8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): December 17, 2018

WESTERN GAS EQUITY PARTNERS, LP

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	001-35753 (Commission File Number)	46-0967367 (IRS Employer Identification No.)
1201 Lake Robbins Drive The Woodlands, Texas 77380-1046 (Address of principal executive office) (Zip Code)
(832) 636-6000 (Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

þ  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

þ  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).    Emerging growth company   ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ¨

Introductory Note

On November 7, 2018, Western Gas Equity Partners, LP (“WGP”), Western Gas Partners, LP (“WES”), Anadarko Petroleum Corporation (“Anadarko”) and certain of their affiliates entered into a Contribution Agreement and Agreement and Plan of Merger (as may be amended from time to time, the “Merger Agreement”), pursuant to which, among other things, Clarity Merger Sub, LLC, a wholly owned subsidiary of WGP, will merge with and into WES, with WES continuing as the surviving entity and a subsidiary of WGP (the “Merger”). Pursuant to the Merger Agreement, immediately prior to the Merger, WES will acquire substantially all of Anadarko’s remaining midstream assets (collectively, the “Anadarko Midstream Assets”), which are largely associated with Anadarko’s two premier U.S. onshore oil plays in the Delaware and DJ Basins.

Item 8.01 Other Information.

This Current Report on Form 8-K includes the following financial information prepared in connection with the Merger and WES’s acquisition of the Anadarko Midstream Assets.

• Audited historical Consolidated Financial Statements of the Anadarko Midstream Assets as of December 31, 2017 and 2016, and for each of the years in the three-year period ended December 31, 2017, together with the notes thereto, attached hereto as Exhibit 99.1 and incorporated herein by reference.

• Unaudited historical Consolidated Financial Statements of the Anadarko Midstream Assets as of September 30, 2018 and December 31, 2017, and for the nine months ended September 30, 2018 and 2017, together with the notes thereto, attached hereto as Exhibit 99.2 and incorporated herein by reference.

• Unaudited Pro Forma Condensed Consolidated Financial Statements of WGP as of September 30, 2018, and for each of the years in the three-year period ended December 31, 2017, and the nine months ended September 30, 2018, together with the notes thereto, attached hereto as Exhibit 99.3 and incorporated herein by reference.

Important Information for Investors and Unitholders

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.

In connection with the Merger and the other proposed transactions contemplated by the Merger Agreement (the “Transactions”), WGP will file with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-4, which will include a prospectus of WGP and a proxy statement of WES. WES and WGP also plan to file other documents with the Commission regarding the proposed Transactions. After the registration statement has been declared effective by the Commission, a definitive proxy statement/prospectus will be mailed to the unitholders of WES. INVESTORS AND UNITHOLDERS OF WES ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER DOCUMENTS RELATING TO THE PROPOSED MERGER THAT WILL BE FILED WITH THE COMMISSION CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. Investors and unitholders will be able to obtain free copies of the proxy statement/prospectus and other documents containing important information about WES and WGP once such documents are filed with the Commission, through the website maintained by the Commission at http://www.sec.gov. Copies of the documents filed with the Commission by WES and WGP will be available free of charge on their internet website at www.westerngas.com or by contacting their Investor Relations Department at 832-636-6000.

Participants in the Solicitation

WES, WGP, their respective general partners and their respective general partners’ directors and executive officers may be deemed to be participants in the solicitation of proxies from the unitholders of WES in connection with the proposed Transactions. Information about the directors and executive officers of WES is set forth in WES’s Annual Report on Form 10-K which was filed with the Commission on February 16, 2018. Information about the directors and executive officers of WGP is set forth in WGP’s Annual Report on Form 10-K which was filed with the Commission on February 16, 2018. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus and other relevant materials to be filed with the Commission when they become available. Free copies of these documents can be obtained using the contact information above.

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Cautionary Statement Regarding Forward-Looking Statements

This communication contains forward-looking statements. For example, statements regarding future financial performance, future competitive positioning, future market demand, future benefits to unitholders, future economic and industry conditions, the proposed merger (including its benefits, results, effects and timing) and whether and when the Transactions will be consummated, are forward-looking statements within the meaning of federal securities laws. WES, WGP and their respective general 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 communication. Such factors include, but are not limited to: the failure of the unitholders of WES to approve the proposed merger; the risk that the conditions to the closing of the proposed Transactions are not satisfied; the risk that regulatory approvals required for the proposed Transactions are not obtained or are obtained subject to conditions that are not anticipated; potential adverse reactions or changes to business relationships resulting from the announcement or completion of the proposed Transactions; uncertainties as to the timing of the proposed Transactions; competitive responses to the proposed Transactions; unexpected costs, charges or expenses resulting from the proposed Transactions; the outcome of pending or potential litigation; the inability to retain key personnel; uncertainty of the expected financial performance of the pro forma partnership, following completion of the proposed Transactions; and any changes in general economic and/or industry specific conditions.

WES and WGP caution that the foregoing list of factors is not exclusive. Additional information concerning these and other risk factors is contained in WES’s and WGP’s most recently filed Annual Reports on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other Commission filings, which are available at the Commission’s website, http://www.sec.gov. All subsequent written and oral forward-looking statements concerning WES, WGP, the proposed Transactions or other matters attributable to WES and WGP or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above. Each forward looking statement speaks only as of the date of the particular statement. Except as required by law, WES, WGP and their respective general partners undertake no obligation to publicly update or revise any forward-looking statements.

Item 9.01 Financial Statements and Exhibits.

(d)	Exhibits
	Exhibit Number	Description of the Exhibit
	23.1	Consent of KPMG LLP.
	99.1	Audited historical Consolidated Financial Statements of the Anadarko Midstream Assets as of December 31, 2017 and 2016, and for each of the years in the three-year period ended December 31, 2017, together with the notes thereto.
	99.2	Unaudited historical Consolidated Financial Statements of the Anadarko Midstream Assets as of September 30, 2018 and December 31, 2017, and for the nine months ended September 30, 2018 and 2017, together with the notes thereto.
	99.3	Unaudited Pro Forma Condensed Consolidated Financial Statements of WGP as of September 30, 2018, and for each of the years in the three-year period ended December 31, 2017, and the nine months ended September 30, 2018, together with the notes thereto.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		WESTERN GAS EQUITY PARTNERS, LP
		By:	Western Gas Equity Holdings, LLC, its general partner
Dated:	December 17, 2018	By:	/s/ Philip H. Peacock
			Philip H. Peacock Senior Vice President, General Counsel and Corporate Secretary

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EX-23.1

EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors and Unitholders

Western Gas Equity Holdings, LLC (as general partner of Western Gas Equity Partners, LP):

We consent to the incorporation by reference in the registration statements (No. 333-214447) on Form S-3 and (No. 333-186306) on Form S-8 of Western Gas Equity Partners, LP of our report dated December 17, 2018, with respect to the consolidated balance sheets of Anadarko Midstream Assets as of December 31, 2017 and 2016, and the related consolidated statements of operations, net investment by Anadarko, and cash flows for each of the years in the three-year period ended December 31, 2017, and the related notes (collectively, the “consolidated financial statements”), which report appears in the current report on Form 8-K of Western Gas Equity Partners, LP dated December 17, 2018.

/s/ KPMG LLP

Houston, Texas

December 17, 2018

EX-99.1

EXHIBIT 99.1

ANADARKO MIDSTREAM ASSETS

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	PAGE
Report of Independent Registered Public Accounting Firm	2
Consolidated Statements of Operations for the years ended December 31, 2017, 2016 and 2015	3
Consolidated Balance Sheets as of December 31, 2017 and 2016	4
Consolidated Statements of Net Investment by Anadarko for the years ended December 31, 2017, 2016 and 2015	5
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015	6
Notes to Consolidated Financial Statements	7

Report of Independent Registered Public Accounting Firm

The Board of Directors and Unitholders

Western Gas Equity Holdings, LLC (as general partner of Western Gas Equity Partners, LP):

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Anadarko Midstream Assets (the Company) as of December 31, 2017 and 2016, the related consolidated statements of operations, net investment by Anadarko, and cash flows for each of the years in the three-year period ended December 31, 2017, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG LLP

We have served as the Company’s auditor since 2012.

Houston, Texas

December 17, 2018

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ANADARKO MIDSTREAM ASSETS

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended December 31,
thousands	2017			2016		2015
Revenues and other – affiliates
Service revenues – fee based	$	123,897		$	104,960	$	67,287
Product sales	61,486			26,935		28,259
Total revenues and other – affiliates	185,383			131,895		95,546
Revenues and other – third parties
Service revenues – fee based	7,416			6,331		7,350
Other	55			44		60
Total revenues and other – third parties	7,471			6,375		7,410
Total revenues and other	192,854			138,270		102,956
Equity income, net – affiliates	30,186			23,126		16,126
Operating expenses
Cost of product (1)	56,694			24,386		24,712
Operation and maintenance (1)	29,623			24,395		19,495
General and administrative – affiliates	3,281			3,112		2,951
Property and other taxes	6,328			5,493		4,717
Depreciation and amortization	27,501			22,783		17,757
Impairments	1,678			2,287		1,410
Total operating expenses	125,105			82,456		71,042
Operating income	97,935			78,940		48,040
Income before income taxes	97,935			78,940		48,040
Income tax (benefit) expense	(62,143		)	22,149		15,205
Net income	$	160,078		$	56,791	$	32,835

⁽¹⁾  Cost of product includes product purchases from affiliates (as defined in Note 1) of $0.1 million, $(3.3) million and $4.0 million for the years ended December 31, 2017, 2016 and 2015, respectively. Operation and maintenance includes charges from affiliates of $9.8 million for each of the years ended December 31, 2017 and 2016, and $7.1 million for the year ended December 31, 2015.

See accompanying Notes to Consolidated Financial Statements.

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ANADARKO MIDSTREAM ASSETS

CONSOLIDATED BALANCE SHEETS

	December 31,
thousands	2017		2016
ASSETS
Current assets
Accounts receivable, net	$	478	$	444
Other current assets	593		1,969
Total current assets	1,071		2,413
Property, plant and equipment
Cost	1,102,972		653,157
Less accumulated depreciation	79,338		55,010
Net property, plant and equipment	1,023,634		598,147
Goodwill	29,641		29,641
Other intangible assets	96,917		99,154
Equity investments	244,139		227,240
Total assets	$	1,395,402	$	956,595
LIABILITIES, EQUITY AND PARTNERS’ CAPITAL
Current liabilities
Accounts and imbalance payables	$	117,037	$	12,480
Accrued ad valorem taxes	6,503		5,153
Total current liabilities	123,540		17,633
Long-term liabilities
APCWH Note Payable	98,966		—
Deferred income taxes	127,439		178,920
Asset retirement obligations	8,874		7,675
Other liabilities	3		—
Total long-term liabilities	235,282		186,595
Total liabilities	358,822		204,228
Net investment by Anadarko	1,036,580		752,367
Total liabilities and net investment by Anadarko	$	1,395,402	$	956,595

See accompanying Notes to Consolidated Financial Statements.

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ANADARKO MIDSTREAM ASSETS

CONSOLIDATED STATEMENTS OF NET INVESTMENT BY ANADARKO

thousands
Balance at December 31, 2014	$	555,801
Net income	32,835
Net contributions from Anadarko	150,655
Elimination of net deferred tax liabilities	(20,246		)
Balance at December 31, 2015	$	719,045
Net income	56,791
Net distributions to Anadarko	(17,298		)
Elimination of net deferred tax liabilities	(6,171		)
Balance at December 31, 2016	$	752,367
Net income	160,078
Net contributions from Anadarko	125,641
Elimination of net deferred tax liabilities	(1,506		)
Balance at December 31, 2017	$	1,036,580

See accompanying Notes to Consolidated Financial Statements.

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ANADARKO MIDSTREAM ASSETS

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
thousands	2017			2016			2015
Cash flows from operating activities
Net income	$	160,078		$	56,791		$	32,835
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	27,501			22,783			17,757
Impairments	1,678			2,287			1,410
Deferred income taxes	(52,988		)	44,884			29,183
Equity income, net – affiliates	(30,186		)	(23,126		)	(16,126		)
Distributions from equity investment earnings - affiliates	29,713			22,762			15,556
Changes in assets and liabilities:
(Increase) decrease in accounts receivable	(49		)	507			(612		)
Increase (decrease) in accounts and imbalance payables and accrued liabilities, net	5,982			2,338			9,117
Change in other items, net	1,443			5,186			(7,127		)
Net cash provided by operating activities	143,172			134,412			81,993
Cash flows from investing activities
Capital expenditures	(351,200		)	(70,381		)	(144,887		)
Acquisitions from affiliates	—			(131		)	—
Acquisitions from third parties	(22,500		)	—			(7,004		)
Investments in equity affiliates	(2,500		)	(55,090		)	(90,255		)
Distributions from equity investments in excess of cumulative earnings – affiliates	8,574			8,488			9,498
Net cash used in investing activities	(367,626		)	(117,114		)	(232,648		)
Cash flows from financing activities
APCWH Note Payable	98,813			—			—
Net contributions from (distributions to) Anadarko	125,641			(17,298		)	150,655
Net cash provided by (used in) financing activities	224,454			(17,298		)	150,655
Net increase (decrease) in cash and cash equivalents	$	—		$	—		$	—
Supplemental disclosures
Accrued capital expenditures	$	108,411		$	8,333		$	22,916

See accompanying Notes to Consolidated Financial Statements.

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ANADARKO MIDSTREAM ASSETS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General. On November 7, 2018, Western Gas Equity Partners, LP (“WGP”), Western Gas Partners, LP (“WES”), Anadarko Petroleum Corporation (“APC”), WGR Asset Holding Company LLC (“WGRAH”) and certain of their affiliates entered into a Contribution Agreement and Agreement and Plan of Merger (as may be amended from time to time, the “Merger Agreement”), pursuant to which, among other things, Clarity Merger Sub, LLC, a wholly owned subsidiary of WGP, will merge with and into WES, with WES continuing as the surviving entity and a subsidiary of WGP (the “Merger”).

