Western Midstream - 10-Q quarterly report FY

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to


WESTERN MIDSTREAM PARTNERS, LP
WESTERN MIDSTREAM OPERATING, LP
(Exact name of registrant as specified in its charter)


	Commission file number:	State or other jurisdiction of incorporation or organization:	I.R.S. Employer Identification No.:
Western Midstream Partners, LP	001-35753	Delaware	46-0967367
Western Midstream Operating, LP	001-34046	Delaware	26-1075808

Address of principal executive offices:

Zip Code:

Registrant’s telephone number, including area code:

Western Midstream Partners, LP

9950 Woodloch Forest Drive, Suite 2800

The Woodlands,

Texas

77380

(346)

786-5000

Western Midstream Operating, LP

9950 Woodloch Forest Drive, Suite 2800

The Woodlands,

Texas

77380

(346)

786-5000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol

Name of exchange
on which registered

Common units outstanding as of April 27, 2023:

Western Midstream Partners, LP

Common units

WES

New York Stock Exchange

384,615,443

Western Midstream Operating, LP

None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Western Midstream Partners, LP

Yes

Western Midstream Operating, LP

Yes

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Western Midstream Partners, LP

Yes

Western Midstream Operating, LP

Yes

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Western Midstream Partners, LP

Large Accelerated Filer

Accelerated Filer

Non-accelerated Filer

Smaller Reporting Company

Emerging Growth Company

☐

Western Midstream Operating, LP

Large Accelerated Filer

Accelerated Filer

Non-accelerated Filer

Smaller Reporting Company

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.


Western Midstream Partners, LP			¨
Western Midstream Operating, LP			¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Western Midstream Partners, LP

Yes

☐

Western Midstream Operating, LP

Yes

☐

FILING FORMAT

This quarterly report on Form 10-Q is a combined report being filed by two separate registrants: Western Midstream Partners, LP and Western Midstream Operating, LP. Western Midstream Operating, LP is a consolidated subsidiary of Western Midstream Partners, LP that has publicly traded debt, but does not have any publicly traded equity securities. Information contained herein related to any individual registrant is filed by such registrant solely on its own behalf. Each registrant makes no representation as to information relating exclusively to the other registrant.

Part I, Item 1 of this quarterly report includes separate financial statements (i.e., consolidated statements of operations, consolidated balance sheets, consolidated statements of equity and partners’ capital, and consolidated statements of cash flows) for Western Midstream Partners, LP and Western Midstream Operating, LP. The accompanying Notes to Consolidated Financial Statements, which are included under Part I, Item 1 of this quarterly report, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, which is included under Part I, Item 2 of this quarterly report, are presented on a combined basis for each registrant, with any material differences between the registrants disclosed separately.


TABLE OF CONTENTS
		PAGE
PART I		FINANCIAL INFORMATION (UNAUDITED)
	Item 1.	Financial Statements
		Western Midstream Partners, LP
		Consolidated Statements of Operations for the three months ended March 3 1 , 202 3 and 2022	6
		Consolidated Balance Sheets as of March 31 , 202 3 , and December 31, 202 2	7
		Consolidated Statements of Equity and Partners’ Capital for the three months ended March 31, 2023 and 2022	8
		Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022	9
		Western Midstream Operating, LP
		Consolidated Statements of Operations for the three months ended March 31, 2023 and 202 2	10
		Consolidated Balance Sheets as of March 31, 2023, and December 31, 2022	11
		Consolidated Statements of Equity and Partners’ Capital for the three months ended March 31, 2023 and 2022	12
		Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022	13
		Notes to Consolidated Financial Statements	14
		Note 1. Description of Business and Basis of Presentation	14
		Note 2. Revenue from Contracts with Customers	17

		Note 3 . Partnership Distributions	19
		Note 4 . Equity and Partners’ Capital	21
		Note 5 . Related-Party Transactions	22
		Note 6 . Equity Investments	26
		Note 7 . Property, Plant, and Equipment	27

		Note 8 . Selected Components of Working Capital	28
		Note 9 . Debt and Interest Expense	29
		Note 1 0 . Commitments and Contingencies	31

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
		Cautionary Note Regarding Forward-Looking Statements	32
		Executive Summary	34
		Outlook	36
		Acquisitions and Divestitures	37

		Results of Operations	37
		Operating Results	37
		Reconciliation of Non-GAAP Financial Measures	45
		Key Performance Metrics	50
		Liquidity and Capital Resources	51
		Items Affecting the Comparability of Financial Results with WES Operating	54
		Critical Accounting Estimates	55

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	56
	Item 4.	Controls and Procedures	56
	Item 5.	Other Information	58
PART II		OTHER INFORMATION
	Item 1.	Legal Proceedings	57
	Item 1A.	Risk Factors	58
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	58
	Item 6.	Exhibits	59

COMMONLY USED ABBREVIATIONS AND TERMS

References to “we,” “us,” “our,” “WES,” “the Partnership,” or “Western Midstream Partners, LP” refer to Western Midstream Partners, LP (formerly Western Gas Equity Partners, LP) and its subsidiaries. The following list of abbreviations and terms are used in this document:


Defined Term						Definition
Anadarko						Anadarko Petroleum Corporation and its subsidiaries, excluding our general partner, which became a wholly owned subsidiary of Occidental on August 8, 2019.
Barrel, Bbl, Bbls/d, MBbls/d						42 U.S. gallons measured at 60 degrees Fahrenheit, barrels per day, thousand barrels per day.
Board						The board of directors of WES’s general partner.
Cactus II						Cactus II Pipeline LLC, in which we held a 15% interest that we sold in November 2022.
Chipeta						Chipeta Processing, LLC.
Condensate						A natural-gas liquid with a low vapor pressure compared to drip condensate, mainly composed of propane, butane, pentane, and heavier hydrocarbon fractions.
DBM						Delaware Basin Midstream, LLC.
DBM Water systems						DBM’s produced-water gathering and disposal systems in West Texas.
DJ Basin complex						The Platte Valley system, Wattenberg system, Lancaster plant, Latham plant, and Wattenberg processing plant.
EBITDA						Earnings before interest, taxes, depreciation, and amortization. For a definition of “Adjusted EBITDA,” see Reconciliation of Non-GAAP Financial Measures under Part I, Item 2 of this Form 10-Q.
Exchange Act						The Securities Exchange Act of 1934, as amended.
FRP						Front Range Pipeline LLC, in which we own a 33.33% interest.
GAAP						Generally accepted accounting principles in the United States.
General partner						Western Midstream Holdings, LLC, the general partner of the Partnership.
Imbalance						Imbalances result from (i) differences between gas and NGLs volumes nominated by customers and gas and NGLs volumes received from those customers and (ii) differences between gas and NGLs volumes received from customers and gas and NGLs volumes delivered to those customers.
Marcellus Interest						The 33.75% interest in the Larry’s Creek, Seely, and Warrensville gas-gathering systems and related facilities located in northern Pennsylvania.
MGR						Mountain Gas Resources, LLC, includes the Red Desert complex and the Granger straddle plant.
Mi Vida						Mi Vida JV LLC, in which we own a 50% interest.
MLP						Master limited partnership.
Mcf, MMcf, MMcf/d						Thousand cubic feet, million cubic feet, million cubic feet per day.
Mont Belvieu JV						Enterprise EF78 LLC, in which we own a 25% interest.
Natural-gas liquid(s) or NGL(s)						The combination of ethane, propane, normal butane, isobutane, and natural gasolines that, when removed from natural gas, become liquid under various levels of pressure and temperature.
Occidental						Occidental Petroleum Corporation and, as the context requires, its subsidiaries, excluding our general partner.
Panola						Panola Pipeline Company, LLC, in which we own a 15% interest.
Produced water						Byproduct associated with the production of crude oil and natural gas that often contains a number of dissolved solids and other materials found in oil and gas reservoirs.
Ranch Westex						Ranch Westex JV LLC, in which we owned a 50% interest through August 2022, and a 100% interest thereafter.
RCF						WES Operating’s $2.0 billion senior unsecured revolving credit facility.
Red Bluff Express						Red Bluff Express Pipeline, LLC, in which we own a 30% interest.
Related parties						Occidental, the Partnership’s equity interests (see Note 6—Equity Investments in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q), and the Partnership and WES Operating for transactions that eliminate upon consolidation.
Rendezvous						Rendezvous Gas Services, LLC, in which we own a 22% interest.
Residue						The natural gas remaining after the unprocessed natural-gas stream has been processed or treated.
Saddlehorn						Saddlehorn Pipeline Company, LLC, in which we own a 20% interest.


Defined Term						Definition
SEC						U.S. Securities and Exchange Commission.
Services Agreement						That certain amended and restated Services, Secondment, and Employee Transfer Agreement, dated as of December 31, 2019, by and among Occidental, Anadarko, and WES Operating GP.
Springfield system						The Springfield gas-gathering system and Springfield oil-gathering system.
TEFR Interests						The interests in TEP, TEG, and FRP.
TEG						Texas Express Gathering LLC, in which we own a 20% interest.
TEP						Texas Express Pipeline LLC, in which we own a 20% interest.
WES Operating						Western Midstream Operating, LP, formerly known as Western Gas Partners, LP, and its subsidiaries.
WES Operating GP						Western Midstream Operating GP, LLC, the general partner of WES Operating.
West Texas complex						The DBM complex and DBJV and Haley systems.
WGRAH						WGR Asset Holding Company LLC.
White Cliffs						White Cliffs Pipeline, LLC, in which we own a 10% interest.
Whitethorn LLC						Whitethorn Pipeline Company LLC, in which we own a 20% interest.
Whitethorn						A crude-oil and condensate pipeline, and related storage facilities, owned by Whitethorn LLC.
$1.25 billion Purchase Program						The $1.25 billion buyback program ending December 31, 2024. The common units may be purchased from time to time in the open market at prevailing market prices or in privately negotiated transactions.

Table of Contents

PART I. FINANCIAL INFORMATION (UNAUDITED)

Item 1. Financial Statements

WESTERN MIDSTREAM PARTNERS, LP

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)



	Three Months Ended March 31,
thousands except per-unit amounts		2023		2022
Revenues and other
Service revenues – fee based		$	647,867	$	631,598
Service revenues – product based		46,810		40,867
Product sales		39,025		85,589
Other		280		243
Total revenues and other (1)		733,982		758,297
Equity income, net – related parties		39,021		49,607
Operating expenses
Cost of product		51,459		72,848
Operation and maintenance		174,239		128,976
General and administrative		51,117		48,602
Property and other taxes		6,831		18,442
Depreciation and amortization		144,626		134,582
Long-lived asset and other impairments (2)		52,401		—

Total operating expenses (3)		480,673		403,450
Gain (loss) on divestiture and other, net		(2,118)		370
Operating income (loss)		290,212		404,824

Interest expense		(81,670)		(85,455)

Other income (expense), net		1,215		106
Income (loss) before income taxes		209,757		319,475
Income tax expense (benefit)		1,416		1,805
Net income (loss)		208,341		317,670
Net income (loss) attributable to noncontrolling interests		4,696		8,953
Net income (loss) attributable to Western Midstream Partners, LP		$	203,645	$	308,717
Limited partners’ interest in net income (loss):
Net income (loss) attributable to Western Midstream Partners, LP		$	203,645	$	308,717

General partner interest in net (income) loss		(4,686)		(6,783)
Limited partners’ interest in net income (loss) (4)		198,959		301,934
Net income (loss) per common unit – basic (4)		$	0.52	$	0.75
Net income (loss) per common unit – diluted (4)		$	0.52	$	0.75
Weighted-average common units outstanding – basic (4)		384,468		403,254
Weighted-average common units outstanding – diluted (4)		385,750		404,460

_________________________________________________________________________________________

(1)Total revenues and other includes related-party amounts of $448.8 million and $428.7 million for the three months ended March 31, 2023 and 2022, respectively. See Note 5.

(2)See Note 7.

(3)Total operating expenses includes related-party amounts of $(3.1) million and $(17.6) million for the three months ended March 31, 2023 and 2022, respectively. See Note 5.

(4)See Note 4.

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

WESTERN MIDSTREAM PARTNERS, LP

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)




thousands except number of units	March 31, 2023		December 31, 2022
ASSETS
Current assets
Cash and cash equivalents	$	112,645	$	286,656
Accounts receivable, net	558,300		554,263
Other current assets	64,353		59,506
Total current assets	735,298		900,425
Property, plant, and equipment
Cost	13,550,060		13,365,593
Less accumulated depreciation	5,008,838		4,823,993
Net property, plant, and equipment	8,541,222		8,541,600
Goodwill	4,783		4,783
Other intangible assets	705,158		713,075
Equity investments	931,852		944,696
Other assets (1)	194,175		167,049
Total assets (2)	$	11,112,488	$	11,271,628
LIABILITIES, EQUITY, AND PARTNERS’ CAPITAL
Current liabilities
Accounts and imbalance payables	$	362,398	$	360,562
Short-term debt	2,714		215,780
Accrued ad valorem taxes	52,717		72,875
Accrued liabilities	163,498		254,640
Total current liabilities	581,327		903,857
Long-term liabilities
Long-term debt	6,693,941		6,569,582
Deferred income taxes	15,348		14,424
Asset retirement obligations	293,718		290,021
Other liabilities	426,590		385,629
Total long-term liabilities	7,429,597		7,259,656
Total liabilities (3)	8,010,924		8,163,513
Equity and partners’ capital
Common units (384,615,227 and 384,070,984 units issued and outstanding at March 31, 2023, and December 31, 2022, respectively)	2,964,712		2,969,604
General partner units (9,060,641 units issued and outstanding at March 31, 2023, and December 31, 2022)	2,261		2,105
Total partners’ capital	2,966,973		2,971,709
Noncontrolling interests	134,591		136,406
Total equity and partners’ capital	3,101,564		3,108,115
Total liabilities, equity, and partners’ capital	$	11,112,488	$	11,271,628

________________________________________________________________________________________

(1)Other assets includes $6.3 million and $6.5 million of NGLs line-fill inventory as of March 31, 2023, and December 31, 2022, respectively. Other assets also includes $77.4 million and $60.4 million of materials and supplies inventory as of March 31, 2023, and December 31, 2022, respectively.

(2)Total assets includes related-party amounts of $1.3 billion as of March 31, 2023, and December 31, 2022, which includes related-party Accounts receivable, net of $307.6 million and $313.9 million as of March 31, 2023, and December 31, 2022, respectively. See Note 5.

(3)Total liabilities includes related-party amounts of $318.7 million and $312.3 million as of March 31, 2023, and December 31, 2022, respectively. See Note 5.

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

WESTERN MIDSTREAM PARTNERS, LP

CONSOLIDATED STATEMENTS OF EQUITY AND PARTNERS’ CAPITAL

(UNAUDITED)


	Partners’ Capital
thousands	Common Units		General Partner Units		Noncontrolling Interests		Total


































Balance at December 31, 2022	$	2,969,604	$	2,105	$	136,406	$	3,108,115
Net income (loss)	198,959		4,686		4,696		208,341
Distributions to Chipeta noncontrolling interest owner	—		—		(2,240)		(2,240)
Distributions to noncontrolling interest owner of WES Operating	—		—		(4,271)		(4,271)
Distributions to Partnership unitholders	(192,039)		(4,530)		—		(196,569)
Unit repurchases (1)	(7,061)		—		—		(7,061)

Equity-based compensation expense	7,199		—		—		7,199

Other	(11,950)		—		—		(11,950)
Balance at March 31, 2023	$	2,964,712	$	2,261	$	134,591	$	3,101,564

_________________________________________________________________________________________

(1)See Note 4.


	Partners’ Capital
thousands	Common Units		General Partner Units		Noncontrolling Interests		Total


































Balance at December 31, 2021	$	2,966,955	$	(8,882)	$	137,687	$	3,095,760
Net income (loss)	301,934		6,783		8,953		317,670
Distributions to Chipeta noncontrolling interest owner	—		—		(1,984)		(1,984)
Distributions to noncontrolling interest owner of WES Operating	—		—		(2,805)		(2,805)
Distributions to Partnership unitholders	(131,786)		(2,963)		—		(134,749)
Unit repurchases (1)	(5,149)		—		—		(5,149)
Contributions of equity-based compensation from Occidental	1,949		—		—		1,949
Equity-based compensation expense	5,794		—		—		5,794
Net contributions from (distributions to) related parties	409		—		—		409
Other	(6,088)		—		—		(6,088)
Balance at March 31, 2022	$	3,134,018	$	(5,062)	$	141,851	$	3,270,807

_________________________________________________________________________________________

(1)See Note 4.

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

WESTERN MIDSTREAM PARTNERS, LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



	Three Months Ended March 31,
thousands	2023		2022
Cash flows from operating activities
Net income (loss)	$	208,341	$	317,670
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	144,626		134,582
Long-lived asset and other impairments	52,401		—

Non-cash equity-based compensation expense	7,199		7,743
Deferred income taxes	924		1,132
Accretion and amortization of long-term obligations, net	1,692		1,782
Equity income, net – related parties	(39,021)		(49,607)
Distributions from equity-investment earnings – related parties	39,609		45,870
(Gain) loss on divestiture and other, net	2,118		(370)


Other	200		—
Changes in assets and liabilities:
(Increase) decrease in accounts receivable, net	(4,037)		(165,134)
Increase (decrease) in accounts and imbalance payables and accrued liabilities, net	(136,460)		(14,292)
Change in other items, net	24,832		(2,918)
Net cash provided by operating activities	302,424		276,458
Cash flows from investing activities
Capital expenditures	(173,088)		(83,971)


Contributions to equity investments – related parties	(110)		(2,070)
Distributions from equity investments in excess of cumulative earnings – related parties	12,366		9,925

Proceeds from the sale of assets to third parties	—		383
(Increase) decrease in materials and supplies inventory and other	(18,346)		4,116
Net cash used in investing activities	(179,178)		(71,617)
Cash flows from financing activities
Borrowings, net of debt issuance costs	220,000		—
Repayments of debt	(313,138)		—
Increase (decrease) in outstanding checks	18,768		(7,088)
Distributions to Partnership unitholders (1)	(196,569)		(134,749)
Distributions to Chipeta noncontrolling interest owner	(2,240)		(1,984)
Distributions to noncontrolling interest owner of WES Operating	(4,271)		(2,805)
Net contributions from (distributions to) related parties	—		409
Unit repurchases	(7,061)		(5,149)
Other	(12,746)		(7,225)
Net cash provided by (used in) financing activities	(297,257)		(158,591)
Net increase (decrease) in cash and cash equivalents	(174,011)		46,250
Cash and cash equivalents at beginning of period	286,656		201,999
Cash and cash equivalents at end of period	$	112,645	$	248,249
Supplemental disclosures
Interest paid, net of capitalized interest	$	133,245	$	149,289
Income taxes paid (reimbursements received)	1,270		905
Accrued capital expenditures	91,067		36,821

_________________________________________________________________________________________

(1)Includes related-party amounts. See Note 5.

