natural gas imbalance receivables from affiliates of $0.1 million. |
(3) | As it relates to the “WGP Historical” column, accounts and natural gas imbalance payables includes amounts payable to affiliates of $0.1 million. |
(a) | The inclusion of interest expense on WES’s $475.0 million of borrowings under WES’s revolving credit facility (the “WES RCF”) to partially finance the acquisition of Nuevo. The interest rate on the WES RCF at September 30, 2014, and used for purposes of calculating interest expense in these unaudited pro forma condensed consolidated statements of income, was 1.46%. A 1/8% variance in this rate would result in an adjustment to income (loss) before income taxes of $594,000 for the twelve months ended December 31, 2013, and $445,000 for the nine months ended September 30, 2014; |
(b) | The adjustment of historical current and deferred income taxes as if WES, an entity which is generally not subject to federal and state income taxes, owned and operated Nuevo, and purchase accounting adjustments; |
(c) | The receipt of $475.0 million of borrowings under WES’s revolving credit facility; |
(d) | The acquisition of Nuevo by WES for $1.6 billion, consisting of (i) $201.0 million of cash on hand, (ii) the issuance of 8,620,153 WES public common units, (iii) the issuance of 153,061 WES general partner units to Anadarko and (iv) the issuance of 10,913,853 WES Class C units to AMH for $750.0 million; |
(e) | The acquisition of Nuevo was accounted for using the acquisition method of accounting, under which tangible and identifiable intangible assets acquired and liabilities assumed are recorded at their estimated fair values as of the acquisition date. The excess of the consideration transferred over the preliminary estimated fair value of net assets acquired is reflected as goodwill on the accompanying unaudited pro forma condensed combined balance sheet. The estimated fair values of assets acquired and liabilities assumed are based on preliminary management estimates and are subject to final valuation adjustments which may cause the amounts ultimately recorded to be different from those shown on the unaudited pro forma condensed combined balance sheet. The pro forma adjustments reflect the increase in depreciation and amortization expense due to the amortization of identifiable intangibles (customer contracts assumed in connection with the acquisition of Nuevo) with a definite life using the straight-line method over a weighted average life of 30 years, and the increase in depreciation resulting from step up of property, plant and equipment, depreciated on a straight-line basis over periods of 3 to 30 years. The pro forma adjustments also reflect the consolidation of Nuevo. The following table presents a preliminary allocation of the major classes of the assets acquired and liabilities assumed at November 25, 2014, including additional specific adjustments as further described above. |
thousands | Nuevo Historical Net Book Value | Adjustment | Preliminary Fair Value | ||||||||
Current assets | $ | 32,232 | 13,826 | $ | 46,058 | ||||||
Property, plant and equipment, net | 274,060 | 130,398 | 404,458 | ||||||||
Goodwill | — | 460,557 | 460,557 | ||||||||
Other intangible assets | — | 700,000 | 700,000 | ||||||||
Other assets | 944 | (944 | ) | — | |||||||
Accounts payable and accrued liabilities | (21,073 | ) | (16,815 | ) | (37,888 | ) | |||||
Current maturities of long-term debt | (3,938 | ) | 3,938 | — | |||||||
Asset retirement obligations | — | (17,640 | ) | (17,640 | ) | ||||||
Long-term notes payable | (71,533 | ) | 71,533 | — | |||||||
Capital lease obligations | — | (265 | ) | (265 | ) | ||||||
Deferred income taxes | — | (1,321 | ) | (1,321 | ) | ||||||
Members’ equity | (210,692 | ) | 210,692 | — | |||||||
Total purchase price | $ | 1,553,959 |
(f) | The allocation of the purchase price to property, plant and equipment, with related changes in depreciation, amortization and accretion expense; |
(g) | The impact of the reversal of the interest expense incurred by Nuevo since January 1, 2013; and |
(h) | The allocation to WGP’s noncontrolling interests of the Nuevo net income and pro forma adjustments. |