Pursuant to the Merger Agreement, immediately prior to the Merger, (i) Anadarko E&P Onshore LLC and WGRAH will contribute all of their interests in each of Anadarko Wattenberg Oil Complex LLC, Anadarko DJ Oil Pipeline LLC, Anadarko DJ Gas Processing LLC, Wamsutter Pipeline LLC, DBM Oil Services, LLC, Anadarko Pecos Midstream LLC, Anadarko Mi Vida LLC and APC Water Holdings 1, LLC (“APCWH”) to WGR Operating, LP, Kerr-McGee Gathering LLC and Delaware Basin Midstream, LLC and (ii) APC Midstream Holdings, LLC will sell to WES all of its interests in each of Saddlehorn Pipeline Company, LLC, a Delaware limited liability company, and Panola Pipeline Company, LLC, a Texas limited liability company (together with the Merger, the “Transactions”). The assets to be acquired by WES as a result of the Transactions are collectively referred to as the Anadarko Midstream Assets (“AMA”) and, as of December 31, 2017, were comprised of the following:

• Wattenberg processing plant. The Wattenberg processing plant consists of a cryogenic train (with capacity of 190 million cubic feet per day (“MMcf/d”)) and a refrigeration train (with capacity of 100 MMcf/d) located in Adams County, Colorado.

• Wamsutter pipeline. The Wamsutter pipeline is a crude oil gathering pipeline located in Sweetwater County, Wyoming and delivers crude oil into Plains All American Pipeline.

• DJ Basin oil system. The DJ Basin oil system consists of (i) a crude oil gathering system, (ii) a centralized oil stabilization facility (“COSF”), which commenced operation in 2015, and (iii) a 12-mile crude oil pipeline, located in Weld County, Colorado. The COSF consists of Trains I through V with total capacity of 125 thousand barrels per day (“MBbls/d”) and two storage tanks with total capacity of 500,000 barrels. Train VI, with capacity of 30 MBbls/d, commenced operation in 2018. The pipeline connects the COSF to Tampa Rail.

• DBM oil system. The DBM oil system consists of (i) a crude oil gathering system, (ii) three central production facilities (“CPFs”), which include ten processing trains with total capacity of 71 MBbls/d, (iii) three storage tanks with total capacity of 30,000 barrels, (iv) a 14-mile crude oil pipeline, and (v) two regional oil treating facilities (“ROTFs”), which include four trains with total capacity of 120 MBbls/d, located in Reeves and Loving Counties, Texas. The ROTFs commenced operation in 2018. The pipeline transports crude oil from the DBM oil system and one third-party CPF into Plains All American Pipeline.

• APC water systems. The APC water systems consist of one produced-water disposal system (with capacity of 30 MBbls/d), which commenced operation in 2017. Three additional produced-water disposal systems commenced operation in 2018, increasing the total capacity to 505 MBbls/d. The APC water systems are located in Reeves, Loving, Winkler and Ward Counties, Texas.

• A 20% interest in Saddlehorn Pipeline Company, LLC (“Saddlehorn”). Saddlehorn owns (i) a 600-mile crude oil and condensate pipeline (excluding pipeline capacity leased by Saddlehorn) that originates in Laramie County, Wyoming and terminates in Cushing, Oklahoma, and (ii) four storage tanks with total capacity of 300,000 barrels. The Saddlehorn interest was acquired in 2015 for a net investment of $6.0 million and is accounted for under the equity method. The pipeline commenced operation in 2016 and is operated by a third party.

• A 15% interest in Panola Pipeline Company, LLC (“Panola”). Panola owns a 248-mile natural gas liquids (“NGLs”) pipeline that originates in Panola County, Texas and terminates in Mont Belvieu, Texas. The Panola interest was acquired in 2015 for a net investment of $1.0 million and is accounted for under the equity method. The pipeline is operated by a third party.

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ANADARKO MIDSTREAM ASSETS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

• A 50% interest in Mi Vida JV LLC (“Mi Vida JV”). Mi Vida JV owns a cryogenic gas processing plant (with capacity of 200 MMcf/d) located in Ward County, Texas. The interest in Mi Vida JV is accounted for under the equity method. The processing plant commenced operation in 2015 and is operated by a third party.

• A 50% interest in Ranch Westex JV LLC (“Ranch Westex JV”). Ranch Westex JV owns a processing plant consisting of a cryogenic train (with capacity of 100 MMcf/d) and a refrigeration train (with capacity of 25 MMcf/d), located in Ward County, Texas. In 2017, an additional interest in Ranch Westex JV was purchased from a third party for a net investment of $22.5 million, increasing the ownership from 33% to 50%. The interest in Ranch Westex JV is accounted for under the equity method and the processing plant is operated by a third party.

For purposes of these consolidated financial statements, “WGP” refers to Western Gas Equity Partners, LP and its subsidiaries, including WES as the context requires. “Anadarko” refers to Anadarko Petroleum Corporation and its subsidiaries, excluding WGP, and “affiliates” refers to subsidiaries of Anadarko, excluding WGP, but including equity interests in Saddlehorn, Panola, Mi Vida JV and Ranch Westex JV. WGP has no independent operations or material assets other than its partnership interests in WES. The consolidated financial results of WES are included in WGP’s consolidated financial statements due to WGP’s 100% ownership interest in WES’s general partner and WES’s general partner’s control of WES.

Basis of presentation. These consolidated financial statements and related notes were prepared in connection with WES’s proposed acquisition of AMA from Anadarko and for the purpose of complying with the U.S. Securities and Exchange Commission rules and regulations, including but not limited to Regulation S-X, Article 3, General Instructions as to Financial Statements, and Staff Accounting Bulletin Topic 1-B, Allocation of Expenses and Related Disclosure in Financial Statements of Subsidiaries, Divisions or Lesser Business Components of Another Entity. These consolidated financial statements and related notes incorporate the activities and account balances of AMA from the historical cost-basis accounts of Anadarko with certain adjustments made to reasonably reflect the stand-alone costs of doing business and may not necessarily be indicative of the actual results of operations that would have occurred if AMA had been owned separately during the periods reported and are also not indicative of future results of operations. For example, in connection with the closing of the acquisition of AMA, existing agreements between Anadarko and WES will become effective for AMA. See Note 8. These agreements will materially affect how general and administrative expense is charged to AMA and how those expenses are reflected in these consolidated financial statements. In addition, the current federal and state income taxes included in these consolidated financial statements represent AMA’s allocable share of Anadarko’s current federal and state income tax, whereas WGP, and AMA upon closing of the acquisition, are generally not subject to federal or state income tax, other than Texas margin tax. Transactions between AMA and Anadarko have been identified in the consolidated financial statements as transactions between affiliates. Management’s adjustments, allocations and related estimates and assumptions are further described in this Note 1 and Note 2.

Use of estimates. In preparing financial statements in accordance with generally accepted accounting principles in the United States, management makes informed judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses in the financial statements and the notes thereto. Management evaluates its estimates and related assumptions regularly, using historical experience and other methods considered reasonable under the particular circumstances. Changes in facts and circumstances or additional information may result in revised estimates and actual results may differ from these estimates. Effects on the business, financial position and results of operations resulting from revisions to estimates are recognized when the facts that give rise to the revision become known.

The information included herein reflects all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the consolidated financial statements.

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ANADARKO MIDSTREAM ASSETS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fair value. The fair-value-measurement standard defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard characterizes inputs used in determining fair value according to a hierarchy that prioritizes those inputs based upon the degree to which they are observable. The three input levels of the fair value hierarchy are as follows:

Level 1 – Inputs represent unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (for example, quoted market prices for similar assets or liabilities in active markets or quoted market prices for identical assets or liabilities in markets not considered to be active, inputs other than quoted prices that are observable for the asset or liability, or market-corroborated inputs).

Level 3 – Inputs that are not observable from objective sources, such as management’s internally developed assumptions used in pricing an asset or liability (for example, an estimate of future cash flows used in management’s internally developed present value of future cash flows model that underlies the fair value measurement).

In determining fair value, management uses observable market data when available, or models that incorporate observable market data. When a fair value measurement is required and there is not a market-observable price for the asset or liability or a market-observable price for a similar asset or liability, the cost, income, or multiples approach is used, depending on the quality of information available to support management’s assumptions. The cost approach is based on management’s best estimate of the current asset replacement cost. The income approach uses management’s best assumptions regarding expectations of projected cash flows, and discounts the expected cash flows using a commensurate risk adjusted discount rate. Such evaluations involve a significant amount of judgment, since the results are based on expected future events or conditions, such as sales prices, estimates of future throughput, capital and operating costs and the timing thereof, economic and regulatory climates and other factors. A multiples approach uses management’s best assumptions regarding expectations of projected earnings before interest, taxes, depreciation, and amortization (“EBITDA”) and the multiple of that EBITDA that a buyer would pay to acquire an asset. Management’s estimates of future net cash flows and EBITDA are inherently imprecise because they reflect management’s expectation of future conditions that are often outside of management’s control.

In arriving at fair value estimates, management uses relevant observable inputs available for the valuation technique employed. If a fair value measurement reflects inputs at multiple levels within the hierarchy, the fair value measurement is characterized based on the lowest level of input that is significant to the fair value measurement. Nonfinancial assets and liabilities initially measured at fair value include certain assets and liabilities acquired in a third-party business combination, assets and liabilities exchanged in non-monetary transactions, goodwill and other intangibles, initial recognition of asset retirement obligations, and initial recognition of environmental obligations assumed in a third-party acquisition. Impairment analyses for long-lived assets, goodwill and other intangibles, and the initial recognition of asset retirement obligations and environmental obligations use Level 3 inputs.

The carrying amounts of accounts receivable and accounts payable reported on the consolidated balance sheets approximate fair value due to the short-term nature of these items.

Cash. Anadarko provided cash as needed to support AMA and collected cash from the services provided by AMA. Consequently, the consolidated balance sheets do not include any cash balances. See Note 2 for information on Anadarko’s centralized cash management process. Net cash received from Anadarko is reflected as a contribution from Anadarko on the consolidated statements of net investment by Anadarko and cash flows.

Bad-debt reserve. Accounts receivable on the consolidated balance sheets are primarily comprised of receivables from third parties associated with joint-interest billings. Affiliate accounts receivable were entirely settled through an adjustment to net investment by Anadarko in connection with WES’s acquisition of AMA. Management analyzes the exposure to bad debts on a customer-by-customer basis for its third-party accounts receivable and may establish credit limits for significant third-party customers. As of December 31, 2017 and 2016, there were no amounts recorded for bad-debt reserve.

9

ANADARKO MIDSTREAM ASSETS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Imbalances. The consolidated balance sheets include imbalance receivables and payables resulting from differences in volumes received into the systems and volumes delivered to customers. Volumes owed to or by AMA that are subject to monthly cash settlement are valued according to the terms of the contract as of the balance sheet dates and reflect market index prices. Other volumes owed to or by AMA are valued at the weighted-average cost as of the balance sheet dates and are settled in-kind. As of December 31, 2017, imbalance receivables and payables were $0.4 million and $0.3 million, respectively. As of December 31, 2016, imbalance receivables and payables were $2.0 million and $0.3 million, respectively. Net changes in imbalance receivables and payables are reported in Cost of product in the consolidated statements of operations.

Property, plant and equipment. Property, plant and equipment are generally stated at the lower of historical cost less accumulated depreciation or fair value, if impaired. All construction-related direct labor and material costs are capitalized. The cost of renewals and betterments that extend the useful life of property, plant and equipment is also capitalized. The cost of repairs, replacements and major maintenance projects that do not extend the useful life or increase the expected output of property, plant and equipment is expensed as incurred.

Depreciation is computed using the straight-line method based on estimated useful lives and salvage values of assets. However, subsequent events could cause a change in estimates, thereby impacting future depreciation amounts. Uncertainties that may impact these estimates include, but are not limited to, changes in laws and regulations relating to environmental matters, including air and water quality, restoration and abandonment requirements, economic conditions and supply and demand in the area.

Management evaluates the ability to recover the carrying amount of its long-lived assets to determine whether its long-lived assets have been impaired. Impairments exist when the carrying amount of an asset exceeds estimates of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. When alternative courses of action to recover the carrying amount of a long-lived asset are under consideration, estimates of future undiscounted cash flows take into account possible outcomes and probabilities of their occurrence. If the carrying amount of the long-lived asset is not recoverable based on the estimated future undiscounted cash flows, the impairment loss is measured as the excess of the asset’s carrying amount over its estimated fair value, such that the asset’s carrying amount is adjusted to its estimated fair value with an offsetting charge to impairment expense. Refer to Note 4 for a description of impairments recorded during the years ended December 31, 2017, 2016 and 2015.

Capitalized interest. Interest is capitalized as part of the historical cost of constructing assets for significant projects that are in progress. Capitalized interest is determined by multiplying the weighted-average borrowing cost on debt by the average amount of qualifying costs incurred. Once the construction of an asset subject to interest capitalization is completed and the asset is placed in service, the associated capitalized interest is expensed through depreciation or impairment, together with other capitalized costs related to that asset.

Goodwill. Goodwill included in these consolidated balance sheets represents the allocated portion of Anadarko’s midstream goodwill attributed to AMA upon WES’s acquisition. The carrying value of Anadarko’s midstream goodwill represents the excess of the purchase price paid to a third-party entity over the estimated fair value of the identifiable assets acquired and liabilities assumed by Anadarko. The goodwill balance in the consolidated financial statements does not represent, and in some cases is significantly different from, the difference between the consideration to be paid for the acquisition from Anadarko and the fair value of such net assets on the acquisition date. The consolidated balance sheets as of December 31, 2017 and 2016, include goodwill of $29.6 million for each period presented, none of which is deductible for tax purposes.

Goodwill is evaluated for impairment annually, as of October 1, or more often as facts and circumstances warrant. An initial qualitative assessment is performed to determine the likelihood of whether or not goodwill is impaired. If management concludes, based on qualitative factors, that it is more likely than not that the fair value of the reporting unit exceeds its carrying amount, then goodwill is not impaired and further testing not necessary. If a quantitative assessment must be performed and the carrying amount of the reporting unit exceeds its fair value, goodwill is written down to its implied fair value through a charge to operating expense. The carrying value of goodwill after such an impairment would represent a Level 3 fair value measurement. Estimating the fair value was not necessary based on the qualitative evaluation performed in 2017 or 2016 and no goodwill impairment has been recognized in these consolidated financial statements.

10

ANADARKO MIDSTREAM ASSETS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Other intangible assets. Intangible assets are assessed for impairment together with related underlying long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. See Property, plant and equipment within this Note 1 for further discussion of management’s process to evaluate potential impairment of long-lived assets.

The intangible asset balance on the consolidated balance sheet includes the fair value, net of amortization, of contracts assumed by Anadarko in connection with the Wattenberg processing plant acquisition in 2011, which are being amortized on a straight-line basis over 50 years. The gross carrying amount of Other intangible assets was $111.8 million at December 31, 2017 and 2016, and accumulated amortization was $14.9 million and $12.7 million, at December 31, 2017 and 2016, respectively. Amortization expense for intangible assets was $2.2 million for each of the years ended December 31, 2017, 2016 and 2015. An estimated $2.2 million of intangible asset amortization will be recorded for each of the next five years.

