Western Midstream Partners, LP - Quarter Report: 2020 March (Form 10-Q)

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(1)

Cost of product includes product purchases from related parties (as defined in Note 1) of $77.9 million and $56.2 million for the three months ended March 31, 2020 and 2019, respectively. Operation and maintenance includes charges from related parties of $32.8 million and $39.1 million for the three months ended March 31, 2020 and 2019, respectively. General and administrative includes charges from related parties of $21.9 million and $18.9 million for the three months ended March 31, 2020 and 2019, respectively. See Note 6.

(2)	Includes losses associated with the interest-rate swap agreements for the three months ended March 31, 2019. See Note 11.

(3)	See Note 5.

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(1)	Accounts receivable, net includes amounts receivable from related parties (as defined in Note 1) of $124.9 million and $113.3 million as of March 31, 2020, and December 31, 2019, respectively.

(2)	Other current assets includes related-party amounts of $9.0 million and $5.0 million as of March 31, 2020, and December 31, 2019, respectively.

(3)	Note receivable – Anadarko is presented net of a $2.1 million allowance for expected credit losses as of March 31, 2020. See Note 1.

(4)	Other assets includes related-party amounts of $59.7 million and $60.2 million as of March 31, 2020, and December 31, 2019, respectively. Other assets also includes $2.0 million and $4.5 million of NGLs line fill as of March 31, 2020, and December 31, 2019, respectively.

(5)	Short-term debt includes related-party amounts for finance leases of $2.6 million and $7.9 million as of March 31, 2020, and December 31, 2019, respectively.

(6)	Accrued liabilities includes related-party amounts of $2.5 million and $3.1 million as of March 31, 2020, and December 31, 2019, respectively.

(7)	Other liabilities includes related-party amounts of $107.8 million and $97.8 million as of March 31, 2020, and December 31, 2019, respectively.

(8)	See Note 1.

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(1)	See December 2019 Agreements—Services, Secondment, and Employee Transfer Agreement within Note 1.

(1)	See Note 1.

(2)	See Note 6.

(3)	For the three months ended March 31, 2019, the $752.8 million decrease to partners’ capital, together with net income (loss) attributable to Western Midstream Partners, LP, totaled $(634.1) million.

(4)	The amounts allocated to common unitholders and noncontrolling interests represent a non-cash investing activity related to the assets and liabilities assumed in the AMA acquisition.

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(1)	For the three months ended March 31, 2019, includes an $11.0 million borrowing under the APCWH Note Payable.

(2)	For the three months ended March 31, 2019, includes a $439.6 million repayment to settle the APCWH Note Payable. See Note 6.

(3)	See Note 6.

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(1)

Cost of product includes product purchases from related parties (as defined in Note 1) of $77.9 million and $56.2 million for the three months ended March 31, 2020 and 2019, respectively. Operation and maintenance includes charges from related parties of $32.8 million and $39.1 million for the three months ended March 31, 2020 and 2019, respectively. General and administrative includes charges from related parties of $21.7 million and $18.5 million for the three months ended March 31, 2020 and 2019, respectively. See Note 6.

(2)	Includes losses associated with the interest-rate swap agreements for the three months ended March 31, 2019. See Note 11.

(3)	See Note 5.

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(1)	Accounts receivable, net includes amounts receivable from related parties (as defined in Note 1) of $117.5 million and $113.6 million as of March 31, 2020, and December 31, 2019, respectively.

(2)	Other current assets includes related-party amounts of $9.0 million and $5.0 million as of March 31, 2020, and December 31, 2019, respectively.

(3)	Note receivable – Anadarko is presented net of a $2.1 million allowance for expected credit losses as of March 31, 2020. See Note 1.

(4)	Other assets includes related-party amounts of $59.7 million and $60.2 million as of March 31, 2020, and December 31, 2019, respectively. Other assets also includes $2.0 million and $4.5 million of NGLs line fill as of March 31, 2020, and December 31, 2019, respectively.

(5)	Short-term debt includes related-party amounts for finance leases of $2.6 million and $7.9 million as of March 31, 2020, and December 31, 2019, respectively.

(6)	Accrued liabilities includes related-party amounts of $2.5 million and $3.1 million as of March 31, 2020, and December 31, 2019, respectively.

