Western Midstream Partners, LP - Quarter Report: 2024 June (Form 10-Q)

Meritage Midstream Services II, LLC, which was acquired by the Partnership on October 13, 2023.

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 Petroleum Corporation and, as the context requires, its subsidiaries, excluding our general partner.

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.

Red Bluff Express Pipeline, LLC, in which we own a 30% interest.

The Springfield gas-gathering system and Springfield oil-gathering system.

thousands except number of unitsJune 30,
2024December 31,
2023ASSETSCurrent assetsCash and cash equivalents$ $ Accounts receivable, net Other current assets Total current assets Property, plant, and equipmentCost Less accumulated depreciation Net property, plant, and equipment Goodwill Other intangible assets Equity investments

Other assets (1)

Total assets (2)

$ $ LIABILITIES, EQUITY, AND PARTNERS’ CAPITALCurrent liabilitiesAccounts and imbalance payables$ $

Short-term debt

Accrued ad valorem taxes Accrued liabilities Total current liabilities Long-term liabilities

Long-term debt

Deferred income taxes Asset retirement obligations Other liabilities

Total long-term liabilities

Total liabilities (3)

Equity and partners’ capital

Common units ( and units issued and outstanding at June 30, 2024, and December 31, 2023, respectively)

General partner units ( units issued and outstanding at June 30, 2024, and December 31, 2023)

Total partners’ capital Noncontrolling interests Total equity and partners’ capital Total liabilities, equity, and partners’ capital$ $

________________________________________________________________________________________

(1) million and $ million of NGLs line-fill inventory as of June 30, 2024, and December 31, 2023, respectively. Other assets also includes $ million and $ million of materials and supplies inventory as of June 30, 2024, and December 31, 2023, respectively.

(2) million and $ billion as of June 30, 2024, and December 31, 2023, respectively, which includes related-party Accounts receivable, net of $ million and $ million as of June 30, 2024, and December 31, 2023, respectively. See Note 6.

(3) million and $ million as of June 30, 2024, and December 31, 2023, respectively. See Note 6.

See accompanying Notes to Consolidated Financial Statements.

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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, 2023

Net income (loss)

Distributions to Chipeta noncontrolling interest owner

—

()

Distributions to noncontrolling interest owner of WES Operating

—

()

Distributions to Partnership unitholders

()

—

()

Equity-based compensation expense

—

Other

()

—

()

Balance at March 31, 2024

Net income (loss)

Distributions to Chipeta noncontrolling interest owner

—

()

Distributions to noncontrolling interest owner of WES Operating

—

()

Distributions to Partnership unitholders

()

—

()

Equity-based compensation expense

—

Other

()

—

()

Balance at June 30, 2024

Partners’ Capital

thousands

Common
Units

General Partner
Units

Noncontrolling
Interests

Total

Balance at December 31, 2022

Net income (loss)

Distributions to Chipeta noncontrolling interest owner

—

()

Distributions to noncontrolling interest owner of WES Operating

—

()

Distributions to Partnership unitholders

()

—

()

Unit repurchases (1)

()

—

()

Equity-based compensation expense

—

Other

()

—

()

Balance at March 31, 2023

Net income (loss)

Distributions to Chipeta noncontrolling interest owner

—

()

Distributions to noncontrolling interest owner of WES Operating

—

()

Distributions to Partnership unitholders

()

—

()

Unit repurchases (1)

()

—

()

Equity-based compensation expense

—

Other

()

—

()

Balance at June 30, 2023

________________________________________________________________________________________

(1) million and $ million for the three and six months ended June 30, 2024, respectively, and $ million and $ million for the three and six months ended June 30, 2023, respectively. See Note 6.

(2)

(3) million and $() million for the three and six months ended June 30, 2024, respectively, and $() million and $() million for the three and six months ended June 30, 2023, respectively, all primarily related to changes in imbalance positions. See Note 6.

See accompanying Notes to Consolidated Financial Statements.

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WESTERN MIDSTREAM OPERATING, LP

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

thousands except number of units

June 30,
2024

December 31,
2023

ASSETS

Current assets

Cash and cash equivalents

Accounts receivable, net

Other current assets

Total current assets

Property, plant, and equipment

Cost

Less accumulated depreciation

Net property, plant, and equipment

Goodwill

Other intangible assets

Equity investments

Other assets (1)

Total assets (2)

LIABILITIES, EQUITY, AND PARTNERS’ CAPITAL

Current liabilities

Accounts and imbalance payables

Short-term debt

Accrued ad valorem taxes

Accrued liabilities

Total current liabilities

Long-term liabilities

Long-term debt

Deferred income taxes

Asset retirement obligations

Other liabilities

Total long-term liabilities

Total liabilities (3)

Equity and partners’ capital

Common units ( units issued and outstanding at June 30, 2024, and December 31, 2023)

Total partners’ capital

Noncontrolling interest

Total equity and partners’ capital

Total liabilities, equity, and partners’ capital

_________________________________________________________________________________________

(3) million and $ million as of June 30, 2024, and December 31, 2023, respectively. See Note 6.

See accompanying Notes to Consolidated Financial Statements.

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WESTERN MIDSTREAM OPERATING, LP

CONSOLIDATED STATEMENTS OF EQUITY AND PARTNERS’ CAPITAL

(UNAUDITED)

thousands

Common
Units

Noncontrolling
Interest

Total

Balance at December 31, 2023

Net income (loss)

Distributions to Chipeta noncontrolling interest owner

—

()

Distributions to WES Operating unitholders

()

—

()

Contributions of equity-based compensation from WES

—

Balance at March 31, 2024

Net income (loss)

Distributions to Chipeta noncontrolling interest owner

—

()

Distributions to WES Operating unitholders

()

—

()

Contributions of equity-based compensation from WES

—

Balance at June 30, 2024

thousands

Common
Units

Noncontrolling
Interest

Total

Balance at December 31, 2022

Net income (loss)

Distributions to Chipeta noncontrolling interest owner

—

()

Distributions to WES Operating unitholders

()

—

()

Contributions of equity-based compensation from WES

—

Balance at March 31, 2023

Net income (loss)

Distributions to Chipeta noncontrolling interest owner

—

()

Distributions to WES Operating unitholders

()

—

()

Contributions of equity-based compensation from WES

—

Balance at June 30, 2023

_________________________________________________________________________________________

(1)Includes the DBM water systems.

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

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Proportionate consolidation (2)

Springfield system %

Equity investments (3)

Mi Vida JV LLC (“Mi Vida”) %Front Range Pipeline LLC (“FRP”) %Red Bluff Express Pipeline, LLC (“Red Bluff Express”) %Rendezvous Gas Services, LLC (“Rendezvous”) %Texas Express Pipeline LLC (“TEP”) %Texas Express Gathering LLC (“TEG”) %White Cliffs Pipeline, LLC (“White Cliffs”) %

_________________________________________________________________________________________

(1)The % 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 this asset.

(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 2023 Form 10-K, as filed with the SEC on February 21, 2024. 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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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

% partnership interest in WES Operating, as of June 30, 2024 (see Note 7). 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.

% third-party interest in Chipeta and (ii) the % limited partner interest in WES Operating owned by an Occidental subsidiary. WES Operating’s noncontrolling interest in the consolidated financial statements consists of the % third-party interest in Chipeta. See Note 5.

Equity-based compensation. During the six months ended June 30, 2024, the Partnership issued common units under its long-term incentive plans. Compensation expense was $ million and $ million for the three and six months ended June 30, 2024, respectively, and $ million and $ million for the three and six months ended June 30, 2023, respectively.

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

$ $ $ Service revenues – product based Product sales Total revenue from customers Revenue from other than customersOther Total revenues and other$ $ $ $

Contract balances. Receivables from customers, which are included in Accounts receivable, net on the consolidated balance sheets were $ million and $ million as of June 30, 2024, and December 31, 2023, 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.

Amounts transferred to Accounts receivable, net that were included in the contract assets balance at the beginning of the period (1)

()

Additional estimated revenues recognized (2)

Contract assets balance at June 30, 2024

Contract assets at June 30, 2024

Other current assets$ Other assets Total contract assets from contracts with customers$ _________________________________________________________________________________________

(1)Includes $() million for the three months ended June 30, 2024.