Asset retirement obligations. A liability based on the estimated costs of retiring tangible long-lived assets is recognized as an asset retirement obligation in the period incurred. The liability is recognized at fair value, measured using discounted expected future cash outflows for the asset retirement obligation when the obligation originates, which generally is when an asset is acquired or constructed. The carrying amount of the associated asset is increased commensurate with the liability recognized. Over time, the discounted liability is adjusted to its expected settlement value through accretion expense, which is reported within Depreciation and amortization in the consolidated statements of operations. Subsequent to the initial recognition, the liability is also adjusted for any changes in the expected value of the retirement obligation (with a corresponding adjustment to property, plant and equipment) until the obligation is settled. Revisions in estimated asset retirement obligations may result from changes in estimated inflation rates, discount rates, asset retirement costs and the estimated timing of settling asset retirement obligations. See Note 6.

Segments. AMA’s operations are organized into a single operating segment, the assets of which gather, compress, treat, process and transport natural gas; gather, stabilize and transport condensate, NGLs and crude oil; and gather and dispose of produced water in the United States.

Revenues and cost of product. The revenue recognition policies described in this section reflect revenue recognition through December 31, 2017. Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (“Topic 606”), was adopted effective January 1, 2018. See Accounting standards adopted in 2018 below for further discussion.

Under fee-based gathering, treating, processing and disposal arrangements, a fixed fee is received based on the volume and/or thermal content of natural gas or produced water and revenues are recognized for services provided by AMA in the month such services are performed. Producers’ wells or production facilities are connected to gathering systems for delivery of natural gas to processing or treating plants, where the natural gas is processed to extract NGLs and condensate or treated in order to satisfy pipeline specifications. In some areas, where no processing is required, the producers’ gas is gathered and delivered to pipelines for market delivery. Under cost-of-service gathering agreements, fee revenue is recognized for gathering and compression services based on the current rate calculated in a cost-of-service model, and such rates are reviewed and updated periodically over the life of the agreements. Under percent-of-proceeds contracts, revenue is recognized when the natural gas, NGLs or condensate is sold. The percentage of the product sale ultimately paid to the producer is recorded as a related cost of product expense.

In certain circumstances, natural gas volumes are purchased at the wellhead or production facility for gathering and processing. As a result, AMA has volumes of NGLs and condensate to sell and volumes of residue to sell, to use for system fuel or to satisfy keep-whole obligations. In addition, depending upon specific contract terms, condensate and NGLs recovered during gathering and processing are either returned to the producer or retained and sold. Under keep-whole contracts, when condensate or NGLs are retained and sold, producers are kept whole for the condensate or NGLs volumes through the receipt of a thermally equivalent volume of residue. The keep-whole contract conveys an economic benefit to AMA when the combined value of the individual NGLs is greater in the form of liquids than as a component of the natural gas stream; however, AMA is adversely impacted when the value of the NGLs is lower than the value of the natural gas stream including the liquids. Revenue is recognized from the sale of condensate and NGLs upon transfer of title, and related purchases are recorded as cost of product.

11

ANADARKO MIDSTREAM ASSETS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Transportation revenues are earned through firm contracts that obligate customers to pay a monthly reservation or demand charge regardless of the pipeline capacity used by that customer. An additional commodity usage fee is charged to the customer based on the actual volume of natural gas transported. Transportation revenues are also generated from interruptible contracts pursuant to which a fee is charged to the customer based on volumes transported through the pipeline. Revenues for transportation of natural gas and NGLs are recognized over the period of firm transportation contracts or, in the case of usage fees and interruptible contracts, when the volumes are received into the pipeline.

Revenues attributable to the fixed-fee component of gathering and processing contracts as well as demand charges and commodity usage fees on transportation contracts are reported as Service revenues – fee based in the consolidated statements of operations. Proceeds from the sale of residue, NGLs and condensate are reported as Product sales in the consolidated statements of operations.

Income taxes. AMA is not subject to income tax as a stand-alone entity. The current federal and state income taxes included in these consolidated financial statements represent Anadarko’s current federal and state income taxes allocable to AMA. Deferred federal and state income taxes are provided on temporary differences between the financial statement carrying amounts of recognized assets and liabilities and their respective tax bases as if tax returns were filed for AMA as a stand-alone entity. See Note 3.

Subsequent events. For purposes of these consolidated financial statements, subsequent events have been evaluated through December 17, 2018, the date the consolidated financial statements were available to be issued. See Note 8.

Accounting standards adopted in 2017. ASU 2017-04, Intangibles—Goodwill and Other (Topic 350) eliminates Step 2 from the goodwill impairment test in an effort to simplify the subsequent measurement of goodwill. This ASU was adopted using a prospective approach on January 1, 2017, and will only be applicable to the extent goodwill is determined to be impaired.

ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business assists in determining whether a transaction should be accounted for as an acquisition or disposal of assets or a business. This ASU provides a screen that when substantially all of the fair value of the gross assets acquired, or disposed of, are concentrated in a single identifiable asset, or a group of similar identifiable assets, the assets will not be considered a business. If the screen is not met, the assets must include an input and a substantive process that together significantly contribute to the ability to create an output to be considered a business. Adoption of this ASU on January 1, 2017, using a prospective approach, could have a material impact on future consolidated financial statements as goodwill will not be allocated to divestitures or recorded on acquisitions that are not considered businesses.

ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs and eliminates the exception for an intra-entity transfer of an asset other than inventory. This ASU was adopted on January 1, 2017, using a modified retrospective approach, with no impact to the consolidated financial statements.

12

ANADARKO MIDSTREAM ASSETS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Accounting standards adopted in 2018. ASU 2014-09, Revenue from Contracts with Customers (Topic 606) supersedes current revenue recognition requirements and industry-specific guidance, and requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. This new standard was adopted beginning January 1, 2018, using the modified retrospective method applied to contracts that were not completed as of January 1, 2018. The cumulative effect adjustment that will be recognized in the 2018 opening balance of the AMA consolidated statements of net investment by Anadarko will be anincrease of $0.6 million. New business processes, procedures, controls and system changes to gather, categorize and analyze the necessary data for the accounting changes and expanded disclosure under Topic 606 have been implemented. Beginning in 2018, additional quantitative and qualitative disclosures will be required, including (i) expanded descriptions of the nature, amount, timing, and uncertainty of revenue and cash flows from contracts with customers, (ii) details of customer contract assets and liabilities, (iii) revenue from customers on a disaggregated basis, and (iv) comparative information presented under both Topic 605, Revenue Recognition (“Topic 605”) and Topic 606. While 2018 net income of AMA is not expected to be materially impacted by revenue recognition timing changes as a result of applying Topic 606, there will be significant changes to the presentation of revenues and related expenses recognized beginning January 1, 2018. The impacts of adopting Topic 606 include the following:

• Fee-based gathering / processing. Under Topic 605, fee revenues were recognized based on the rate in effect for the month of service, even when certain fees were charged on an upfront or limited-term basis. In addition, deficiency fees were charged and recognized only when the customer did not meet the specified delivery minimums for the completed performance period. Under Topic 606, (i) revenues will continue to be recognized based on the rate in effect when the fee is either the same rate per unit over the contract term or when the fee escalates and the escalation factor approximates inflation, (ii) deficiency fees will be estimated and recognized during the performance period as the services are performed for the customer’s delivered volumes, and (iii) timing differences between Service revenues – fee based recognized and amounts billed to customers will be recognized as contract assets or contract liabilities, as appropriate, which will result in a change in the timing of revenue and changes to net income as a result of the revenue contract’s consideration provisions. In addition, under Topic 606, revenue associated with upfront or limited-term fees is recognized over the expected period of customer benefit, which is generally the life of the related properties. These revenues will also include revenues earned for marketing services performed on behalf of AMA’s customers, and the expense associated with these marketing activities will be recognized in cost of product expense, resulting in no impact to operating income.

• Cost of service rate adjustments. Under Topic 605, revenue was recognized based on the amounts billed to customers each period as Service revenues – fee based. Under Topic 606, fixed minimum volume commitment demand fees and variable fees that are also billed on these minimum volumes will be recognized as Service revenues – fee based on a consistent per-unit rate over the term of the contract. Annual adjustments are made to the cost of service rates charged to customers, and, as a result, a cumulative catch-up revenue adjustment related to the services already provided under the contract may be recorded in future periods, with revenues for the remaining term of the contract recognized on a consistent per-unit rate. Fees received on volumes in excess of the minimum volumes will be recognized as Service revenues – fee based as service is provided to the customer based on the billing rate in effect for the performance period. This revenue recognition timing will not affect billings to customers, and differences between amounts billed and revenue recognized will be recorded as contract assets or liabilities, as appropriate.

• Aid in construction. Under Topic 605, aid in construction reimbursements were reflected as a reduction to property, plant and equipment upon receipt (and a reduction to capital expenditures). Under Topic 606, reimbursement of capital costs received from customers will be reflected as a contract liability (deferred revenue) upon receipt. The contract liability will be amortized to Service revenues – fee based over the expected period of customer benefit, which is generally the life of the related properties.

13

ANADARKO MIDSTREAM ASSETS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

• Percent-of-proceeds gathering / processing. Under Topic 605, cost of product expense was recognized when the product was purchased from a producer to whom services were provided, and revenue was recognized when the product was sold to Anadarko or a third party. Under Topic 606, in some instances, where all or a percentage of the proceeds from the sale must be returned to the producer, the net margin from the purchase and sale transactions will be presented net within Service revenues – product based because AMA is acting as the producer’s agent in the product sale.

• Noncash consideration - keep-whole and percent-of-product agreements. Under Topic 605, revenues were recognized only upon the sale of the related products. Under Topic 606, (i) Service revenues – product based will be recognized for the products received as noncash consideration in exchange for the services provided, with the keep-whole noncash consideration value based on the net value of the NGLs over the replacement residue gas cost, and (ii) product sales revenue will be recognized, along with cost of product expense related to the sale, when the product is sold to Anadarko or a third party. When the product is sold to Anadarko, Anadarko is acting as AMA’s agent in the product sale and AMA will recognize revenue, along with cost of product expense related to the sale, based on the Anadarko sales price to the third party, resulting in no impact to operating income.

• Wellhead purchase / sale incorporated into gathering / processing. Under Topic 605, the natural gas purchase cost was recognized as cost of product expense and any specified gathering or processing fees charged to the producer were recognized as revenues. Under Topic 606, the fees charged to the producer under this contract type will be recognized as adjustments to the amount recognized in cost of product expense instead of revenues when such fees relate to services performed after control of the product transfers to AMA.

2.  TRANSACTIONS WITH AFFILIATES

Affiliate transactions.Revenues from affiliates include amounts earned by AMA from services provided to Anadarko as well as from the sale of natural gas, condensate and NGLs to Anadarko. In addition, natural gas, condensate and NGLs is purchased from an affiliate of Anadarko pursuant to gas purchase agreements. Operation and maintenance expense includes amounts accrued for or paid to affiliates for the operation of AMA, whether in providing services to affiliates or to third parties, including field labor, measurement and analysis, and other disbursements. Affiliate expenses do not bear a direct relationship to affiliate revenues, and third-party expenses do not bear a direct relationship to third-party revenues.

Cash management.Anadarko operates a cash management system whereby excess cash from most of its subsidiaries’ separate bank accounts is generally swept to centralized accounts. Sales and purchases related to third-party transactions of AMA were received or paid in cash by Anadarko within its centralized cash management system and were ultimately settled through an adjustment to net investment by Anadarko. Anadarko did not charge interest on intercompany balances for all periods presented because cash settlement of the intercompany balances was never the intent. The outstanding affiliate balances were entirely settled through an adjustment to net investment by Anadarko in connection with the acquisition of AMA.

APCWH Note Payable. In June 2017, in connection with funding the construction of the APC water systems, the Anadarko subsidiary that owns the APC water systems entered into an eight-year note payable agreement with Anadarko (the “APCWH Note Payable”). This note payable has a maximum borrowing limit of $500 million, and accrues interest, which is payable upon maturity, at the applicable mid-term federal rate based on a quarterly compounding basis as determined by the U.S. Secretary of the Treasury.

As of December 31, 2017, the consolidated balance sheet included a long-term APCWH Note Payable of $99.0 million, which approximates fair value, and the interest rate on the outstanding borrowings was 2.09%. The interest expense related to the APCWH Note Payable of $0.2 million for the year ended December 31, 2017, was offset by capitalized interest in the consolidated statements of operations (see Capitalized interest in Note 1). At December 31, 2017, AMA was in compliance with all covenants under this agreement.

14

ANADARKO MIDSTREAM ASSETS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.  TRANSACTIONS WITH AFFILIATES (CONTINUED)

Gathering and processing agreements. AMA has significant gathering and processing arrangements with affiliates of Anadarko. AMA’s natural gas processing throughput (excluding equity investment throughput) attributable to production owned or controlled by Anadarko was 76%, 71% and 72% for the years ended December 31, 2017, 2016 and 2015, respectively. AMA’s crude oil, NGLs and produced water gathering, treating, transportation and disposal throughput (excluding equity investment throughput) attributable to production owned or controlled by Anadarko was 91%, 93% and 94% for the years ended December 31, 2017, 2016 and 2015, respectively.

Commodity purchase and sale agreements. AMA sells a significant amount of its natural gas, condensate and NGLs to Anadarko Energy Services Company (“AESC”), Anadarko’s marketing affiliate. In addition, AMA purchases natural gas, condensate and NGLs from AESC pursuant to purchase agreements. AMA’s purchase and sale agreements with AESC are generally one-year contracts, subject to annual renewal.

Allocation of costs. For the purpose of these consolidated financial statements, a portion of Anadarko’s general and administrative expenses has been allocated and included in General and administrative expenses in the consolidated statements of operations in the form of a management services fee. General, administrative and management costs were allocated based on AMA’s proportionate share of Anadarko’s revenues and expenses or other contractual arrangements. Management believes these allocation methodologies are reasonable. The management services fee represents allocable costs, including compensation, benefits, pension and postretirement costs, associated with the provision of services for or on behalf of AMA by Anadarko related to the following: (i) various business services, including but not limited to, payroll, accounts payable and facilities management; and (ii) various corporate services, including, but not limited to, legal, accounting, treasury, information technology and human resources.

Net contributions from (distributions to) Anadarko. For the years ended December 31, 2017, 2016 and 2015, AMA recorded Net contributions from (distributions to) Anadarko of $125.6 million, $(17.3) million and $150.7 million, respectively, on the consolidated statements of net investment by Anadarko. These amounts represent contribution of net intercompany accounts receivables and payables between AMA and Anadarko.