(7)	Other liabilities includes related-party amounts of $107.8 million and $97.8 million as of March 31, 2020, and December 31, 2019, respectively.

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(1)	See December 2019 Agreements—Services, Secondment, and Employee Transfer Agreement within Note 1.

(1)	See Note 1.

(2)	See Note 6.

(3)	The amount allocated to common unitholders represents a non-cash investing activity related to the assets and liabilities assumed in the AMA acquisition.

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(1)	For the three months ended March 31, 2019, includes an $11.0 million borrowing under the APCWH Note Payable.

(2)	For the three months ended March 31, 2019, includes a $439.6 million repayment to settle the APCWH Note Payable. See Note 6.

(3)	See Note 6.

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(1)	Includes the DBM water systems.

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Exchange Agreement. Western Gas Resources, Inc. (“WGRI”), the general partner, and the Partnership entered into a partnership interests exchange agreement (the “Exchange Agreement”), pursuant to which the Partnership canceled the non-economic general partner interest in the Partnership and simultaneously issued a 2.0% general partner interest to the general partner in exchange for which WGRI transferred 9,060,641 common units to the Partnership, which immediately canceled such units on receipt.

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Services, Secondment, and Employee Transfer Agreement. Occidental, Anadarko, and WES Operating GP entered into an amended and restated Services, Secondment, and Employee Transfer Agreement (the “Services Agreement”), pursuant to which Occidental, Anadarko, and their subsidiaries (i) seconded certain personnel employed by Occidental to WES Operating GP, in exchange for which WES Operating GP pays a monthly secondment and shared services fee to Occidental equivalent to the direct cost of the seconded employees until their transfer to the Partnership and (ii) agreed to continue to provide certain administrative and operational services to the Partnership for up to a two-year transition period. In January 2020, pursuant to the Services Agreement, Occidental made a one-time cash contribution of $20.0 million to WES Operating for anticipated transition costs required to establish stand-alone human resources and information technology functions. The Services Agreement also includes provisions governing the transfer of certain employees to the Partnership and the assumption by the Partnership of liabilities relating to those employees at the time of their transfer. In late March 2020, seconded employees’ employment was transferred to the Partnership.

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RCF amendment. WES Operating entered into an amendment to its $2.0 billion senior unsecured revolving credit facility (“RCF”) to, among other things, (i) effective on February 14, 2020, exercise the final one-year extension option to extend the maturity date of the RCF to February 14, 2025, for the extending lenders, and (ii) modify the change of control definition to provide, among other things, that, subject to certain conditions, if the limited partners of the Partnership elect to remove the general partner as the general partner of the Partnership in accordance with the terms of the partnership agreement, then such removal will not constitute a change of control under the RCF.

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Term loan facility amendment. WES Operating entered into an amendment of its $3.0 billion senior unsecured credit facility (“Term loan facility”) to, among other things, modify the change of control definition to provide, among other things, that, subject to certain conditions, if the limited partners of the Partnership elect to remove the general partner as the general partner of the Partnership in accordance with the terms of the partnership agreement, then such removal will not constitute a change of control under the Term loan facility. See Note 11.

•	Termination of debt-indemnification agreements. WES Operating GP and certain wholly owned subsidiaries of Occidental mutually terminated the debt-indemnification agreements related to certain indebtedness incurred by WES Operating.

•	Termination of omnibus agreements. The Partnership and WES Operating entered into agreements with Occidental to terminate the WES and WES Operating omnibus agreements. See Note 6.

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(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.

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(1)	For the three months ended March 31, 2020, includes fixed- and variable-lease revenue from an operating and maintenance agreement entered into with Occidental. See Operating lease within Note 6.

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(1)	The Board of Directors declared a cash distribution to the Partnership’s unitholders for the first quarter of 2020 of $0.31100 per unit, or $140.9 million in aggregate. The cash distribution is payable on May 14, 2020 to unitholders of record at the close of business on May 1, 2020, including the general partner units that were issued on December 31, 2019 (see Note 1).

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(1)	Includes amounts charged by Occidental pursuant to the shared services agreements (see Shared services agreements within this Note 6). Also see Incentive Plans within this Note 6.