(2)Includes $ million for the three months ended June 30, 2024.

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Cash received or receivable, excluding revenues recognized during the period (1)

Revenues recognized that were included in the contract liability balance at the beginning of the period (2)

()

Contract liabilities balance at June 30, 2024

Contract liabilities at June 30, 2024

Accrued liabilities$ Other liabilities Total contract liabilities from contracts with customers$ _________________________________________________________________________________________

(1)Includes $ million for the three months ended June 30, 2024.

(2)Includes $() million for the three months ended June 30, 2024.

Transaction price allocated to remaining performance obligations. Revenues expected to be recognized from certain performance obligations that are unsatisfied (or partially unsatisfied) as of June 30, 2024, are presented in the table below. 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.

2025 2026 2027 2028 Thereafter Total$

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

% interest in the Marcellus Interest systems for proceeds of $ million, resulting in a net gain on sale of $ million that was recorded as Gain (loss) on divestiture and other, net in the consolidated statement of operations.

Mont Belvieu JV, Whitethorn LLC, Panola, and Saddlehorn. During the first quarter of 2024, the Partnership closed on the sale of the following equity investments to third parties: (i) the % interest in Enterprise EF78 LLC (the “Mont Belvieu JV”), (ii) the % interest in Whitethorn Pipeline Company LLC (“Whitethorn LLC”), (iii) the % interest in Panola Pipeline Company, LLC (“Panola”), and (iv) the % interest in Saddlehorn Pipeline Company, LLC (“Saddlehorn”). The combined proceeds received in the first quarter of 2024 of $ million includes $ million in pro-rata distributions through closing, resulting in a net gain on sale of $ million that was recorded as Gain (loss) on divestiture and other, net in the consolidated statement of operations. The sale of the interests in Mont Belvieu JV and Whitethorn LLC also resolved outstanding legal proceedings associated with those assets.

Meritage. On October 13, 2023, the Partnership closed on the acquisition of Meritage Midstream Services II, LLC (“Meritage”) for $ million (subject to certain customary post-closing adjustments) funded with cash, including proceeds from the Partnership’s $ million senior note issuance in September 2023 (see Note 10) and borrowings on the senior unsecured revolving credit facility (“RCF”). The cash purchase price, adjusted for working capital and certain customary post-closing adjustments and reduced by the $ million of cash acquired (as presented in the table below), was $ million.

The assets acquired, located in Converse, Campbell, and Johnson counties, Wyoming, include approximately 1,500 miles of high- and low-pressure natural-gas gathering pipelines, approximately 380 MMcf/d of natural-gas processing capacity, and the Thunder Creek NGL pipeline, which is a 120 mile, 38 MBbls/d FERC-regulated NGL pipeline that connects to the processing facility. The acquisition expands the Partnership’s existing Powder River Basin asset base, increasing total natural-gas processing capacity in that region to 440 MMcf/d.

The Meritage acquisition has been accounted for under the acquisition method of accounting. The assets acquired and liabilities assumed in the Meritage acquisition were recorded in the consolidated balance sheet at their estimated fair values as of the acquisition date. Results of operations attributable to the Meritage acquisition were included in the Partnership’s consolidated statements of operations beginning on the acquisition date in the fourth quarter of 2023.

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Accounts receivable, net Other current assets Property, plant, and equipment Other assets Total assets acquired Liabilities assumed:

Accounts payable and accrued liabilities

Other current liabilities Asset retirement obligation Other liabilities

Total liabilities assumed

Net assets acquired$

The acquisition-date fair values are based on an assessment of the fair value of the assets acquired and liabilities assumed in the Meritage acquisition using inputs that are not observable in the market and thus represent Level 3 inputs. The fair values of the processing plants, gathering system, and related facilities and equipment are based on market and cost approaches.

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.

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

$ May 15, 2023May 1, 2023June 30 August 14, 2023July 31, 2023September 30 November 13, 2023November 1, 2023December 31 February 13, 2024February 1, 20242024March 31$ $ May 15, 2024May 1, 2024June 30 August 14, 2024August 1, 2024

_________________________________________________________________________________________

(1)Includes the regular quarterly distribution of $ per unit, or $ million, as well as the Enhanced Distribution of $ 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. In April 2023, the Board approved an Enhanced Distribution of $ per unit, or $ million, related to the Partnership’s 2022 performance, which was paid in conjunction with the regular first-quarter 2023 distribution on May 15, 2023.

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 5.

May 2023June 30 August 2023September 30 November 2023December 31 February 20242024March 31$ May 2024June 30 August 2024

_________________________________________________________________________________________

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

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

common units, representing a % limited partner interest in the Partnership, and through its ownership of the general partner, Occidental indirectly held general partner units, representing a % general partner interest in the Partnership. The public held common units, representing a % limited partner interest in the Partnership.

Partnership equity repurchases. In 2022, the Board authorized the Partnership to buy back up to $ 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 six months ended June 30, 2024, there were common units repurchased. During the six months ended June 30, 2023, the Partnership repurchased common units for an aggregate purchase price of $ million. The units were canceled immediately upon receipt. As of June 30, 2024, the Partnership had an authorized amount of $ million remaining under the program.

Holdings of WES Operating equity. As of June 30, 2024, (i) the Partnership, directly and indirectly through its ownership of WES Operating GP, owned a % limited partner interest and the entire non-economic general partner interest in WES Operating and (ii) Occidental, through its ownership of WGRAH, owned a % limited partner interest in WES Operating, which is reflected as a noncontrolling interest within the consolidated financial statements of the Partnership (see Note 1).

$ $ $ Weighted-average common units outstandingBasic Dilutive effect of non-vested phantom units Diluted Excluded due to anti-dilutive effect Net income (loss) per common unitBasic$ $ $ $ Diluted$ $ $ $

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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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

$ $ $ Service revenues – product based Product sales Total revenues and other

Equity income, net – related parties (1)

Operating expenses

Cost of product (2)

()()()()Operation and maintenance General and administrative Total operating expenses ()()()

_________________________________________________________________________________________

(1)See Note 7.

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

Consolidated balance sheets

thousands

June 30,
2024

December 31,
2023

Assets

Accounts receivable, net

Other current assets

Equity investments (1)

Other assets

Total assets

Liabilities

Accounts and imbalance payables

Accrued liabilities

Other liabilities (2)

Total liabilities

_________________________________________________________________________________________

(1)See Note 7.

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

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

$ Contributions to equity investments – related parties ()Distributions from equity investments in excess of cumulative earnings – related parties

Distributions to Partnership unitholders (1)

()()

Distributions to WES Operating unitholders (2)

()()

_________________________________________________________________________________________

(1)Represents common and general partner unit distributions paid to Occidental pursuant to the partnership agreement of the Partnership. See Note 4 and Note 5.

(2)Represents distributions paid to Occidental, through its ownership of WGRAH, pursuant to WES Operating’s partnership agreement. See Note 4 and Note 5.

$ $ $

_________________________________________________________________________________________

(1)Includes an intercompany service fee between the Partnership and WES Operating.

Consolidated balance sheets

thousands

June 30,
2024

December 31,
2023

Accounts receivable, net (1)

Other current assets

Other assets

Accounts and imbalance payables

Accrued liabilities

_________________________________________________________________________________________

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


Consolidated statements of cash flows


	2023
()		$	()

))))))))))()$()$()$

_________________________________________________________________________________________

(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.

(2)See Note 3.

During the first quarter of 2024, the Partnership closed on the sale of the following equity investments to third parties: (i) the % interest in Mont Belvieu JV, (ii) the % interest in Whitethorn LLC, (iii) the % interest in Panola, and (iv) the % interest in Saddlehorn. See Note 3.

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

$ Gathering systems – pipelines years Gathering systems – compressors years Processing complexes and treating facilities years Transportation pipeline and equipment

to years

Produced-water disposal systems

years Assets under constructionN/A Other

to years

Total property, plant, and equipment Less accumulated depreciation Net property, plant, and equipment$ $

“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.