3.  INCOME TAXES

Following the adoption of the U.S. Tax Cuts and Jobs Act signed into law on December 22, 2017 (“Tax Reform Legislation”), AMA recognized a one-time deferred tax benefit of $84.1 million due to the remeasurement of its U.S. deferred tax assets and liabilities based on the reduction of the corporate tax rate from 35% to 21%.

AMA regards this item as provisional since the amount is based on reasonable estimates of material temporary difference changes in 2017 and its state tax apportionment ratios. The provisional federal tax benefit is included in the Deferred income taxes balance as presented on the consolidated balance sheet. AMA expects to adjust this provisional amount in subsequent periods when more information becomes available. Analysis of the income tax effects of the Tax Reform Legislation will be completed before the end of the measurement period on December 21, 2018.

The components of allocated income tax expense (benefit) are as follows:

	Year Ended December 31,
thousands	2017			2016			2015
Current income tax expense (benefit)
Federal income tax expense (benefit)	$	(9,170	)	$	(22,659	)	$	(13,956	)
State income tax expense (benefit)	15			(76		)	(22		)
Total current income tax expense (benefit)	(9,155		)	(22,735		)	(13,978		)
Deferred income tax expense (benefit)
Federal income tax expense (benefit)	(53,220		)	44,504			29,148
State income tax expense (benefit)	232			380			35
Total deferred income tax expense (benefit)	(52,988		)	44,884			29,183
Total income tax expense (benefit)	$	(62,143	)	$	22,149		$	15,205

15

ANADARKO MIDSTREAM ASSETS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.  INCOME TAXES (CONTINUED)

The following table summarizes the reconciliation of the federal statutory tax rate to the effective tax rate:

	Year Ended December 31,
thousands except percentages	2017			2016			2015
Income before income taxes	$	97,935		$	78,940		$	48,040
Statutory tax rate	—		%	—		%	—		%
Tax computed at statutory rate	$	—		$	—		$	—
Adjustments resulting from:
U.S. federal tax reform	(84,147		)	—			—
Federal taxes on income attributable to AMA	21,843			21,952			15,197
State taxes on income attributable to AMA (net of federal benefit)	161			197			8
Income tax expense (benefit)	$	(62,143	)	$	22,149		$	15,205
Effective tax rate	(63		)%	28		%	32		%

The tax effects of temporary differences that give rise to deferred tax liabilities are as follows:

	December 31,
thousands	2017		2016
Depreciable property	$	127,439	$	178,920
Net long-term deferred income tax liabilities	$	127,439	$	178,920

4.  PROPERTY, PLANT AND EQUIPMENT

A summary of the historical cost of property, plant and equipment is as follows:

		December 31,
thousands	Estimated Useful Life	2017		2016
Land	n/a	$	646	$	645
Gathering systems and processing complexes	3 to 49 years	726,233		623,378
Assets under construction	n/a	375,218		27,993
Other	3 to 40 years	875		1,141
Total property, plant and equipment		1,102,972		653,157
Less accumulated depreciation		79,338		55,010
Net property, plant and equipment		$	1,023,634	$	598,147

The cost of property classified as “Assets under construction” is excluded from capitalized costs being depreciated. These amounts represent property that is not yet suitable to be placed into productive service as of the respective balance sheet date.

Impairments.Impairment expense of $1.7 million, $2.3 million and $1.4 million was recognized during the years ended December 31, 2017, 2016 and 2015, respectively, all primarily due to project cancellations at the DBM oil system.

16

ANADARKO MIDSTREAM ASSETS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5.  EQUITY INVESTMENTS

The following table presents the activity in equity investments for the years ended December 31, 2017 and 2016:

thousands	Saddlehorn			Panola			Mi Vida JV			Ranch Westex JV			Total
Balance at December 31, 2015	$	50,026		$	18,023		$	78,443		$	33,782		$	180,274
Investment earnings, net of amortization	2,580			2,430			10,255			7,861			23,126
Contributions	51,308			7,446			(3,151		)	—			55,603
Capitalized interest	—			(513		)	—			—			(513		)
Distributions	(1,800		)	(2,191		)	(12,462		)	(6,309		)	(22,762		)
Distributions in excess of cumulative earnings (1)	—			(649		)	(7,282		)	(557		)	(8,488		)
Balance at December 31, 2016	$	102,114		$	24,546		$	65,803		$	34,777		$	227,240
Acquisitions	—			—			—			22,500			22,500
Investment earnings, net of amortization	10,135			2,230			10,135			7,686			30,186
Contributions	2,454			46			—			—			2,500
Distributions	(10,127		)	(2,470		)	(9,161		)	(7,955		)	(29,713		)
Distributions in excess of cumulative earnings (1)	(521		)	(727		)	(3,618		)	(3,708		)	(8,574		)
Balance at December 31, 2017	$	104,055		$	23,625		$	63,159		$	53,300		$	244,139

⁽¹⁾  Distributions in excess of cumulative earnings, classified as investing cash flows in the consolidated statements of cash flows, are calculated on an individual investment basis.

Investments in non-controlled entities over which AMA exercises significant influence are accounted for under the equity method. Management evaluates its equity investments for impairment whenever events or changes in circumstances indicate that the carrying value of such investments may have experienced a decline in value that is other than temporary. When evidence of loss in value has occurred, management compares the estimated fair value of the investment to the carrying value of the investment to determine whether the investment has been impaired. Management assesses the fair value of equity investments using commonly accepted techniques, and may use more than one method, including, but not limited to, recent third-party comparable sales and discounted cash flow models. If the estimated fair value is less than the carrying value, the excess of the carrying value over the estimated fair value is recognized as an impairment loss. No equity investment impairment has been recognized in these consolidated financial statements.

17

ANADARKO MIDSTREAM ASSETS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5.  EQUITY INVESTMENTS (CONTINUED)

The following tables present the summarized combined financial information for the equity investments (amounts represent 100% of investee financial information):

	Year Ended December 31,
thousands	2017		2016		2015
Revenues	$	173,596	$	119,117	$	81,274
Operating income	106,656		74,785		54,813
Net income	105,789		74,749		54,720

	December 31,
thousands	2017		2016
Current assets	$	76,515	$	93,755
Property, plant and equipment, net	854,540		861,237
Other assets	48,149		49,941
Total assets	$	979,204	$	1,004,933
Current liabilities	$	31,653	$	43,207
Non-current liabilities	37,965		45,154
Equity	909,586		916,572
Total liabilities and equity	$	979,204	$	1,004,933

6.  ASSET RETIREMENT OBLIGATIONS

The following table provides a summary of changes in asset retirement obligations:

	Year Ended December 31,
thousands	2017			2016
Carrying amount of asset retirement obligations at beginning of year	$	7,675		$	6,076
Liabilities incurred	1,779			1,575
Accretion expense	384			324
Revisions in estimated liabilities	(964		)	(300		)
Carrying amount of asset retirement obligations at end of year	$	8,874		$	7,675

18

ANADARKO MIDSTREAM ASSETS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7.  COMMITMENTS AND CONTINGENCIES

Litigation and legal proceedings. From time to time, AMA is involved in legal, tax, regulatory and other proceedings in various forums regarding performance, contracts and other matters that arise in the ordinary course of business. Management is not aware of any such proceedings for which a final disposition could have a material adverse effect on AMA’s financial condition, results of operations or cash flows.

Other commitments. AMA has short-term payment obligations, or commitments, related to its capital spending, as well as those of its unconsolidated affiliates, the majority of which is expected to be paid in the next twelve months. These commitments relate primarily to construction and expansion projects at the DBM and DJ Basin oil systems and the APC water systems.

Lease commitments. Anadarko, on behalf of AMA, has entered into lease arrangements for shared field offices and equipment supporting AMA’s operations, for which Anadarko charges AMA lease expense. The leases for shared field offices extend through 2019. Lease expense charged to AMA associated with these lease arrangements was $0.6 million, $0.4 million and $0.3 million for the years ended December 31, 2017, 2016 and 2015, respectively.

8.  SUBSEQUENT EVENTS

Agreements with Anadarko. Beginning on the closing date of the Transactions, AMA is subject to the terms and conditions of new and existing agreements between WES and Anadarko including the following:

• the Merger Agreement pursuant to which Anadarko agreed to indemnify WES against certain losses resulting from breaches of Anadarko’s representations, warranties, covenants or agreements and for certain other matters;

• an omnibus agreement that provides for reimbursement for expenses paid by Anadarko on behalf of WES and compensation to Anadarko for providing WES with certain general and administrative services and insurance coverage; and

• a tax sharing agreement pursuant to which WES will reimburse Anadarko for WES’s share of Texas margin tax borne by Anadarko as a result of the financial results of AMA being included in a combined or consolidated tax return filed by Anadarko with respect to activity subsequent to the Transactions closing.

Change in tax status. WES is generally not subject to federal or state income tax, other than Texas margin tax. As such, the income attributable to the interest in AMA upon WES’s consolidation is not subject to federal income tax, thereby eliminating the applicability of entity-level federal income taxation.

Affiliated balances subsequent to acquisition. Prior to the Transactions closing, cash transactions attributable to AMA were received or paid in cash by Anadarko within its centralized cash management system. In connection with the closing of the Transactions associated with the AMA acquisition, net affiliate receivable and payable balances with Anadarko other than the APCWH Note Payable will be settled through an adjustment to net investment by Anadarko. Subsequent to the Transactions closing, WES will cash-settle transactions directly with third parties and Anadarko, including transactions attributable to AMA, and no interest is charged or earned on affiliate balances other than balances associated with loan agreements.

Pursuant to the Merger Agreement, upon closing of the Transactions, WES will assume and then immediately repay the APCWH Note Payable, which had an outstanding balance of $368.5 million at September 30, 2018. Borrowings under this note have been used to construct the APC water systems.

19

EX-99.2

EXHIBIT 99.2

ANADARKO MIDSTREAM ASSETS

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	PAGE
Consolidated Statements of Operations for the nine months ended September 30, 2018 and 2017	2
Consolidated Balance Sheets as of September 30, 2018, and December 31, 2017	3
Consolidated Statement of Net Investment by Anadarko for the nine months ended September 30, 2018	4
Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 and 2017	5
Notes to Consolidated Financial Statements	6

ANADARKO MIDSTREAM ASSETS

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Nine Months Ended September 30,
thousands	2018		2017
Revenues and other – affiliates
Service revenues – fee based	$	177,275	$	89,136
Service revenues – product based	822		—
Product sales	6,250		42,303
Total revenues and other – affiliates	184,347		131,439
Revenues and other – third parties
Service revenues – fee based	13,970		4,980
Service revenues – product based	1,166		—
Product sales	85		—
Other	496		39
Total revenues and other – third parties	15,717		5,019
Total revenues and other	200,064		136,458
Equity income, net – affiliates	31,301		21,076
Operating expenses
Cost of product (1)	12,955		38,478
Operation and maintenance (1)	38,363		21,111
General and administrative – affiliates	2,595		2,461
Property and other taxes	6,406		5,472
Depreciation and amortization	32,240		20,176
Impairments	1,668		1,353
Total operating expenses	94,227		89,051
Operating income	137,138		68,483
Income before income taxes	137,138		68,483
Income tax expense	34,908		15,387
Net income	$	102,230	$	53,096

⁽¹⁾  Cost of product includes product purchases from affiliates (as defined in Note 1) of $6.6 million and zero for the nine months ended September 30, 2018 and 2017, respectively. Operation and maintenance includes charges from affiliates of $10.8 million and $7.4 million for the nine months ended September 30, 2018 and 2017, respectively.

See accompanying Notes to Consolidated Financial Statements.

2

ANADARKO MIDSTREAM ASSETS

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

thousands	September 30, 2018		December 31, 2017
ASSETS
Current assets
Accounts receivable, net	$	641	$	478
Other current assets	220		593
Total current assets	861		1,071
Property, plant and equipment
Cost	1,909,524		1,102,972
Less accumulated depreciation	191,052		79,338
Net property, plant and equipment	1,718,472		1,023,634
Goodwill	29,641		29,641
Other intangible assets	95,240		96,917
Equity investments	240,819		244,139
Other assets (1)	6,203		—
Total assets	$	2,091,236	$	1,395,402
LIABILITIES, EQUITY AND PARTNERS’ CAPITAL
Current liabilities
Accounts and imbalance payables	$	128,506	$	117,037
Accrued ad valorem taxes	6,215		6,503
Accrued liabilities	257		—
Total current liabilities	134,978		123,540
Long-term liabilities
APCWH Note Payable	368,456		98,966
Deferred income taxes	192,320		127,439
Asset retirement obligations	23,099		8,874
Other liabilities	—		3
Total long-term liabilities	583,875		235,282
Total liabilities	718,853		358,822
Net investment by Anadarko	1,372,383		1,036,580
Total liabilities and net investment by Anadarko	$	2,091,236	$	1,395,402

⁽¹⁾  Other assets includes affiliate amounts (as defined in Note 1) of $3.0 million and zero as of September 30, 2018, and December 31, 2017, respectively.

See accompanying Notes to Consolidated Financial Statements.

3

ANADARKO MIDSTREAM ASSETS

CONSOLIDATED STATEMENT OF NET INVESTMENT BY ANADARKO

(UNAUDITED)

thousands
Balance at December 31, 2017	$	1,036,580
Cumulative effect of accounting change (1)	629
Net income	102,230
Net contributions from Anadarko	174,285
Net contributions from Anadarko of other assets	58,834
Elimination of net deferred tax liabilities	(175		)
Balance at September 30, 2018	$	1,372,383

⁽¹⁾  See Note 1.

See accompanying Notes to Consolidated Financial Statements.

4

ANADARKO MIDSTREAM ASSETS

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended September 30,
thousands	2018			2017
Cash flows from operating activities
Net income	$	102,230		$	53,096
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	32,240			20,176
Impairments	1,668			1,353
Deferred income taxes	64,705			21,790
Equity income, net – affiliates	(31,301		)	(21,076		)
Distributions from equity investment earnings - affiliates	32,007			23,253
Changes in assets and liabilities:
(Increase) decrease in accounts receivable	(163		)	(401		)
Increase (decrease) in accounts and imbalance payables and accrued liabilities, net	5,760			3,675
Change in other items, net	(5,201		)	1,340
Net cash provided by operating activities	201,945			103,206
Cash flows from investing activities
Capital expenditures	(644,312		)	(164,723		)
Acquisitions from third parties	—			(22,500		)
Investments in equity affiliates	893			(2,500		)
Distributions from equity investments in excess of cumulative earnings – affiliates	1,721			5,623
Net cash used in investing activities	(641,698		)	(184,100		)
Cash flows from financing activities
APCWH Note Payable	265,468			14,132
Net contributions from Anadarko	174,285			66,762
Net cash provided by financing activities	439,753			80,894
Net increase (decrease) in cash and cash equivalents	$	—		$	—
Supplemental disclosures
Net distributions to (contributions from) Anadarko of other assets	$	(58,834	)	$	—
Accrued capital expenditures	118,111			95,846

See accompanying Notes to Consolidated Financial Statements.