(2)	Represents interest income recognized on the Anadarko note receivable.

(3)	Includes amounts related to finance leases for the three months ended March 31, 2020, and the APCWH Note Payable for the three months ended March 31, 2019 (see Note 11).

(4)	Represents distributions paid to Occidental pursuant to the partnership agreement of the Partnership (see Note 4 and Note 5).

(5)	Represents distributions paid to certain subsidiaries of Occidental pursuant to WES Operating’s partnership agreement (see Note 4 and Note 5).

(1)	Includes amounts charged by Occidental pursuant to the shared services agreements (see Shared services agreements within this Note 6). Also see Incentive Plans within this Note 6.

(2)	Represents distributions paid to the Partnership and certain subsidiaries of Occidental pursuant to WES Operating’s partnership agreement (see Note 4 and Note 5). For the three months ended March 31, 2019, includes distributions to the Partnership and a subsidiary of Occidental related to the repayment of the WGP RCF (see Note 11).

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(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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(1)	Includes amounts related to WES Operating’s interest-rate swap agreements as of March 31, 2020, and December 31, 2019 (see Note 11).

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

(2)	Includes related-party amounts of $2.6 million and $7.9 million as of March 31, 2020, and December 31, 2019, respectively.

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3.100% Senior Notes due 2025, 4.050% Senior Notes due 2030, and 5.250% Senior Notes due 2050, offered to the public at prices of 99.962%, 99.900%, and 99.442%, respectively, of the face amount (collectively referred to as the “Senior Notes”). Including the effects of the issuance and underwriting discounts, the effective interest rates of the Senior Notes due 2025, 2030, and 2050, are 3.287%, 4.168%, and 5.362%, respectively. Interest is paid on each such series semi-annually on February 1 and August 1 of each year, beginning August 1, 2020; and

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Floating-Rate Senior Notes due 2023 (the “Floating-Rate Notes”). As of March 31, 2020, the interest rate on the Floating-Rate Notes was 2.69%. Interest is paid quarterly in arrears on January 13, April 13, July 13, and October 13 of each year, beginning April 13, 2020. Interest will accrue from January 13, 2020 at a benchmark rate (which will initially be a three-month London Interbank Offered Rate) on the interest determination date plus 0.85%.

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•	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, and keep-whole 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;

•	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;

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•	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;

•	conflicts of interest among us, 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 and the note receivable from Anadarko;

•	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;

•	the economic uncertainty from the worldwide outbreak of the coronavirus (“COVID-19”); 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 2019 Form 10-K, in our quarterly reports on Form 10-Q, and in our other public filings and press releases.

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(1)	Includes the DBM water systems.

•	We decreased our per-unit distribution to $0.31100 for the first quarter of 2020, representing a 50.0% decrease from the fourth-quarter 2019 distribution and a 49.0% decrease from the first-quarter 2019 distribution.

•	We commenced operations of Latham Train II at the DJ Basin complex (with capacity of 250 MMcf/d) and Loving ROTF Train III at the DBM oil system (with capacity of 30 MBbls/d) in the first quarter of 2020.

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In January 2020, WES Operating completed an offering of $3.2 billion in aggregate principal amount of senior notes and $300.0 million in aggregate principal amount of floating-rate senior notes. Net proceeds from these offerings were used to repay and terminate the Term loan facility, repay outstanding amounts under the RCF, and for general partnership purposes. See Liquidity and Capital Resources within this Item 2 for additional information.

•	In March 2020, WES Operating purchased and retired $61.4 million of its 5.375% Senior Notes due 2021 and $38.6 million of its 4.000% Senior Notes due 2022 via open-market repurchases. See Liquidity and Capital Resources within this Item 2 for additional information.

•	Natural-gas throughput attributable to WES totaled 4,466 MMcf/d for the three months ended March 31, 2020, representing a 6% increase compared to the three months ended March 31, 2019.

•	Crude-oil and NGLs throughput attributable to WES totaled 760 MBbls/d for the three months ended March 31, 2020, representing a 28% increase compared to the three months ended March 31, 2019.

•	Produced-water throughput attributable to WES totaled 703 MBbls/d for the three months ended March 31, 2020, representing a 38% increase compared to the three months ended March 31, 2019.