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 $ 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 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)

$ $ $ Other receivables, net Total accounts receivable, net$ $ $ $

$ $ $ Imbalance receivables Prepaid insurance Contract assets Other Total other current assets$ $ $ $

$ $ $

Short-term asset retirement obligations

Short-term remediation and reclamation obligations

Income taxes payable Contract liabilities Accrued payroll and benefits Other Total accrued liabilities$ $ $ $

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

$ $ $ $ $ Finance lease liabilities

Total short-term debt

$ $ $ $ $ $

Long-term debt

% Senior Notes due 2025

$ $ $ $ $ $

% Senior Notes due 2025

% Senior Notes due 2026

% Senior Notes due 2028

% Senior Notes due 2029

% Senior Notes due 2030

% Senior Notes due 2033

% Senior Notes due 2044

% Senior Notes due 2048

% Senior Notes due 2050

Finance lease liabilities

Total long-term debt

$ $ $ $ $ $

_________________________________________________________________________________________

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

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Commercial paper borrowings (repayments), net (1)

()

Repayment of % Senior Notes due 2025

()

Repayment of % Senior Notes due 2025

()

Repayment of % Senior Notes due 2026

()

Repayment of % Senior Notes due 2028

()

Repayment of % Senior Notes due 2028

()

Repayment of % Senior Notes due 2030

()Finance lease liabilities Other Balance at June 30, 2024$

________________________________________________________________________________________

(1)Net of borrowings and repayments related to commercial paper notes with original maturities of 90 days or less.

WES Operating Senior Notes. WES Operating issued the Fixed-Rate % Senior Notes due 2025, % Senior Notes due 2030, % Senior Notes due 2050, and the Floating-Rate Senior Notes due 2023 in January 2020. 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 %, %, and %, respectively, at June 30, 2024, and were %, %, and %, respectively, at June 30, 2023. The effective interest rate of these notes is subject to adjustment from time to time due to a change in credit rating.

During the six months ended June 30, 2024, WES Operating purchased and retired $ million of certain of its senior notes via open-market repurchases with cash from operations (see Debt activity above) and a gain of $ million was recognized for the early retirement of portions of these notes. As of June 30, 2024, the % Senior Notes due 2025 and % Senior Notes due 2025 were classified as long-term debt on the consolidated balance sheet as WES Operating has the ability and intent to refinance these obligations using long-term debt.

During the third quarter of 2023, WES Operating completed the public offering of $ million in aggregate principal amount of % Senior Notes due 2029. Net proceeds from the offering were used to fund a portion of the aggregate purchase price for the Meritage acquisition (see Note 3), to pay related costs and expenses, and for general partnership purposes. During the second quarter of 2023, WES Operating completed the public offering of $ million in aggregate principal amount of % Senior Notes due 2033. Net proceeds from the offering were used to repay borrowings under the RCF and for general partnership purposes. In addition, during 2023, WES Operating purchased and retired $ million of certain of its senior notes via open-market repurchases and redeemed the total principal amount outstanding on the Floating-Rate Senior Notes due 2023 at par value with cash on hand.

As of June 30, 2024, WES Operating was in compliance with all covenants under the relevant governing indentures.

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

million out of $ billion of total commitments from all lenders.

In April 2023, WES Operating (i) repaid all then-outstanding borrowings under its RCF with proceeds from the % Senior Notes due 2033 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 $ billion, expandable to a maximum of $ billion, through the maturity date.

As of June 30, 2024, there were outstanding borrowings and outstanding letters of credit, resulting in $ billion in effective borrowing capacity under the RCF. Any outstanding commercial paper borrowings (see below) reduce the effective borrowing capacity under the RCF as WES Operating maintains availability under the RCF as support for its commercial paper program. As of June 30, 2024 and 2023, the interest rate on any outstanding RCF borrowings was % and %, respectively. The facility-fee rate was % at June 30, 2024 and 2023. As of June 30, 2024, WES Operating was in compliance with all covenants under the RCF.

Commercial paper program. In November 2023, WES operating entered into an unsecured commercial paper program under which it may issue (and have outstanding at any one time) an aggregate principal amount up to $ billion. WES Operating intends to maintain a minimum aggregate available borrowing capacity under the RCF equal to the aggregate amount of outstanding commercial paper borrowings. The maturities of the notes may vary, but may not exceed days. As of June 30, 2024, there were outstanding borrowings under the commercial paper program.

Interest expense.

)$()$()$()Finance lease liabilities()()()()Commitment fees and amortization of debt-related costs()()()()Capitalized interest Interest expense$()$()$()$()

_________________________________________________________________________________________

(1)Includes the DBM water systems.

Significant financial and operational events during the six months ended June 30, 2024, included the following:

•We closed on the sale of (i) several equity investments to third parties for combined proceeds of $588.6 million, which included $5.9 million in pro-rata distributions through closing, and (ii) our 33.75% interest in the Marcellus Interest systems for proceeds of $206.2 million. See Acquisitions and Divestitures within this Item 2 for additional information.

•WES Operating purchased and retired $150.0 million of certain of its senior notes via open-market repurchases.

•Our regular second-quarter 2024 per-unit distribution is unchanged from the first-quarter 2024 per-unit distribution of $0.875.

•Natural-gas throughput attributable to WES totaled 4,988 MMcf/d and 4,989 MMcf/d for the three and six months ended June 30, 2024, respectively, representing no change compared to the three months ended March 31, 2024, and a 19% increase compared to the six months ended June 30, 2023.

•Crude-oil and NGLs throughput attributable to WES totaled 515 MBbls/d and 540 MBbls/d for the three and six months ended June 30, 2024, respectively, representing a 9% decrease and a 13% decrease compared to the three months ended March 31, 2024, and six months ended June 30, 2023, respectively.

•Produced-water throughput attributable to WES totaled 1,080 MBbls/d and 1,103 MBbls/d for the three and six months ended June 30, 2024, respectively, representing a 4% decrease and a 16% increase compared to the three months ended March 31, 2024, and six months ended June 30, 2023, respectively.

•Gross margin was $688.2 million and $1.4 billion for the three and six months ended June 30, 2024, respectively, representing a 1% increase and a 26% increase compared to the three months ended March 31, 2024, and six months ended June 30, 2023, 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 $1.33 per Mcf and $1.32 per Mcf for the three and six months ended June 30, 2024, respectively, representing a 1% increase and a 3% increase compared to the three months ended March 31, 2024, and six months ended June 30, 2023, 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 $2.96 per Bbl and $2.94 per Bbl for the three and six months ended June 30, 2024, respectively, representing a 1% increase and a 13% increase compared to the three months ended March 31, 2024, and six months ended June 30, 2023, respectively.

•Adjusted gross margin for produced-water assets (as defined under the caption Reconciliation of Non-GAAP Financial Measures within this Item 2) averaged $0.97 per Bbl and $0.96 per Bbl for the three and six months ended June 30, 2024, respectively, representing a 2% increase and a 17% increase compared to the three months ended March 31, 2024, and six months ended June 30, 2023, respectively.

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



	Three Months Ended				Six Months Ended

	June 30, 2024	March 31, 2024	Inc/ (Dec)		June 30, 2024	June 30, 2023	Inc/ (Dec)
Throughput for natural-gas assets (MMcf/d)
Delaware Basin	1,858	1,761	6	%	1,810	1,581	14	%
DJ Basin	1,452	1,372	6	%	1,412	1,308	8	%
Powder River Basin	426	406	5	%	416	34	NM
Equity investments	508	508	—	%	509	438	16	%
Other	911	1,117	(18)	%	1,013	970	4	%
Total throughput for natural-gas assets	5,155	5,164	—	%	5,160	4,331	19	%
Throughput for crude-oil and NGLs assets (MBbls/d)
Delaware Basin	241	225	7	%	233	206	13	%
DJ Basin	91	87	5	%	89	67	33	%
Powder River Basin	25	23	9	%	24	—	NM
Equity investments	130	202	(36)	%	166	319	(48)	%
Other	39	39	—	%	39	40	(3)	%
Total throughput for crude-oil and NGLs assets	526	576	(9)	%	551	632	(13)	%
Throughput for produced-water assets (MBbls/d)
Delaware Basin	1,102	1,149	(4)	%	1,126	970	16	%



Total throughput for produced-water assets	1,102	1,149	(4)	%	1,126	970	16	%

_________________________________________________________________________________________

NM—Not meaningful

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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 producer activity. Our business is primarily driven by the level of production of crude oil and natural gas by producers in our areas of operation. This activity, however, can be impacted negatively by, among other things, commodity-price fluctuations and operational challenges. Fluctuating crude-oil, natural-gas, and NGLs prices can reduce the level of our customers’ activities and change the allocation of capital within their own asset portfolios. Such fluctuations can also impact us directly to the extent we take ownership of and sell certain volumes at the tailgate of our plants for our own account. 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 2023 ranged from a low of $66.74 per barrel in March 2023 to a high of $93.68 per barrel in September 2023, and prices during the six months ended June 30, 2024, ranged from a low of $70.38 per barrel in January 2024 to a high of $86.91 per barrel in April 2024. Similar disruptions could occur as a consequence of the current conflict in the Middle East. The extent and duration of commodity-price volatility, and the associated direct and indirect impact on our business, cannot be predicted. To address the risks posed by fluctuating commodity prices, we intend to continue evaluating the relevant price environments and adjust our capital spending plans to reflect our customers’ anticipated activity levels, while maintaining appropriate liquidity and financial flexibility.

