Western Midstream Announces Third-Quarter 2022 Results

Today Western Midstream Partners, LP (NYSE: WES) ("WES" or the "Partnership") announced third-quarter 2022 financial and operating results. Net income (loss) attributable to limited partners for the third quarter of 2022 totaled $259.5 million, or $0.67 per common unit (diluted), with third-quarter 2022 Adjusted EBITDA⁽¹⁾ totaling $524.8 million, third-quarter 2022 Cash flows provided by operating activities totaling $468.8 million, and third-quarter 2022 Free cash flow⁽¹⁾ totaling $330.4 million.

RECENT HIGHLIGHTS

• Processed record Delaware Basin natural-gas throughput of 1.54 Bcf/d for the third quarter, representing a 3-percent sequential-quarter increase.
• Gathered record Delaware Basin produced-water throughput of 895 MBbls/d for the third quarter, representing a 1-percent sequential-quarter increase.
• After quarter end, executed a long-term amendment to Occidental Petroleum Corporation's ("Occidental") oil gathering agreement in the Delaware Basin to provide up to approximately 57 MBbls/d of peak additional firm-treating capacity supported by significant corresponding minimum-volume commitments.
• After quarter end, executed a long-term amendment to Occidental's gas-processing agreement in the Delaware Basin to provide up to 250 MMcf/d of peak additional firm-processing capacity supported by significant corresponding minimum-volume commitments.
• After quarter end, executed several contracts to provide midstream services, including gas gathering, condensate gathering, and condensate stabilization, for new customers in the Maverick Basin of South Texas.
• After quarter end, sold our 15-percent interest in Cactus II for $265 million.
• In conjunction with the sale of the equity interest in Cactus II, increased the previously announced $1.0 billion unit repurchase program to $1.25 billion, which runs through December 31, 2024.
• Acquired the remaining 50-percent interest in Ranch Westex JV for $41.0 million, immediately adding 125 MMcf/d of operated natural-gas processing capacity to our West Texas complex.
• Repurchased 18,506,215 common units for aggregate consideration of $460.7 million year-to-date through October 28, 2022. The total common units repurchased since September 2020 now represents 13.5% of total unaffected units outstanding.

On November 14, 2022, WES will pay its third-quarter 2022 per-unit distribution of $0.50, which is in line with the prior quarter's distribution and is consistent with the Partnership's previously announced annualized regular quarterly distribution ("Base Distribution") target of $2.00 per unit. Third-quarter 2022 Free cash flow after distributions totaled $132.7 million. Third-quarter 2022 and year-to-date capital expenditures⁽³⁾ totaled $171.5 million and $382.1 million, respectively.

Third-quarter 2022 total natural-gas throughput⁽⁵⁾ averaged 4.3 Bcf/d, remaining flat relative to the prior quarter. Third-quarter 2022 total throughput for crude-oil and NGLs assets⁽⁵⁾ averaged 715 MBbls/d, representing a 7-percent sequential-quarter increase. Third-quarter 2022 total throughput for produced-water assets⁽⁵⁾ averaged 877 MBbls/d, representing a 2-percent sequential-quarter increase.

"Our well-positioned assets are a competitive advantage that continue to yield results with another record-breaking quarter of natural-gas and produced-water throughput in the Delaware Basin. We expect continued throughput growth in the Delaware Basin into next year as producer activity levels remain strong," said Michael Ure, President and Chief Executive Officer.

Mr. Ure continued, "Despite volumetric records in the Delaware Basin, our third-quarter Adjusted EBITDA declined on a sequential-quarter basis primarily due to reduced excess natural-gas liquids volumes in combination with lower natural-gas liquids pricing, lower distributions from equity investments, and higher operation and maintenance expense. As expected, our operation and maintenance expense increased sequentially due to higher utility costs, driven by higher natural-gas pricing, and previously disclosed costs from field-level projects associated with our corporate transformation efforts."

"Our recent M&A activity reflects our team's focus on strategically pursuing and executing transactions that create substantial value for WES. We are pleased to announce the acquisition of the remaining 50-percent interest in our Ranch Westex joint venture, which adds an incremental 125 MMcf/d of operated natural-gas processing capacity to our West Texas complex. This acquisition is in line with our M&A strategy that focuses on adding processing capacity in our core operating basins, allocating capital efficiently, and generating strong returns for our unitholders. Furthermore, our recently executed agreement to divest our interest in our Cactus II equity investment asset will allow us to return additional capital to our unitholders through our increased unit repurchase program."