•	Operating income (loss) was $(214.9) million for the three months ended March 31, 2020, which includes goodwill and long-lived asset impairments of $596.8 million, and represents a 167% decrease compared to the three months ended March 31, 2019.

•	Adjusted gross margin for natural-gas assets (as defined under the caption Key Performance Metrics within this Item 2) averaged $1.16 per Mcf for the three months ended March 31, 2020, representing a 6% increase compared to the three months ended March 31, 2019.

•	Adjusted gross margin for crude-oil and NGLs assets (as defined under the caption Key Performance Metrics within this Item 2) averaged $2.43 per Bbl for the three months ended March 31, 2020, representing a 1% decrease compared to the three months ended March 31, 2019.

•	Adjusted gross margin for produced-water assets (as defined under the caption Key Performance Metrics within this Item 2) averaged $0.97 per Bbl for the three months ended March 31, 2020, representing a 1% increase compared to the three months ended March 31, 2019.

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Exchange Agreement. WGRI, the general partner, and WES entered into a partnership interests exchange agreement (the “Exchange Agreement”), pursuant to which WES canceled the non-economic general partner interest in WES and simultaneously issued a 2.0% general partner interest to the general partner in exchange for which WGRI transferred 9,060,641 WES common units to WES, which immediately canceled such units on receipt.

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Services, Secondment, and Employee Transfer Agreement. Occidental, Anadarko, and WES Operating GP entered into an amended and restated Services, Secondment, and Employee Transfer Agreement (the “Services Agreement”), pursuant to which Occidental, Anadarko, and their subsidiaries (i) seconded certain personnel employed by Occidental to WES Operating GP, in exchange for which WES Operating GP pays a monthly secondment and shared services fee to Occidental equivalent to the direct cost of the seconded employees until their transfer to WES and (ii) agreed to continue to provide certain administrative and operational services to WES for up to a two-year transition period. In January 2020, pursuant to the Services Agreement, Occidental made a one-time cash contribution of $20.0 million to WES Operating for anticipated transition costs required to establish stand-alone human resources and information technology functions. The Services Agreement also includes provisions governing the transfer of certain employees to WES and the assumption by WES of liabilities relating to those employees at the time of their transfer. In late March 2020, seconded employees’ employment was transferred to WES.

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RCF amendment. WES Operating entered into an amendment to its RCF to, among other things, (i) effective on February 14, 2020, exercise the final one-year extension option to extend the maturity date of the RCF to February 14, 2025, for the extending lenders, and (ii) modify the change of control definition to provide, among other things, that, subject to certain conditions, if the limited partners of WES elect to remove the general partner as the general partner of WES in accordance with the terms of the partnership agreement, then such removal will not constitute a change of control under the RCF.

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Term loan facility amendment. WES Operating entered into an amendment of its Term loan facility to, among other things, modify the change of control definition to provide, among other things, that, subject to certain conditions, if the limited partners of WES elect to remove the general partner as the general partner of WES in accordance with the terms of the partnership agreement, then such removal will not constitute a change of control under the Term loan facility. See Note 11—Debt and Interest Expense in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q for further information.

•	Termination of debt-indemnification agreements. WES Operating GP and certain wholly owned subsidiaries of Occidental mutually terminated the debt-indemnification agreements related to certain indebtedness incurred by WES Operating.

•	Termination of omnibus agreements. WES and WES Operating entered into agreements with Occidental to terminate the WES and WES Operating omnibus agreements. See Note 6—Related-Party Transactions in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q for further information on the WES and WES Operating omnibus agreements.

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With significant and increasing excess supply, domestic oil-storage capacity may reach operational limits, causing downstream-storage constraints and potential production curtailments that could adversely impact revenues generated from our midstream gathering and processing contracts. As available storage nears capacity, our customers may shut-in field production due to their inability to access downstream-takeaway alternatives or challenged wellhead economics.

•	We have exposure to increased credit risk to the extent any of our customers, including Occidental, is in financial distress. See Liquidity and Capital Resources—Credit risk within this Item 2 for additional information.