Additionally, even when the commodity-price environments are favorable, our customers must manage numerous operational challenges, including severe weather disruptions, downstream and produced-water takeaway constraints, seismicity concerns, new regulatory requirements, and the ability to optimize the efficiency and results of large, complex drilling programs. Our producers’ ability to mitigate or manage such challenges can have a significant impact on the volumes available for us to service in the short term. For this reason, we strive to work proactively with our customers whenever possible to provide high levels of reliability on our systems and help them meet these operational challenges as they arise.

Impact of inflation and supply-chain disruptions. The U.S. economy has recently experienced 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 continued bottlenecks and disruptions 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 steel products, automation components, power supply, 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. Short- and long-term interest rates can be volatile, resulting in immediate changes to interest expense on RCF borrowings and commercial paper borrowings. Any future increases in interest rates likely will result in additional increases in financing costs. 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

Marcellus Interest systems. During the second quarter of 2024, we closed on the sale of our 33.75% interest in the Marcellus Interest systems for proceeds of $206.2 million, resulting in a net gain on sale of $63.9 million that was recorded as Gain (loss) on divestiture and other, net in the consolidated statement of operations.

Mont Belvieu JV, Whitethorn LLC, Panola, and Saddlehorn. During the first quarter of 2024, we closed on the sale of the following equity investments to third parties: (i) the 25.00% interest in Mont Belvieu JV, (ii) the 20.00% interest in Whitethorn LLC, (iii) the 15.00% interest in Panola, and (iv) the 20.00% interest in Saddlehorn. The combined proceeds received in the first quarter of 2024 of $588.6 million includes $5.9 million in pro-rata distributions through closing, resulting in a net gain on sale of $239.7 million that was recorded as Gain (loss) on divestiture and other, net in the consolidated statement of operations. The sale of the interests in Mont Belvieu JV and Whitethorn LLC also resolved outstanding legal proceedings associated with those assets.

Meritage. In October 2023, we closed on the acquisition of Meritage for $885.0 million (subject to certain customary post-closing adjustments) funded with cash, including proceeds from our $600.0 million senior note issuance in September 2023 and borrowings on the RCF.

See Note 3—Acquisitions and Divestitures and Note 10—Debt and Interest Expense under Part I, Item 1 of this Form 10-Q.

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RESULTS OF OPERATIONS

OPERATING RESULTS

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


	Three Months Ended				Six Months Ended

thousands	June 30, 2024		March 31, 2024		June 30, 2024		June 30, 2023
Total revenues and other (1)	$	905,629	$	887,729	$	1,793,358	$	1,472,255
Equity income, net – related parties	27,431		32,819		60,250		81,345
Total operating expenses (1)	522,653		480,791		1,003,444		924,528
Gain (loss) on divestiture and other, net	59,342		239,617		298,959		(2,188)
Operating income (loss)	469,749		679,374		1,149,123		626,884
Interest expense	(90,522)		(94,506)		(185,028)		(167,852)
Gain (loss) on early extinguishment of debt	4,879		524		5,403		6,813
Other income (expense), net	4,213		2,346		6,559		4,087
Income (loss) before income taxes	388,319		587,738		976,057		469,932
Income tax expense (benefit)	755		1,522		2,277		2,075
Net income (loss)	387,564		586,216		973,780		467,857
Net income (loss) attributable to noncontrolling interests	8,916		13,386		22,302		11,291
Net income (loss) attributable to Western Midstream Partners, LP (2)	$	378,648	$	572,830	$	951,478	$	456,566

_________________________________________________________________________________________

(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 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.

For purposes of the following discussion, any increases or decreases “for the three months ended June 30, 2024” refer to the comparison of the three months ended June 30, 2024, to the three months ended March 31, 2024; and any increases or decreases “for the six months ended June 30, 2024” refer to the comparison of the six months ended June 30, 2024, to the six months ended June 30, 2023.

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Throughput


	Three Months Ended				Six Months Ended

	June 30, 2024	March 31, 2024	Inc/ (Dec)		June 30, 2024	June 30, 2023	Inc/ (Dec)
Throughput for natural-gas assets (MMcf/d)
Gathering, treating, and transportation	438	606	(28)	%	522	382	37	%
Processing	4,209	4,050	4	%	4,129	3,511	18	%
Equity investments (1)	508	508	—	%	509	438	16	%
Total throughput	5,155	5,164	—	%	5,160	4,331	19	%
Throughput attributable to noncontrolling interests (2)	167	174	(4)	%	171	150	14	%
Total throughput attributable to WES for natural-gas assets	4,988	4,990	—	%	4,989	4,181	19	%
Throughput for crude-oil and NGLs assets (MBbls/d)
Gathering, treating, and transportation	396	374	6	%	385	313	23	%
Equity investments (1)	130	202	(36)	%	166	319	(48)	%
Total throughput	526	576	(9)	%	551	632	(13)	%
Throughput attributable to noncontrolling interests (2)	11	11	—	%	11	13	(15)	%
Total throughput attributable to WES for crude-oil and NGLs assets	515	565	(9)	%	540	619	(13)	%
Throughput for produced-water assets (MBbls/d)
Gathering and disposal	1,102	1,149	(4)	%	1,126	970	16	%
Throughput attributable to noncontrolling interests (2)	22	23	(4)	%	23	20	15	%
Total throughput attributable to WES for produced-water assets	1,080	1,126	(4)	%	1,103	950	16	%

_________________________________________________________________________________________

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

(2)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 2 MMcf/d for the three months ended June 30, 2024, primarily due to (i) lower volumes at the Marcellus Interest systems due to the sale of the asset during the second quarter of 2024 and (ii) lower volumes at the Chipeta complex. These decreases were offset partially by higher volumes at the West Texas and DJ Basin complexes due to increased production in the areas.

Total throughput attributable to WES for natural-gas assets increased by 808 MMcf/d for the six months ended June 30, 2024, primarily due to (i) higher volumes at the Powder River Basin complex due to the Meritage acquisition, (ii) higher volumes at the West Texas and DJ Basin complexes due to increased production in the areas, and (iii) higher volumes on the Red Bluff Express pipeline due to the addition of a new receipt point into the pipeline.

Crude-oil and NGLs assets

Total throughput attributable to WES for crude-oil and NGLs assets decreased by 50 MBbls/d for the three months ended June 30, 2024, primarily due to the divestiture of Whitethorn LLC and Saddlehorn in the first quarter of 2024, partially offset by higher volumes at the DBM oil system due to increased production in the area.

Total throughput attributable to WES for crude-oil and NGLs assets decreased by 79 MBbls/d for the six months ended June 30, 2024, primarily due to the divestiture of Whitethorn LLC, Mont Belvieu JV, and Saddlehorn in the first quarter of 2024. These decreases were offset partially by (i) higher volumes at the DBM and DJ Basin oil systems resulting from increased production in the areas and (ii) higher volumes on the Thunder Creek NGL pipeline, which was acquired as part of the Meritage acquisition.

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Produced-water assets

Total throughput attributable to WES for produced-water assets decreased by 46 MBbls/d for the three months ended June 30, 2024, due to fluctuations in produced water used for recycling activities in the upstream operations of our producers.

Total throughput attributable to WES for produced-water assets increased by 153 MBbls/d for the six months ended June 30, 2024, due to higher production.