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

WESTERN MIDSTREAM OPERATING, LP

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)



	Three Months Ended March 31,
thousands		2023		2022
Revenues and other
Service revenues – fee based		$	647,867	$	631,598
Service revenues – product based		46,810		40,867
Product sales		39,025		85,589
Other		280		243
Total revenues and other (1)		733,982		758,297
Equity income, net – related parties		39,021		49,607
Operating expenses
Cost of product		51,459		72,848
Operation and maintenance		174,239		128,976
General and administrative		50,885		47,861
Property and other taxes		6,831		18,442
Depreciation and amortization		144,626		134,582
Long-lived asset and other impairments (2)		52,401		—

Total operating expenses (3)		480,441		402,709
Gain (loss) on divestiture and other, net		(2,118)		370
Operating income (loss)		290,444		405,565

Interest expense		(81,670)		(85,455)

Other income (expense), net		1,190		103
Income (loss) before income taxes		209,964		320,213
Income tax expense (benefit)		1,416		1,805
Net income (loss)		208,548		318,408
Net income (loss) attributable to noncontrolling interest		535		2,636
Net income (loss) attributable to Western Midstream Operating, LP		$	208,013	$	315,772

________________________________________________________________________________________

(1)Total revenues and other includes related-party amounts of $448.8 million and $428.7 million for the three months ended March 31, 2023 and 2022, respectively. See Note 5.

(2)See Note 7.

(3)Total operating expenses includes related-party amounts of $(1.9) million and $(16.7) million for the three months ended March 31, 2023 and 2022, respectively. See Note 5.

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

WESTERN MIDSTREAM OPERATING, LP

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)




thousands except number of units	March 31, 2023		December 31, 2022
ASSETS
Current assets
Cash and cash equivalents	$	106,930	$	286,101
Accounts receivable, net	559,311		554,263
Other current assets	62,277		57,291
Total current assets	728,518		897,655
Property, plant, and equipment
Cost	13,550,060		13,365,593
Less accumulated depreciation	5,008,838		4,823,993
Net property, plant, and equipment	8,541,222		8,541,600
Goodwill	4,783		4,783
Other intangible assets	705,158		713,075
Equity investments	931,852		944,696
Other assets (1)	192,459		166,450
Total assets (2)	$	11,103,992	$	11,268,259
LIABILITIES, EQUITY, AND PARTNERS’ CAPITAL
Current liabilities
Accounts and imbalance payables	$	362,347	$	404,468
Short-term debt	2,714		215,780
Accrued ad valorem taxes	52,717		72,875
Accrued liabilities	138,373		197,289

Total current liabilities	556,151		890,412
Long-term liabilities
Long-term debt	6,693,941		6,569,582
Deferred income taxes	15,348		14,424
Asset retirement obligations	293,718		290,021
Other liabilities	424,874		383,713
Total long-term liabilities	7,427,881		7,257,740
Total liabilities (3)	7,984,032		8,148,152
Equity and partners’ capital
Common units (318,675,578 units issued and outstanding at March 31, 2023, and December 31, 2022)	3,093,570		3,092,012



Total partners’ capital	3,093,570		3,092,012
Noncontrolling interest	26,390		28,095
Total equity and partners’ capital	3,119,960		3,120,107
Total liabilities, equity, and partners’ capital	$	11,103,992	$	11,268,259

_________________________________________________________________________________________

(2)Total assets includes related-party amounts of $1.3 billion as of March 31, 2023, and December 31, 2022, which includes related-party Accounts receivable, net of $308.6 million and $313.9 million as of March 31, 2023, and December 31, 2022, respectively. See Note 5.

(3)Total liabilities includes related-party amounts of $318.4 million and $356.0 million as of March 31, 2023, and December 31, 2022, respectively. See Note 5.

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

WESTERN MIDSTREAM OPERATING, LP

CONSOLIDATED STATEMENTS OF EQUITY AND PARTNERS’ CAPITAL

(UNAUDITED)


thousands	Common Units		Noncontrolling Interest		Total

























Balance at December 31, 2022	$	3,092,012	$	28,095	$	3,120,107
Net income (loss)	208,013		535		208,548
Distributions to Chipeta noncontrolling interest owner	—		(2,240)		(2,240)
Distributions to WES Operating unitholders	(213,513)		—		(213,513)

Contributions of equity-based compensation from WES	7,058		—		7,058


Balance at March 31, 2023	$	3,093,570	$	26,390	$	3,119,960


thousands	Common Units		Noncontrolling Interest		Total

























Balance at December 31, 2021	$	3,063,289	$	29,377	$	3,092,666
Net income (loss)	315,772		2,636		318,408
Distributions to Chipeta noncontrolling interest owner	—		(1,984)		(1,984)
Distributions to WES Operating unitholders	(140,217)		—		(140,217)
Contributions of equity-based compensation from Occidental	1,949		—		1,949
Contributions of equity-based compensation from WES	5,663		—		5,663
Net contributions from (distributions to) related parties	409		—		409

Balance at March 31, 2022	$	3,246,865	$	30,029	$	3,276,894

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

WESTERN MIDSTREAM OPERATING, LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



	Three Months Ended March 31,
thousands	2023		2022
Cash flows from operating activities
Net income (loss)	$	208,548	$	318,408
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	144,626		134,582
Long-lived asset and other impairments	52,401		—

Non-cash equity-based compensation expense	7,058		7,612
Deferred income taxes	924		1,132
Accretion and amortization of long-term obligations, net	1,692		1,782
Equity income, net – related parties	(39,021)		(49,607)
Distributions from equity-investment earnings – related parties	39,609		45,870
(Gain) loss on divestiture and other, net	2,118		(370)


Other	200		—
Changes in assets and liabilities:
(Increase) decrease in accounts receivable, net	(5,048)		(165,134)
Increase (decrease) in accounts and imbalance payables and accrued liabilities, net	(148,148)		(21,864)
Change in other items, net	26,009		(2,294)
Net cash provided by operating activities	290,968		270,117
Cash flows from investing activities
Capital expenditures	(173,088)		(83,971)


Contributions to equity investments – related parties	(110)		(2,070)
Distributions from equity investments in excess of cumulative earnings – related parties	12,366		9,925

Proceeds from the sale of assets to third parties	—		383
(Increase) decrease in materials and supplies inventory and other	(18,346)		4,116
Net cash used in investing activities	(179,178)		(71,617)
Cash flows from financing activities
Borrowings, net of debt issuance costs	220,000		—
Repayments of debt	(313,138)		—
Increase (decrease) in outstanding checks	18,726		(6,953)
Distributions to WES Operating unitholders (1)	(213,513)		(140,217)
Distributions to Chipeta noncontrolling interest owner	(2,240)		(1,984)
Net contributions from (distributions to) related parties	—		409
Other	(796)		(1,140)
Net cash provided by (used in) financing activities	(290,961)		(149,885)
Net increase (decrease) in cash and cash equivalents	(179,171)		48,615
Cash and cash equivalents at beginning of period	286,101		195,598
Cash and cash equivalents at end of period	$	106,930	$	244,213
Supplemental disclosures

Interest paid, net of capitalized interest	$	133,245	$	149,289
Income taxes paid (reimbursements received)	1,270		905
Accrued capital expenditures	91,067		36,821

________________________________________________________________________________________

(1)Includes related-party amounts. See Note 5.

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

General. Western Midstream Partners, LP is a Delaware master limited partnership formed in September 2012. Western Midstream Operating, LP (together with its subsidiaries, “WES Operating”) is a Delaware limited partnership formed in 2007 to acquire, own, develop, and operate midstream assets. Western Midstream Partners, LP owns, directly and indirectly, a 98.0% limited partner interest in WES Operating, and directly owns all of the outstanding equity interests of Western Midstream Operating GP, LLC, which holds the entire non-economic general partner interest in WES Operating.

For purposes of these consolidated financial statements, the “Partnership” refers to Western Midstream Partners, LP in its individual capacity or to Western Midstream Partners, LP and its subsidiaries, including Western Midstream Operating GP, LLC and WES Operating, as the context requires. “WES Operating GP” refers to Western Midstream Operating GP, LLC, individually as the general partner of WES Operating. The Partnership’s general partner, Western Midstream Holdings, LLC (the “general partner”), is a wholly owned subsidiary of Occidental Petroleum Corporation. “Occidental” refers to Occidental Petroleum Corporation, as the context requires, and its subsidiaries, excluding the general partner. “Anadarko” refers to Anadarko Petroleum Corporation and its subsidiaries, excluding Western Midstream Holdings, LLC. Anadarko became a wholly owned subsidiary of Occidental as a result of Occidental’s acquisition by merger of Anadarko on August 8, 2019. “Related parties” refers to Occidental (see Note 5), the Partnership’s investments accounted for under the equity method of accounting (see Note 6), and the Partnership and WES Operating for transactions that eliminate upon consolidation (see Note 5).

The Partnership is engaged in the business of gathering, compressing, treating, processing, and transporting natural gas; gathering, stabilizing, and transporting condensate, natural-gas liquids (“NGLs”), and crude oil; and gathering and disposing of produced water. In its capacity as a natural-gas processor, the Partnership also buys and sells natural gas, NGLs, and condensate on behalf of itself and as an agent for its customers under certain contracts. As of March 31, 2023, the Partnership’s assets and investments consisted of the following:


	Wholly Owned and Operated	Operated Interests	Non-Operated Interests	Equity Interests
Gathering systems (1)	17	2	3	1
Treating facilities	37	3	—	—
Natural-gas processing plants/trains	25	3	—	3
NGLs pipelines	2	—	—	5
Natural-gas pipelines	6	—	—	1
Crude-oil pipelines	3	1	—	3

_________________________________________________________________________________________

(1)Includes the DBM water systems.

These assets and investments are located in Texas, New Mexico, the Rocky Mountains (Colorado, Utah, and Wyoming), and North-central Pennsylvania.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Basis of presentation. The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and include the accounts of the Partnership and entities in which it holds a controlling financial interest, including WES Operating, WES Operating GP, proportionately consolidated interests, and equity investments (see table below). All significant intercompany transactions have been eliminated.

The following table outlines the ownership interests and the accounting method of consolidation used in the consolidated financial statements for entities not wholly owned (see Note 6):


	Percentage Interest
Full consolidation
Chipeta (1)	75.00	%
Proportionate consolidation (2)
Springfield system	50.10	%
Marcellus Interest systems	33.75	%
Equity investments (3)
Mi Vida JV LLC (“Mi Vida”)	50.00	%
Front Range Pipeline LLC (“FRP”)	33.33	%
Red Bluff Express Pipeline, LLC (“Red Bluff Express”)	30.00	%
Enterprise EF78 LLC (“Mont Belvieu JV”)	25.00	%
Rendezvous Gas Services, LLC (“Rendezvous”)	22.00	%
Texas Express Pipeline LLC (“TEP”)	20.00	%
Texas Express Gathering LLC (“TEG”)	20.00	%
Whitethorn Pipeline Company LLC (“Whitethorn LLC”)	20.00	%
Saddlehorn Pipeline Company, LLC (“Saddlehorn”)	20.00	%
Panola Pipeline Company, LLC (“Panola”)	15.00	%
White Cliffs Pipeline, LLC (“White Cliffs”)	10.00	%

_________________________________________________________________________________________

(1)The 25% third-party interest in Chipeta Processing LLC (“Chipeta”) is reflected within noncontrolling interests in the consolidated financial statements. See Noncontrolling interests below.

(2)The Partnership proportionately consolidates its associated share of the assets, liabilities, revenues, and expenses attributable to these assets.

(3)Investments in non-controlled entities over which the Partnership exercises significant influence are accounted for under the equity method of accounting. “Equity-investment throughput” refers to the Partnership’s share of average throughput for these investments.

Certain information and note disclosures commonly included in annual financial statements have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, the accompanying consolidated financial statements and notes should be read in conjunction with the Partnership’s 2022 Form 10-K, as filed with the SEC on February 22, 2023. Management believes that the disclosures made are adequate to make the information not misleading.

The consolidated financial results of WES Operating are included in the Partnership’s consolidated financial statements. Throughout these notes to consolidated financial statements, and to the extent material, any differences between the consolidated financial results of the Partnership and WES Operating are discussed separately. The Partnership’s consolidated financial statements differ from those of WES Operating primarily as a result of (i) the presentation of noncontrolling interest ownership (see Noncontrolling interests below), (ii) the elimination of WES Operating GP’s investment in WES Operating with WES Operating GP’s underlying capital account, (iii) the general and administrative expenses incurred by the Partnership, which are separate from, and in addition to, those incurred by WES Operating, (iv) the inclusion of the impact of Partnership equity balances and Partnership distributions, and (v) transactions between the Partnership and WES Operating that eliminate upon consolidation.

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(UNAUDITED)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Presentation of the Partnership’s assets. The Partnership’s assets include assets owned and ownership interests accounted for by the Partnership under the equity method of accounting, through its 98.0% partnership interest in WES Operating, as of March 31, 2023 (see Note 6). The Partnership also owns and controls the entire non-economic general partner interest in WES Operating GP, and the Partnership’s general partner is owned by Occidental.

Use of estimates. In preparing financial statements in accordance with GAAP, management makes informed judgments and estimates that affect the reported amounts of assets, liabilities, revenues, and expenses. Management evaluates its estimates and related assumptions regularly, using historical experience and other reasonable methods. 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 condition, and results of operations resulting from revisions to estimates are recognized when the facts that give rise to the revisions become known. The information included herein reflects all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the consolidated financial statements.

Noncontrolling interests. The Partnership’s noncontrolling interests in the consolidated financial statements consist of (i) the 25% third-party interest in Chipeta and (ii) the 2.0% limited partner interest in WES Operating owned by an Occidental subsidiary. WES Operating’s noncontrolling interest in the consolidated financial statements consists of the 25% third-party interest in Chipeta. See Note 4.

Segments. The Partnership’s operations continue to be 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.

Equity-based compensation. During the three months ended March 31, 2023, the Partnership issued 829,931 common units under its long-term incentive plans. Compensation expense was $7.2 million and $5.8 million for the three months ended March 31, 2023 and 2022, respectively.

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(UNAUDITED)

2. REVENUE FROM CONTRACTS WITH CUSTOMERS

The following table summarizes revenue from contracts with customers:



	Three Months Ended March 31,
thousands		2023		2022
Revenue from customers
Service revenues – fee based		$	647,867	$	631,598
Service revenues – product based		46,810		40,867
Product sales		39,025		85,589
Total revenue from customers		733,702		758,054
Revenue from other than customers

Other		280		243
Total revenues and other		$	733,982	$	758,297

Contract balances. Receivables from customers, which are included in Accounts receivable, net on the consolidated balance sheets were $555.3 million and $545.0 million as of March 31, 2023, and December 31, 2022, respectively.

Contract assets primarily relate to (i) revenue accrued but not yet billed under cost-of-service contracts with fixed and variable fees and (ii) accrued deficiency fees the Partnership expects to charge customers once the related performance periods are completed. The following table summarizes activity related to contract assets from contracts with customers:




thousands
Contract assets balance at December 31, 2022	$	22,561
Amounts transferred to Accounts receivable, net that were included in the contract assets balance at the beginning of the period	(1,307)
Additional estimated revenues recognized	5,231

Contract assets balance at March 31, 2023	$	26,485



Contract assets at March 31, 2023
Other current assets	$	7,937
Other assets	18,548
Total contract assets from contracts with customers	$	26,485

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2. REVENUE FROM CONTRACTS WITH CUSTOMERS

Contract liabilities primarily relate to (i) fixed and variable fees under cost-of-service contracts that are received from customers for which revenue recognition is deferred, (ii) aid-in-construction payments received from customers that must be recognized over the expected period of customer benefit, and (iii) fees that are charged to customers for only a portion of the contract term and must be recognized as revenues over the expected period of customer benefit. The following table summarizes activity related to contract liabilities from contracts with customers:




thousands
Contract liabilities balance at December 31, 2022	$	369,285
Cash received or receivable, excluding revenues recognized during the period	23,738

Revenues recognized that were included in the contract liability balance at the beginning of the period	(10,179)

Contract liabilities balance at March 31, 2023	$	382,844



Contract liabilities at March 31, 2023
Accrued liabilities	$	14,307
Other liabilities	368,537
Total contract liabilities from contracts with customers	$	382,844

Transaction price allocated to remaining performance obligations. Revenues expected to be recognized from certain performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2023, are presented in the following table. The Partnership applies the optional exemptions in Revenue from Contracts with Customers (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 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 2023	$	826,454
2024	1,138,601
2025	1,078,564
2026	923,013
2027	832,803
Thereafter	1,915,544
Total	$	6,714,979

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(UNAUDITED)

3. PARTNERSHIP DISTRIBUTIONS

Partnership distributions. Under its partnership agreement, the Partnership distributes all of its available cash (beyond proper reserves as defined in its partnership agreement) to unitholders of record on the applicable record date within 55 days following each quarter’s end. The amount of available cash (beyond proper reserves as defined in the partnership agreement) generally is all cash on hand at the end of the quarter, plus, at the discretion of the general partner, working capital borrowings made subsequent to the end of such quarter, less the amount of cash reserves established by the general partner to provide for the proper conduct of the Partnership’s business, including (i) to fund future capital expenditures; (ii) to comply with applicable laws, debt instruments, or other agreements; or (iii) to provide funds for unitholder distributions for any one or more of the next four quarters. Working capital borrowings generally include borrowings made under a credit facility or similar financing arrangement and are intended to be repaid or refinanced within 12 months. In all cases, working capital borrowings are used solely for working capital purposes or to fund unitholder distributions.