5

ANADARKO MIDSTREAM ASSETS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.  DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

General. On November 7, 2018, Western Gas Equity Partners, LP (“WGP”), Western Gas Partners, LP (“WES”), Anadarko Petroleum Corporation (“APC”), WGR Asset Holding Company LLC (“WGRAH”) and certain of their affiliates entered into a Contribution Agreement and Agreement and Plan of Merger (as may be amended from time to time, the “Merger Agreement”), pursuant to which, among other things, Clarity Merger Sub, LLC, a wholly owned subsidiary of WGP, will merge with and into WES, with WES continuing as the surviving entity and a subsidiary of WGP (the “Merger”).

Pursuant to the Merger Agreement, immediately prior to the Merger, (i) Anadarko E&P Onshore LLC and WGRAH will contribute all of their interests in each of Anadarko Wattenberg Oil Complex LLC, Anadarko DJ Oil Pipeline LLC, Anadarko DJ Gas Processing LLC, Wamsutter Pipeline LLC, DBM Oil Services, LLC, Anadarko Pecos Midstream LLC, Anadarko Mi Vida LLC and APC Water Holdings 1, LLC (“APCWH”) to WGR Operating, LP, Kerr-McGee Gathering LLC and Delaware Basin Midstream, LLC and (ii) APC Midstream Holdings, LLC will sell to WES all of its interests in each of Saddlehorn Pipeline Company, LLC, a Delaware limited liability company, and Panola Pipeline Company, LLC, a Texas limited liability company (together with the Merger, the “Transactions”). The assets to be acquired by WES as a result of the Transactions are collectively referred to as the Anadarko Midstream Assets (“AMA”) and, as of September 30, 2018, were comprised of the following:

• Wattenberg processing plant. The Wattenberg processing plant consists of a cryogenic train (with capacity of 190 million cubic feet per day (“MMcf/d”)) and a refrigeration train (with capacity of 100 MMcf/d) located in Adams County, Colorado.

• Wamsutter pipeline. The Wamsutter pipeline is a crude oil gathering pipeline located in Sweetwater County, Wyoming and delivers crude oil into Plains All American Pipeline.

• DJ Basin oil system. The DJ Basin oil system consists of (i) a crude oil gathering system, (ii) a centralized oil stabilization facility (“COSF”), which commenced operation in 2015, and (iii) a 12-mile crude oil pipeline, located in Weld County, Colorado. The COSF consists of Trains I through VI with total capacity of 155 thousand barrels per day (“MBbls/d”) and two storage tanks with total capacity of 500,000 barrels. Train VI commenced operation in 2018. The pipeline connects the COSF to Tampa Rail.

• DBM oil system. The DBM oil system consists of (i) a crude oil gathering system, (ii) three central production facilities (“CPFs”), which include ten processing trains with total capacity of 71 MBbls/d, (iii) three storage tanks with total capacity of 30,000 barrels, (iv) a 14-mile crude oil pipeline, and (v) two regional oil treating facilities (“ROTFs”), which include four trains with total capacity of 120 MBbls/d, located in Reeves and Loving Counties, Texas. The ROTFs commenced operation in 2018. The pipeline transports crude oil from the DBM oil system and one third-party CPF into Plains All American Pipeline.

• APC water systems. The APC water systems consist of four produced-water disposal systems with total capacity of 505 MBbls/d, located in Reeves, Loving, Winkler and Ward Counties, Texas. One of the produced-water disposal systems commenced operation in 2017 and the other three commenced operation in 2018.

• A 20% interest in Saddlehorn Pipeline Company, LLC (“Saddlehorn”). Saddlehorn owns (i) a 600-mile crude oil and condensate pipeline (excluding pipeline capacity leased by Saddlehorn) that originates in Laramie County, Wyoming and terminates in Cushing, Oklahoma, and (ii) four storage tanks with total capacity of 300,000 barrels. The Saddlehorn interest was acquired in 2015 and is accounted for under the equity method. The pipeline commenced operation in 2016 and is operated by a third party.

• A 15% interest in Panola Pipeline Company, LLC (“Panola”). Panola owns a 248-mile natural gas liquids (“NGLs”) pipeline that originates in Panola County, Texas and terminates in Mont Belvieu, Texas. The Panola interest was acquired in 2015 and is accounted for under the equity method. The pipeline is operated by a third party.

6

ANADARKO MIDSTREAM ASSETS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.  DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (CONTINUED)

• A 50% interest in Mi Vida JV LLC (“Mi Vida JV”). Mi Vida JV owns a cryogenic gas processing plant (with capacity of 200 MMcf/d) located in Ward County, Texas. The interest in Mi Vida JV is accounted for under the equity method. The processing plant commenced operation in 2015 and is operated by a third party.

• A 50% interest in Ranch Westex JV LLC (“Ranch Westex JV”). Ranch Westex JV owns a processing plant consisting of a cryogenic train (with capacity of 100 MMcf/d) and a refrigeration train (with capacity of 25 MMcf/d), located in Ward County, Texas. In 2017, an additional interest in Ranch Westex JV was purchased from a third party for a net investment of $22.5 million, increasing the ownership from 33% to 50%. The interest in Ranch Westex JV is accounted for under the equity method and the processing plant is operated by a third party.

For purposes of these consolidated financial statements, “WGP” refers to Western Gas Equity Partners, LP and its subsidiaries, including WES as the context requires. “Anadarko” refers to Anadarko Petroleum Corporation and its subsidiaries, excluding WGP, and “affiliates” refers to subsidiaries of Anadarko, excluding WGP, but including equity interests in Saddlehorn, Panola, Mi Vida JV and Ranch Westex JV. WGP has no independent operations or material assets other than its partnership interests in WES. The consolidated financial results of WES are included in WGP’s consolidated financial statements due to WGP’s 100% ownership interest in WES’s general partner and WES’s general partner’s control of WES.

Basis of presentation. These consolidated financial statements and related notes were prepared in connection with WES’s proposed acquisition of AMA from Anadarko and for the purpose of complying with the U.S. Securities and Exchange Commission (“SEC”) rules and regulations, including but not limited to Regulation S-X, Article 3, General Instructions as to Financial Statements, and Staff Accounting Bulletin Topic 1-B, Allocation of Expenses and Related Disclosure in Financial Statements of Subsidiaries, Divisions or Lesser Business Components of Another Entity. These consolidated financial statements and related notes incorporate the activities and account balances of AMA from the historical cost-basis accounts of Anadarko with certain adjustments made to reasonably reflect the stand-alone costs of doing business and may not necessarily be indicative of the actual results of operations that would have occurred if AMA had been owned separately during the periods reported and are also not indicative of future results of operations. For example, in connection with the closing of the acquisition of AMA, existing agreements between Anadarko and WES will become effective for AMA. See Note 8. These agreements will materially affect how general and administrative expense is charged to AMA and how those expenses are reflected in these consolidated financial statements. In addition, the current federal and state income taxes included in these consolidated financial statements represent AMA’s allocable share of Anadarko’s current federal and state income tax, whereas WGP, and AMA upon closing of the acquisition, are generally not subject to federal or state income tax, other than Texas margin tax. Transactions between AMA and Anadarko have been identified in the consolidated financial statements as transactions between affiliates. Management’s adjustments, allocations and related estimates and assumptions are further described in this Note 1 and Note 3.

Certain information and note disclosures commonly included in annual financial statements have been condensed or omitted pursuant to the rules and regulations of the SEC. Accordingly, the accompanying consolidated financial statements and notes should be read in conjunction with the audited historical financial statements of AMA, as presented in Exhibit 99.1 of this Current Report on Form 8-K. Management believes that the disclosures made are adequate to make the information not misleading.

Use of estimates. In preparing financial statements in accordance with generally accepted accounting principles in the United States, management makes informed judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses in the financial statements and the notes thereto. Management evaluates its estimates and related assumptions regularly, using historical experience and other methods considered reasonable under the particular circumstances. Changes in facts and circumstances or additional information may result in revised estimates and actual results may differ from these estimates. Effects on the business, financial position and results of operations resulting from revisions to estimates are recognized when the facts that give rise to the revision become known.

The information included herein reflects all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the consolidated financial statements.

7

ANADARKO MIDSTREAM ASSETS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.  DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (CONTINUED)

Subsequent events. For purposes of these consolidated financial statements, subsequent events have been evaluated through December 17, 2018, the date the consolidated financial statements were available to be issued. See Note 8.

Recently adopted accounting standards. ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“Topic 606”) was adopted on January 1, 2018, using the modified retrospective method applied to contracts that were not completed as of January 1, 2018. The cumulative effect adjustment that was recognized in the opening balance of the AMA consolidated statement of net investment by Anadarko was anincrease of $0.6 million. The comparative historical financial information has not been adjusted and continues to be reported under Revenue Recognition (Topic 605) (“Topic 605”).

Effective January 1, 2018, the accounting policy for revenue recognition was changed as detailed below:

• Fee-based gathering / processing. Under Topic 605, fee revenues were recognized based on the rate in effect for the month of service, even when certain fees were charged on an upfront or limited-term basis. In addition, deficiency fees were charged and recognized only when the customer did not meet the specified delivery minimums for the completed performance period. Under Topic 606, (i) revenues continue to be recognized based on the rate in effect when the fee is either the same rate per unit over the contract term or when the fee escalates and the escalation factor approximates inflation, (ii) deficiency fees are estimated and recognized during the performance period as the services are performed for the customer’s delivered volumes, and (iii) timing differences between Service revenues – fee based recognized and amounts billed to customers are recognized as contract assets or contract liabilities, as appropriate, which results in a change in the timing of revenue and changes to net income as a result of the revenue contract’s consideration provisions. In addition, under Topic 606, revenue associated with upfront or limited-term fees is recognized over the expected period of customer benefit, which is generally the life of the related properties. These revenues also include revenues earned for marketing services performed on behalf of AMA’s customers, and the expense associated with these marketing activities is recognized in cost of product expense, resulting in no impact to operating income.

• Cost of service rate adjustments. Under Topic 605, revenue was recognized based on the amounts billed to customers each period as Service revenues – fee based. Under Topic 606, fixed minimum volume commitment demand fees and variable fees that are also billed on these minimum volumes are recognized as Service revenues – fee based on a consistent per-unit rate over the term of the contract. Annual adjustments are made to the cost of service rates charged to customers, and, as a result, a cumulative catch-up revenue adjustment related to the services already provided under the contract may be recorded in future periods, with revenues for the remaining term of the contract recognized on a consistent per-unit rate. Fees received on volumes in excess of the minimum volumes are recognized as Service revenues – fee based as service is provided to the customer based on the billing rate in effect for the performance period. This revenue recognition timing does not affect billings to customers, and differences between amounts billed and revenue recognized are recorded as contract assets or liabilities, as appropriate.

• Aid in construction. Under Topic 605, aid in construction reimbursements were reflected as a reduction to property, plant and equipment upon receipt (and a reduction to capital expenditures). Under Topic 606, reimbursement of capital costs received from customers is reflected as a contract liability (deferred revenue) upon receipt. The contract liability is amortized to Service revenues – fee based over the expected period of customer benefit, which is generally the life of the related properties.

• Percent-of-proceeds gathering / processing. Under Topic 605, cost of product expense was recognized when the product was purchased from a producer to whom services were provided, and revenue was recognized when the product was sold to Anadarko or a third party. Under Topic 606, in some instances, where all or a percentage of the proceeds from the sale must be returned to the producer, the net margin from the purchase and sale transactions is presented net within Service revenues – product based because AMA is acting as the producer’s agent in the product sale.

8

ANADARKO MIDSTREAM ASSETS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.  DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (CONTINUED)

• Noncash consideration - keep-whole and percent-of-product agreements. Under Topic 605, revenues were recognized only upon the sale of the related products. Under Topic 606, (i) Service revenues – product based is recognized for the products received as noncash consideration in exchange for the services provided, with the keep-whole noncash consideration value based on the net value of the NGLs over the replacement residue gas cost, and (ii) product sales revenue is recognized, along with cost of product expense related to the sale, when the product is sold to Anadarko or a third party. When the product is sold to Anadarko, Anadarko is acting as AMA’s agent in the product sale and AMA recognizes revenue, along with cost of product expense related to the sale, based on the Anadarko sales price to the third party, resulting in no impact to operating income.

• Wellhead purchase / sale incorporated into gathering / processing. Under Topic 605, the natural gas purchase cost was recognized as cost of product expense and any specified gathering or processing fees charged to the producer were recognized as revenues. Under Topic 606, the fees charged to the producer under this contract type are recognized as adjustments to the amount recognized in cost of product expense instead of revenues when such fees relate to services performed after control of the product transfers to AMA.

The following tables summarize the impact of adopting Topic 606 on the impacted line items within the consolidated statement of operations and the consolidated balance sheet. The differences between revenue as reported following Topic 606 and revenue as it would have been reported under Topic 605 are due to the changes described above.

	Nine Months Ended   September 30, 2018
thousands	As Reported		Without Adoption of Topic 606		Effect of Change Increase / (Decrease)
Revenues
Service revenues – fee based	$	191,245	$	186,082	$	5,163
Service revenues – product based	1,988		—		1,988
Product sales	6,335		77,198		(70,863		)
Expenses
Cost of product	12,955		78,850		(65,895		)
Income tax (benefit) expense	34,908		34,557		351
Net income	102,230		100,398		1,832

	September 30, 2018
thousands	As Reported		Without Adoption of Topic 606		Effect of Change Increase / (Decrease)
Assets
Other assets	$	6,203	$	3,200	$	3,003
Liabilities
Deferred income taxes	192,320		191,638		682
Net investment by Anadarko	1,372,383		1,370,062		2,321

9

ANADARKO MIDSTREAM ASSETS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.  DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (CONTINUED)

Revenue and cost of product. Upon adoption of the new revenue recognition standard on January 1, 2018 (discussed in Recently adopted accounting standards), AMA changed its accounting policy for revenue recognition as described below.

AMAprovides gathering, processing, treating, transportation and disposal services pursuant to a variety of contracts. Under these arrangements, AMA receives fees and/or retains a percentage of products or a percentage of the proceeds from the sale of the customer’s products. These revenues are included in Service revenues and Product sales in the consolidated statements of operations. Payment is generally received from the customer in the month following the service or delivery of the product. Contracts with customers generally have initial terms ranging from 5 to 10 years.