"Additionally, we're excited to further strengthen our relationship with one of the premier producers in the Delaware Basin by executing amendments to Occidental's oil gathering and natural-gas processing agreements shortly after quarter end. These amendments increase Occidental's firm capacities and minimum-volume commitments on our infrastructure and position both organizations for future success."

UNIT BUYBACK PROGRAM

Previously, the Board authorized a buyback program of up to $1.0 billion of the Partnership's common units through December 31, 2024 (the "Purchase Program"). On November 1, the Board authorized an increase in the Purchase Program to $1.250 billion.

The common units may be purchased from time to time in the open market at prevailing market prices or in privately negotiated transactions. The timing and amount of purchases under the Purchase Program will be determined based on ongoing assessments of capital needs, WES's financial performance, the market price of the common units, and other factors, including organic growth and acquisition opportunities and general market conditions. The Purchase Program does not obligate the Partnership to purchase any specific dollar amount or number of units and may be suspended or discontinued at any time.

CONFERENCE CALL TOMORROW AT 1:00 P.M. CT

WES will host a conference call on Thursday, November 3, 2022, at 1:00 p.m. Central Time (2:00 p.m. Eastern Time) to discuss third-quarter 2022 results. To participate, individuals should dial 888-330-2354 (Domestic) or 240-789-2706 (International) fifteen minutes before the scheduled conference call time and enter participant access code 32054. To access the live audio webcast of the conference call, please visit the investor relations section of the Partnership's website at www.westernmidstream.com. A replay of the conference call also will be available on the website following the call.

For additional details on WES's financial and operational performance, please refer to the earnings slides and updated investor presentation available at www.westernmidstream.com.

ABOUT WESTERN MIDSTREAM

Western Midstream Partners, LP ("WES") is a Delaware master limited partnership formed to acquire, own, develop, and operate midstream assets. With midstream assets located in Texas, New Mexico, Colorado, Utah, Wyoming, and Pennsylvania, WES is engaged in the business of gathering, compressing, treating, processing, and transporting natural gas; gathering, stabilizing, and transporting condensate, natural-gas liquids, and crude oil; and gathering and disposing of produced water for its customers. In its capacity as a natural-gas processor, WES also buys and sells natural gas, natural-gas liquids, and condensate on behalf of itself and as an agent for its customers under certain contracts.

For more information about Western Midstream Partners, LP, please visit www.westernmidstream.com.

This news release contains forward-looking statements. WES's management believes that its expectations are based on reasonable assumptions. No assurance, however, can be given that such expectations will prove correct. A number of factors could cause actual results to differ materially from the projections, anticipated results, or other expectations expressed in this news release. These factors include our ability to meet financial guidance or distribution expectations; our ability to safely and efficiently operate WES's assets; the supply of, demand for, and price of oil, natural gas, NGLs, and related products or services; our ability to meet projected in-service dates for capital-growth projects; construction costs or capital expenditures exceeding estimated or budgeted costs or expenditures; and the other factors described in the "Risk Factors" section of WES's most-recent Form 10-K and Form 10-Q filed with the Securities and Exchange Commission and other public filings and press releases. WES undertakes no obligation to publicly update or revise any forward-looking statements.

Western Midstream Partners, LP
RECONCILIATION OF GAAP TO NON-GAAP MEASURES

WES defines Adjusted gross margin attributable to Western Midstream Partners, LP ("Adjusted gross margin") as total revenues and other (less reimbursements for electricity-related expenses recorded as revenue), less cost of product, plus distributions from equity investments, and excluding the noncontrolling interest owners' proportionate share of revenues and cost of product.

WES defines Adjusted EBITDA as net income (loss), plus (i) distributions from equity investments, (ii) non-cash equity-based compensation expense, (iii) interest expense, (iv) income tax expense, (v) depreciation and amortization, (vi) impairments, and (vii) other expense (including lower of cost or market inventory adjustments recorded in cost of product), less (i) gain (loss) on divestiture and other, net, (ii) gain (loss) on early extinguishment of debt, (iii) income from equity investments, (iv) interest income, (v) income tax benefit, (vi) other income, and (vii) the noncontrolling interest owners' proportionate share of revenues and expenses.

WES defines Free cash flow as net cash provided by operating activities less total capital expenditures and contributions to equity investments, plus distributions from equity investments in excess of cumulative earnings. Management considers Free cash flow an appropriate metric for assessing capital discipline, cost efficiency, and balance-sheet strength. Although Free cash flow is the metric used to assess WES's ability to make distributions to unitholders, this measure should not be viewed as indicative of the actual amount of cash that is available for distributions or planned for distributions for a given period. Instead, Free cash flow should be considered indicative of the amount of cash that is available for distributions, debt repayments, and other general partnership purposes.

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