The Board of Directors of the general partner (the “Board”) declared the following cash distributions to the Partnership’s unitholders for the periods presented:


thousands except per-unit amounts Quarters Ended	Total Quarterly Per-unit Distribution		Total Quarterly Cash Distribution		Distribution Date	Record Date





2022
March 31	$	0.500	$	206,197	May 13, 2022	May 2, 2022
June 30	0.500		197,744		August 12, 2022	August 1, 2022
September 30	0.500		197,065		November 14, 2022	October 31, 2022
December 31	0.500		196,569		February 13, 2023	February 1, 2023
2023
March 31 (1)	$	0.856	$	336,987	May 15, 2023	May 1, 2023

_________________________________________________________________________________________

(1)Includes the regular quarterly distribution of $0.500 per unit, or $196.8 million, as well as the Enhanced Distribution of $0.356 per unit discussed below.

To facilitate the distribution of available cash, during 2022 the Partnership adopted a financial policy that provided for an additional distribution (“Enhanced Distribution”) to be paid in conjunction with the regular first-quarter distribution of the following year (beginning in 2023), in a target amount equal to Free cash flow generated in the prior year after subtracting Free cash flow used for the prior year’s debt repayments, regular-quarter distributions, and unit repurchases. This Enhanced Distribution is subject to Board discretion, the establishment of cash reserves for the proper conduct of the Partnership’s business and is also contingent on the attainment of prior year-end net leverage thresholds (the ratio of total principal debt outstanding less total cash on hand as of the end of such period, as compared to trailing-twelve-months Adjusted EBITDA), after taking the Enhanced Distribution for such prior year into effect. Free cash flow and Adjusted EBITDA are defined under the caption Reconciliation of Non-GAAP Financial Measures within Part I, Item 2 of this Form 10-Q. In April 2023, the Board approved an Enhanced Distribution of $0.356 per unit, or $140.1 million, related to the Partnership’s 2022 performance.

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3. PARTNERSHIP DISTRIBUTIONS

WES Operating partnership distributions. WES Operating makes quarterly cash distributions to the Partnership and WGR Asset Holding Company LLC (“WGRAH”), a subsidiary of Occidental, in proportion to their share of limited partner interests in WES Operating. See Note 4. WES Operating made the following cash distributions to its limited partners for the periods presented:


thousands Quarters Ended	Total Quarterly Cash Distribution		Distribution Date





2022
March 31	$	213,513	May 2022
June 30	213,513		August 2022
September 30	213,513		November 2022
December 31	213,513		February 2023
2023
March 31 (1)	$	342,895	May 2023

_________________________________________________________________________________________

(1)Includes amounts related to the Enhanced Distribution discussed above.

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4. EQUITY AND PARTNERS’ CAPITAL

Holdings of Partnership equity. The Partnership’s common units are listed on the New York Stock Exchange under the ticker symbol “WES.” As of March 31, 2023, Occidental held 190,281,578 common units, representing a 48.3% limited partner interest in the Partnership, and through its ownership of the general partner, Occidental indirectly held 9,060,641 general partner units, representing a 2.3% general partner interest in the Partnership. The public held 194,333,649 common units, representing a 49.4% limited partner interest in the Partnership.

Partnership equity repurchases. In 2022, the Board authorized the Partnership to buy back up to $1.25 billion of the Partnership’s common units through December 31, 2024 (the “$1.25 billion Purchase Program”). The common units may be purchased from time to time in the open market at prevailing market prices or in privately negotiated transactions. During the three months ended March 31, 2023, the Partnership repurchased 285,688 common units for an aggregate purchase price of $7.1 million. During the three months ended March 31, 2022, the Partnership repurchased 225,355 common units on the open market for an aggregate purchase price of $5.1 million. The units were canceled immediately upon receipt. As of March 31, 2023, the Partnership had an authorized amount of $755.3 million remaining under the program.

Holdings of WES Operating equity. As of March 31, 2023, (i) the Partnership, directly and indirectly through its ownership of WES Operating GP, owned a 98.0% limited partner interest and the entire non-economic general partner interest in WES Operating and (ii) Occidental, through its ownership of WGRAH, owned a 2.0% limited partner interest in WES Operating, which is reflected as a noncontrolling interest within the consolidated financial statements of the Partnership (see Note 1).

Partnership’s net income (loss) per common unit. The common and general partner unitholders’ allocation of net income (loss) attributable to the Partnership was equal to their cash distributions plus their respective allocations of undistributed earnings or losses in accordance with their weighted-average ownership percentage during each period using the two-class method.

The Partnership’s basic net income (loss) per common unit is calculated by dividing the limited partners’ interest in net income (loss) by the weighted-average number of common units outstanding during the period. Diluted net income (loss) per common unit includes the effect of outstanding units issued under the Partnership’s long-term incentive plans.

The following table provides a reconciliation between basic and diluted net income (loss) per common unit:


	Three Months Ended March 31,
thousands except per-unit amounts	2023		2022
Net income (loss)
Limited partners’ interest in net income (loss)	$	198,959	$	301,934
Weighted-average common units outstanding
Basic	384,468		403,254
Dilutive effect of non-vested phantom units	1,282		1,206
Diluted	385,750		404,460
Excluded due to anti-dilutive effect	663		469
Net income (loss) per common unit
Basic	$	0.52	$	0.75
Diluted	$	0.52	$	0.75

WES Operating’s net income (loss) per common unit. Net income (loss) per common unit for WES Operating is not calculated because it has no publicly traded units.

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(UNAUDITED)

5. RELATED-PARTY TRANSACTIONS

Summary of related-party transactions. The following tables summarize material related-party transactions included in the Partnership’s consolidated financial statements:


Consolidated statements of operations

	Three Months Ended March 31,
thousands	2023		2022
Revenues and other
Service revenues – fee based	$	423,501	$	414,899
Service revenues – product based	8,116		2,243
Product sales	17,168		11,567
Total revenues and other	448,785		428,709
Equity income, net – related parties (1)	39,021		49,607
Operating expenses
Cost of product (2)	(3,947)		(19,543)
Operation and maintenance	747		(59)
General and administrative (3)	67		1,975
Total operating expenses	(3,133)		(17,627)

_________________________________________________________________________________________

(1)See Note 6.

(2)Includes related-party natural-gas and NGLs imbalances.

(3)Includes equity-based compensation expense allocated to the Partnership by Occidental, which is not reimbursed to Occidental and is reflected as a contribution to partners’ capital in the consolidated statements of equity and partners’ capital.





Consolidated balance sheets
thousands	March 31, 2023		December 31, 2022
Assets
Accounts receivable, net	$	307,570	$	313,937
Other current assets	4,175		1,578
Equity investments (1)	931,852		944,696
Other assets	36,158		29,058
Total assets	1,279,755		1,289,269
Liabilities
Accounts and imbalance payables	19,490		32,150
Accrued liabilities	6,109		11,756
Other liabilities (2)	293,077		268,399
Total liabilities	318,676		312,305

_________________________________________________________________________________________

(1)See Note 6.

(2)Includes contract liabilities from contracts with customers. See Note 2.

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5. RELATED-PARTY TRANSACTIONS


Consolidated statements of cash flows

	Three Months Ended March 31,
thousands	2023		2022
Distributions from equity-investment earnings – related parties	$	39,609	$	45,870


Contributions to equity investments – related parties	(110)		(2,070)
Distributions from equity investments in excess of cumulative earnings – related parties	12,366		9,925
Distributions to Partnership unitholders (1)	(99,671)		(68,455)
Distributions to WES Operating unitholders (2)	(4,271)		(2,805)
Net contributions from (distributions to) related parties	—		409

_________________________________________________________________________________________

(1)Represents common and general partner unit distributions paid to Occidental pursuant to the partnership agreement of the Partnership (see Note 3 and Note 4).

(2)Represents distributions paid to Occidental, through its ownership of WGRAH, pursuant to WES Operating’s partnership agreement (see Note 3 and Note 4).

The following tables summarize material related-party transactions for WES Operating (which are included in the Partnership’s consolidated financial statements) to the extent the amounts differ materially from the Partnership’s consolidated financial statements:


Consolidated statements of operations

	Three Months Ended March 31,
thousands	2023		2022
General and administrative (1)	$	1,281	$	2,948

_________________________________________________________________________________________

(1)Includes (i) an intercompany service fee between the Partnership and WES Operating and (ii) equity-based compensation expense allocated to WES Operating by Occidental, which is not reimbursed to Occidental and is reflected as a contribution to partners’ capital in the consolidated statements of equity and partners’ capital.





Consolidated balance sheets
thousands	March 31, 2023		December 31, 2022
Accounts receivable, net	$	308,581	$	313,937
Other current assets	3,720		1,487
Other assets	34,442		28,459
Accounts and imbalance payables (1)	19,490		76,131
Accrued liabilities	5,792		11,439

_________________________________________________________________________________________

(1)Includes balances related to transactions between the Partnership and WES Operating.

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5. RELATED-PARTY TRANSACTIONS


Consolidated statements of cash flows

	Three Months Ended March 31,
thousands	2023		2022
Distributions to WES Operating unitholders (1)	$	(213,513)	$	(140,217)

_________________________________________________________________________________________

(1)Represents distributions paid to the Partnership and Occidental, through its ownership of WGRAH, pursuant to WES Operating’s partnership agreement. See Note 3 and Note 4.

Related-party revenues. Related-party revenues include amounts earned by the Partnership from services provided to Occidental and from the sale of natural gas, condensate, and NGLs to Occidental.

Gathering and processing agreements. The Partnership has significant gathering, processing, and produced-water disposal arrangements with affiliates of Occidental on most of its systems (see also Part II, Item 5 of this Form 10-Q). While Occidental is the contracting counterparty of the Partnership, these arrangements with Occidental include not just Occidental-produced volumes, but also, in some instances, the volumes of other working-interest owners of Occidental who rely on the Partnership’s facilities and infrastructure to bring their volumes to market. Natural-gas throughput (excluding equity-investment throughput) attributable to production owned or controlled by Occidental was 35% and 36% for the three months ended March 31, 2023 and 2022, respectively. Crude-oil and NGLs throughput (excluding equity-investment throughput) attributable to production owned or controlled by Occidental was 88% and 89% for the three months ended March 31, 2023 and 2022, respectively. Produced-water throughput attributable to production owned or controlled by Occidental was 80% and 84% for the three months ended March 31, 2023 and 2022, respectively.

The Partnership is currently discussing varying interpretations of certain contractual provisions with Occidental regarding the calculation of the cost-of-service rates under an oil-gathering contract related to the Partnership’s DJ Basin oil-gathering system. If such discussions are resolved in a manner adverse to the Partnership, such resolution could have a negative impact on the Partnership’s financial condition and results of operations, including a reduction in rates and a non-cash charge to earnings.

In connection with the sale of its Eagle Ford assets in 2017, Anadarko remained the primary counterparty to the Partnership’s Brasada gas processing agreement and entered into an agency relationship with Sanchez Energy Corporation (“Sanchez”), now Mesquite Energy, Inc. (“Mesquite”), that allows Mesquite to process gas under such agreement. In December 2021, the Brasada gas processing agreement was assigned from Anadarko to Mesquite effective July 1, 2023. For this reason, Anadarko continues to be liable under the Brasada gas processing agreement until June 30, 2023, to the extent Mesquite does not perform. For all periods presented, Mesquite has performed Anadarko’s obligations under the Brasada gas processing agreement pursuant to its agency arrangement with Anadarko.

Further, in connection with the sale of its Uinta Basin assets in 2020, Kerr McGee Oil & Gas Onshore LP, a subsidiary of Occidental, retained the deficiency payment obligations under a gas processing agreement at the Chipeta plant. This contingent payment obligation ended as of September 30, 2022.

Marketing Transition Services Agreement. During the year ended December 31, 2020, Occidental provided marketing-related services to certain of the Partnership’s subsidiaries (the “Marketing Transition Services Agreement”). While the Partnership still has some marketing agreements with affiliates of Occidental, on January 1, 2021, the Partnership began marketing and selling substantially all of its crude oil and residue gas, and a majority of its NGLs, directly to third parties.

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5. RELATED-PARTY TRANSACTIONS

Operating leases. The Partnership has entered into operating leases with Occidental for corporate offices, shared field offices, and easements supporting the Partnership’s operations. Also, as a result of the surface-use and salt-water disposal agreements being amended under the CUA (see Related-party commercial agreement below), these agreements are classified as operating leases and a $30.0 million right-of-use (“ROU”) asset, included in Other assets on the consolidated balance sheets, was recognized during the first quarter of 2021. The ROU asset is being amortized to Operation and maintenance expense through 2038, the remaining term of the agreements.

Related-party expenses. Operation and maintenance expense includes amounts accrued for or paid to related parties for field-related costs provided by related parties at certain of the Partnership’s assets. A portion of general and administrative expense is paid by Occidental, which results in related-party transactions pursuant to the reimbursement provisions of the Partnership’s and WES Operating’s agreements with Occidental. Cost of product expense includes amounts related to certain continuing marketing arrangements with affiliates of Occidental, related-party imbalances, and transactions with affiliates accounted for under the equity method of accounting. See Marketing Transition Services Agreement in the section above. Related-party expenses bear no direct relationship to related-party revenues, and third-party expenses bear no direct relationship to third-party revenues.

Services Agreement. General and administrative expense includes costs incurred pursuant to the agreement dated as of December 31, 2019, by and among Occidental, Anadarko, and WES Operating GP, under which Occidental has performed certain centralized corporate functions for the Partnership and WES Operating (“Services Agreement”). Most of the administrative and operational services previously provided by Occidental fully transitioned to the Partnership by December 31, 2021, with certain limited transition services remaining in place pursuant to the terms of the Services Agreement.

Construction reimbursement agreements and purchases and sales with related parties. From time to time, the Partnership enters into construction reimbursement agreements with Occidental providing that the Partnership will manage the construction of certain midstream infrastructure for Occidental in the Partnership’s areas of operation. Such arrangements generally provide for a reimbursement of costs incurred by the Partnership on a cost or cost-plus basis.

Additionally, from time to time, in support of the Partnership’s business, the Partnership purchases and sells equipment, inventory, and other miscellaneous assets from or to Occidental or its affiliates.

Related-party commercial agreement. During the first quarter of 2021, an affiliate of Occidental and certain wholly owned subsidiaries of the Partnership entered into a Commercial Understanding Agreement (“CUA”). Under the CUA, certain West Texas surface-use and salt-water disposal agreements were amended to reduce usage fees owed by the Partnership in exchange for the forgiveness of certain deficiency fees owed by Occidental and other unrelated contractual amendments. The present value of the reduced usage fees under the CUA was $30.0 million at the time the agreement was executed.

Customer concentration. Occidental was the only customer from which revenues exceeded 10% of consolidated revenues for all periods presented in the consolidated statements of operations.

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(UNAUDITED)

6. EQUITY INVESTMENTS

The following table presents the financial statement impact of the Partnership’s equity investments for the three months ended March 31, 2023:


thousands	Balance at December 31, 2022		Equity income, net		Contributions		Distributions		Distributions in excess of cumulative earnings (1)		Balance at March 31, 2023
White Cliffs	$	16,095	$	538	$	—	$	(164)	$	(858)	$	15,611
Rendezvous	16,114		(715)		—		(100)		(476)		14,823
Mont Belvieu JV	91,310		6,884		—		(6,893)		(382)		90,919
TEG	15,856		1,655		—		(1,661)		(74)		15,776
TEP	184,687		10,079		—		(10,141)		(3,069)		181,556
FRP	192,716		9,963		—		(10,007)		(3,353)		189,319
Whitethorn LLC	146,595		(184)		110		509		—		147,030
Saddlehorn	104,191		5,238		—		(5,123)		(394)		103,912
Panola	19,311		567		—		(698)		(59)		19,121
Mi Vida	48,862		1,477		—		(1,812)		(2,956)		45,571
Red Bluff Express	108,959		3,519		—		(3,519)		(745)		108,214
Total	$	944,696	$	39,021	$	110	$	(39,609)	$	(12,366)	$	931,852

_________________________________________________________________________________________

(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.

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7. PROPERTY, PLANT, AND EQUIPMENT

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




thousands	Estimated Useful Life	March 31, 2023		December 31, 2022
Land	N/A	$	10,982	$	10,982
Gathering systems – pipelines	30 years	5,555,746		5,519,592
Gathering systems – compressors	15 years	2,331,782		2,266,410
Processing complexes and treating facilities	25 years	3,437,494		3,419,201
Transportation pipeline and equipment	4 to 48 years	175,394		174,241
Produced-water disposal systems	20 years	976,958		932,627
Assets under construction	N/A	270,503		263,353
Other	3 to 40 years	791,201		779,187
Total property, plant, and equipment		13,550,060		13,365,593
Less accumulated depreciation		5,008,838		4,823,993
Net property, plant, and equipment		$	8,541,222	$	8,541,600

“Assets under construction” represents property that is not yet placed into productive service as of the respective balance sheet date and is excluded from capitalized costs being depreciated.

Long-lived asset impairments. During the three months ended March 31, 2023, the Partnership recognized a long-lived asset impairment of $52.1 million for assets located in the Rockies due to a reduction in estimated future cash flows resulting from a contract termination notice received in the first quarter of 2023. This asset was impaired to its estimated fair value of $22.8 million. The fair value was measured using the income approach and Level-3 fair value inputs. The income approach was based on the Partnership’s projected future earnings before interest, taxes, depreciation, and amortization (“EBITDA”) and free cash flows, which requires significant assumptions including, among others, future throughput volumes based on current expectations of producer activity and operating costs.