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An extended period of diminished earnings may restrict our ability to fully access our RCF, which contains various customary covenants, certain events of default, and a maximum consolidated leverage ratio based on Adjusted EBITDA (as defined in the covenant) related to the trailing twelve-month period. Further, any future waivers or amendments to the RCF also may trigger pricing increases for available credit. See Liquidity and Capital Resources—Debt and credit facilities within this Item 2 for additional information.

•	As of March 31, 2020, it is reasonably possible that prolonged low commodity prices, further commodity-price declines, and changes to producers’ drilling plans in response to lower prices could result in future long-lived asset impairments.

•	WES Operating’s annualized borrowing costs will increase by $17.5 million for the senior notes and floating-rate notes issued in January 2020 that provide for increased interest rates following downgrade events.

•	Beginning in the second quarter of 2020, the interest rate on outstanding RCF borrowings will increase by 0.20% and the RCF facility-fee rate will increase by 0.05%, from 0.20% to 0.25%.

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•	We may be obligated to provide financial assurance of our performance under certain contractual arrangements requiring us to post collateral in the form of letters of credit or cash. At March 31, 2020, we had $6.5 million in letters of credit or cash-provided assurance of our performance outstanding under contractual arrangements with credit-risk-related contingent features.

•	A quarterly cash distribution of $0.311 per unit for the first quarter of 2020, which reflects a 50% reduction to the distribution paid for the previous quarter.

•	For the year ended December 31, 2020, capital expenditures are expected to be $450.0 million to $550.0 million, representing a 45% reduction to prior guidance. This reduction results from deferred producer activity in all basins and the elimination of associated capital expenditures, other than those expenditures that are necessary to support proper maintenance and long-term asset integrity.

•	We expect to achieve other cost reductions of approximately $75.0 million through operating and maintenance and general and administrative expense cost-saving initiatives.

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(1)

Total revenues and other includes amounts earned from services provided to related parties and from the sale of residue gas and NGLs to related parties. Total operating expenses includes amounts charged by related parties for services and reimbursements of amounts paid by related parties to third parties on our behalf. See Note 6—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.

(3)	Adjusted gross margin, Adjusted EBITDA, and Free cash flow are defined under the caption Key Performance Metrics within this Item 2. For reconciliations of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with GAAP, see Key Performance Metrics—Reconciliation of non-GAAP financial measures within this Item 2.

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(1)	Represents the 14.81% share of average Fort Union throughput, 22% share of average Rendezvous throughput, 50% share of average Mi Vida and Ranch Westex throughput, and 30% share of average Red Bluff Express throughput.

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

(3)	Represents the 10% share of average White Cliffs throughput; 25% share of average Mont Belvieu JV throughput; 20% share of average TEG, TEP, Whitethorn, and Saddlehorn throughput; 33.33% share of average FRP throughput; and 15% share of average Panola and Cactus II throughput.

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(1)	Adjusted gross margin is calculated as total revenues and other (less reimbursements for electricity-related expenses recorded as revenue), less cost of product, plus distributions from our equity investments, and excluding the noncontrolling interests owners’ proportionate share of revenues and cost of product.

(2)	For a reconciliation of Adjusted gross margin, Adjusted EBITDA, and Free cash flow to the most directly comparable financial measure calculated and presented in accordance with GAAP, see the below descriptions.

(3)	Average for period. Calculated as Adjusted gross margin for natural-gas assets, divided by total throughput (MMcf/d) attributable to WES for natural-gas assets.

(4)	Average for period. Calculated as Adjusted gross margin for crude-oil and NGLs assets, divided by total throughput (MBbls/d) attributable to WES for crude-oil and NGLs assets.

(5)	Average for period. Calculated as Adjusted gross margin for produced-water assets, divided by total throughput (MBbls/d) attributable to WES for produced-water assets.

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•	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.

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(1)	Includes goodwill impairment for the three months ended March 31, 2020. See Note 9—Goodwill in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

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

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(1)	Includes goodwill impairment for the three months ended March 31, 2020. See Note 9—Goodwill in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

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

(3)	Excludes the non-cash loss on interest-rate swaps of $35.6 million for the three months ended March 31, 2019. See Note 11—Debt and Interest Expense in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

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(1)	For the three months ended March 31, 2020 and 2019, included $4.8 million and $4.7 million, respectively, of capitalized interest.