Service Revenues


	Three Months Ended						Six Months Ended

thousands except percentages	June 30, 2024		March 31, 2024		Inc/ (Dec)		June 30, 2024		June 30, 2023		Inc/ (Dec)
Service revenues – fee based	$	793,785	$	781,262	2	%	$	1,575,047	$	1,309,373	20	%
Service revenues – product based	61,466		66,740		(8)	%	128,206		93,766		37	%
Total service revenues	$	855,251	$	848,002	1	%	$	1,703,253	$	1,403,139	21	%

Service revenues – fee based

Service revenues – fee based increased by $12.5 million for the three months ended June 30, 2024, primarily due to increases of (i) $11.8 million and $6.4 million at the West Texas and DJ Basin complexes, respectively, as a result of increased throughput and electricity-related rates billed to customers, partially offset by a decrease in deficiency fees, and (ii) $4.1 million at the DBM oil system primarily due to increased throughput. These increases were offset partially by a decrease of $9.0 million at the Marcellus Interest systems due to the sale of the asset during the second quarter of 2024.

Service revenues – fee based increased by $265.7 million for the six months ended June 30, 2024, primarily due to increases of (i) $95.2 million at the West Texas complex as a result of increased throughput, a higher average fee resulting from a cost-of-service rate redetermination effective January 1, 2024, and increased deficiency fees on certain contracts with increasing throughput minimums, (ii) $89.3 million at the Powder River Basin complex attributable to the acquisition of Meritage, (iii) $50.2 million and $16.3 million at the DBM water and DBM oil systems as a result of increased throughput and a higher average fee resulting from a cost-of-service rate redetermination effective January 1, 2024, and (iv) $41.9 million at the DJ Basin complex primarily due to increased throughput. These increases were offset partially by decreases of (i) $12.3 million at the Brasada complex due to a change in contract terms effective July 1, 2023, partially offset by increased throughput, (ii) $5.6 million at the Granger complex due to a contract expiration in the fourth quarter of 2023, and (iii) $4.2 million at the Marcellus Interest systems due to the sale of the asset during the second quarter of 2024.

Service revenues – product based

Service revenues – product based decreased by $5.3 million for the three months ended June 30, 2024, primarily due to a decrease of $2.6 million at the West Texas complex due to the contract mix of product-related electricity reimbursements from customers, partially offset by increased average prices.

Service revenues – product based increased by $34.4 million for the six months ended June 30, 2024, primarily due to increases of (i) $24.4 million at the West Texas complex due to increased volumes sold, (ii) $3.7 million at the DBM water systems due to increased skim-oil average prices and volumes sold, (iii) $2.6 million at the Powder River Basin complex attributable to the acquisition of Meritage, and (iv) $2.5 million at the DJ Basin complex primarily due to increased throughput.

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Product Sales


	Three Months Ended						Six Months Ended

thousands except percentages and per-unit amounts	June 30, 2024		March 31, 2024		Inc/ (Dec)		June 30, 2024		June 30, 2023		Inc/ (Dec)
Natural-gas sales	$	8,931	$	3,194	180	%	$	12,125	$	10,012	21	%
NGLs sales	41,180		36,098		14	%	77,278		58,672		32	%
Total Product sales	$	50,111	$	39,292	28	%	$	89,403	$	68,684	30	%
Per-unit gross average sales price:
Natural gas (per Mcf)	$	(0.26)	$	1.25	(121)	%	$	0.51	$	1.53	(67)	%
NGLs (per Bbl)	28.06		30.93		(9)	%	29.39		26.17		12	%

Natural-gas sales

Natural-gas sales increased by $5.7 million for the three months ended June 30, 2024, primarily due to an increase of $4.5 million at the DJ Basin complex as a result of increased volumes sold.

Natural-gas sales increased by $2.1 million for the six months ended June 30, 2024, primarily due to an increase of $3.4 million at the DJ Basin complex as a result of changes in contract mix during 2024.

NGLs sales

NGLs sales increased by $5.1 million for the three months ended June 30, 2024, primarily due to an increase of $10.9 million at the DJ Basin complex due to contract mix and increased volumes sold, partially offset by decreased average prices. This increase was offset partially by decreases of (i) $2.2 million at the DBM water systems due to decreased skim-oil volumes and (ii) $1.6 million at the Granger complex.

NGLs sales increased by $18.6 million for the six months ended June 30, 2024, primarily due to increases of (i) $14.1 million at the Powder River Basin complex attributable to the acquisition of Meritage, (ii) $3.3 million at the DBM water systems due to increased skim-oil prices, (iii) $2.6 million at the DJ Basin complex due to increased volumes sold, partially offset by decreased average prices, and (iv) $2.1 million at the Granger complex. These increases were offset partially by a decrease of $5.3 million at the West Texas complex due to decreased average prices, partially offset by increased volumes.

Equity Income, Net – Related Parties


	Three Months Ended						Six Months Ended

thousands except percentages	June 30, 2024		March 31, 2024		Inc/ (Dec)		June 30, 2024		June 30, 2023		Inc/ (Dec)
Equity income, net – related parties	$	27,431	$	32,819	(16)	%	$	60,250	$	81,345	(26)	%

Equity income, net – related parties decreased by $5.4 million for the three months ended June 30, 2024, primarily due to the sale of several equity investments to third parties in the first quarter of 2024, see Note 3—Acquisitions and Divestitures.

Equity income, net – related parties decreased by $21.1 million for the six months ended June 30, 2024, primarily due to decreases of (i) $19.5 million resulting from the sale of several equity investments to third parties in the first quarter of 2024 and (ii) $4.9 million at TEP. See Note 3—Acquisitions and Divestitures.

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Cost of Product and Operation and Maintenance Expenses


	Three Months Ended						Six Months Ended

thousands except percentages	June 30, 2024		March 31, 2024		Inc/ (Dec)		June 30, 2024		June 30, 2023		Inc/ (Dec)
Residue purchases	$	85	$	9,228	(99)	%	$	9,313	$	21,704	(57)	%
NGLs purchases	67,574		70,425		(4)	%	137,999		100,771		37	%
Other	(13,649)		(33,574)		59	%	(47,223)		(26,270)		(80)	%
Cost of product	54,010		46,079		17	%	100,089		96,205		4	%
Operation and maintenance	223,319		194,939		15	%	418,258		357,670		17	%
Total Cost of product and Operation and maintenance expenses	$	277,329	$	241,018	15	%	$	518,347	$	453,875	14	%

Residue purchases

Residue purchases decreased by $9.1 million for the three months ended June 30, 2024, primarily due to the contract mix of product-related electricity purchases and lower average prices at the West Texas complex.

Residue purchases decreased by $12.4 million for the six months ended June 30, 2024, primarily due to decreases of (i) $7.5 million at the West Texas complex due to the contract mix of product-related electricity purchases and lower average prices and (ii) $4.9 million at the Granger complex due to a contract expiration in the fourth quarter of 2023.

NGLs purchases

NGLs purchases decreased by $2.9 million for the three months ended June 30, 2024, primarily due to decreases of (i) $4.5 million at the West Texas complex attributable to lower average prices and volumes purchased and changes in line-fill inventory, and (ii) $1.8 million at the DBM water systems due to decreased skim-oil volumes. These decreases were offset partially by an increase of $6.0 million at the DJ Basin complex primarily due to increased volumes purchased and changes in line-fill inventory.

NGLs purchases increased by $37.2 million for the six months ended June 30, 2024, primarily due to increases of (i) $30.3 million at the West Texas complex primarily attributable to increased volumes purchased, (ii) $3.3 million at the DBM water systems due to increased skim-oil volumes and average prices, and (iii) $2.6 million at the Powder River Basin complex attributable to the acquisition of Meritage.

Other items

Other items increased by $19.9 million for the three months ended June 30, 2024, primarily due to increases of $9.3 million at the DJ Basin complex, $6.0 million at the West Texas complex, and $3.6 million at the Powder River Basin complex, attributable to changes in imbalance positions.

Other items decreased by $21.0 million for the six months ended June 30, 2024, primarily due to a decrease of $26.3 million at the West Texas complex due to changes in imbalance positions, partially offset by an increase of $5.8 million at the Powder River Basin complex attributable to the acquisition of Meritage and changes in imbalance positions.