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

8. SELECTED COMPONENTS OF WORKING CAPITAL

A summary of accounts receivable, net is as follows:


	The Partnership				WES Operating


thousands	March 31, 2023		December 31, 2022		March 31, 2023		December 31, 2022
Trade receivables, net	$	558,300	$	548,859	$	559,311	$	548,859
Other receivables, net	—		5,404		—		5,404
Total accounts receivable, net	$	558,300	$	554,263	$	559,311	$	554,263

A summary of other current assets is as follows:


	The Partnership				WES Operating


thousands	March 31, 2023		December 31, 2022		March 31, 2023		December 31, 2022
NGLs inventory	$	2,792	$	3,797	$	2,792	$	3,797
Imbalance receivables	34,146		32,658		34,146		32,658
Prepaid insurance	10,975		13,262		9,355		11,139
Contract assets	7,937		3,381		7,937		3,381
Other	8,503		6,408		8,047		6,316
Total other current assets	$	64,353	$	59,506	$	62,277	$	57,291

A summary of accrued liabilities is as follows:


	The Partnership				WES Operating


thousands	March 31, 2023		December 31, 2022		March 31, 2023		December 31, 2022
Accrued interest expense	$	58,541	$	110,486	$	58,541	$	110,486
Short-term asset retirement obligations	6,159		10,493		6,159		10,493
Short-term remediation and reclamation obligations	6,648		5,383		6,648		5,383
Income taxes payable	2,920		2,428		2,920		2,428
Contract liabilities	14,307		20,903		14,307		20,903
Accrued payroll and benefits	24,914		44,855		—		—
Other	50,009		60,092		49,798		47,596
Total accrued liabilities	$	163,498	$	254,640	$	138,373	$	197,289

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

9. DEBT AND INTEREST EXPENSE

WES Operating is the borrower for all outstanding debt and is expected to be the borrower for all future debt issuances. The following table presents the outstanding debt:


	March 31, 2023						December 31, 2022
thousands	Principal		Carrying Value		Fair Value (1)		Principal		Carrying Value		Fair Value (1)
Short-term debt
Floating-Rate Senior Notes due 2023	$	—	$	—	$	—	$	213,138	$	213,121	$	214,823

Finance lease liabilities	2,714		2,714		2,714		2,659		2,659		2,659
Total short-term debt	$	2,714	$	2,714	$	2,714	$	215,797	$	215,780	$	217,482

Long-term debt
3.100% Senior Notes due 2025	$	730,706	$	728,273	$	703,032	$	730,706	$	727,953	$	692,491
3.950% Senior Notes due 2025	399,163		397,056		383,140		399,163		396,825		379,107
4.650% Senior Notes due 2026	474,242		472,299		459,488		474,242		472,161		452,201
4.500% Senior Notes due 2028	400,000		396,840		378,827		400,000		396,698		368,346
4.750% Senior Notes due 2028	400,000		397,443		381,273		400,000		397,340		368,141
4.050% Senior Notes due 2030	1,200,000		1,191,606		1,101,320		1,200,000		1,191,345		1,053,038
5.450% Senior Notes due 2044	600,000		593,915		524,661		600,000		593,878		503,742
5.300% Senior Notes due 2048	700,000		687,553		598,444		700,000		687,494		580,570
5.500% Senior Notes due 2048	350,000		342,815		302,297		350,000		342,783		291,194
5.250% Senior Notes due 2050	1,000,000		984,006		859,814		1,000,000		983,945		829,804
RCF	495,000		495,000		495,000		375,000		375,000		375,000
Finance lease liabilities	7,135		7,135		7,135		4,160		4,160		4,160
Total long-term debt	$	6,756,246	$	6,693,941	$	6,194,431	$	6,633,271	$	6,569,582	$	5,897,794

_________________________________________________________________________________________

(1)Fair value is measured using the market approach and Level-2 fair value inputs.

Debt activity. The following table presents the debt activity for the three months ended March 31, 2023:


thousands	Carrying Value







Balance at December 31, 2022	$	6,785,362
RCF borrowings	220,000
Repayments of RCF borrowings	(100,000)

Repayment of Floating-Rate Senior Notes due 2023	(213,138)



Finance lease liabilities	3,030
Other	1,401
Balance at March 31, 2023	$	6,696,655

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

9. DEBT AND INTEREST EXPENSE

WES Operating Senior Notes. In mid-January 2020, WES Operating issued the Fixed-Rate 3.100% Senior Notes due 2025, 4.050% Senior Notes due 2030, 5.250% Senior Notes due 2050, and the Floating-Rate Senior Notes due 2023. Including the effects of the issuance prices, underwriting discounts, and interest-rate adjustments, the effective interest rates of the Senior Notes due 2025, 2030, and 2050, were 3.790%, 4.671%, and 5.869%, respectively, at March 31, 2023 and 2022. The effective interest rate of these notes is subject to adjustment from time to time due to a change in credit rating.

During the first quarter of 2023, WES Operating redeemed the total principal amount outstanding on the Floating-Rate Senior Notes due 2023 at par value with cash on hand. In April 2023, WES Operating completed the public offering of $750.0 million in aggregate principal amount of 6.150% Senior Notes due 2033. Interest will be payable semi-annually on April 1st and October 1st of each year, with the initial interest payment being due on October 1, 2023. Net proceeds from the offering were used to repay borrowings under the RCF and for general partnership purposes.

During the second quarter of 2022, WES Operating (i) redeemed the total principal amount outstanding of the 4.000% Senior Notes due 2022 at par value and (ii) purchased and retired $1.4 million of the 3.100% Senior Notes due 2025 via open-market repurchases.

As of March 31, 2023, WES Operating was in compliance with all covenants under the relevant governing indentures.

Revolving credit facility. WES Operating’s $2.0 billion senior unsecured revolving credit facility (“RCF”), which is expandable to a maximum of $2.5 billion, matures in February 2026 for each extending lender. The non-extending lender’s commitments mature in February 2025 and represent $400.0 million out of $2.0 billion of total commitments from all lenders.

As of March 31, 2023, there were $495.0 million of outstanding borrowings and $5.1 million of outstanding letters of credit, resulting in $1.5 billion of available borrowing capacity under the RCF. As of March 31, 2023 and 2022, the interest rate on any outstanding RCF borrowings was 6.21% and 1.95%, respectively. The facility-fee rate was 0.20% and 0.25% at March 31, 2023 and 2022, respectively. As of March 31, 2023, the outstanding borrowings under the RCF were classified as long-term debt on the consolidated balance sheet and WES Operating was in compliance with all covenants under the RCF.

In April 2023, WES Operating (i) repaid all outstanding borrowings under the RCF with proceeds from the senior note offering, and (ii) entered into an amendment to its RCF to, among other things, extend the maturity date to April 2028 and provide for a maximum borrowing capacity up to $2.0 billion through the maturity date.

Interest expense. The following table summarizes the amounts included in interest expense:



	Three Months Ended March 31,
thousands		2023		2022

Long-term and short-term debt		$	(81,151)	$	(83,428)
Finance lease liabilities		(163)		(42)
Commitment fees and amortization of debt-related costs		(2,881)		(3,032)
Capitalized interest		2,525		1,047

Interest expense		$	(81,670)	$	(85,455)

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

10. COMMITMENTS AND CONTINGENCIES

Environmental obligations. The Partnership is subject to various environmental-remediation obligations arising from federal, state, and local regulations regarding air and water quality, hazardous and solid waste disposal, and other environmental matters. As of March 31, 2023, and December 31, 2022, the consolidated balance sheets included $9.2 million and $7.4 million, respectively, of liabilities for remediation and reclamation obligations. The current portion of these amounts is included in Accrued liabilities, and the long-term portion of these amounts is included in Other liabilities. The majority of payments related to these obligations are expected to be made over the next year. See Note 8.

Litigation and legal proceedings. From time to time, the Partnership 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 proceeding for which the final disposition could have a material adverse effect on the Partnership’s financial condition, results of operations, or cash flows.

Other commitments. The Partnership has payment obligations, or commitments, that include, among other things, a revolving credit facility, other third-party long-term debt, obligations related to the Partnership’s capital spending programs, pipeline and offload commitments, and various operating and finance leases. The payment obligations related to the Partnership’s capital spending programs, the majority of which is expected to be paid in the next 12 months, primarily relate to construction, expansion, and asset-integrity projects at the West Texas complex, DBM water systems, DBM oil system, and DJ Basin complex.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion analyzes our financial condition and results of operations and should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements, wherein WES Operating is fully consolidated, and which are included under Part I, Item 1 of this quarterly report, and the historical consolidated financial statements, and the notes thereto, which are included under Part II, Item 8 of the 2022 Form 10-K as filed with the SEC on February 22, 2023.

The Partnership’s assets include assets owned and ownership interests accounted for by us under the equity method of accounting, through our 98.0% partnership interest in WES Operating, as of March 31, 2023 (see Note 6—Equity Investments in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q). We also own and control the entire non-economic general partner interest in WES Operating GP, and our general partner is owned by Occidental.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

We have made in this Form 10-Q, and may make in other public filings, press releases, and statements by management, forward-looking statements concerning our operations, economic performance, and financial condition. These forward-looking statements include statements preceded by, followed by, or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “estimates,” “projects,” “target,” “goal,” “plans,” “objective,” “should,” or similar expressions or variations on such expressions. These statements discuss future expectations, contain projections of results of operations or financial condition, or include other “forward-looking” information.

Although we and our general partner believe that the expectations reflected in our forward-looking statements are reasonable, neither we nor our general partner can provide any assurance that such expectations will prove correct. These forward-looking statements involve risks and uncertainties. Important factors that could cause actual results to differ materially from expectations include, but are not limited to, the following:

•our ability to pay distributions to our unitholders;

•our assumptions about the energy market;

•future throughput (including Occidental production) that is gathered or processed by, or transported through, our assets;

•our operating results;

•competitive conditions;

•technology;

•the availability of capital resources to fund acquisitions, capital expenditures, and other contractual obligations, and our ability to access financing through the debt or equity capital markets;

•the supply of, demand for, and price of oil, natural gas, NGLs, and related products or services;

•commodity-price risks inherent in percent-of-proceeds, percent-of-product, keep-whole, and fixed-recovery processing contracts;

•weather and natural disasters;

•inflation;

•the availability of goods and services;

•general economic conditions, internationally, domestically, or in the jurisdictions in which we are doing business;

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•federal, state, and local laws and state-approved voter ballot initiatives, including those laws or ballot initiatives that limit producers’ hydraulic-fracturing activities or other oil and natural-gas development or operations;

•environmental liabilities;

•legislative or regulatory changes, including changes affecting our status as a partnership for federal income tax purposes;

•changes in the financial or operational condition of Occidental;

•the creditworthiness of Occidental or our other counterparties, including financial institutions, operating partners, and other parties;

•changes in Occidental’s capital program, corporate strategy, or other desired areas of focus;

•our commitments to capital projects;

•our ability to access liquidity under the RCF;

•our ability to repay debt;

•the resolution of litigation or other disputes;

•conflicts of interest among us and our general partner and its related parties, including Occidental, with respect to, among other things, the allocation of capital and operational and administrative costs and our future business opportunities;

•our ability to maintain and/or obtain rights to operate our assets on land owned by third parties;

•our ability to acquire assets on acceptable terms from third parties;

•non-payment or non-performance of significant customers, including under gathering, processing, transportation, and disposal agreements;

•the timing, amount, and terms of future issuances of equity and debt securities;

•the outcome of pending and future regulatory, legislative, or other proceedings or investigations, and continued or additional disruptions in operations that may occur as we and our customers comply with any regulatory orders or other state or local changes in laws or regulations;

•cyber attacks or security breaches; and

•other factors discussed below, in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” included in the 2022 Form 10-K, in our quarterly reports on Form 10-Q, and in our other public filings and press releases.

Risk factors and other factors noted throughout or incorporated by reference in this Form 10-Q could cause actual results to differ materially from those contained in any forward-looking statement. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

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EXECUTIVE SUMMARY

We are a midstream energy company organized as a publicly traded partnership, engaged in the business of gathering, compressing, treating, processing, and transporting natural gas; gathering, stabilizing, and transporting condensate, NGLs, and crude oil; and gathering and disposing of produced water. In our capacity as a natural-gas processor, we also buy and sell natural gas, NGLs, and condensate on behalf of ourselves and as an agent for our customers under certain contracts. To provide superior midstream service, we focus on ensuring the reliability and performance of our systems, creating sustainable cost efficiencies, enhancing our safety culture, and protecting the environment. We own or have investments in assets located in Texas, New Mexico, the Rocky Mountains (Colorado, Utah, and Wyoming), and North-central Pennsylvania. As of March 31, 2023, our assets and investments consisted of the following:


	Wholly Owned and Operated	Operated Interests	Non-Operated Interests	Equity Interests
Gathering systems (1)	17	2	3	1
Treating facilities	37	3	—	—
Natural-gas processing plants/trains	25	3	—	3
NGLs pipelines	2	—	—	5
Natural-gas pipelines	6	—	—	1
Crude-oil pipelines	3	1	—	3

_________________________________________________________________________________________

(1)Includes the DBM water systems.

Significant financial and operational events during the three months ended March 31, 2023, included the following:

•WES Operating redeemed the $213.1 million total principal amount outstanding of the Floating-Rate Senior Notes due 2023 at par value with cash on hand.

•We repurchased 285,688 common units for an aggregate purchase price of $7.1 million.

•Our regular first-quarter 2023 per-unit distribution is unchanged from the fourth-quarter 2022 per-unit distribution of $0.500.

•In April 2023, the Board approved an Enhanced Distribution of $0.356 per unit, or $140.1 million, related to our 2022 performance. This Enhanced Distribution is payable, along with our regular first-quarter 2023 distribution, on May 15, 2023, to our unitholders of record at the close of business on May 1, 2023.

•Natural-gas throughput attributable to WES totaled 4,107 MMcf/d for the three months ended March 31, 2023, representing a 3% decrease and a 1% increase compared to the three months ended December 31, 2022, and March 31, 2022, respectively.

•Crude-oil and NGLs throughput attributable to WES totaled 611 MBbls/d for the three months ended March 31, 2023, representing a 6% decrease and a 9% decrease compared to the three months ended December 31, 2022, and March 31, 2022, respectively.

•Produced-water throughput attributable to WES totaled 957 MBbls/d for the three months ended March 31, 2023, representing a 12% increase and a 27% increase compared to the three months ended December 31, 2022, and March 31, 2022, respectively.

•Gross margin was $537.9 million for the three months ended March 31, 2023, representing a 1% increase and a 2% decrease compared to the three months ended December 31, 2022, and March 31, 2022, respectively. See Reconciliation of Non-GAAP Financial Measures within this Item 2.

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•Adjusted gross margin for natural-gas assets (as defined under the caption Reconciliation of Non-GAAP Financial Measures within this Item 2) averaged $1.30 per Mcf for the three months ended March 31, 2023, representing a 2% increase and a 3% decrease compared to the three months ended December 31, 2022, and March 31, 2022, respectively.

•Adjusted gross margin for crude-oil and NGLs assets (as defined under the caption Reconciliation of Non-GAAP Financial Measures within this Item 2) averaged $2.65 per Bbl for the three months ended March 31, 2023, representing a 5% increase and a 9% increase compared to the three months ended December 31, 2022, and March 31, 2022, respectively.

•Adjusted gross margin for produced-water assets (as defined under the caption Reconciliation of Non-GAAP Financial Measures within this Item 2) averaged $0.81 per Bbl for the three months ended March 31, 2023, representing a 12% decrease and a 19% decrease compared to the three months ended December 31, 2022, and March 31, 2022, respectively.

The following table provides additional information on throughput for the periods presented below:


	Three Months Ended


	March 31, 2023	December 31, 2022	Inc/ (Dec)		March 31, 2022	Inc/ (Dec)
Throughput for natural-gas assets (MMcf/d)
Delaware Basin	1,569	1,524	3	%	1,326	18	%
DJ Basin	1,306	1,343	(3)	%	1,321	(1)	%
Equity investments	423	463	(9)	%	479	(12)	%
Other	948	1,055	(10)	%	1,084	(13)	%
Total throughput for natural-gas assets	4,246	4,385	(3)	%	4,210	1	%
Throughput for crude-oil and NGLs assets (MBbls/d)
Delaware Basin	205	203	1	%	192	7	%
DJ Basin	69	77	(10)	%	88	(22)	%
Equity investments	314	347	(10)	%	374	(16)	%
Other	35	35	—	%	35	—	%
Total throughput for crude-oil and NGLs assets	623	662	(6)	%	689	(10)	%
Throughput for produced-water assets (MBbls/d)
Delaware Basin	977	868	13	%	766	28	%



Total throughput for produced-water assets	977	868	13	%	766	28	%

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OUTLOOK

We expect our business to be affected by the below-described key trends and uncertainties. Our expectations are based on assumptions made by us and information currently available to us. To the extent our underlying assumptions about, or interpretations of, available information prove incorrect, our actual results may vary materially from expected results.

Impact of crude-oil, natural-gas, and NGLs prices. Crude-oil, natural-gas, and NGLs prices can fluctuate significantly, and have done so over time. Commodity-price fluctuations affect the level of our customers’ activities and our customers’ allocations of capital within their own asset portfolios. During 2020, oil and natural-gas prices were negatively impacted by the worldwide macroeconomic downturn that followed the global outbreak of COVID-19. In 2021, prices began to increase and in the first quarter of 2022, commodity prices increased significantly in connection with the war in Ukraine. For example, the New York Mercantile Exchange (“NYMEX”) West Texas Intermediate crude-oil daily settlement prices during 2022 ranged from a high of $123.70 per barrel in March 2022 to a low of $71.02 per barrel in December 2022, and prices during the three months ended March 31, 2023, ranged from a high of $81.62 per barrel in January 2023 to a low of $66.74 per barrel in March 2023. The extent and duration of the recent commodity-price volatility cannot be predicted.