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•	$172.8 million of capital expenditures, primarily related to construction and expansion at the West Texas and DJ Basin complexes, DBM water systems, and DBM oil system;

•	$11.0 million of capital contributions primarily paid to Cactus II and FRP for construction activities; and

•	$5.1 million of distributions received from equity investments in excess of cumulative earnings.

•	$2.0 billion of cash paid for the acquisition of AMA;

•	$386.1 million of capital expenditures, primarily related to construction and expansion at the DBM oil and DBM water systems and the West Texas and DJ Basin complexes;

•	$92.5 million of cash paid for the acquisition of our interest in Red Bluff Express;

•	$36.5 million of capital contributions paid to Cactus II, Red Bluff Express, the TEFR Interests, Whitethorn LLC, and White Cliffs for construction activities; and

•	$7.8 million of distributions received from equity investments in excess of cumulative earnings.

•	$3.0 billion of repayments of outstanding borrowings under the Term loan facility;

•	$380.0 million of repayments of outstanding borrowings under the RCF;

•	$281.8 million of distributions paid to WES unitholders;

•	$90.1 million to purchase and retire portions of WES Operating’s 5.375% Senior Notes due 2021 and 4.000% Senior Notes due 2022 via open-market repurchases;

•	$5.8 million of distributions paid to the noncontrolling interest owners of WES Operating;

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•	$3.5 billion of net proceeds from the Senior Notes and Floating-Rate Notes issued in January 2020, which were used to repay the $3.0 billion outstanding borrowings under the Term loan facility, repay outstanding amounts under the RCF, and for general partnership purposes;

•	$125.0 million of borrowings under the RCF, which were used for general partnership purposes, including the funding of capital expenditures; and

•	$20.0 million of a one-time cash contribution from Occidental received in January 2020, pursuant to the Services Agreement, for anticipated transition costs required to establish stand-alone human resources and information technology functions.

•	$2.0 billion of borrowings under the Term loan facility, net of issuance costs, which were used to fund the acquisition of AMA and to repay the APCWH Note Payable;

•	$451.6 million of net contributions from Anadarko representing intercompany transactions attributable to the acquisition of AMA;

•	$420.0 million of borrowings under the RCF, which were used for general partnership purposes, including the funding of capital expenditures;

•	$11.0 million of borrowings under the APCWH Note Payable, which were used to fund the construction of the DBM water systems;

•	$7.4 million of capital contributions from Anadarko related to the above-market component of swap agreements;

•	$439.6 million of repayments of the total outstanding balance under the APCWH Note Payable;

•	$131.9 million of distributions paid to WES unitholders;

•	$101.0 million of distributions paid to the noncontrolling interest owners of WES Operating;

•	$28.0 million of repayments of the total outstanding balance under the WGP RCF, which matured in March 2019; and

•	$1.9 million of distributions paid to the noncontrolling interest owner of Chipeta.

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3.100% Senior Notes due 2025, 4.050% Senior Notes due 2030, and 5.250% Senior Notes due 2050, offered to the public at prices of 99.962%, 99.900%, and 99.442%, respectively, of the face amount (collectively referred to as the “Senior Notes”). Including the effects of the issuance and underwriting discounts, the effective interest rates of the Senior Notes due 2025, 2030, and 2050, are 3.287%, 4.168%, and 5.362%, respectively. Interest is paid on each such series semi-annually on February 1 and August 1 of each year, beginning August 1, 2020; and

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Floating-Rate Senior Notes due 2023 (the “Floating-Rate Notes”). As of March 31, 2020, the interest rate on the Floating-Rate Notes was 2.69%. Interest is paid quarterly in arrears on January 13, April 13, July 13, and October 13 of each year, beginning April 13, 2020. Interest will accrue from January 13, 2020 at a benchmark rate (which will initially be a three-month LIBOR rate) on the interest determination date plus 0.85%.

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(1)

Represents the portion of net income (loss) allocated to the limited partner interests in WES Operating not held by WES. A subsidiary of Occidental held a 2.0% limited partner interest in WES Operating as of March 31, 2020 and 2019. Immediately prior to the Merger closing, the WES Operating IDRs and the general partner units were converted into a non-economic general partner interest in WES Operating and WES Operating common units, and at Merger completion, all WES Operating common units held by the public and subsidiaries of Anadarko (other than common units held by WES, WES Operating GP, and 6.4 million common units held by a subsidiary of Anadarko) were converted into WES common units. 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.