Operation and maintenance expense

Operation and maintenance expense increased by $28.4 million for the three months ended June 30, 2024, primarily due to increases of (i) $11.1 million in equipment, materials, maintenance, and repair costs, (ii) $7.0 million in utility expense, (iii) $3.8 million in mechanical-integrity costs, and (iv) $3.0 million in contract labor and consulting expense.

Operation and maintenance expense increased by $60.6 million for the six months ended June 30, 2024, primarily due to increases of (i) $18.3 million in salaries and wages costs, (ii) $10.7 million in equipment, materials, maintenance, and repair costs, (iii) $9.6 million in utility expense, (iv) $7.6 million in chemical and treating services, (v) $6.3 million in equipment rental costs, (vi) $5.6 million in land-related costs, and (vii) $4.2 million in water-disposal costs.

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Other Operating Expenses


	Three Months Ended						Six Months Ended

thousands except percentages	June 30, 2024		March 31, 2024		Inc/ (Dec)		June 30, 2024		June 30, 2023		Inc/ (Dec)
General and administrative	$	62,933	$	67,839	(7)	%	$	130,772	$	104,522	25	%
Property and other taxes	17,429		13,920		25	%	31,349		25,378		24	%
Depreciation and amortization	163,432		157,991		3	%	321,423		288,118		12	%
Long-lived asset and other impairments	1,530		23		NM		1,553		52,635		(97)	%

Total other operating expenses	$	245,324	$	239,773	2	%	$	485,097	$	470,653	3	%

General and administrative expenses

General and administrative expenses decreased by $4.9 million for the three months ended June 30, 2024, primarily due to a decrease in personnel costs.

General and administrative expenses increased by $26.3 million for the six months ended June 30, 2024, primarily due to increases of (i) $14.0 million in personnel costs and (ii) $8.2 million in information technology costs.

Property and other taxes

Property and other taxes increased by $3.5 million for the three months ended June 30, 2024, primarily due to a lower ad valorem property tax accrual recorded during the first quarter of 2024 related to the finalization of 2023 assessments at the DJ Basin complex.

Property and other taxes increased by $6.0 million for the six months ended June 30, 2024, primarily due to a lower ad valorem property tax accrual recorded during the first quarter of 2023 related to the finalization of 2022 assessments at the DJ Basin complex.

Depreciation and amortization expense

Depreciation and amortization expense increased by $5.4 million for the three months ended June 30, 2024, primarily due to capital projects being placed into service at the West Texas complex.

Depreciation and amortization expense increased by $33.3 million for the six months ended June 30, 2024, primarily due to increases of (i) $31.1 million at the Powder River Basin complex attributable to the acquisition of Meritage and (ii) $10.8 million and $5.0 million at the West Texas complex and DBM water systems, respectively, primarily related to capital projects being placed into service. These increases were offset partially by a decrease of $10.1 million at the DJ Basin complex primarily due to acceleration of depreciation expense during 2023 and updated salvage values.

Long-lived asset and other impairment expense

Long-lived asset and other impairment expense for the six months ended June 30, 2023, was primarily due to a $52.1 million impairment for assets located in the Rockies.

For further information on Long-lived asset and other impairment expense, see Note 8—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						Six Months Ended

thousands except percentages	June 30, 2024		March 31, 2024		Inc/ (Dec)		June 30, 2024		June 30, 2023		Inc/ (Dec)
Long-term and short-term debt	$	(88,850)	$	(95,956)	(7)	%	$	(184,806)	$	(166,239)	11	%
Finance lease liabilities	(655)		(677)		(3)	%	(1,332)		(393)		NM
Commitment fees and amortization of debt-related costs	(3,485)		(3,200)		9	%	(6,685)		(6,295)		6	%
Capitalized interest	2,468		5,327		(54)	%	7,795		5,075		54	%

Interest expense	$	(90,522)	$	(94,506)	(4)	%	$	(185,028)	$	(167,852)	10	%

Interest expense decreased by $4.0 million for the three months ended June 30, 2024, primarily due to decreases of (i) $5.7 million resulting from lower outstanding borrowings under the commercial paper program during the second quarter of 2024 and (ii) $1.4 million due to credit-rating related interest-rate changes and lower outstanding balances on certain senior notes due to debt repurchases. These decreases were offset partially by $2.9 million due to lower capitalized interest.

Interest expense increased by $17.2 million for the six months ended June 30, 2024, primarily due to increases of (i) $19.6 million of interest incurred on the 6.350% Senior Notes due 2029 that were issued during the third quarter of 2023, (ii) $12.1 million of interest incurred on the 6.150% Senior Notes due 2033 that were issued during the second quarter of 2023, and (iii) $5.7 million due to borrowings on the commercial paper program that was established during the fourth quarter of 2023. These increases were offset partially by decreases of (i) $10.5 million due to credit-rating related interest-rate changes and lower outstanding balances on certain senior notes due to debt repurchases, (ii) $7.5 million due to no outstanding borrowings under the RCF during 2024, and (iii) $2.7 million due to higher capitalized interest. 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, (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, and (iv) costs associated with our offload commitments with third parties providing firm-processing capacity. The electricity-related expenses included in our Adjusted gross margin definition relate to pass-through expenses that are recorded as Operation and maintenance expense with an offset recorded as revenue for the reimbursement by certain customers.

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 our 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 represents the amount of cash that is available in aggregate 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				Six Months Ended

thousands	June 30, 2024		March 31, 2024		June 30, 2024		June 30, 2023
Reconciliation of Gross margin to Adjusted gross margin
Total revenues and other	$	905,629	$	887,729	$	1,793,358	$	1,472,255
Less:
Cost of product	54,010		46,079		100,089		96,205
Depreciation and amortization	163,432		157,991		321,423		288,118
Gross margin	688,187		683,659		1,371,846		1,087,932
Add:
Distributions from equity investments	32,970		48,337		81,307		106,050
Depreciation and amortization	163,432		157,991		321,423		288,118
Less:
Reimbursed electricity-related charges recorded as revenues	28,998		24,695		53,693		46,855
Adjusted gross margin attributable to noncontrolling interests (1)	19,741		20,240		39,981		32,688
Adjusted gross margin	$	835,850	$	845,052	$	1,680,902	$	1,402,557

_________________________________________________________________________________________

(1)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				Six Months Ended

thousands except per-unit amounts	June 30, 2024		March 31, 2024		June 30, 2024		June 30, 2023
Gross margin
Gross margin for natural-gas assets (1)	$	516,253	$	511,584	$	1,027,837	$	803,307
Gross margin for crude-oil and NGLs assets (1)	96,786		93,578		190,364		177,305
Gross margin for produced-water assets (1)	82,346		85,041		167,387		118,679
Per-Mcf Gross margin for natural-gas assets (2)	1.10		1.09		1.09		1.02
Per-Bbl Gross margin for crude-oil and NGLs assets (2)	2.02		1.78		1.90		1.55
Per-Bbl Gross margin for produced-water assets (2)	0.82		0.81		0.82		0.68
Adjusted gross margin
Adjusted gross margin for natural-gas assets	$	601,443	$	597,163	$	1,198,606	$	969,485
Adjusted gross margin for crude-oil and NGLs assets	138,894		150,269		289,163		292,613
Adjusted gross margin for produced-water assets	95,513		97,620		193,133		140,459
Per-Mcf Adjusted gross margin for natural-gas assets (3)	1.33		1.32		1.32		1.28
Per-Bbl Adjusted gross margin for crude-oil and NGLs assets (3)	2.96		2.92		2.94		2.61
Per-Bbl Adjusted gross margin for produced-water assets (3)	0.97		0.95		0.96		0.82

_________________________________________________________________________________________

(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				Six Months Ended

thousands	June 30, 2024		March 31, 2024		June 30, 2024		June 30, 2023
Reconciliation of Net income (loss) to Adjusted EBITDA
Net income (loss)	$	387,564	$	586,216	$	973,780	$	467,857
Add:
Distributions from equity investments	32,970		48,337		81,307		106,050
Non-cash equity-based compensation expense	10,391		9,423		19,814		14,864
Interest expense	90,522		94,506		185,028		167,852
Income tax expense	755		1,522		2,277		2,075
Depreciation and amortization	163,432		157,991		321,423		288,118
Impairments	1,530		23		1,553		52,635
Other expense	37		112		149		399
Less:
Gain (loss) on divestiture and other, net	59,342		239,617		298,959		(2,188)
Gain (loss) on early extinguishment of debt	4,879		524		5,403		6,813
Equity income, net – related parties	27,431		32,819		60,250		81,345