To the extent producers continue with development plans in our areas of operation, we intend to continue connecting new wells or production facilities to our systems to maintain or increase throughput on our systems and mitigate the impact of production declines. However, our success in connecting additional wells or production facilities is dependent on the activity levels of our customers, any capacity constraints, and the availability of downstream-takeaway alternatives. In some cases, we take ownership of volumes at the tailgate of our plants based on certain contractual arrangements with our producer customers, which introduces additional commodity-price exposure. Additionally, we intend to continue evaluating the crude-oil, NGLs, and natural-gas price environments and adjust our capital spending plans to reflect our customers’ anticipated activity levels, while maintaining appropriate liquidity and financial flexibility.

Impact of inflation and supply-chain disruptions. Although inflation in the United States has been relatively low in recent years, the U.S. economy currently is experiencing significant inflation relative to historical precedent, from, among other things, supply-chain disruptions caused by, or governmental stimulus or fiscal policies adopted in response to, the COVID-19 crisis and in connection with the war in Ukraine. More specifically, the bottlenecks and disruptions from the lingering effects of the COVID-19 crisis have caused difficulties within the U.S. and global supply chains, creating logistical delays along with labor shortages. Continued inflation has raised our costs for labor, materials, fuel, and services, which has increased our operating costs and capital expenditures. Increases in inflationary pressure could materially and negatively impact our financial results. To the extent permitted by regulations and escalation provisions in certain of our existing agreements, we have the ability to recover a portion of increased costs in the form of higher fees.

Impact of interest rates. Overall, short- and long-term interest rates increased during 2022, and have continued to increase during 2023, resulting in increased interest expense on RCF borrowings. Any future increases in interest rates likely will result in additional increases in financing costs. Additionally, as with other yield-oriented securities, our unit price could be impacted by our implied distribution yield relative to market interest rates. Therefore, changes in interest rates, either positive or negative, may affect the yield requirements of investors who invest in our units, and a rising interest-rate environment could have an adverse impact on our unit price and our ability to issue additional equity, or increase the cost of issuing equity, to make acquisitions, to reduce debt, or for other purposes. However, we expect our cost of capital to remain competitive, as our competitors face similar interest-rate dynamics.

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ACQUISITIONS AND DIVESTITURES

Cactus II. In November 2022, we sold our 15.00% interest in Cactus II to two third parties for $264.8 million, which includes a $1.8 million pro-rata distribution through closing. Total proceeds were received during the fourth quarter of 2022, resulting in a net gain on sale of $109.9 million that was recorded as Gain (loss) on divestiture and other, net in the consolidated statements of operations.

Ranch Westex. In September 2022, we acquired the remaining 50% interest in Ranch Westex from a third party for $40.1 million. Subsequent to the acquisition, (i) we are the sole owner and operator of the asset, (ii) Ranch Westex is no longer accounted for under the equity method of accounting, and (iii) the Ranch Westex processing plant is included as part of the operations of the West Texas complex.

RESULTS OF OPERATIONS

OPERATING RESULTS

The following tables and discussion present a summary of our results of operations:


	Three Months Ended


thousands	March 31, 2023		December 31, 2022		March 31, 2022
Total revenues and other (1)	$	733,982	$	779,437	$	758,297
Equity income, net – related parties	39,021		44,095		49,607
Total operating expenses (1)	480,673		499,434		403,450
Gain (loss) on divestiture and other, net	(2,118)		104,560		370
Operating income (loss)	290,212		428,658		404,824

Interest expense	(81,670)		(84,606)		(85,455)

Other income (expense), net	1,215		1,486		106
Income (loss) before income taxes	209,757		345,538		319,475
Income tax expense (benefit)	1,416		504		1,805
Net income (loss)	208,341		345,034		317,670
Net income (loss) attributable to noncontrolling interests	4,696		8,710		8,953
Net income (loss) attributable to Western Midstream Partners, LP (2)	$	203,645	$	336,324	$	308,717

_________________________________________________________________________________________

(1)Total revenues and other includes amounts earned from services provided to related parties and from the sale of natural gas, condensate, and NGLs to related parties. Total operating expenses includes amounts charged by related parties for services received. See Note 5—Related-Party Transactions in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

(2)For reconciliations to comparable consolidated results of WES Operating, see Items Affecting the Comparability of Financial Results with WES Operating within this Item 2.

For purposes of the following discussion, any increases or decreases refer to the comparison of the three months ended March 31, 2023, to the three months ended December 31, 2022, or to the three months ended March 31, 2022, as applicable.

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Throughput


	Three Months Ended


	March 31, 2023	December 31, 2022	Inc/ (Dec)		March 31, 2022	Inc/ (Dec)
Throughput for natural-gas assets (MMcf/d)
Gathering, treating, and transportation	369	402	(8)	%	406	(9)	%
Processing	3,454	3,520	(2)	%	3,325	4	%
Equity investments (1)	423	463	(9)	%	479	(12)	%
Total throughput	4,246	4,385	(3)	%	4,210	1	%
Throughput attributable to noncontrolling interests (2)	139	154	(10)	%	152	(9)	%
Total throughput attributable to WES for natural-gas assets	4,107	4,231	(3)	%	4,058	1	%
Throughput for crude-oil and NGLs assets (MBbls/d)
Gathering, treating, and transportation	309	315	(2)	%	315	(2)	%
Equity investments (1)	314	347	(10)	%	374	(16)	%
Total throughput	623	662	(6)	%	689	(10)	%
Throughput attributable to noncontrolling interests (2)	12	13	(8)	%	14	(14)	%
Total throughput attributable to WES for crude-oil and NGLs assets	611	649	(6)	%	675	(9)	%
Throughput for produced-water assets (MBbls/d)
Gathering and disposal	977	868	13	%	766	28	%
Throughput attributable to noncontrolling interests (2)	20	17	18	%	15	33	%
Total throughput attributable to WES for produced-water assets	957	851	12	%	751	27	%

_________________________________________________________________________________________

(1)Represents our share of average throughput for investments accounted for under the equity method of accounting.

(2)For all periods presented, includes (i) the 2.0% limited partner interest in WES Operating owned by an Occidental subsidiary and (ii) for natural-gas assets, the 25% third-party interest in Chipeta, which collectively represent WES’s noncontrolling interests.

Natural-gas assets

Total throughput attributable to WES for natural-gas assets decreased by 124 MMcf/d compared to the three months ended December 31, 2022, primarily due to (i) lower volumes at Chipeta due to volumes being diverted away from the plant for part of December 2022 through February 2023, (ii) lower volumes due to production declines in areas around the DJ Basin complex and the Marcellus Interest systems, (iii) lower volumes due to production declines and extended winter weather conditions during the first quarter of 2023 in areas around the Granger and Red Desert complexes, and (iv) lower volumes at Mi Vida and on Red Bluff Express. These decreases were offset partially by higher volumes at the West Texas complex due to increased production in the area.

Total throughput attributable to WES for natural-gas assets increased by 49 MMcf/d compared to the three months ended March 31, 2022, primarily due to higher volumes at the West Texas complex due to increased production in the area. This increase was offset partially by (i) decreased volumes at the Ranch Westex plant, which we acquired in the third quarter of 2022 and is included as part of the West Texas complex subsequent to the acquisition, (ii) lower volumes at Chipeta due to volumes being diverted away from the plant for part of December 2022 through February 2023, (iii) lower volumes due to production declines and extended winter weather conditions during the first quarter of 2023 in areas around the Granger and Red Desert complexes, (iv) lower volumes due to production declines in the area around the Marcellus Interest systems, and (v) lower volumes at Mi Vida.

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Crude-oil and NGLs assets

Total throughput attributable to WES for crude-oil and NGLs assets decreased by 38 MBbls/d compared to the three months ended December 31, 2022, primarily due to (i) lower volumes on the Cactus II pipeline, which was sold in the fourth quarter of 2022, and (ii) decreased volumes on FRP and at the DJ Basin oil system resulting from production declines in the area.

Total throughput attributable to WES for crude-oil and NGLs assets decreased by 64 MBbls/d compared to the three months ended March 31, 2022, primarily due to (i) lower volumes on the Cactus II pipeline, which was sold in the fourth quarter of 2022, and (ii) lower volumes at the DJ Basin oil system resulting from production declines in the area. These decreases were offset partially by (i) higher volumes at the DBM oil system resulting from increased production in the area and (ii) increased volumes on the Whitethorn pipeline.

Produced-water assets

Total throughput attributable to WES for produced-water assets increased by 106 MBbls/d and 206 MBbls/d compared to the three months ended December 31, 2022, and March 31, 2022, respectively, due to higher production and new third-party connections brought online during the first quarter of 2023 and the second half of 2022.

Service Revenues


	Three Months Ended


thousands except percentages	March 31, 2023		December 31, 2022		Inc/ (Dec)		March 31, 2022		Inc/ (Dec)
Service revenues – fee based	$	647,867	$	647,948	—	%	$	631,598	3	%
Service revenues – product based	46,810		46,971		—	%	40,867		15	%
Total service revenues	$	694,677	$	694,919	—	%	$	672,465	3	%

Service revenues – fee based

Service revenues – fee based decreased by $0.1 million compared to the three months ended December 31, 2022, primarily due to decreases of (i) $20.2 million at the Springfield system due to an annual cost-of-service rate adjustment that increased revenue during the fourth quarter of 2022, (ii) $2.2 million at the DBM water systems due to decreased deficiency fees and a lower average fee resulting from a cost-of-service rate redetermination effective January 1, 2023, partially offset by increased throughput, and (iii) $1.7 million at the DBM oil system due to a lower average fee resulting from a cost-of-service rate redetermination effective January 1, 2023, and decreased deficiency fees. These decreases were partially offset by increases of (i) $16.4 million at the DJ Basin oil system due to an annual cost-of-service rate adjustment that decreased revenue during the fourth quarter of 2022, partially offset by decreased throughput, and (ii) $10.0 million at the West Texas complex due to increased throughput.

Service revenues – fee based increased by $16.3 million compared to the three months ended March 31, 2022, primarily due to increases of (i) $28.6 million and $3.1 million at the West Texas complex and DBM oil system, respectively, as a result of increased throughput and (ii) $2.1 million at the DBM water systems due to increased throughput, partially offset by decreased deficiency fees and a lower average fee resulting from a cost-of-service rate redetermination effective January 1, 2023. These increases were partially offset by decreases of (i) $5.2 million at the Chipeta complex due to decreased deficiency fees, (ii) $3.3 million at the DJ Basin complex due to decreased throughput, partially offset by increased deficiency fees, (iii) $3.0 million at the DJ Basin oil system due to decreased throughput, (iv) $2.8 million at the Springfield system primarily due to decreased demand-fee revenue, and (v) $1.9 million at the Marcellus Interest systems due to decreased throughput.

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Service revenues – product based

Service revenues – product based increased by $5.9 million compared to the three months ended March 31, 2022, primarily due to increases of (i) $10.3 million at the West Texas complex due to increased volumes and changes in contract mix, and (ii) $4.8 million at the DJ Basin complex due to changes in contract mix. These increases were partially offset by decreases of (i) $2.8 million at the Chipeta complex as a result of lower volumes, (ii) $2.5 million at the Granger complex due to decreased average prices, (iii) $1.9 million at the Red Desert complex due to decreased throughput and average prices, and (iv) $1.8 million at the Hilight system due to decreased average prices.

Product Sales


	Three Months Ended


thousands except percentages and per-unit amounts	March 31, 2023		December 31, 2022		Inc/ (Dec)		March 31, 2022		Inc/ (Dec)
Natural-gas sales	$	2,775	$	27,712	(90)	%	$	19,071	(85)	%
NGLs sales	36,250		56,556		(36)	%	66,518		(46)	%
Total Product sales	$	39,025	$	84,268	(54)	%	$	85,589	(54)	%
Per-unit gross average sales price:
Natural gas (per Mcf)	$	1.75	$	3.78	(54)	%	$	4.38	(60)	%
NGLs (per Bbl)	28.78		29.21		(1)	%	46.48		(38)	%

Natural-gas sales

Natural-gas sales decreased by $24.9 million compared to the three months ended December 31, 2022, primarily due to decreases of (i) $8.2 million and $3.7 million at the DJ Basin and Red Desert complexes, respectively, due to decreases in volumes sold and average prices, (ii) $7.9 million at the West Texas complex due to decreased average prices, and (iii) $4.1 million at the Chipeta complex due to decreased volumes sold.

Natural-gas sales decreased by $16.3 million compared to the three months ended March 31, 2022, primarily due to decreases of (i) $13.2 million at the West Texas complex due to decreased average prices, partially offset by increased volumes sold, and (ii) $2.5 million and $2.0 million at the DJ Basin and Red Desert complexes, respectively, due to decreases in volumes sold and average prices.

NGLs sales

NGLs sales decreased by $20.3 million compared to the three months ended December 31, 2022, primarily due to decreases of (i) $12.1 million and $1.4 million at the DJ Basin and Granger complexes, respectively, due to a decrease in volumes sold, partially offset by an increase in average prices, (ii) $4.1 million at the West Texas complex due to a decrease in average prices, partially offset by an increase in volumes sold, and (iii) $2.0 million at the Chipeta complex due to lower volumes sold.

NGLs sales decreased by $30.3 million compared to the three months ended March 31, 2022, primarily due to decreases of (i) $14.0 million at the West Texas complex due to a decrease in average prices, partially offset by an increase in volumes sold, (ii) $9.7 million, $4.1 million, and $1.4 million at the Chipeta complex, Granger complex, and Hilight system, respectively, as a result of decreases in average prices and volumes sold, and (iii) $3.5 million at the Brasada complex due to a contract expiration in the third quarter of 2022. These decreases were partially offset by an increase of $4.6 million at the DJ Basin complex due to an increase in volumes sold partially offset by a decrease in average prices.

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Equity Income, Net – Related Parties


	Three Months Ended


thousands except percentages	March 31, 2023		December 31, 2022		Inc/ (Dec)		March 31, 2022		Inc/ (Dec)
Equity income, net – related parties	$	39,021	$	44,095	(12)	%	$	49,607	(21)	%

Equity income, net – related parties decreased by $5.1 million compared to the three months ended December 31, 2022, primarily due to decreases of (i) $2.1 million at TEP due to decreased revenue coupled with increased ad valorem taxes, (ii) $1.8 million at FRP due to decreased revenue, and (iii) $1.6 million at Mi Vida due to decreased revenue and increases in certain expenses. These decreases were partially offset by an increase of $2.2 million at White Cliffs due to a goodwill impairment recorded in the fourth quarter of 2022.

Equity income, net – related parties decreased by $10.6 million compared to the three months ended March 31, 2022, primarily due to decreases of (i) $3.9 million at Ranch Westex, which we acquired in the third quarter of 2022 and is included as part of the West Texas complex subsequent to the acquisition (see Acquisitions and Divestitures within this Item 2), (ii) $3.6 million at Cactus II due to the divestiture of our interest in the fourth quarter of 2022 (see Acquisitions and Divestitures within this Item 2), (iii) 2.7 million at Mi Vida due to increases in certain expenses, and (iv) $1.0 million at the Mont Belvieu JV due to decreases in revenue.

Cost of Product and Operation and Maintenance Expenses


	Three Months Ended


thousands except percentages	March 31, 2023		December 31, 2022		Inc/ (Dec)		March 31, 2022		Inc/ (Dec)
Residue purchases	$	15,638	$	30,145	(48)	%	$	34,992	(55)	%
NGLs purchases	51,829		57,725		(10)	%	70,404		(26)	%
Other	(16,008)		4,793		NM		(32,548)		51	%
Cost of product	51,459		92,663		(44)	%	72,848		(29)	%
Operation and maintenance	174,239		166,923		4	%	128,976		35	%
Total Cost of product and Operation and maintenance expenses	$	225,698	$	259,586	(13)	%	$	201,824	12	%

_________________________________________________________________________________________

NM—Not meaningful

Residue purchases

Residue purchases decreased by $14.5 million compared to the three months ended December 31, 2022, primarily due to decreases of (i) $7.4 million at the West Texas complex primarily due to lower average prices and (ii) $6.1 million at the Chipeta complex primarily due to decreased volumes purchased.

Residue purchases decreased by $19.4 million compared to the three months ended March 31, 2022, primarily due to decreases of (i) $11.9 million at the West Texas complex attributable to changes in contract mix during 2022 and lower average prices, (ii) $5.2 million at the Chipeta complex due to decreased volumes purchased and lower average prices, and (iii) $3.8 million at the DJ Basin complex primarily due to a change in contract mix during the second quarter of 2022. These decreases were offset partially by an increase of $3.3 million at the Granger complex primarily due to an increase in average prices.

NGLs purchases

NGLs purchases decreased by $5.9 million compared to the three months ended December 31, 2022, primarily due to a decrease of $5.1 million at the West Texas complex due to lower average prices.

NGLs purchases decreased by $18.6 million compared to the three months ended March 31, 2022, primarily due to decreases of (i) $9.0 million at the West Texas complex primarily due to lower average prices, partially offset by increased volumes purchased, (ii) $3.5 million at the Brasada complex due to a contract expiration in the third quarter of 2022, (iii) $3.3 million at the Chipeta complex due to decreased volumes purchased, and (iv) $3.0 million at the Granger complex due to lower average prices.

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Other items

Other items decreased by $20.8 million compared to the three months ended December 31, 2022, primarily due to a decrease of $19.2 million at the DJ Basin complex attributable to changes in imbalance positions.

Other items increased by $16.5 million compared to the three months ended March 31, 2022, primarily due to increases of $9.7 million at the DJ Basin complex attributable to changes in imbalance positions and $8.7 million at the West Texas complex primarily due to increased offload fees and changes in imbalance positions.

Operation and maintenance expense

Operation and maintenance expense increased by $7.3 million compared to the three months ended December 31, 2022, primarily due to increases of (i) $4.5 million for maintenance and repair expense, (ii) $4.3 million in regulatory and environmental expense, and (iii) $2.6 million for salaries and wages costs. These increases were offset partially by decreases of $2.5 million for mechanical-integrity costs and $2.3 million in utility expense.