Service revenues – fee based is recognized for fee-based contracts in the month of service based on the volumes delivered by the customer. Producers’ wells or production facilities are connected to AMA’s gathering systems for gathering, processing, treating, transportation and disposal of natural gas, NGLs, condensate, crude oil and produced water, as applicable. Revenues are valued based on the rate in effect for the month of service when the fee is either the same rate per unit over the contract term or when the fee escalates and the escalation factor approximates inflation. Deficiency fees charged to customers that do not meet their minimum delivery requirements are recognized as services are performed based on an estimate of the fees that will be billed upon completion of the performance period. Because of its significant upfront capital investment, additional service fees may be charged to customers for only a portion of the contract term (i.e., for the first year of a contract or until reaching a volume threshold), and these fees are recognized as revenue over the expected period of customer benefit, which is generally the life of the related properties. AMA also recognizes revenue and cost of product expense from marketing services performed on behalf of its customers by Anadarko.

AMA also receives Service revenues – fee based from contracts that have minimum volume commitment demand fees and fees that require periodic rate redeterminations based upon the related facility cost of service. These fees include fixed and variable consideration that are recognized on a consistent per-unit rate over the term of the contract. Annual adjustments are made to the cost of service rates charged to customers, and a cumulative catch-up revenue adjustment related to services already provided to the minimum volumes under the contract may be recorded in future periods, with revenues for the remaining term of the contract recognized on a consistent per-unit rate.    

Service revenues – product based includes service revenues from percent-of-proceeds gathering and processing contracts that are recognized net of the cost of product for purchases from customers since it is acting as the agent in the product sale. Keep-whole and percent-of-product agreements result in Service revenues – product based being recognized when the natural gas and/or NGLs are received from the customer as noncash consideration for the services provided. Noncash consideration for these services is valued at the time the services are provided. Revenue from product sales is also recognized, along with the cost of product expense related to the sale, when the product received as noncash consideration is sold to either Anadarko or a third party. When the product is sold to Anadarko, Anadarko is acting as AMA’s agent in the product sale, with AMA recognizing revenue and related cost of product expense associated with these marketing activities based on the Anadarko sales price to the third party.

AMA also purchases natural gas volumes from producers at the wellhead or from a production facility, typically at an index price, and charges the producer fees associated with the downstream gathering and processing services. When the fees relate to services performed after control of the product has transferred to AMA, the fees are treated as a reduction of the purchase cost. Revenue from product sales is recognized, along with cost of product expense related to the sale, when the purchased product is sold to either Anadarko or a third party.

AMA receives aid in construction reimbursements for certain capital costs necessary to provide services to customers (i.e., connection costs, etc.) under certain service contracts. Aid in construction reimbursements are reflected as a contract liability upon receipt and amortized to Service revenues – fee based over the expected period of customer benefit, which is generally the life of the related properties.

10

ANADARKO MIDSTREAM ASSETS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

2.  REVENUE FROM CONTRACTS WITH CUSTOMERS

The following table summarizes revenue from contracts with customers:

thousands	Nine Months Ended   September 30, 2018
Revenue from customers
Service revenues – fee based	$	191,245
Service revenues – product based	1,988
Product sales	6,335
Total revenue from customers	199,568
Revenue from other than customers
Other	496
Total revenues and other	$	200,064

Contract balances. Receivables from customers, which are included in Accounts receivable, net on the consolidated balance sheets were $0.6 million and $0.5 million as of September 30, 2018, and December 31, 2017, respectively.

Contract assets, which are included in Other assets on the consolidated balance sheets, primarily relate to accrued deficiency fees AMA expects to charge customers once the related performance periods are completed. The following table summarizes the current period activity related to contract assets from contracts with customers:

thousands
Balance at December 31, 2017	$	—
Cumulative effect of adopting Topic 606	821
Additional estimated revenues recognized	2,182
Balance at September 30, 2018	$	3,003

Transaction price allocated to remaining performance obligations. Revenues expected to be recognized from certainperformance obligations that are unsatisfied (or partially unsatisfied) as of September 30, 2018, are reflected in the following table. AMA applies the optional exemptions in Topic 606 and does not disclose consideration for remaining performance obligations with an original expected duration of one year or less or for variable consideration related to unsatisfied (or partially unsatisfied) performance obligations. Therefore, the following table represents only a small portion of expected future revenues from existing contracts as most future revenues from customers are dependent on future variable customer volumes and in some cases variable commodity prices for those volumes.

thousands
Remainder of 2018	$	30,593
2019	204,419
2020	293,058
2021	360,929
2022	416,866
Thereafter	3,107,367
Total	$	4,413,232

11

ANADARKO MIDSTREAM ASSETS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

3.  TRANSACTIONS WITH AFFILIATES

Affiliate transactions.Revenues from affiliates include amounts earned by AMA from services provided to Anadarko as well as from the sale of natural gas, condensate and NGLs to Anadarko. Anadarko sells such natural gas, condensate and NGLs as an agent on behalf of either AMA or AMA’s customers. When such sales are on AMA’s customers’ behalf, AMA recognizes associated service revenues and cost of product expense. When such sales are on AMA’s behalf, AMA recognizes product sales revenues based on the Anadarko sales price to the third party and cost of product expense associated with these sales activities.

In addition, natural gas, condensate and NGLs is purchased from an affiliate of Anadarko pursuant to gas purchase agreements. Operation and maintenance expense includes amounts accrued for or paid to affiliates for the operation of AMA, whether in providing services to affiliates or to third parties, including field labor, measurement and analysis, and other disbursements. Affiliate expenses do not bear a direct relationship to affiliate revenues, and third-party expenses do not bear a direct relationship to third-party revenues.

Cash management.Anadarko operates a cash management system whereby excess cash from most of its subsidiaries’ separate bank accounts is generally swept to centralized accounts. Sales and purchases related to third-party transactions of AMA were received or paid in cash by Anadarko within its centralized cash management system and were ultimately settled through an adjustment to net investment by Anadarko. Anadarko did not charge interest on intercompany balances for all periods presented because cash settlement of the intercompany balances was never the intent. The outstanding affiliate balances were entirely settled through an adjustment to net investment by Anadarko in connection with the acquisition of AMA.

APCWH Note Payable. In June 2017, in connection with funding the construction of the APC water systems, the Anadarko subsidiary that owns the APC water systems entered into an eight-year note payable agreement with Anadarko (the “APCWH Note Payable”). This note payable has a maximum borrowing limit of $500 million, and accrues interest, which is payable upon maturity, at the applicable mid-term federal rate based on a quarterly compounding basis as determined by the U.S. Secretary of the Treasury.

As of September 30, 2018, and December 31, 2017, the consolidated balance sheets included a long-term APCWH Note Payable of $368.5 million and $99.0 million, respectively, which approximates fair value. As of September 30, 2018, the interest rate on the outstanding borrowings was 2.83%. The interest expense related to the APCWH Note Payable of $4.0 million for the nine months ended September 30, 2018, was offset by capitalized interest in the consolidated statements of operations. At September 30, 2018, AMA was in compliance with all covenants under this agreement.

Gathering and processing agreements. AMA has significant gathering and processing arrangements with affiliates of Anadarko. AMA’s natural gas processing throughput (excluding equity investment throughput) attributable to production owned or controlled by Anadarko was 81% and 75% for the nine months ended September 30, 2018 and 2017, respectively. AMA’s crude oil, NGLs and produced water gathering, treating, transportation and disposal throughput (excluding equity investment throughput) attributable to production owned or controlled by Anadarko was 92% and 91% for the nine months ended September 30, 2018 and 2017, respectively.

Commodity purchase and sale agreements. AMA sells a significant amount of its natural gas, condensate and NGLs to Anadarko Energy Services Company (“AESC”), Anadarko’s marketing affiliate that acts as an agent in the sale to a third party. In addition, AMA purchases natural gas, condensate and NGLs from AESC pursuant to purchase agreements. AMA’s purchase and sale agreements with AESC are generally one-year contracts, subject to annual renewal.

12

ANADARKO MIDSTREAM ASSETS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

3.  TRANSACTIONS WITH AFFILIATES (CONTINUED)

Allocation of costs. For the purpose of these consolidated financial statements, a portion of Anadarko’s general and administrative expenses has been allocated and included in General and administrative expenses in the consolidated statements of operations in the form of a management services fee. General, administrative and management costs were allocated based on AMA’s proportionate share of Anadarko’s revenues and expenses or other contractual arrangements. Management believes these allocation methodologies are reasonable. The management services fee represents allocable costs, including compensation, benefits, pension and postretirement costs, associated with the provision of services for or on behalf of AMA by Anadarko related to the following: (i) various business services, including but not limited to, payroll, accounts payable and facilities management; and (ii) various corporate services, including, but not limited to, legal, accounting, treasury, information technology and human resources.

Net contributions from Anadarko. For the nine months ended September 30, 2018, AMA recorded Net contributions from Anadarko of $174.3 million on the consolidated statement of net investment by Anadarko. This amount represents contribution of net intercompany accounts receivables and payables between AMA and Anadarko.

Affiliate asset contribution. The following table summarizes Anadarko’s contribution of other assets to AMA:

	Nine Months Ended September 30,
thousands	2018		2017
Net carrying value	$	58,834	$	—
Partners’ capital adjustment	$	58,834	$	—

4.  PROPERTY, PLANT AND EQUIPMENT

A summary of the historical cost of property, plant and equipment is as follows:

thousands	Estimated Useful Life	September 30, 2018		December 31, 2017
Land	n/a	$	646	$	646
Gathering systems and processing complexes	3 to 49 years	1,615,415		726,233
Assets under construction	n/a	292,286		375,218
Other	3 to 40 years	1,177		875
Total property, plant and equipment		1,909,524		1,102,972
Less accumulated depreciation		191,052		79,338
Net property, plant and equipment		$	1,718,472	$	1,023,634

The cost of property classified as “Assets under construction” is excluded from capitalized costs being depreciated. These amounts represent property that is not yet suitable to be placed into productive service as of the respective balance sheet date.

Impairments.Impairment expense of $1.7 million was recognized during both the nine months ended September 30, 2018, and year ended December 31, 2017, primarily due to project cancellations at the DBM oil system.

13

ANADARKO MIDSTREAM ASSETS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

5.  EQUITY INVESTMENTS

The following table presents the activity in equity investments for the nine months ended September 30, 2018:

thousands	Saddlehorn			Panola			Mi Vida JV			Ranch Westex JV			Total
Balance at December 31, 2017	$	104,055		$	23,625		$	63,159		$	53,300		$	244,139
Investment earnings (loss), net of amortization	11,016			1,621			10,621			8,043			31,301
Contributions	(893		)	—						—			(893		)
Distributions	(11,582		)	(1,621		)	(9,271		)	(9,533		)	(32,007		)
Distributions in excess of cumulative earnings (1)	(830		)	(655		)	(91		)	(145		)	(1,721		)
Balance at September 30, 2018	$	101,766		$	22,970		$	64,418		$	51,665		$	240,819

⁽¹⁾  Distributions in excess of cumulative earnings, classified as investing cash flows in the consolidated statements of cash flows, are calculated on an individual investment basis.

6.  ASSET RETIREMENT OBLIGATIONS

The following table provides a summary of changes in asset retirement obligations:

thousands	September 30, 2018		December 31, 2017
Carrying amount of asset retirement obligations at beginning of period	$	8,874	$	7,675
Liabilities incurred	12,266		1,779
Accretion expense	417		384
Revisions in estimated liabilities	1,542		(964		)
Carrying amount of asset retirement obligations at end of period	$	23,099	$	8,874

The liabilities incurred for the nine months ended September 30, 2018, represented additions in asset retirement obligations primarily related to (i) the three produced-water disposal systems that commenced operation in 2018 at the APC water systems and (ii) the ROTFs that commenced operation in 2018 at the DMB oil system.

7.  COMMITMENTS AND CONTINGENCIES

Litigation and legal proceedings. From time to time, AMA is involved in legal, tax, regulatory and other proceedings in various forums regarding performance, contracts and other matters that arise in the ordinary course of business. Management is not aware of any such proceedings for which a final disposition could have a material adverse effect on AMA’s financial condition, results of operations or cash flows.

Other commitments. AMA has short-term payment obligations, or commitments, related to its capital spending, as well as those of its unconsolidated affiliates, the majority of which is expected to be paid in the next twelve months. These commitments relate primarily to construction and expansion projects at the DBM and DJ Basin oil systems and the APC water systems.

Lease commitments. Anadarko, on behalf of AMA, has entered into lease arrangements for shared field offices and equipment supporting AMA’s operations, for which Anadarko charges AMA lease expense. The leases for shared field offices extend through 2019. Lease expense charged to AMA associated with these lease arrangements was $1.7 million and $0.4 million for the nine months ended September 30, 2018 and 2017, respectively.

14

ANADARKO MIDSTREAM ASSETS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

8.  SUBSEQUENT EVENTS

Agreements with Anadarko. Beginning on the closing date of the Transactions, AMA is subject to the terms and conditions of new and existing agreements between WES and Anadarko including the following:

• the Merger Agreement pursuant to which Anadarko agreed to indemnify WES against certain losses resulting from breaches of Anadarko’s representations, warranties, covenants or agreements and for certain other matters;

• an omnibus agreement that provides for reimbursement for expenses paid by Anadarko on behalf of WES and compensation to Anadarko for providing WES with certain general and administrative services and insurance coverage; and

• a tax sharing agreement pursuant to which WES will reimburse Anadarko for WES’s share of Texas margin tax borne by Anadarko as a result of the financial results of AMA being included in a combined or consolidated tax return filed by Anadarko with respect to activity subsequent to the Transactions closing.

Change in tax status. WES is generally not subject to federal or state income tax, other than Texas margin tax. As such, the income attributable to the interest in AMA upon WES’s consolidation is not subject to federal income tax, thereby eliminating the applicability of entity-level federal income taxation.

Affiliated balances subsequent to acquisition. Prior to the Transactions closing, cash transactions attributable to AMA were received or paid in cash by Anadarko within its centralized cash management system. In connection with the closing of the Transactions associated with the AMA acquisition, net affiliate receivable and payable balances with Anadarko other than the APCWH Note Payable will be settled through an adjustment to net investment by Anadarko. Subsequent to the Transactions closing, WES will cash-settle transactions directly with third parties and Anadarko, including transactions attributable to AMA, and no interest is charged or earned on affiliate balances other than balances associated with loan agreements.