Other income	4,213		2,346		6,559		4,087

Adjusted EBITDA attributable to noncontrolling interests (1)	13,276		14,415		27,691		22,752
Adjusted EBITDA	$	578,060	$	608,409	$	1,186,469	$	987,041
Reconciliation of Net cash provided by operating activities to Adjusted EBITDA
Net cash provided by operating activities	$	631,418	$	399,708	$	1,031,126	$	793,247
Interest (income) expense, net	90,522		94,506		185,028		167,852
Accretion and amortization of long-term obligations, net	(2,473)		(2,190)		(4,663)		(4,095)
Current income tax expense (benefit)	726		1,292		2,018		1,220
Other (income) expense, net	(4,213)		(2,346)		(6,559)		(4,087)

Distributions from equity investments in excess of cumulative earnings – related parties	5,270		19,033		24,303		23,179
Changes in assets and liabilities:
Accounts receivable, net	(28,436)		53,714		25,278		(41)
Accounts and imbalance payables and accrued liabilities, net	(13,338)		100,383		87,045		99,575
Other items, net	(88,140)		(41,276)		(129,416)		(67,057)
Adjusted EBITDA attributable to noncontrolling interests (1)	(13,276)		(14,415)		(27,691)		(22,752)
Adjusted EBITDA	$	578,060	$	608,409	$	1,186,469	$	987,041
Cash flow information
Net cash provided by operating activities	$	631,418	$	399,708	$	1,031,126	$	793,247
Net cash provided by (used in) investing activities	(14,995)		396,849		381,854		(330,668)
Net cash provided by (used in) financing activities	(567,550)		(774,098)		(1,341,648)		(535,282)

_________________________________________________________________________________________

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	Three Months Ended				Six Months Ended

thousands	June 30, 2024		March 31, 2024		June 30, 2024		June 30, 2023
Reconciliation of Net cash provided by operating activities to Free cash flow
Net cash provided by operating activities	$	631,418	$	399,708	$	1,031,126	$	793,247
Less:
Capital expenditures	211,864		193,789		405,653		334,570
Contributions to equity investments – related parties	—		—		—		132
Add:
Distributions from equity investments in excess of cumulative earnings – related parties	5,270		19,033		24,303		23,179
Free cash flow	$	424,824	$	224,952	$	649,776	$	481,724
Cash flow information
Net cash provided by operating activities	$	631,418	$	399,708	$	1,031,126	$	793,247
Net cash provided by (used in) investing activities	(14,995)		396,849		381,854		(330,668)
Net cash provided by (used in) financing activities	(567,550)		(774,098)		(1,341,648)		(535,282)

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 $4.5 million for the three months ended June 30, 2024, primarily due to a $17.9 million increase in total revenues and other. This increase was offset partially by (i) a $7.9 million increase in cost of product and (ii) a $5.4 million increase in depreciation and amortization.

Gross margin increased by $283.9 million for the six months ended June 30, 2024, primarily due to a $321.1 million increase in total revenues and other. This increase was offset partially by (i) a $33.3 million increase in depreciation and amortization and (ii) a $3.9 million increase 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 $198.7 million for the three months ended June 30, 2024, primarily due to (i) a $180.3 million decrease in gain (loss) on divestiture and other, net and (ii) a $41.9 million increase in total operating expenses. These amounts were offset partially by a $17.9 million increase in total revenues and other.

Net income (loss) increased by $505.9 million for the six months ended June 30, 2024, primarily due to (i) a $321.1 million increase in total revenues and other and (ii) a $301.1 million increase in gain (loss) on divestiture and other, net. These amounts were offset partially by (i) a $78.9 million increase in total operating expenses, (ii) a $21.1 million decrease in equity income, net – related parties, and (iii) a $17.2 million increase in interest expense.

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						Six Months Ended

thousands except percentages and per-unit amounts	June 30, 2024		March 31, 2024		Inc/ (Dec)		June 30, 2024		June 30, 2023		Inc/ (Dec)



Adjusted gross margin	$	835,850	$	845,052	(1)	%	$	1,680,902	$	1,402,557	20	%
Per-Mcf Adjusted gross margin for natural-gas assets (1)	1.33		1.32		1	%	1.32		1.28		3	%
Per-Bbl Adjusted gross margin for crude-oil and NGLs assets (1)	2.96		2.92		1	%	2.94		2.61		13	%
Per-Bbl Adjusted gross margin for produced-water assets (1)	0.97		0.95		2	%	0.96		0.82		17	%
Adjusted EBITDA	578,060		608,409		(5)	%	1,186,469		987,041		20	%
Free cash flow	424,824		224,952		89	%	649,776		481,724		35	%

_________________________________________________________________________________________

(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 $9.2 million for the three months ended June 30, 2024, primarily due to (i) the sale of our interests in the Marcellus Interest systems, Saddlehorn, Mont Belvieu JV, Whitethorn LLC, and Panola during 2024, (ii) decreases at the Granger complex, and (iii) decreased skim-oil volumes at the DBM water systems. These decreases were offset partially by (i) increased throughput, partially offset by decreased deficiency fees, at the West Texas and DJ Basin complexes and (ii) increased throughput at the DBM oil system.

Adjusted gross margin increased by $278.3 million for the six months ended June 30, 2024, primarily due to (i) increased throughput, a higher average fee resulting from a cost-of-service rate redetermination effective January 1, 2024, and increased deficiency fees on certain contracts with increasing throughput minimums at the West Texas complex, (ii) increased throughput at the Powder River Basin complex attributable to the acquisition of Meritage, (iii) increased throughput and a higher average fee resulting from a cost-of-service rate redetermination effective January 1, 2024 at the DBM water and DBM oil systems, and (iv) increased throughput at the DJ Basin complex. These increases were offset partially by (i) decreased processing fees at the Brasada complex resulting from a change in contract terms effective July 1, 2023, partially offset by increased throughput, (ii) decreased distributions from TEP, and (iii) the sale of our interests in Mont Belvieu JV, Saddlehorn, and the Marcellus Interest systems during 2024.

Per-Mcf Adjusted gross margin for natural-gas assets increased by $0.04 for the six months ended June 30, 2024, primarily due to (i) increased throughput at the West Texas complex, which has a higher-than-average per-Mcf margin as compared to our other natural-gas assets, in addition to a higher average fee resulting from a cost-of-service rate redetermination effective January 1, 2024, and increased deficiency fees on certain contracts with increasing throughput minimums, and (ii) increased throughput at the DJ Basin complex, which has a higher-than-average per-Mcf margin as compared to our other natural-gas assets. These increases were offset partially by decreased processing fees at the Brasada complex resulting from a change in contract terms effective July 1, 2023.

Per-Bbl Adjusted gross margin for crude-oil and NGLs assets increased by $0.04 for the three months ended June 30, 2024, primarily due to (i) the sale of our interests in Whitethorn LLC and Saddlehorn in the first quarter of 2024, both of which had lower-than-average per-Bbl margins as compared to our other crude-oil and NGLs assets and (ii) increased throughput at the DBM oil system. These increases were offset partially by decreased distributions from Mont Belvieu JV due to the sale of our interest in the first quarter of 2024.

Per-Bbl Adjusted gross margin for crude-oil and NGLs assets increased by $0.33 for the six months ended June 30, 2024, primarily due to the sale of our interests in Mont Belvieu JV, Saddlehorn, and Whitethorn LLC in the first quarter of 2024, all of which had lower-than-average per-Bbl margins as compared to our other crude-oil and NGLs assets. This increase was offset partially by (i) a decrease in distributions from TEP and (ii) decreased revenues associated with demand volumes at the DJ Basin oil system.

Per-Bbl Adjusted gross margin for produced-water assets increased by $0.14 for the six months ended June 30, 2024, primarily due to a higher average fee resulting from a cost-of-service rate redetermination effective January 1, 2024.