Operation and maintenance expense increased by $45.3 million compared to the three months ended March 31, 2022, primarily due to increases of (i) $13.5 million for maintenance and repair expense, (ii) $6.4 million in regulatory and environmental expense, (iii) $5.7 million in utility expense, (iv) $5.6 million for salaries and wages costs, (v) $2.7 million for mechanical-integrity costs, (vi) $2.7 million in contract labor and consulting expense, (vii) $2.7 million in land-related costs, and (viii) $2.4 million in water-disposal costs.

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Other Operating Expenses


	Three Months Ended


thousands except percentages	March 31, 2023		December 31, 2022		Inc/ (Dec)		March 31, 2022		Inc/ (Dec)
General and administrative	$	51,117	$	49,382	4	%	$	48,602	5	%
Property and other taxes	6,831		18,065		(62)	%	18,442		(63)	%
Depreciation and amortization	144,626		151,910		(5)	%	134,582		7	%
Long-lived asset and other impairments	52,401		20,491		156	%	—		100	%

Total other operating expenses	$	254,975	$	239,848	6	%	$	201,626	26	%

General and administrative expenses

General and administrative expenses increased by $1.7 million compared to the three months ended December 31, 2022, primarily due to an increase of $4.3 million in personnel costs, partially offset by a decrease of $2.5 million in contract and consulting costs, primarily related to information technology services and fees incurred in 2022.

General and administrative expenses increased by $2.5 million compared to the three months ended March 31, 2022, primarily due to an increase of $2.3 million in personnel costs.

Property and other taxes

Property and other taxes decreased by $11.2 million and $11.6 million compared to the three months ended December 31, 2022, and March 31, 2022, respectively, primarily due to decreases in the ad valorem property tax accrual related to the finalization of 2022 assessments at the DJ Basin complex.

Depreciation and amortization expense

Depreciation and amortization expense decreased by $7.3 million compared to the three months ended December 31, 2022, primarily due to decreases of (i) $5.4 million and $3.6 million at the MGR assets and Hilight system, respectively, as a result of a change in estimate for asset retirement obligations during the fourth quarter of 2022 and (ii) $2.5 million at the West Texas complex as a result of accretion adjustments to our asset retirement obligation during the first quarter of 2023. These decreases were partially offset by an increase of $5.3 million at the DJ Basin complex due to acceleration of depreciation expense.

Depreciation and amortization expense increased by $10.0 million compared to the three months ended March 31, 2022, primarily due to increases of (i) $4.5 million and $2.4 million at the DJ Basin complex and MGR assets, respectively, due to acceleration of depreciation expense as well as accretion adjustments to our asset retirement obligation during the first quarter of 2023 and (ii) $1.3 million at the Hilight system as a result of a change in estimate for asset retirement obligations during the first quarter of 2023.

Long-lived asset and other impairment expense

Long-lived asset and other impairment expense for the three months ended March 31, 2023, was primarily due to a $52.1 million impairment for assets located in the Rockies.

Long-lived asset and other impairment expense for the three months ended December 31, 2022, was primarily due to a $19.9 million other-than-temporary impairment of our investment in White Cliffs.

For further information on Long-lived asset and other impairment expense, see Note 7—Property, Plant, and Equipment in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

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Interest Expense


	Three Months Ended


thousands except percentages	March 31, 2023		December 31, 2022		Inc/ (Dec)		March 31, 2022		Inc/ (Dec)
Long-term and short-term debt	$	(81,151)	$	(83,390)	(3)	%	$	(83,428)	(3)	%
Finance lease liabilities	(163)		(318)		(49)	%	(42)		NM
Commitment fees and amortization of debt-related costs	(2,881)		(3,063)		(6)	%	(3,032)		(5)	%
Capitalized interest	2,525		2,165		17	%	1,047		141	%

Interest expense	$	(81,670)	$	(84,606)	(3)	%	$	(85,455)	(4)	%

Interest expense

Interest expense decreased by $2.9 million compared to the three months ended December 31, 2022, primarily due to the redemption of the total principal amount outstanding on the Floating-Rate Senior Notes due 2023 during the first quarter of 2023.

Interest expense decreased by $3.8 million compared to the three months ended March 31, 2022, primarily due to decreases of (i) $5.1 million due to the redemption of the total principal amount outstanding of the 4.000% Senior Notes due 2022 during the second quarter of 2022, (ii) $3.6 million due to credit-rating related interest rate changes on the 3.100% Senior Notes due 2025, 4.050% Senior Notes due 2030, and 5.250% Senior Notes due 2050, and (iii) $1.5 million due to higher capitalized interest. These decreases were offset partially by an increase of $7.0 million due to higher outstanding borrowings and average interest rates under the RCF during the first quarter of 2023.

See Liquidity and Capital Resources—Debt and credit facilities within this Item 2.

Income Tax Expense (Benefit)

We are not a taxable entity for U.S. federal income tax purposes; therefore, our federal statutory rate is zero percent. However, income apportionable to Texas is subject to Texas margin tax.

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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Adjusted gross margin. We define 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. We believe Adjusted gross margin is an important performance measure of our operations’ profitability and performance as compared to other companies in the midstream industry. Cost of product expenses include (i) costs associated with the purchase of natural gas and NGLs pursuant to our percent-of-proceeds, percent-of-product, and keep-whole contracts, (ii) costs associated with the valuation of gas and NGLs imbalances, and (iii) costs associated with our obligations under certain contracts to redeliver a volume of natural gas to shippers, which is thermally equivalent to condensate retained by us and sold to third parties. The electricity-related expenses included in our Adjusted gross margin definition relate to pass-through expenses that are reimbursed by certain customers (recorded as revenue with an offset recorded as Operation and maintenance expense).

Adjusted EBITDA. We define Adjusted EBITDA attributable to Western Midstream Partners, LP (“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. We believe the presentation of Adjusted EBITDA provides information useful to investors in assessing our financial condition and results of operations and that Adjusted EBITDA is a widely accepted financial indicator of a company’s ability to incur and service debt, fund capital expenditures, and make distributions. Adjusted EBITDA is a supplemental financial measure that management and external users of our consolidated financial statements, such as industry analysts, investors, commercial banks, and rating agencies, use, among other measures, to assess the following:

•our operating performance as compared to other publicly traded partnerships in the midstream industry, without regard to financing methods, capital structure, or historical cost basis;

•the ability of our assets to generate cash flow to make distributions; and

•the viability of acquisitions and capital expenditures and the returns on investment of various investment opportunities.

Free cash flow. We define “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.

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Adjusted gross margin, Adjusted EBITDA, and Free cash flow are not defined in GAAP. The GAAP measure that is most directly comparable to Adjusted gross margin is gross margin. Net income (loss) and net cash provided by operating activities are the GAAP measures that are most directly comparable to Adjusted EBITDA. The GAAP measure that is most directly comparable to Free cash flow is net cash provided by operating activities. Our non-GAAP financial measures of Adjusted gross margin, Adjusted EBITDA, and Free cash flow should not be considered as alternatives to the GAAP measures of gross margin, net income (loss), net cash provided by operating activities, or any other measure of financial performance presented in accordance with GAAP. Adjusted gross margin, Adjusted EBITDA, and Free cash flow have important limitations as analytical tools because they exclude some, but not all, items that affect gross margin, net income (loss), and net cash provided by operating activities. Adjusted gross margin, Adjusted EBITDA, and Free cash flow should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Our definitions of Adjusted gross margin, Adjusted EBITDA, and Free cash flow may not be comparable to similarly titled measures of other companies in our industry, thereby diminishing their utility as comparative measures.

Management compensates for the limitations of Adjusted gross margin, Adjusted EBITDA, and Free cash flow as analytical tools by reviewing the comparable GAAP measures, understanding the differences between Adjusted gross margin, Adjusted EBITDA, and Free cash flow compared to (as applicable) gross margin, net income (loss), and net cash provided by operating activities, and incorporating this knowledge into its decision-making processes. We believe that investors benefit from having access to the same financial measures that our management considers in evaluating our operating results.

The following tables present (i) a reconciliation of the GAAP financial measure of gross margin to the non-GAAP financial measure of Adjusted gross margin, (ii) a reconciliation of the GAAP financial measures of net income (loss) and net cash provided by operating activities to the non-GAAP financial measure of Adjusted EBITDA, and (iii) a reconciliation of the GAAP financial measure of net cash provided by operating activities to the non-GAAP financial measure of Free cash flow:


	Three Months Ended


thousands	March 31, 2023		December 31, 2022		March 31, 2022
Reconciliation of Gross margin to Adjusted gross margin
Total revenues and other	$	733,982	$	779,437	$	758,297
Less:
Cost of product	51,459		92,663		72,848
Depreciation and amortization	144,626		151,910		134,582
Gross margin	537,897		534,864		550,867
Add:
Distributions from equity investments	51,975		69,282		55,795
Depreciation and amortization	144,626		151,910		134,582
Less:
Reimbursed electricity-related charges recorded as revenues	23,569		23,577		18,404
Adjusted gross margin attributable to noncontrolling interests (1)	15,774		17,490		18,090
Adjusted gross margin	$	695,155	$	714,989	$	704,750

_________________________________________________________________________________________

(1)For all periods presented, includes (i) the 25% third-party interest in Chipeta and (ii) the 2.0% limited partner interest in WES Operating owned by an Occidental subsidiary, which collectively represent WES’s noncontrolling interests.

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To facilitate investor and industry analysis, we also disclose per-Mcf Adjusted gross margin for natural-gas assets, per-Bbl Adjusted gross margin for crude-oil and NGLs assets, and per-Bbl Adjusted gross margin for produced-water assets.


	Three Months Ended


thousands except per-unit amounts	March 31, 2023		December 31, 2022		March 31, 2022
Gross margin
Gross margin for natural-gas assets (1)	$	393,673	$	403,043	$	409,384
Gross margin for crude-oil and NGLs assets (1)	89,281		75,690		88,816
Gross margin for produced-water assets (1)	59,549		61,189		57,686
Per-Mcf Gross margin for natural-gas assets (2)	1.03		1.00		1.08
Per-Bbl Gross margin for crude-oil and NGLs assets (2)	1.59		1.24		1.43
Per-Bbl Gross margin for produced-water assets (2)	0.68		0.77		0.84
Adjusted gross margin
Adjusted gross margin for natural-gas assets	$	480,009	$	492,591	$	488,909
Adjusted gross margin for crude-oil and NGLs assets	145,577		150,611		148,247
Adjusted gross margin for produced-water assets	69,569		71,787		67,594
Per-Mcf Adjusted gross margin for natural-gas assets (3)	1.30		1.27		1.34
Per-Bbl Adjusted gross margin for crude-oil and NGLs assets (3)	2.65		2.53		2.44
Per-Bbl Adjusted gross margin for produced-water assets (3)	0.81		0.92		1.00

_________________________________________________________________________________________

(1)Excludes corporate-level depreciation and amortization.

(2)Average for period. Calculated as Gross margin for natural-gas assets, crude-oil and NGLs assets, or produced-water assets, divided by the respective total throughput (MMcf or MBbls) for natural-gas assets, crude-oil and NGLs assets, or produced-water assets.

(3)Average for period. Calculated as Adjusted Gross margin for natural-gas assets, crude-oil and NGLs assets, or produced-water assets, divided by the respective total throughput (MMcf or MBbls) attributable to WES for natural-gas assets, crude-oil and NGLs assets, or produced-water assets.

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	Three Months Ended


thousands	March 31, 2023		December 31, 2022		March 31, 2022
Reconciliation of Net income (loss) to Adjusted EBITDA
Net income (loss)	$	208,341	$	345,034	$	317,670
Add:
Distributions from equity investments	51,975		69,282		55,795
Non-cash equity-based compensation expense	7,199		6,538		7,743
Interest expense	81,670		84,606		85,455
Income tax expense	1,416		504		1,805
Depreciation and amortization	144,626		151,910		134,582
Impairments	52,401		20,491		—
Other expense	200		209		—
Less:
Gain (loss) on divestiture and other, net	(2,118)		104,560		370

Equity income, net – related parties	39,021		44,095		49,607

Other income	1,215		1,484		106

Adjusted EBITDA attributable to noncontrolling interests (1)	11,015		12,654		13,917
Adjusted EBITDA	$	498,695	$	515,781	$	539,050
Reconciliation of Net cash provided by operating activities to Adjusted EBITDA
Net cash provided by operating activities	$	302,424	$	489,219	$	276,458
Interest (income) expense, net	81,670		84,606		85,455
Accretion and amortization of long-term obligations, net	(1,692)		(1,783)		(1,782)
Current income tax expense (benefit)	492		262		673
Other (income) expense, net	(1,215)		(1,486)		(106)

Distributions from equity investments in excess of cumulative earnings – related parties	12,366		22,839		9,925
Changes in assets and liabilities:
Accounts receivable, net	4,037		(96,659)		165,134
Accounts and imbalance payables and accrued liabilities, net	136,460		72,881		14,292
Other items, net	(24,832)		(41,444)		2,918
Adjusted EBITDA attributable to noncontrolling interests (1)	(11,015)		(12,654)		(13,917)
Adjusted EBITDA	$	498,695	$	515,781	$	539,050
Cash flow information
Net cash provided by operating activities	$	302,424	$	489,219	$	276,458
Net cash used in investing activities	(179,178)		138,015		(71,617)
Net cash provided by (used in) financing activities	(297,257)		(499,671)		(158,591)

_________________________________________________________________________________________

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	Three Months Ended


thousands	March 31, 2023		December 31, 2022		March 31, 2022
Reconciliation of Net cash provided by operating activities to Free cash flow
Net cash provided by operating activities	$	302,424	$	489,219	$	276,458
Less:
Capital expenditures	173,088		145,723		83,971
Contributions to equity investments – related parties	110		733		2,070
Add:
Distributions from equity investments in excess of cumulative earnings – related parties	12,366		22,839		9,925
Free cash flow	$	141,592	$	365,602	$	200,342
Cash flow information
Net cash provided by operating activities	$	302,424	$	489,219	$	276,458
Net cash used in investing activities	(179,178)		138,015		(71,617)
Net cash provided by (used in) financing activities	(297,257)		(499,671)		(158,591)

Gross margin. Refer to Operating Results within this Item 2 for a discussion of the components of Gross margin as compared to the prior periods, including Service Revenues, Product Sales, Cost of Product (Residue purchases, NGLs purchases, and Other items), and Other Operating Expenses (Depreciation and amortization expense).

Gross margin increased by $3.0 million compared to the three months ended December 31, 2022, due to (i) a $41.2 million decrease in cost of product and (ii) a $7.3 million decrease in depreciation and amortization. These amounts were offset partially by a $45.5 million decrease in total revenues and other.

Gross margin decreased by $13.0 million compared to the three months ended March 31, 2022, due to (i) a $24.3 million decrease in total revenues and other and (ii) a $10.0 million increase in depreciation and amortization. These amounts were offset partially by a $21.4 million decrease in cost of product.

Net income (loss). Refer to Operating Results within this Item 2 for a discussion of the primary components of Net income (loss) as compared to the prior periods.

Net income (loss) decreased by $136.7 million compared to the three months ended December 31, 2022, primarily due to (i) a $106.7 million decrease in gain (loss) on divestiture and other, net, and (ii) a $45.5 million decrease in total revenues and other. These amounts were offset partially by an $18.8 million decrease in total operating expenses.

Net income (loss) decreased by $109.3 million compared to the three months ended March 31, 2022, primarily due to (i) a $77.2 million increase in total operating expenses and (ii) a $24.3 million decrease in total revenues and other.

Net cash provided by operating activities. Refer to Historical cash flow within this Item 2 for a discussion of the primary components of Net cash provided by operating activities as compared to the prior periods.

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KEY PERFORMANCE METRICS


	Three Months Ended


thousands except percentages and per-unit amounts	March 31, 2023		December 31, 2022		Inc/ (Dec)		March 31, 2022		Inc/ (Dec)



Adjusted gross margin	$	695,155	$	714,989	(3)	%	$	704,750	(1)	%
Per-Mcf Adjusted gross margin for natural-gas assets (1)	1.30		1.27		2	%	1.34		(3)	%
Per-Bbl Adjusted gross margin for crude-oil and NGLs assets (1)	2.65		2.53		5	%	2.44		9	%
Per-Bbl Adjusted gross margin for produced-water assets (1)	0.81		0.92		(12)	%	1.00		(19)	%
Adjusted EBITDA	498,695		515,781		(3)	%	539,050		(7)	%
Free cash flow	141,592		365,602		(61)	%	200,342		(29)	%

_________________________________________________________________________________________

(1)Average for period. Calculated as Adjusted gross margin for natural-gas assets, crude-oil and NGLs assets, or produced-water assets, divided by the respective total throughput (MMcf or MBbls) attributable to WES for natural-gas assets, crude-oil and NGLs assets, or produced-water assets.

Adjusted gross margin. Adjusted gross margin decreased by $19.8 million compared to the three months ended December 31, 2022, primarily due to (i) an annual cost-of-service rate adjustment that increased revenue during the fourth quarter of 2022 at the Springfield system, (ii) a decrease in distributions from Cactus II, which was sold in the fourth quarter of 2022, (iii) decreased throughput at the Chipeta and Granger complexes, and (iv) a decrease in distributions from Mont Belvieu JV and Whitethorn LLC. These decreases were partially offset by (i) an annual cost-of-service rate adjustment that decreased revenue during the fourth quarter of 2022 at the DJ Basin oil system, partially offset by decreased throughput, and (ii) increased throughput at the West Texas complex.

Adjusted gross margin decreased by $9.6 million compared to the three months ended March 31, 2022, primarily due to (i) decreased throughput at the DJ Basin and Granger complexes, (ii) decreased deficiency fees and throughput at the Chipeta complex, and (iii) a decrease in distributions from Cactus II, which was sold in the fourth quarter of 2022. These decreases were partially offset by increased throughput at the West Texas complex.

Per-Mcf Adjusted gross margin for natural-gas assets increased by $0.03 compared to the three months ended December 31, 2022, primarily due to increased throughput at the West Texas complex, which has a higher-than-average per-Mcf margin as compared to our other natural-gas assets, partially offset by an annual cost-of-service rate adjustment that increased revenue during the fourth quarter of 2022 at the Springfield system.