Pursuant to the Merger Agreement, upon closing of the Transactions, WES will assume and then immediately repay the APCWH Note Payable, which had an outstanding balance of $368.5 million at September 30, 2018. Borrowings under this note have been used to construct the APC water systems.

15

EX-99.3

EXHIBIT 99.3

WESTERN GAS EQUITY PARTNERS, LP

INDEX TO UNAUDITED PRO FORMA CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

	PAGE
Introduction	2
Unaudited Pro Forma Condensed Consolidated Statements of Operations for the years ended December 31, 2017, 2016 and 2015	5
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the nine months ended September 30, 2018	8
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2018	9
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements	10

INTRODUCTION

These unaudited pro forma condensed consolidated financial statements present the impact to the results of operations and financial condition of Western Gas Equity Partners, LP attributable to (i) the acquisition of the Anadarko Midstream Assets (“AMA”) and (ii) the Merger (as defined below).

“WGP” refers to Western Gas Equity Partners, LP in its individual capacity or to Western Gas Equity Partners, LP and its subsidiaries, including Western Gas Holdings, LLC and Western Gas Partners, LP (“WES”), as the context requires. “WES GP” refers to Western Gas Holdings, LLC, individually as the general partner of WES, and excludes WES. WGP’s general partner, Western Gas Equity Holdings, LLC (“WGP GP”), is a wholly owned subsidiary of Anadarko Petroleum Corporation. “Anadarko” refers to Anadarko Petroleum Corporation and its subsidiaries, excluding WGP and WGP GP, and “affiliates” refers to subsidiaries of Anadarko, excluding WGP, but including equity interests in Fort Union Gas Gathering, LLC, White Cliffs Pipeline, LLC, Rendezvous Gas Services, LLC, Enterprise EF78 LLC, Texas Express Pipeline LLC, Texas Express Gathering LLC, Front Range Pipeline LLC, Whitethorn Pipeline Company LLC and Cactus II Pipeline LLC.

Subject to the terms and conditions of the Contribution Agreement and Agreement and Plan of Merger, dated as of November 7, 2018 (the “Merger Agreement”) and in accordance with Delaware law, the Merger Agreement provides for the merger of Clarity Merger Sub, LLC, a wholly owned subsidiary of WGP, with and into WES (the “Merger”). WES will survive the Merger and remain a subsidiary of WGP, but WES common units will no longer be publicly traded.

The Merger Agreement also provides that Anadarko, WGP and WES will, and will cause their respective affiliates to, cause the following transactions (collectively, the “pre-Merger transactions”), among others, to occur immediately prior to the effective time in the order as follows: (1) Anadarko E&P Onshore LLC and WGR Asset Holding Company LLC (“WGRAH”) (the “Contributing Parties”) will contribute all of their interests in each of Anadarko Wattenberg Oil Complex LLC, Anadarko DJ Oil Pipeline LLC, Anadarko DJ Gas Processing LLC, Wamsutter Pipeline LLC, DBM Oil Services, LLC, Anadarko Pecos Midstream LLC, Anadarko Mi Vida LLC and APC Water Holdings 1, LLC (“APCWH”) to WGR Operating, LP, Kerr-McGee Gathering LLC and Delaware Basin Midstream, LLC in exchange for aggregate consideration of $1.814 billion in cash, minus the outstanding amount payable pursuant to an intercompany note (the “APCWH Note Payable”) to be assumed in connection with the transaction, and 45,760,201 WES common units; (2) APC Midstream Holdings, LLC will sell to WES its interests in Saddlehorn Pipeline Company, LLC and Panola Pipeline Company, LLC in exchange for aggregate consideration of $193.9 million in cash; (3) WES will contribute cash in an amount equal to the outstanding balance of the APCWH Note Payable immediately prior to the effective time to APCWH, and APCWH will pay such cash to Anadarko in satisfaction of the APCWH Note Payable; (4) WES Class C units will convert into WES common units on a one-for-one basis; and (5) WES and WES GP will cause the conversion of the incentive distribution rights and the 2,583,068 general partner units in WES held by WES GP into a non-economic general partner interest in WES and 105,624,704 WES common units. The 45,760,201 WES common units to be issued to the Contributing Parties, less 6,375,284 WES common units to be retained by WGRAH, will be converted into the right to receive an aggregate of 55,360,984 WGP common units upon the consummation of the Merger.

In connection with the cash consideration referred to above, WES has obtained, subject to customary closing conditions and negotiation of definitive documentation, committed debt financing for $2.0 billion from Barclays Bank PLC.

WGP has no independent operations or material assets other than its partnership interests in WES. Historically, the consolidated financial results of WES are included in WGP’s consolidated financial statements due to WGP’s 100% ownership interest in WES GP and WES GP’s control of WES. The term “WES assets” includes both the assets indirectly owned and the interests accounted for under the equity method by WGP through its partnership interests in WES as of September 30, 2018. WES’s acquisition of AMA from Anadarko is considered a transfer of net assets between entities under common control and recorded at Anadarko’s historic carrying value. After an acquisition of assets from Anadarko, WES and WGP (by virtue of its consolidation of WES) are required to recast their financial statements to include the activities of such assets from the date of common control.

The unaudited pro forma condensed consolidated statements of operations for the years ended December 31, 2017, 2016 and 2015 are based upon the audited historical consolidated financial statements of WGP, as presented in WGP’s 2017 Form 10-K, and the audited historical consolidated financial statements of AMA, as presented in Exhibit 99.1 of this Current Report on Form 8-K. The unaudited pro forma condensed consolidated statements of operations for the years ended December 31, 2017, 2016 and 2015, have been prepared as if the acquisition of AMA occurred on January 1, 2015. In addition, the unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2017, has been prepared as if the financing related to the acquisition of AMA and the Merger occurred on January 1, 2017.

2

INTRODUCTION (CONTINUED)

The unaudited pro forma condensed consolidated statement of operations for the nine months ended September 30, 2018, and the unaudited pro forma condensed consolidated balance sheet as of September 30, 2018, are based upon the unaudited historical consolidated financial statements of WGP, as presented in WGP’s third quarter 2018 Form 10-Q, and the unaudited historical consolidated financial statements of AMA, as presented in Exhibit 99.2 of this Current Report on Form 8-K. The unaudited pro forma condensed consolidated statement of operations for the nine months ended September 30, 2018, has been prepared as if the acquisition of AMA (including the related acquisition financing) and the Merger occurred on January 1, 2017. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2018, has been prepared as if the acquisition of AMA and the Merger occurred on September 30, 2018.

The unaudited pro forma condensed consolidated financial statements for all periods presented have been prepared based on the assumption that WGP will continue to be treated as a partnership for U.S. federal and state income tax purposes and therefore will not be subject to U.S. federal income taxes and state income taxes, except for the Texas margin tax. The unaudited pro forma condensed consolidated financial statements have also been prepared based on certain acquisition and Merger pro forma adjustments as described in Note 2—Pro Forma Adjustments.

The historical financial information of AMA and WGP included in these unaudited pro forma condensed consolidated financial statements (and the notes thereto) is qualified in its entirety by reference to the audited historical consolidated financial statements of AMA as set forth in Exhibit 99.1 of this Current Report on Form 8-K, the unaudited historical consolidated financial statements of AMA as set forth in Exhibit 99.2 of this Current Report on Form 8-K, WGP’s audited historical consolidated financial statements as set forth in its 2017 Form 10-K, as filed with the U.S. Securities and Exchange Commission (“SEC”) on February 16, 2018, WGP’s unaudited historical financial statements as set forth in its third quarter 2018 Form 10-Q, as filed with the SEC on October 31, 2018, and the related notes contained in those reports. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with those historical consolidated financial statements and the related notes thereto.

The pro forma adjustments reflected in the unaudited pro forma condensed consolidated financial statements are based upon currently available information and certain assumptions and estimates. The actual effects of these transactions will differ from these pro forma adjustments. However, WGP’s management believes that the applied estimates and assumptions provide a reasonable basis for the presentation of the significant effects of certain transactions that are expected to have a continuing impact on WGP in the case of the unaudited pro forma condensed consolidated statements of operations. In addition, WGP’s management believes that the pro forma adjustments are factually supportable and appropriately represent the expected impact of items that are directly attributable to the acquisition of AMA by WES and the Merger.

The pro forma adjustments included in the unaudited pro forma condensed consolidated financial statements reflect the acquisition of AMA and the Merger, including the following significant transactions:

• Anadarko’s transfer of AMA to WES;

• WES’s issuance of 45,760,201 WES common units to Anadarko, valued at $2.008 billion based on the 30-day volume-weighted-average price as of November 6, 2018, to fund the equity consideration for the acquisition of AMA;

• WES’s underwritten commitment for a $2.0 billion senior unsecured term loan facility (the “Term loan facility”), to fund the cash consideration for the acquisition of AMA and to repay amounts outstanding on the APCWH Note Payable. The Term loan facility is classified as Short-term debt in the unaudited pro forma condensed consolidated balance sheet as it has a maturity of less than one year and WES will be required to refinance borrowings under this facility prior to its expiration;

• WGP’s issuance to public WES unitholders of 1.525 WGP common units for each WES common unit, as a result of the Merger; and

• the anticipated issuance of $2.0 billion senior notes (the “new WES Senior Notes”) to repay the amounts borrowed under the Term loan facility.

3

INTRODUCTION (CONTINUED)

From and after the closing of the acquisition of AMA and the Merger, AMA is subject to the terms and conditions of new and existing agreements between WES and Anadarko including the following:

• the Merger Agreement, pursuant to which Anadarko agreed to indemnify WES against certain losses resulting from breaches of Anadarko’s representations, warranties, covenants or agreements and for certain other matters;

• an omnibus agreement that provides for reimbursement for expenses paid by Anadarko on behalf of WES and compensation to Anadarko for providing WES with certain general and administrative services and insurance coverage; and

• a tax sharing agreement pursuant to which WES will reimburse Anadarko for WES’s share of Texas margin tax borne by Anadarko as a result of the financial results of AMA being included in a combined or consolidated tax return filed by Anadarko with respect to activity subsequent to the acquisition of AMA and the Merger closing.

The unaudited pro forma condensed consolidated financial statements are not necessarily indicative of the results that would have occurred if the acquisition of AMA and the Merger had occurred on the dates indicated, nor are they indicative of the future operating results of WGP.

4

WESTERN GAS EQUITY PARTNERS, LP

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2017

(UNAUDITED)

thousands except per-unit amounts	WGP Historical			AMA Historical			Acquisition Adjustments				Merger Adjustments				WGP Pro Forma
Revenues and other – affiliates
Service revenues – fee based	$	656,795		$	123,897		$	(11,387	)	(a)	$	—			$	769,305
Product sales	692,447			61,486			(208		)	(a)	—				753,725
Other	16,076			—			—				—				16,076
Total revenues and other – affiliates	1,365,318			185,383			(11,595		)		—				1,539,106
Revenues and other – third parties
Service revenues – fee based	581,154			7,416			—				—				588,570
Product sales	297,486			—			—				—				297,486
Other	4,398			55			—				—				4,453
Total revenues and other – third parties	883,038			7,471			—				—				890,509
Total revenues and other	2,248,356			192,854			(11,595		)		—				2,429,615
Equity income, net – affiliates	85,194			30,186			(239		)	(b)	—				115,141
Operating expenses
Cost of product	908,693			56,694			(11,595		)	(a)	—				953,792
Operation and maintenance	315,994			29,623			—				—				345,617
General and administrative	50,668			3,281			—				—				53,949
Property and other taxes	46,818			6,328			—				—				53,146
Depreciation and amortization	290,874			27,501			396			(b)	—				318,771
Impairments	178,374			1,678			—				—				180,052
Total operating expenses	1,791,421			125,105			(11,199		)		—				1,905,327
Gain (loss) on divestiture and other, net	132,388			—			—				—				132,388
Proceeds from business interruption insurance claims	29,882			—			—				—				29,882
Operating income (loss)	704,399			97,935			(635		)		—				801,699
Interest income – affiliates	16,900			—			—				—				16,900
Interest expense	(144,615		)	—			2,094			(b)	—				(265,546		)
							(123,178		)	(d)
							153			(i)
Other income (expense), net	1,384			—			—				—				1,384
Income (loss) before income taxes	578,068			97,935			(121,566		)		—				554,437
Income tax (benefit) expense	4,866			(62,143		)	62,391			(c)	—				5,114
Net income (loss)	573,202			160,078			(183,957		)		—				549,323
Net income (loss) attributable to noncontrolling interests	196,595			—			—				(174,988		)	(k)	21,607
Net income (loss) attributable to Western Gas Equity Partners, LP	$	376,607		$	160,078		$	(183,957	)		$	174,988			$	527,716
Limited partners’ interest in net income (loss):
Net income (loss) per common unit – basic and diluted	$	1.72													$	1.17
Weighted-average common units outstanding – basic and diluted	218,931										231,106			(m)	450,037

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

5

WESTERN GAS EQUITY PARTNERS, LP

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2016

(UNAUDITED)

thousands except per-unit amounts	WGP Historical			AMA Historical		Acquisition Adjustments				WGP Pro Forma
Revenues and other – affiliates
Service revenues – fee based	$	750,087		$	104,960	$	(1,209	)	(a)	$	853,838
Product sales	478,145			26,935		—				505,080
Total revenues and other – affiliates	1,228,232			131,895		(1,209		)		1,358,918
Revenues and other – third parties
Service revenues – fee based	477,762			6,331		—				484,093
Product sales	94,168			—		—				94,168
Other	4,108			44		—				4,152
Total revenues and other – third parties	576,038			6,375		—				582,413
Total revenues and other	1,804,270			138,270		(1,209		)		1,941,331
Equity income, net – affiliates	78,717			23,126		(150		)	(b)	101,693
Operating expenses
Cost of product	494,194			24,386		(1,209		)	(a)	517,371
Operation and maintenance	308,010			24,395		—				332,405
General and administrative	49,248			3,112		—				52,360
Property and other taxes	40,161			5,493		—				45,654
Depreciation and amortization	272,933			22,783		243			(b)	295,959
Impairments	15,535			2,287		—				17,822
Total operating expenses	1,180,081			82,456		(966		)		1,261,571
Gain (loss) on divestiture and other, net	(14,641		)	—		—				(14,641		)
Proceeds from business interruption insurance claims	16,270			—		—				16,270
Operating income (loss)	704,535			78,940		(393		)		783,082
Interest income – affiliates	16,900			—		—				16,900
Interest expense	(116,628		)	—		7,356			(b)	(109,272		)
Other income (expense), net	545			—		—				545
Income (loss) before income taxes	605,352			78,940		6,963				691,255
Income tax (benefit) expense	8,372			22,149		(27,944		)	(c)	2,577
Net income (loss)	596,980			56,791		34,907				688,678
Net income (loss) attributable to noncontrolling interests	251,208			—		58,481			(j)	309,689
Net income (loss) attributable to Western Gas Equity Partners, LP	$	345,772		$	56,791	$	(23,574	)		$	378,989
Limited partners’ interest in net income (loss):
Net income (loss) attributable to Western Gas Equity Partners, LP	$	345,772								$	378,989
Pre-acquisition net (income) loss allocated to Anadarko	(11,326		)							(11,326		)
Limited partners’ interest in net income (loss)	334,446									367,663
Net income (loss) per common unit – basic and diluted	$	1.53								$	1.68
Weighted-average common units outstanding – basic and diluted	218,922									218,922