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

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(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 4—Partnership Distributions and Note 5—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 4—Partnership Distributions and Note 5—Equity and Partners’ Capital in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

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The impact of downstream-storage constraints and potential production curtailments reducing revenues generated from our midstream gathering and processing contracts. With significant excess supply, domestic oil-storage capacity could reach operational limits. As available storage nears capacity, our customers may shut-in field production due to limited downstream-takeaway alternatives or resulting wellhead economics. Additionally, it is possible that the Texas Railroad Commission may require production curtailments to alleviate downstream bottlenecks. If production is shut-in for these or for other reasons, affected producers may become insolvent or seek to avoid their contractual obligations with us, in which case, our earnings, cash flows from operations, and ability to make cash distributions to our unitholders could be materially and adversely impacted. Additionally, a significant decline in produced volumes on our systems may trigger liability under certain downstream transportation commitments we have through December 31, 2020.

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Exposure to the credit risk of our customers, including Occidental, and any material non-payment or non-performance by these parties. To the extent any of our customers, including Occidental, is in financial distress, we are exposed to risk of non-payment for our services or for other amounts owed to us. Also, if any of our customers enter bankruptcy proceedings, then those customers may seek to renegotiate contracts with us at lower rates or altogether reject contracts. For example, on April 29, 2020, we received notice that Sanchez has elected to reject a number of midstream and downstream agreements with commercial counterparties, including Sanchez’s Springfield gathering agreements with WES. As a result of such contract breaches or bankruptcy events, our earnings, cash flows from operations, and ability to make cash distributions to our unitholders could be materially and adversely impacted.

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Credit-rating downgrades negatively impact our cost of and ability to access capital. Our costs of borrowing and ability to access the capital markets are affected by, among other factors, market conditions and the credit ratings assigned to WES Operating’s debt by the major credit rating agencies. In March 2020, WES Operating’s credit ratings were downgraded below investment grade by S&P and Fitch. As a result of these downgrades, financing costs under WES Operating’s RCF increased. Additionally, WES Operating currently has $3.5 billion of outstanding senior notes that provide for increased interest rates following downgrade events. For example, the March downgrades to WES Operating’s credit ratings resulted in a $17.5 million increase to WES Operating’s annualized borrowing costs attributable to the aforementioned senior notes. Additional downgrades to WES Operating’s credit ratings will further increase its borrowing costs, and could adversely affect WES Operating’s ability to issue public debt and effectively execute aspects of our business strategy.

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Restrictions in the RCF may limit our ability to access capital. The financial restrictions in our RCF could restrict our ability to access capital. The RCF contains various customary covenants, certain events of default, and a maximum consolidated leverage ratio as of the end of each fiscal quarter (which is defined as the ratio of consolidated indebtedness as of the last day of a fiscal quarter to Consolidated EBITDA, as defined in the RCF, for the most-recent four-consecutive fiscal quarters ending on such day) of 5.0 to 1.0. If we experience an extended period of diminished earnings, we may be unable to draw on our RCF, be required to repay existing RCF borrowings, or be required to seek waivers or amendments to our RCF to comply with our leverage-ratio requirements. Any future waivers or amendments also may trigger additional pricing increases for available credit. If we are unable to access credit to fund our business requirements, or the cost of available credit increases, our earnings, cash flows from operations, and ability to make cash distributions to our unitholders could be materially and adversely impacted.

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Our results of operations could be adversely affected by asset impairments. Commodity-price declines may require us to write down the value of our midstream properties if the estimated future cash flows from these properties fall below their respective net book values. For example, during the three months ended March 31, 2020, we recognized long-lived asset impairments of $155.8 million (see Note 8—Property, Plant, and Equipment in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q). We also performed an interim goodwill impairment test that resulted in us recognizing a $441.0 million goodwill impairment for our gathering and processing reporting unit. Prolonged low commodity prices, further commodity-price declines, and changes to producers’ drilling plans in response to lower prices could result in additional long-lived asset impairments in the future. Future non-cash asset impairments could negatively affect our results of operations.

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