Per-Mcf Adjusted gross margin for natural-gas assets decreased by $0.04 compared to the three months ended March 31, 2022, primarily due to contract mix and lower commodity prices, partially offset by increased throughput at the West Texas complex.

Per-Bbl Adjusted gross margin for crude-oil and NGLs assets increased by $0.12 compared to the three months ended December 31, 2022, primarily due to an annual cost-of-service rate adjustment that decreased revenue during the fourth quarter of 2022 at the DJ Basin oil system. This increase was offset partially by (i) a decrease in distributions from Cactus II, which was sold in the fourth quarter of 2022, and (ii) a decrease in distributions from Whitethorn LLC.

Per-Bbl Adjusted gross margin for crude-oil and NGLs assets increased by $0.21 compared to the three months ended March 31, 2022, primarily due to decreases in throughput and distributions from Cactus II, which was sold in the fourth quarter of 2022, and had lower-than-average per-Bbl margin as compared to our other crude-oil and NGLs assets.

Per-Bbl Adjusted gross margin for produced-water assets decreased by $0.11 and $0.19 compared to the three months ended December 31, 2022, and March 31, 2022, respectively, primarily due to a lower average fee resulting from a cost-of-service rate redetermination effective January 1, 2023, and lower deficiency fee revenues.

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Adjusted EBITDA. Adjusted EBITDA decreased by $17.1 million compared to the three months ended December 31, 2022, primarily due to (i) a $45.5 million decrease in total revenues and other, (ii) a $17.3 million decrease in distributions from equity investments, and (iii) a $7.3 million increase in operation and maintenance expenses. These amounts were offset partially by (i) a $41.2 million decrease in cost of product (net of lower of cost or market inventory adjustments) and (ii) an $11.2 million decrease in property and other taxes.

Adjusted EBITDA decreased by $40.4 million compared to the three months ended March 31, 2022, primarily due to (i) a $45.3 million increase in operation and maintenance expenses and (ii) a $24.3 million decrease in total revenues and other. These amounts were offset partially by (i) a $21.6 million decrease in cost of product (net of lower of cost or market inventory adjustments) and (ii) an $11.6 million decrease in property and other taxes.

Free cash flow. Free cash flow decreased by $224.0 million compared to the three months ended December 31, 2022, primarily due to (i) a decrease of $186.8 million in net cash provided by operating activities, (ii) an increase of $27.4 million in capital expenditures, and (iii) a decrease of $10.5 million in distributions from equity investments in excess of cumulative earnings.

Free cash flow decreased by $58.8 million compared to the three months ended March 31, 2022, primarily due to an increase of $89.1 million in capital expenditures, offset partially by an increase of $26.0 million in net cash provided by operating activities.

See Capital Expenditures and Historical Cash Flow within this Item 2 for further information.

LIQUIDITY AND CAPITAL RESOURCES

Our primary cash uses include equity and debt service, operating expenses, and capital expenditures. Our sources of liquidity as of March 31, 2023, included cash and cash equivalents, cash flows generated from operations, available borrowing capacity under the RCF, and potential issuances of additional equity or debt securities. We believe that cash flows generated from these sources will be sufficient to satisfy our short-term working capital requirements and long-term capital-expenditure and debt-service requirements.

The amount of future distributions to unitholders will be determined by the Board on a quarterly basis. Under our partnership agreement, we distribute all of our available cash (beyond proper reserves as defined in our partnership agreement) within 55 days following each quarter’s end. Our cash flow and resulting ability to make cash distributions are dependent on our ability to generate cash flow from operations. Generally, our available cash is our cash on hand at the end of a quarter after the payment of our expenses and the establishment of cash reserves and cash on hand resulting from working capital borrowings made after the end of the quarter. The general partner establishes cash reserves to provide for the proper conduct of our business, including (i) to fund future capital expenditures, (ii) to comply with applicable laws, debt instruments, or other agreements, or (iii) to provide funds for unitholder distributions for any one or more of the next four quarters. The Board declared a cash distribution of $0.500 per unit for the first quarter of 2023, and an Enhanced Distribution of $0.356 per unit (discussed below), for an aggregate of $0.856 per unit, or $337.0 million, which is payable on May 15, 2023, to our unitholders of record at the close of business on May 1, 2023.

To facilitate the distribution of available cash, during 2022 we adopted a financial policy that provided for an additional distribution (“Enhanced Distribution”) to be paid in conjunction with the regular first-quarter distribution of the following year (beginning in 2023), in a target amount equal to Free cash flow generated in the prior year after subtracting Free cash flow used for the prior year’s debt repayments, regular-quarter distributions, and unit repurchases. This Enhanced Distribution is subject to Board discretion, the establishment of cash reserves for the proper conduct of our business and is also contingent on the attainment of prior year-end net leverage thresholds (the ratio of our total principal debt outstanding less total cash on hand as of the end of such period, as compared to our trailing-twelve-months Adjusted EBITDA), after taking the Enhanced Distribution for such prior year into effect. Free cash flow and Adjusted EBITDA are defined under the caption Reconciliation of Non-GAAP Financial Measures within this Item 2. In April 2023, the Board approved an Enhanced Distribution of $0.356 per unit, or $140.1 million, related to our 2022 performance.

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In 2022, we announced a common-unit buyback program of up to $1.25 billion through December 31, 2024. 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 program will be determined based on ongoing assessments of capital needs, our financial performance, the market price of our common units, and other factors, including organic growth and acquisition opportunities and general market conditions. The program does not obligate us to purchase any specific dollar amount or number of units and may be suspended or discontinued at any time. During the three months ended March 31, 2023, we repurchased 285,688 common units for an aggregate purchase price of $7.1 million. The units were canceled immediately upon receipt. As of March 31, 2023, we had an authorized amount of $755.3 million remaining under the program.

Management continuously monitors our leverage position and other financial projections to manage the capital structure according to long-term objectives. We may, from time to time, seek to retire, rearrange, or amend some or all of our outstanding debt or financing agreements through cash purchases, exchanges, open-market repurchases, privately negotiated transactions, tender offers, or otherwise. Such transactions, if any, will depend on prevailing market conditions, our liquidity position and requirements, contractual restrictions, and other factors and the amounts involved may be material. Our ability to generate cash flows is subject to a number of factors, some of which are beyond our control. Read Risk Factors under Part II, Item 1A of this Form 10-Q.

Working capital. Working capital is an indication of liquidity and potential needs for short-term funding. Working capital requirements are driven by changes in accounts receivable and accounts payable and other factors such as credit extended to, and the timing of collections from, our customers, and the level and timing of our spending for acquisitions, maintenance, and other capital activities. As of March 31, 2023, we had a $154.0 million working capital surplus, which we define as the amount by which current assets exceed current liabilities. As of March 31, 2023, there was $1.5 billion available for borrowing under the RCF due to $495.0 million of outstanding borrowings, which were repaid in April 2023. See Note 8—Selected Components of Working Capital and Note 9—Debt and Interest Expense in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

Capital expenditures. Our business is capital intensive, requiring significant investment to maintain and improve existing facilities or to develop new midstream infrastructure. Capital expenditures include maintenance capital expenditures, which include those expenditures required to maintain existing operating capacity and service capability of our assets, and expansion capital expenditures, which include expenditures to construct new midstream infrastructure and expenditures incurred to reduce costs, increase revenues, or increase system throughput or capacity from current levels.

Capital expenditures in the consolidated statements of cash flows reflect capital expenditures on a cash basis, when payments are made. Capital incurred is presented on an accrual basis. Capital expenditures as presented in the consolidated statements of cash flows and capital incurred were as follows:


	Three Months Ended March 31,

thousands	2023		2022

Capital expenditures (1)	$	173,088	$	83,971
Capital incurred (1)	181,803		85,553

_________________________________________________________________________________________

(1)For the three months ended March 31, 2023 and 2022, included $2.5 million and $1.0 million, respectively, of capitalized interest.

Capital expenditures increased by $89.1 million for the three months ended March 31, 2023, primarily due to increases of (i) $44.3 million at the West Texas complex, primarily attributable to facility expansion, including ongoing construction of Mentone Train III, and pipeline projects, (ii) $34.6 million at the DBM water systems due to construction of additional water-disposal wells and facilities and pipeline projects, and (iii) $4.4 million at the DBM oil system, primarily related to an increase in pipeline, oil treating, and oil pumping projects.

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Historical cash flow. The following table and discussion present a summary of our net cash flows provided by (used in) operating, investing, and financing activities:


	Three Months Ended March 31,

thousands	2023		2022
Net cash provided by (used in):
Operating activities	$	302,424	$	276,458
Investing activities	(179,178)		(71,617)
Financing activities	(297,257)		(158,591)
Net increase (decrease) in cash and cash equivalents	$	(174,011)	$	46,250

Operating activities. Net cash provided by operating activities increased for the three months ended March 31, 2023, primarily due to (i) the impact of changes in assets and liabilities and (ii) lower interest expense. These increases were partially offset by (i) lower cash operating income and (ii) lower distributions from equity investments. Refer to Operating Results within this Item 2 for a discussion of our results of operations as compared to the prior periods.

Investing activities. Net cash used in investing activities for the three months ended March 31, 2023, primarily included the following:

•$173.1 million of capital expenditures, primarily related to construction, expansion, and asset-integrity projects at the West Texas complex, DBM water systems, DBM oil system, and DJ Basin complex;

•$18.3 million of increases to materials and supplies inventory; and

•$12.4 million of distributions received from equity investments in excess of cumulative earnings.

Net cash used in investing activities for the three months ended March 31, 2022, primarily included the following:

•$84.0 million of capital expenditures, primarily related to construction, expansion, and asset-integrity projects at the West Texas complex, DBM water systems, DJ Basin complex, and DBM oil system;

•$9.9 million of distributions received from equity investments in excess of cumulative earnings; and

•$4.1 million of decreases to materials and supplies inventory.

Financing activities. Net cash used in financing activities for the three months ended March 31, 2023, primarily included the following:

•$213.1 million to redeem the total principal amount outstanding on the Floating-Rate Senior Notes due 2023 at par value;

•$203.1 million of distributions paid to WES unitholders and noncontrolling interest owners;

•$100.0 million of repayments of outstanding borrowings under the RCF;

•$7.1 million of unit repurchases; and

•$220.0 million of borrowings under the RCF, which were used for general partnership purposes.

Net cash used in financing activities for the three months ended March 31, 2022, primarily included the following:

•$139.5 million of distributions paid to WES unitholders and noncontrolling interest owners; and

•$5.1 million of unit repurchases.

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Debt and credit facilities. As of March 31, 2023, the carrying value of outstanding debt was $6.7 billion, we have no borrowings due within the next year, and have $1.5 billion of available borrowing capacity under WES Operating’s $2.0 billion RCF. In April 2023, we (i) completed the public offering of $750.0 million in aggregate principal amount of 6.150% Senior Notes due 2033, (ii) repaid all outstanding borrowings under the RCF with proceeds from the senior note offering, and (iii) entered into an amendment to our RCF to, among other things, extend the maturity date to April 2028 and provide for a maximum borrowing capacity up to $2.0 billion through the maturity date.

For additional information on our senior notes and the RCF, see Note 9—Debt and Interest Expense in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

Offload commitments. During the year ended December 31, 2022, we entered into offload agreements with third parties providing firm-processing capacity through 2025. As of March 31, 2023, we have future minimum payments under offload agreements totaling $12.4 million for the remainder of 2023 and a total of $10.5 million in years thereafter.

Credit risk. We bear credit risk through exposure to non-payment or non-performance by our counterparties, including Occidental, financial institutions, customers, and other parties. Generally, non-payment or non-performance results from a customer’s inability to satisfy payables to us for services rendered, minimum-volume-commitment deficiency payments owed, or volumes owed pursuant to gas- or NGLs-imbalance agreements. We examine and monitor the creditworthiness of customers and may establish credit limits for customers. We are subject to the risk of non-payment or late payment by producers for gathering, processing, transportation, and disposal fees. Additionally, we continue to evaluate counterparty credit risk and, in certain circumstances, are exercising our rights to request adequate assurance.

We expect our exposure to the concentrated risk of non-payment or non-performance to continue for as long as our commercial relationships with Occidental generate a significant portion of our revenues. While Occidental is our contracting counterparty, gathering and processing arrangements with affiliates of Occidental on most of our systems include not just Occidental-produced volumes, but also, in some instances, the volumes of other working-interest owners of Occidental who rely on our facilities and infrastructure to bring their volumes to market. See Note 5—Related-Party Transactions in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

Our ability to make cash distributions to our unitholders may be adversely impacted if Occidental becomes unable to perform under the terms of gathering, processing, transportation, and disposal agreements.

ITEMS AFFECTING THE COMPARABILITY OF FINANCIAL RESULTS WITH WES OPERATING

Our consolidated financial statements include the consolidated financial results of WES Operating. Our results of operations do not differ materially from the results of operations and cash flows of WES Operating, which are reconciled below.

Reconciliation of net income (loss). The differences between net income (loss) attributable to WES and WES Operating are reconciled as follows:


	Three Months Ended


thousands	March 31, 2023		December 31, 2022		March 31, 2022
Net income (loss) attributable to WES	$	203,645	$	336,324	$	308,717
Limited partner interest in WES Operating not held by WES (1)	4,161		6,883		6,317
General and administrative expenses (2)	232		892		741
Other income (expense), net	(25)		(27)		(3)

Income taxes	—		7		—
Net income (loss) attributable to WES Operating	$	208,013	$	344,079	$	315,772

_________________________________________________________________________________________

(1)Represents the portion of net income (loss) allocated to the limited partner interest in WES Operating not held by WES. A subsidiary of Occidental held a 2.0% limited partner interest in WES Operating for all periods presented.

(2)Represents general and administrative expenses incurred by WES separate from, and in addition to, those incurred by WES Operating.

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Reconciliation of net cash provided by (used in) operating and financing activities. The differences between net cash provided by (used in) operating and financing activities for WES and WES Operating are reconciled as follows:



	Three Months Ended March 31,
thousands	2023		2022
WES net cash provided by operating activities	$	302,424	$	276,458
General and administrative expenses (1)	232		741
Non-cash equity-based compensation expense	(141)		(131)
Changes in working capital	(11,522)		(6,948)
Other income (expense), net	(25)		(3)


WES Operating net cash provided by operating activities	$	290,968	$	270,117

WES net cash provided by (used in) financing activities	$	(297,257)	$	(158,591)
Distributions to WES unitholders (2)	196,569		134,749
Distributions to WES from WES Operating (3)	(209,242)		(137,412)
Increase (decrease) in outstanding checks	(42)		135
Unit repurchases	7,061		5,149
Other	11,950		6,085
WES Operating net cash provided by (used in) financing activities	$	(290,961)	$	(149,885)

_________________________________________________________________________________________

(1)Represents general and administrative expenses incurred by WES separate from, and in addition to, those incurred by WES Operating.

(2)Represents distributions to WES common unitholders paid under WES’s partnership agreement. See Note 3—Partnership Distributions and Note 4—Equity and Partners’ Capital in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

(3)Difference attributable to elimination in consolidation of WES Operating’s distributions on partnership interests owned by WES. See Note 3—Partnership Distributions and Note 4—Equity and Partners’ Capital in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

Noncontrolling interest. WES Operating’s noncontrolling interest consists of the 25% third-party interest in Chipeta. See Note 1—Description of Business and Basis of Presentation in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

WES Operating distributions. WES Operating distributes all of its available cash on a quarterly basis to WES Operating unitholders in proportion to their share of limited partner interests in WES Operating. See Note 3—Partnership Distributions in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

CRITICAL ACCOUNTING ESTIMATES

The preparation of consolidated financial statements in accordance with GAAP requires management to make informed judgments and estimates that affect the amounts of assets and liabilities as of the date of the financial statements and the amounts of revenues and expenses recognized during the periods reported. There have been no significant changes to our critical accounting estimates from those disclosed in our annual report on Form 10-K for the fiscal year ended December 31, 2022.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Commodity-price risk. There have been no significant changes to our commodity-price risk discussion from the disclosure set forth under Part II, Item 7A in our Form 10-K for the year ended December 31, 2022, except as noted below and in Outlook under Part I, Item 2 of this Form 10-Q.

For the three months ended March 31, 2023, 95% of our wellhead natural-gas volume (excluding equity investments) and 100% of our crude-oil and produced-water throughput (excluding equity investments) were serviced under fee-based contracts. A 10% increase or decrease in commodity prices would not have a material impact on our operating income (loss), financial condition, or cash flows for the next 12 months, excluding the effect of imbalances.

Interest-rate risk. The Federal Open Market Committee increased its target range seven times for the federal funds rate in 2022 and increased its target range twice during the three months ended March 31, 2023. Any future increases in the federal funds rate likely will result in an increase in financing costs. As of March 31, 2023, we had $495.0 million of outstanding borrowings under the RCF that bear interest at a rate based on the Secured Overnight Financing Rate (“SOFR”) or an alternative base rate at WES Operating’s option. While a 10% change in the applicable benchmark interest rate would not materially impact interest expense on our outstanding borrowings at March 31, 2023, it would impact the fair value of the senior notes.

Additional variable-rate debt may be issued in the future, either under the RCF or other financing sources, including commercial paper borrowings or debt issuances.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. The Chief Executive Officer and Chief Financial Officer of WES’s general partner and WES Operating GP (for purposes of this Item 4, “Management”) performed an evaluation of WES’s and WES Operating’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. WES’s and WES Operating’s disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports that are filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and to ensure that the information required to be disclosed in the reports that are filed or submitted under the Exchange Act is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, Management concluded that WES’s and WES Operating’s disclosure controls and procedures were effective as of March 31, 2023.