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

6

WESTERN GAS EQUITY PARTNERS, LP

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2015

(UNAUDITED)

thousands except per-unit amounts	WGP Historical			AMA Historical		Acquisition Adjustments				WGP Pro Forma
Revenues and other – affiliates
Service revenues – fee based	$	772,361		$	67,287	$	(1,795	)	(a)	$	837,853
Product sales	447,106			28,259		—				475,365
Other	1,172			—		—				1,172
Total revenues and other – affiliates	1,220,639			95,546		(1,795		)		1,314,390
Revenues and other – third parties
Service revenues – fee based	356,477			7,350		—				363,827
Product sales	170,843			—		—				170,843
Other	4,113			60		—				4,173
Total revenues and other – third parties	531,433			7,410		—				538,843
Total revenues and other	1,752,072			102,956		(1,795		)		1,853,233
Equity income, net – affiliates	71,251			16,126		(70		)	(b)	87,307
Operating expenses
Cost of product	528,369			24,712		(1,795		)	(a)	551,286
Operation and maintenance	331,972			19,495		—				351,467
General and administrative	44,428			2,951		—				47,379
Property and other taxes	33,327			4,717		—				38,044
Depreciation and amortization	272,611			17,757		48			(b)	290,416
Impairments	515,458			1,410		—				516,868
Total operating expenses	1,726,165			71,042		(1,747		)		1,795,460
Gain (loss) on divestiture and other, net	57,024			—		—				57,024
Operating income (loss)	154,182			48,040		(118		)		202,104
Interest income – affiliates	16,900			—		—				16,900
Interest expense	(113,874		)	—		7,893			(b)	(105,981		)
Other income (expense), net	(578		)	—		—				(578		)
Income (loss) before income taxes	56,630			48,040		7,775				112,445
Income tax (benefit) expense	45,532			15,205		(57,864		)	(c)	2,873
Net income (loss)	11,098			32,835		65,639				109,572
Net income (loss) attributable to noncontrolling interests	(154,409		)	—		111,892			(j)	(42,517		)
Net income (loss) attributable to Western Gas Equity Partners, LP	$	165,507		$	32,835	$	(46,253	)		$	152,089
Limited partners’ interest in net income (loss):
Net income (loss) attributable to Western Gas Equity Partners, LP	$	165,507								$	152,089
Pre-acquisition net (income) loss allocated to Anadarko	(79,386		)							(79,386		)
Limited partners’ interest in net income (loss)	86,121									72,703
Net income (loss) per common unit – basic and diluted	$	0.39								$	0.33
Weighted-average common units outstanding – basic and diluted	218,913									218,913

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

7

WESTERN GAS EQUITY PARTNERS, LP

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 2018

(UNAUDITED)

thousands except per-unit amounts	WGP Historical			AMA Historical		Acquisition Adjustments				Merger Adjustments				WGP Pro Forma
Revenues and other – affiliates
Service revenues – fee based	$	582,579		$	177,275	$	(24,540	)	(a)	$	—			$	735,314
Service revenues – product based	1,228			822		—				—				2,050
Product sales	182,372			6,250		(132		)	(a)	—				188,490
Total revenues and other – affiliates	766,179			184,347		(24,672		)		—				925,854
Revenues and other – third parties
Service revenues – fee based	563,520			13,970		—				—				577,490
Service revenues – product based	66,205			1,166		—				—				67,371
Product sales	35,366			85		—				—				35,451
Other	1,213			496		—				—				1,709
Total revenues and other – third parties	666,304			15,717		—				—				682,021
Total revenues and other	1,432,483			200,064		(24,672		)		—				1,607,875
Equity income, net – affiliates	102,752			31,301		(179		)	(b)	—				133,874
Operating expenses
Cost of product	303,518			12,955		(24,623		)	(a)	—				291,850
Operation and maintenance	300,266			38,363		—				—				338,629
General and administrative	44,853			2,595		—				(629		)	(l)	46,819
Property and other taxes	35,090			6,406		—				—				41,496
Depreciation and amortization	238,187			32,240		(50		)	(a)	—				270,756
						379			(b)
Impairments	152,708			1,668		908			(b)	—				155,284
Total operating expenses	1,074,622			94,227		(23,386		)		(629		)		1,144,834
Gain (loss) on divestiture and other, net	351			—		—				—				351
Operating income (loss)	460,964			137,138		(1,465		)		629				597,266
Interest income – affiliates	12,675			—		—				—				12,675
Interest expense	(133,359		)	—		4,229			(b)	—				(214,890		)
						(89,782		)	(d)
						4,022			(i)
Other income (expense), net	2,749			—		—				—				2,749
Income (loss) before income taxes	343,029			137,138		(82,996		)		629				397,800
Income tax (benefit) expense	3,301			34,908		(33,451		)	(c)	—				4,758
Net income (loss)	339,728			102,230		(49,545		)		629				393,042
Net income (loss) attributable to noncontrolling interests	63,669			—		—				(49,082		)	(k)	14,587
Net income (loss) attributable to Western Gas Equity Partners, LP	$	276,059		$	102,230	$	(49,545	)		$	49,711			$	378,455
Limited partners’ interest in net income (loss):
Net income (loss) per common unit – basic and diluted	$	1.26												$	0.84
Weighted-average common units outstanding – basic and diluted	218,935									232,450			(m)	451,385

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

8

WESTERN GAS EQUITY PARTNERS, LP

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

AS OF SEPTEMBER 30, 2018

(UNAUDITED)

thousands	WGP Historical		AMA Historical		Acquisition Adjustments				Merger Adjustments				WGP Pro Forma
ASSETS
Current assets
Cash and cash equivalents	$	132,877	$	—	$	(2,007,500	)	(e) (h)	$	—			$	109,827
					1,984,450			(g)
Accounts receivable, net	224,887		641		—				—				225,528
Other current assets	26,119		220		—				—				26,339
Total current assets	383,883		861		(23,050		)		—				361,694
Note receivable – Anadarko	260,000		—		—				—				260,000
Property, plant and equipment
Cost	8,912,755		1,909,524		(7,910		)	(a)	—				10,829,801
					15,432			(b)
Less accumulated depreciation	2,494,121		191,052		(50		)	(a)	—				2,686,238
					1,115			(b)
Net property, plant and equipment	6,418,634		1,718,472		6,457				—				8,143,563
Goodwill	416,160		29,641		—				—				445,801
Other intangible assets	753,947		95,240		—				—				849,187
Equity investments	786,876		240,819		6,822			(b)	—				1,034,517
Other assets	14,057		6,203		—				—				20,260
Total assets	$	9,033,557	$	2,091,236	$	(9,771	)		$	—			$	11,115,022
LIABILITIES, EQUITY AND PARTNERS’ CAPITAL
Current liabilities
Accounts and imbalance payables	$	360,651	$	128,506	$	—			$	—			$	489,157
Short-term debt	28,000		—		2,000,000			(f)	—				28,000
					(2,000,000		)	(f)
Accrued ad valorem taxes	37,123		6,215		—				—				43,338
Accrued liabilities	114,504		257		(158		)	(a)	23,021			(l)	137,624
Total current liabilities	540,278		134,978		(158		)		23,021				698,119
Long-term liabilities
Long-term debt	4,566,464		368,456		(368,456		)	(h)	—				6,550,914
					1,984,450			(g)
Deferred income taxes	10,285		192,320		(189,138		)	(c)	—				13,467
Asset retirement obligations	157,933		23,099		—				—				181,032
Other liabilities	141,957		—		(7,702		)	(a)	—				134,255
Total long-term liabilities	4,876,639		583,875		1,419,154				—				6,879,668
Total liabilities	5,416,917		718,853		1,418,996				23,021				7,577,787
Equity and partners’ capital
Common units	981,408		—		(635,116		)	(e)	(23,021		)	(l)	323,271
Net investment by Anadarko	—		1,372,383		189,138			(c)	2,623,300			(k)	3,202,032
					21,139			(b)
					(1,003,928		)	(e)
Total partners’ capital	981,408		1,372,383		(1,428,767		)		2,600,279				3,525,303
Noncontrolling interests	2,635,232		—		—				(2,623,300		)	(k)	11,932
Total equity and partners’ capital	3,616,640		1,372,383		(1,428,767		)		(23,021		)		3,537,235
Total liabilities, equity and partners’ capital	$	9,033,557	$	2,091,236	$	(9,771	)		$	—			$	11,115,022

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

9

WESTERN GAS EQUITY PARTNERS, LP

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

1.  BASIS OF PRESENTATION

The unaudited pro forma condensed consolidated financial statements are based on the historical consolidated financial statements of WGP and the historical consolidated financial statements of AMA. As described in the Introduction, these unaudited pro forma condensed consolidated financial statements present the impact of the acquisition of AMA (including the related acquisition financing) and the Merger on WGP’s results of operations and financial condition. The contribution and sale, as applicable, of AMA to WES is recorded at Anadarko’s historical cost as this transaction is considered a reorganization of entities under common control.

2.  PRO FORMA ADJUSTMENTS

The following pro forma adjustments have been prepared as if the acquisition of AMA occurred (i) on January 1, 2015, in the case of the unaudited pro forma condensed consolidated statements of operations for the years ended December 31, 2017, 2016 and 2015, (ii) on January 1, 2017, in the case of the unaudited pro forma condensed consolidated statement of operations for the nine months ended September 30, 2018, and (iii) on September 30, 2018, in the case of the unaudited pro forma condensed consolidated balance sheet:

(a) the elimination of historical revenue, cost of product, depreciation, net property plant and equipment, accrued liabilities and other liabilities between AMA and other WES subsidiaries for consolidation purposes;

(b) the inclusion of capitalized interest not recognized in the historical consolidated financial statements of AMA;

(c) the elimination of historical current and deferred income taxes as WGP is generally not subject to federal and state income taxes, other than Texas margin tax. Texas margin taxes that continue to be borne by WGP on the portion of WGP’s pro forma income that is allocable to Texas have not been eliminated;

(d) the increase in interest expense consisting of (i) interest expense and amortization of deferred financing costs related to WES’s anticipated issuance of the new WES Senior Notes and (ii) the write-off of issuance costs related to the Term loan facility. The anticipated issuance of the new WES Senior Notes is assumed to have occurred on January 1, 2017, with interest expense incurred for both the nine months ended September 30, 2018, and year ended December 31, 2017. Interest expense is calculated using an assumed weighted average annual interest rate of 5.953% for the new WES Senior Notes, which is based on indicative new issue credit spreads to applicable U.S. Treasury yields;

(e) the acquisition of AMA by WES, consisting of the cash payment of $2.008 billion (including the repayment of the APCWH Note Payable) and the issuance of 45,760,201 WES common units to Anadarko. The excess of cash consideration over the historical net book value of assets acquired and liabilities assumed is recorded as a decrease to partners’ capital;

(f) the receipt of $2.0 billion of borrowings under the Term loan facility to fund the cash consideration for the acquisition of AMA and subsequent repayment with proceeds received from the anticipated issuance of the new WES Senior Notes and cash on hand;

(g) the increase to long-term debt and cash for the anticipated issuance of the new WES Senior Notes, net of the expected issuance costs and underwriting discounts to be amortized through interest expense over the expected life of the new WES Senior Notes;

(h) the repayment of the APCWH Note Payable with a portion of the borrowings under the Term loan facility;

(i) the elimination of interest expense related to the repayment of the APCWH Note Payable; and

(j) the reallocation of net income to WGP’s noncontrolling interests in connection with the acquisition of AMA.

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WESTERN GAS EQUITY PARTNERS, LP

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

2.  PRO FORMA ADJUSTMENTS (CONTINUED)

The following pro forma adjustments have been prepared as if the Merger occurred (i) on January 1, 2017, in the case of the unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2017, and the nine months ended September 30, 2018, and (ii) on September 30, 2018, in the case of the unaudited pro forma condensed consolidated balance sheet:

(k) the reallocation of net income to WGP’s noncontrolling interests in connection with the Merger;

(l) the estimated nonrecurring transaction costs to be paid in connection with the Merger; and

(m) the recognition of the following equity impacts:

	Nine Months Ended September 30, 2018			Year Ended December 31, 2017
WGP historical weighted-average common units outstanding			218,935,153			218,931,450
WES historical weighted-average common units outstanding	166,257,207			165,375,167
Less: WES common units owned by WGP	(50,132,046	)		(50,132,046	)
WES common units subject to conversion into WGP common units	116,125,161			115,243,121
Exchange ratio per unit	1.525			1.525
WGP common units issued for WES common units			177,090,871			175,745,760
WES acquisition common units subject to conversion into WGP common units	39,384,917			39,384,917
Conversion ratio per unit	1.4056			1.4056
WGP common units issued for WES acquisition common units			55,359,439			55,359,439
WGP pro forma weighted-average common units outstanding - basic and diluted			451,385,463			450,036,649

3.  PRO FORMA NET INCOME (LOSS) PER COMMON UNIT

For purposes of calculating pro forma net income (loss) per common unit, management assumed that pro forma cash distributions were equal to pro forma earnings. Pro forma basic net income (loss) per common unit is calculated by dividing the limited partners’ interest in pro forma net income (loss) by the pro forma weighted-average number of common units outstanding during the period.    

Net income (loss) attributable to the WES assets acquired from Anadarko for periods prior to WES’s acquisition of the WES assets is not allocated to the limited partners when calculating net income (loss) per common unit (pre-acquisition net income). Net income equal to the amount of available cash (as defined by the WGP Partnership Agreement) is allocated to WGP common unitholders consistent with actual cash distributions. Net income (loss) per common unit is calculated assuming that cash distributions are equal to the net income attributable to WGP.

Upon closing of the acquisition of AMA and the Merger, WGP will own a 98% limited partner interest in WES and Anadarko will own the remaining 2% limited partner interest.

11