Changes in Internal Control Over Financial Reporting. There were no changes in WES’s or WES Operating’s internal control over financial reporting during the quarter ended March 31, 2023, that have materially affected, or are reasonably likely to materially affect, WES’s or WES Operating’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

On July 1, 2020, the U.S. Department of Justice, on behalf of the U.S. Environmental Protection Agency (the “EPA”), and the State of Colorado commenced an enforcement action in the United States District Court for the District of Colorado against Kerr-McGee Gathering LLC (“KMG”), a wholly owned subsidiary of WES, for alleged non-compliance with the leak detection and repair requirements of the federal Clean Air Act (“LDAR requirements”) at its Fort Lupton, Platte Valley, and Lancaster facilities in the DJ Basin complex. KMG previously had been in negotiations with the EPA and the State of Colorado to resolve these allegations of non-compliance. Per the complaint, plaintiffs pray for injunctive relief, remedial action, and civil penalties. We reached an agreement with the EPA on a proposed consent decree that was filed with the court on April 20, 2023. We would expect the consent decree to become effective following a 30-day comment period. While such resolution as proposed will include an injunctive relief component and payment of a civil penalty, which exceeds the disclosure threshold amount required by Item 103 of Regulation S-K, management believes the resolution of these claims will not have a material impact on WES’s results of operations, cash flows, or financial condition.

On October 29, 2020, WGR Operating, LP (“WGR”), on behalf of itself and derivatively on behalf of Mont Belvieu JV, filed suit against Enterprise Products Operating, LLC (“Enterprise”) and Mont Belvieu JV (as a nominal defendant) in the District Court of Harris County, Texas. Our lawsuit seeks a declaratory judgment regarding proper revenue allocation as set forth in the Operating Agreement between Mont Belvieu JV (of which WGR is a 25% owner) and Enterprise (the “Operating Agreement”) related to fractionation trains at the Mont Belvieu complex in Chambers County, Texas. Specifically, the Operating Agreement sets forth a revenue allocation structure, whereby revenue would be allocated to the various fracs at the Mont Belvieu complex in sequential order, with Fracs VII and VIII (which are owned by Mont Belvieu JV) following Fracs I through VI, but preceding any “Later Frac Facilities.” Subsequent to the construction of Fracs VII and VIII, Enterprise built Fracs IX, X, and XI, which it wholly owns, and has treated such subsequent fracs as outside the Mont Belvieu revenue allocation. We do not believe Enterprise’s attempt to bypass the agreed-to revenue allocation is proper under the parties’ agreements and now seek judicial determination. We currently sue only for declaratory judgment to avoid potential future damages. We cannot make any assurances regarding the ultimate outcome of this proceeding and its resulting impact on WGR or WES.

On November 22, 2022, WGR filed suit against Enterprise Crude Oil LLC (“ECO”) in the District Court of Harris County, Texas. Our lawsuit alleges that ECO breached a contract related to the Whitethorn joint venture pursuant to which ECO must share with WGR certain of the profits and losses generated by ECO’s hydrocarbon trading activity conducted utilizing the Whitethorn pipeline. Specifically, we claim that ECO has engaged in trades knowing that the revenue to be realized would be less than the minimum floor set under the contract and has failed to allocate revenues and expenses as prescribed by the contract, resulting in improper losses to WGR. Enterprise has filed a counterclaim to our lawsuit, alleging that, between 2017 and 2019, it had mistakenly overpaid WGR approximately $12.0 million in trading profits and seeking recovery of such amount. We cannot make any assurances regarding the ultimate outcome of this proceeding and its resulting impact on WGR or WES.

Except as discussed above, we are not a party to any legal, regulatory, or administrative proceedings other than proceedings arising in the ordinary course of business. Management believes that there are no such proceedings for which a final disposition could have a material adverse effect on results of operations, cash flows, or financial condition, or for which disclosure is otherwise required by Item 103 of Regulation S-K.

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Item 1A. Risk Factors

Security holders and potential investors in our securities should carefully consider the risk factors set forth under Part I, Item 1A in our Form 10-K for the year ended December 31, 2022, together with all of the other information included in this document, and in our other public filings, press releases, and public discussions with management.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth information with respect to repurchases made by WES of its common units in the open market or in privately negotiated transactions under the $1.25 billion Purchase Program during the first quarter of 2023:


Period	Total number of units purchased	Average price paid per unit		Total number of units purchased as part of publicly announced plans or programs (1)	Approximate dollar value of units that may yet be purchased under the plans or programs (1)
January 1-31, 2023	—	$	—	—	$	762,409,380
February 1-28, 2023	—	—		—	762,409,380
March 1-31, 2023	285,688	24.72		285,688	755,348,136
Total	285,688	24.72		285,688

______________________________________________________________________________________

(1)In 2022, the Board authorized WES to buy back up to $1.25 billion of our common units through December 31, 2024. See Note 4—Equity and Partners’ Capital in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q for additional details.

Item 5. Other Information

On May 2, 2023, Anadarko E&P Onshore LP, a subsidiary of Occidental (“AEP”), and DBM entered into an amendment (the “Gas Gathering Agreement Amendment”) to that certain Gas Gathering Agreement (“Gas Gathering Agreement”) between AEP and DBM, dated October 8, 2018, pursuant to which the parties agreed to, among other things, extend the primary term of the Gas Gathering Agreement to be through at least December 31, 2035, with the ability to extend the term up to six additional years, dependent upon concurrent extensions of AEP’s Delaware Basin gas processing contract.

The above summary of the Gas Gathering Agreement Amendment is qualified in its entirety by reference to the Gas Gathering Agreement Amendment, a copy of which will be filed with the Form 10-Q for the quarterly period ended June 30, 2023.

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Item 6. Exhibits

Exhibits designated by an asterisk (*) are filed herewith and those designated with asterisks (**) are furnished herewith; all exhibits not so designated are incorporated herein by reference to a prior filing as indicated.

Exhibit Index


Exhibit Number			Description
#	2.	1	Contribution Agreement and Agreement and Plan of Merger, dated as of November 7, 2018, by and among Anadarko Petroleum Corporation, Anadarko E&P Onshore LLC, APC Midstream Holdings, LLC, Western Gas Equity Partners, LP, Western Gas Equity Holdings, LLC, Western Gas Partners, LP, Western Gas Holdings, LLC, Clarity Merger Sub, LLC, WGR Asset Holding Company LLC, WGR Operating, LP, Kerr-McGee Gathering LLC, Kerr-McGee Worldwide Corporation and Delaware Basin Midstream, LLC (incorporated by reference to Exhibit 2.1 to Western Gas Equity Partners, LP’s Current Report on Form 8-K filed on November 8, 2018, File No. 001-35753).
	3.	1	Certificate of Limited Partnership of Western Gas Equity Partners, LP (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 of Western Gas Equity Partners, LP filed on November 5, 2012, File No. 333-184763).
	3.	2	Certificate of Amendment to Certificate of Limited Partnership of Western Gas Equity Partners, LP, effective as of February 28, 2019 (incorporated by reference to Exhibit 3.1 to Western Midstream Partners, LP’s Current Report on Form 8-K filed on February 28, 2019, File No. 001-35753).
	3.	3	Second Amended and Restated Agreement of Limited Partnership of Western Midstream Partners, LP, dated as of December 31, 2019 (incorporated by reference to Exhibit 3.1 to Western Midstream Partners, LP’s Current Report on Form 8-K filed on January 6, 2020, File No. 001-35753).
	3.	4	Certificate of Formation of Western Gas Equity Holdings, LLC (incorporated by reference to Exhibit 3.3 to Western Gas Equity Partners, LP’s Registration Statement on Form S-1 filed on November 5, 2012, File No. 333-184763).
	3.	5	Certificate of Amendment to Certificate of Formation of Western Gas Equity Holdings, LLC, effective as of February 28, 2019 (incorporated by reference to Exhibit 3.2 to Western Midstream Partners, LP’s Current Report on Form 8-K filed on February 28, 2019, File No. 001-35753).
	3.	6	Second Amended and Restated Limited Liability Company Agreement of Western Midstream Holdings, LLC, dated as of February 28, 2019 (incorporated by reference to Exhibit 3.7 to Western Midstream Partners, LP’s Current Report on Form 8-K filed on February 28, 2019, File No. 001-35753).
	3.	7	Amendment No. 1 to Second Amended and Restated Limited Liability Company Agreement of Western Midstream Holdings, LLC, dated February 28, 2019 (incorporated by reference to Exhibit 3.1 to Western Midstream Partners, LP’s Current Report on Form 8-K filed on March 26, 2019, File No. 001-35753).
	3.	8	Certificate of Limited Partnership of Western Gas Partners, LP (incorporated by reference to Exhibit 3.1 to Western Gas Partners, LP’s Registration Statement on Form S-1 filed on October 15, 2007, File No. 333-146700).
	3.	9	Third Amended and Restated Agreement of Limited Partnership of Western Midstream Operating, LP, dated as of February 28, 2019 (incorporated by reference to Exhibit 3.5 to Western Midstream Partners, LP’s Current Report on Form 8-K filed on February 28, 2019, File No. 001-35753).
	3.	10	Certificate of Formation of Western Gas Holdings, LLC (incorporated by reference to Exhibit 3.3 to Western Gas Partners, LP’s Registration Statement on Form S-1 filed on October 15, 2007, File No. 333-146700).
	3.	11	Certificate of Amendment to Certificate of Formation of Western Gas Holdings, LLC, effective as of February 28, 2019 (incorporated by reference to Exhibit 3.4 to Western Midstream Partners, LP’s Current Report on Form 8-K filed on February 28, 2019, File No. 001-35753).
	3.	12	Third Amended and Restated Limited Liability Company Agreement of Western Midstream Operating GP, LLC, dated as of February 28, 2019 (incorporated by reference to Exhibit 3.8 to Western Midstream Partners, LP’s Current Report on Form 8-K filed on February 28, 2019, File No. 001-35753).
	3.	13	Certificate of Merger of Clarity Merger Sub, LLC with and into Western Gas Partners, LP, effective as of February 28, 2019 (incorporated by reference to Exhibit 3.3 to Western Midstream Partners, LP’s Current Report on Form 8-K filed on February 28, 2019, File No. 001-35753).

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Exhibit Number			Description
	4.	1	Specimen Unit Certificate for the Common Units (incorporated by reference to Exhibit 4.1 to Western Gas Partners, LP’s Quarterly Report on Form 10-Q filed on June 13, 2008, File No. 001-34046).
	4.	2	Indenture, dated as of May 18, 2011, among Western Gas Partners, LP, as Issuer, the Subsidiary Guarantors named therein, as Guarantors, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to Western Gas Partners, LP’s Current Report on Form 8-K filed on May 18, 2011, File No. 001-34046).
	4.	3	First Supplemental Indenture, dated as of May 18, 2011, among Western Gas Partners, LP, as Issuer, the Subsidiary Guarantors named therein, as Guarantors, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.2 to Western Gas Partners, LP’s Current Report on Form 8-K filed on May 18, 2011, File No. 001-34046).
	4.	4	Fourth Supplemental Indenture, dated as of June 28, 2012, among Western Gas Partners, LP, as Issuer, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to Western Gas Partners, LP’s Current Report on Form 8-K filed on June 28, 2012, File No. 001-34046).
	4.	5	Form of 4.000% Senior Notes due 2022 (incorporated by reference to Exhibit 4.2, which is included as Exhibit A to Exhibit 4.1, to Western Gas Partners, LP’s Current Report on Form 8-K filed on June 28, 2012, File No. 001-34046).
	4.	6	Sixth Supplemental Indenture, dated as of March 20, 2014, among Western Gas Partners, LP, as Issuer, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.2 to Western Gas Partners, LP’s Current Report on Form 8-K filed on March 20, 2014, File No. 001-34046).
	4.	7	Form of 5.450% Senior Notes due 2044 (incorporated by reference to Exhibit 4.4, which is included as Exhibit A to Exhibit 4.2, to Western Gas Partners, LP’s Current Report on Form 8-K filed on March 20, 2014, File No. 001-34046).
	4.	8	Seventh Supplemental Indenture, dated as of June 4, 2015, among Western Gas Partners, LP, as Issuer, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to Western Gas Partners, LP’s Current Report on Form 8-K filed on June 4, 2015, File No. 001-34046).
	4.	9	Form of 3.950% Senior Notes due 2025 (incorporated by reference to Exhibit 4.2, which is included as Exhibit A to Exhibit 4.1, to Western Gas Partners, LP’s Current Report on Form 8-K filed on June 4, 2015, File No. 001-34046).
	4.	10	Eighth Supplemental Indenture, dated as of July 12, 2016, among Western Gas Partners, LP, as Issuer, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to Western Gas Partners, LP’s Current Report on Form 8-K filed on July 12, 2016, File No. 001-34046).
	4.	11	Form of 4.650% Senior Notes due 2026 (incorporated by reference to Exhibit 4.2, which is included as Exhibit A to Exhibit 4.1, to Western Gas Partners, LP’s Current Report on Form 8-K filed on July 12, 2016, File No. 001-34046).
	4.	12	Ninth Supplemental Indenture, dated as of March 2, 2018, among Western Gas Partners, LP, as Issuer, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to Western Gas Partners, LP’s Current Report on Form 8-K filed on March 2, 2018, File No. 001-34046).
	4.	13	Form of 4.500% Senior Notes due 2028 (incorporated by reference to Exhibit 4.2, which is included as Exhibit A-1 to Exhibit 4.1, to Western Gas Partners, LP’s Current Report on Form 8-K filed on March 2, 2018, File No. 001-34046).
	4.	14	Form of 5.300% Senior Notes due 2048 (incorporated by reference to Exhibit 4.3, which is included as Exhibit A-2 to Exhibit 4.1, to Western Gas Partners, LP’s Current Report on Form 8-K filed on March 2, 2018, File No. 001-34046).
	4.	15	Tenth Supplemental Indenture, dated as of August 9, 2018, by and between Western Gas Partners, LP, as Issuer, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to Western Gas Partners, LP’s Current Report on Form 8-K filed on August 9, 2018, File No. 001-34046).
	4.	16	Form of 4.750% Senior Notes due 2028 (incorporated by reference to Exhibit 4.2, which is included as Exhibit A-1 to Exhibit 4.1, to Western Gas Partners, LP’s Current Report on Form 8-K filed on August 9, 2018, File No. 001-34046).
	4.	17	Form of 5.500% Senior Notes due 2048 (incorporated by reference to Exhibit 4.3, which is included as Exhibit A-2 to Exhibit 4.1, to Western Gas Partners, LP’s Current Report on Form 8-K filed on August 9, 2018, File No. 001-34046).
	4.	18	Eleventh Supplemental Indenture, dated as of January 13, 2020, by and between Western Midstream Operating, LP, as Issuer, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to Western Midstream Operating, LP’s Current Report on Form 8-K filed on January 13, 2020, File No. 001-34046).

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Exhibit Number			Description
	4.	19	Form of Floating Rate Senior Notes due 2023 (incorporated by reference to Exhibit 4.2, which is included as Exhibit A-1 to Exhibit 4.1 to Western Midstream Operating, LP’s Current Report on Form 8-K filed on January 13, 2020, File No. 001-34046).
	4.	20	Form of 3.100% Senior Notes due 2025 (incorporated by reference to Exhibit 4.3, which is included as Exhibit A-2 to Exhibit 4.1 to Western Midstream Operating, LP’s Current Report on Form 8-K filed on January 13, 2020, File No. 001-34046).
	4.	21	Form of 4.050% Senior Notes due 2030 (incorporated by reference to Exhibit 4.4, which is included as Exhibit A-3 to Exhibit 4.1 to Western Midstream Operating, LP’s Current Report on Form 8-K filed on January 13, 2020, File No. 001-34046).
	4.	22	Form of 5.250% Senior Notes due 2050 (incorporated by reference to Exhibit 4.5, which is included as Exhibit A-4 to Exhibit 4.1 to Western Midstream Operating, LP’s Current Report on Form 8-K filed on January 13, 2020, File No. 001-34046).
	4.	23	Twelfth Supplemental Indenture, dated as of April 4, 2023, by and between Western Midstream Operating, LP, as Issuer, and Computershare Trust Company, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to Western Midstream Operating, LP’s Current Report on Form 8-K filed on April 5, 2023, File No. 001-34046).
	4.	24	Form of 6.150% Senior Notes due 2033 (incorporated by reference to Exhibit 4.2, which is included as Exhibit A to Exhibit 4.1 to Western Midstream Operating, LP’s Current Report on Form 8-K filed on April 5, 2023, File No. 001-34046).
‡	10.	1	Form of 2023 Phantom Unit Award Agreement (TUR Awards).










































*	31.	1	Certification of Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Western Midstream Partners, LP.
*	31.	2	Certification of Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Western Midstream Partners, LP.
*	31.	3	Certification of Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Western Midstream Operating, LP.
*	31.	4	Certification of Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Western Midstream Operating, LP.
**	32.	1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Western Midstream Partners, LP.
**	32.	2	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Western Midstream Operating, LP.
*	101.	INS	XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
*	101.	SCH	Inline XBRL Schema Document
*	101.	CAL	Inline XBRL Calculation Linkbase Document
*	101.	DEF	Inline XBRL Definition Linkbase Document
*	101.	LAB	Inline XBRL Label Linkbase Document
*	101.	PRE	Inline XBRL Presentation Linkbase Document
*	104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

______________________________________________________________________________________




#			Pursuant to Item 601(b)(2) of Regulation S-K, the registrant agrees to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request.

‡			Management contracts or compensatory plans or arrangements required to be filed pursuant to Item 15.

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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 MIDSTREAM PARTNERS, LP

May 3, 2023
			/s/ Michael P. Ure
			Michael P. Ure President and Chief Executive Officer Western Midstream Holdings, LLC (as general partner of Western Midstream Partners, LP)

May 3, 2023
			/s/ Kristen S. Shults
			Kristen S. Shults Senior Vice President and Chief Financial Officer Western Midstream Holdings, LLC (as general partner of Western Midstream Partners, LP)


			WESTERN MIDSTREAM OPERATING, LP

May 3, 2023
			/s/ Michael P. Ure
			Michael P. Ure President and Chief Executive Officer Western Midstream Operating GP, LLC (as general partner of Western Midstream Operating, LP)

May 3, 2023
			/s/ Kristen S. Shults
			Kristen S. Shults Senior Vice President and Chief Financial Officer Western Midstream Operating GP, LLC (as general partner of Western Midstream Operating, LP)

Western Midstream - 10-Q quarterly report FY

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