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Adjusted EBITDA. Adjusted EBITDA decreased by $30.3 million for the three months ended June 30, 2024, primarily due to (i) a $28.4 million increase in operation and maintenance expenses, (ii) a $15.4 million decrease in distributions from equity investments, (iii) an $8.0 million increase in cost of product (net of lower of cost or market inventory adjustments), and (iv) a $3.5 million increase in property taxes. These amounts were offset partially by (i) a $17.9 million increase in total revenues and other and (ii) a $5.9 million decrease in general and administrative expenses excluding non-cash equity-based compensation expense.

Adjusted EBITDA increased by $199.4 million for the six months ended June 30, 2024, primarily due to a $321.1 million increase in total revenues and other. This was offset partially by (i) a $60.6 million increase in operation and maintenance expenses, (ii) a $24.7 million decrease in distributions from equity investments, (iii) a $21.3 million increase in general and administrative expenses excluding non-cash equity-based compensation expense, (iv) a $6.0 million increase in property and other taxes, and (v) a $4.1 million increase in cost of product (net of lower of cost or market inventory adjustments).

Free cash flow. Free cash flow increased by $199.9 million for the three months ended June 30, 2024, primarily due to a $231.7 million increase in net cash provided by operating activities, partially offset by (i) an $18.1 million increase in capital expenditures and (ii) a $13.8 million decrease in distributions from equity investments in excess of cumulative earnings.

Free cash flow increased by $168.1 million for the six months ended June 30, 2024, primarily due to a $237.9 million increase in net cash provided by operating activities, partially offset by a $71.1 million increase in capital expenditures.

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

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LIQUIDITY AND CAPITAL RESOURCES

Our primary cash uses include equity and debt service, operating expenses, and capital expenditures. Our sources of liquidity, as of June 30, 2024, included cash and cash equivalents, cash flows generated from operations, effective borrowing capacity under the RCF, our commercial paper program, 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 to unitholders for the second quarter of 2024 of $0.875 per unit, or $340.9 million in the aggregate. The cash distribution is payable on August 14, 2024, to our unitholders of record at the close of business on August 1, 2024.

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 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 six months ended June 30, 2024, there were no common units repurchased. As of June 30, 2024, we had an authorized amount of $627.8 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.

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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 June 30, 2024, we had a $434.2 million working capital surplus, which we define as the amount by which current assets exceed current liabilities. As of June 30, 2024, there was $2.0 billion in effective borrowing capacity under the RCF. Any outstanding commercial paper borrowings reduce the effective borrowing capacity under the RCF as WES Operating maintains availability under the RCF as support for its commercial paper program. See Note 9—Selected Components of Working Capital and Note 10—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. Acquisitions and capital expenditures as presented in the consolidated statements of cash flows and capital incurred were as follows:


	Six Months Ended June 30,
thousands	2024		2023
Acquisitions	$	443	$	—
Capital expenditures (1)	405,653		334,570
Capital incurred (1)	422,185		368,683

_________________________________________________________________________________________

(1)For the six months ended June 30, 2024 and 2023, included $7.8 million and $5.1 million, respectively, of capitalized interest.

Capital expenditures increased by $71.1 million for the six months ended June 30, 2024, primarily due to increases of (i) $69.4 million at the West Texas complex, primarily attributable to engineering and equipment milestone payments for the North Loving Plant, (ii) $18.2 million at the Powder River Basin complex primarily attributable to the acquisition of Meritage, (iii) $10.9 million at the DJ Basin complex due to the purchase of a field office in the first quarter of 2024 and an increase in well connection and pipeline projects, and (iv) $6.1 million in corporate-level capital expenditures. These increases were offset partially by decreases of (i) $21.2 million at the DBM oil system related to a decrease in pipeline, oil treating, and oil pumping projects and (ii) $17.6 million at the DBM water systems due to reduced construction of water-disposal wells and facilities and well-connect 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:


	Six Months Ended June 30,
thousands	2024		2023
Net cash provided by (used in):
Operating activities	$	1,031,126	$	793,247
Investing activities	381,854		(330,668)
Financing activities	(1,341,648)		(535,282)
Net increase (decrease) in cash and cash equivalents	$	71,332	$	(72,703)

Operating activities. Net cash provided by operating activities increased for the six months ended June 30, 2024, primarily due to higher cash operating income, partially offset by lower distributions from equity investments and higher interest expense. 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 provided by investing activities for the six months ended June 30, 2024, primarily included the following:

•$582.7 million of proceeds related to the sale of several equity investments to third parties;

•$206.2 million of proceeds related to the sale of our 33.75% interest in the Marcellus Interest systems to a third party;

•$24.3 million of distributions received from equity investments in excess of cumulative earnings;

•$405.7 million of capital expenditures, primarily related to expansion, construction, and asset-integrity projects at the West Texas complex, DBM water systems, DJ Basin complex, Powder River Basin complex, and DBM oil system; and

•$25.3 million of increases to materials and supplies inventory.

Net cash used in investing activities for the six months ended June 30, 2023, primarily included the following:

•$334.6 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;

•$19.1 million of increases to materials and supplies inventory; and

•$23.2 million of distributions received from equity investments in excess of cumulative earnings

Financing activities. Net cash used in financing activities for the six months ended June 30, 2024, primarily included the following:

•$610.3 million of net repayments under the commercial paper program;

•$577.5 million of distributions paid to WES unitholders and noncontrolling interest owners; and

•$143.9 million to purchase and retire portions of certain of WES Operating’s senior notes via open-market repurchases.

Net cash used in financing activities for the six months ended June 30, 2023, primarily included the following:

•$595.0 million of repayments of outstanding borrowings under the RCF;

•$548.2 million of distributions paid to WES unitholders and noncontrolling interest owners;

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

•$110.2 million to purchase and retire portions of certain of WES Operating’s senior notes via open-market repurchases;

•$7.1 million of unit repurchases;

•$740.9 million of net proceeds from the 6.150% Senior Notes due 2033 issued in April 2023, which were used to repay borrowings under the RCF and for general partnership purposes; and

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

Debt and credit facilities. As of June 30, 2024, the carrying value of outstanding debt was $7.1 billion and we have $2.0 billion in effective borrowing capacity under WES Operating’s $2.0 billion RCF. Any outstanding commercial paper borrowings reduce the effective borrowing capacity under the RCF as WES Operating maintains availability under the RCF as support for its commercial paper program.

During the six months ended June 30, 2024, WES Operating (i) purchased and retired $150.0 million of certain of its senior notes via open-market repurchases with cash from operations and a gain of $5.4 million was recognized for the early retirement of portions of these notes and (ii) entered into an amendment to the RCF to exercise an option to extend the maturity date of the RCF from April 2028 to April 2029, for each extending lender. As of June 30, 2024, the 3.100% Senior Notes due 2025 and 3.950% Senior Notes due 2025 were classified as long-term debt on the consolidated balance sheet as WES Operating has the ability and intent to refinance these obligations using long-term debt.

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

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 contractual rights to request adequate assurance of performance.

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 6—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.

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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				Six Months Ended

thousands	June 30, 2024		March 31, 2024		June 30, 2024		June 30, 2023
Net income (loss) attributable to WES	$	378,648	$	572,830	$	951,478	$	456,566
Limited partner interest in WES Operating not held by WES (1)	7,747		11,700		19,447		9,346
General and administrative expenses (2)	932		360		1,292		1,418
Other income (expense), net	(68)		(59)		(127)		(154)


Net income (loss) attributable to WES Operating	$	387,259	$	584,831	$	972,090	$	467,176

_________________________________________________________________________________________

(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.

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:


	Six Months Ended June 30,
thousands	2024		2023
WES net cash provided by operating activities	$	1,031,126	$	793,247
General and administrative expenses (1)	1,292		1,418
Non-cash equity-based compensation expense	(289)		(287)
Changes in working capital	(22,497)		(14,327)
Other income (expense), net	(127)		(154)


WES Operating net cash provided by operating activities	$	1,009,505	$	779,897

WES net cash provided by (used in) financing activities	$	(1,341,648)	$	(535,282)
Distributions to WES unitholders (2)	564,296		533,556
Distributions to WES from WES Operating (3)	(565,575)		(545,277)
Increase (decrease) in outstanding checks	36		—
Unit repurchases	—		7,102
Other	21,195		13,415
WES Operating net cash provided by (used in) financing activities	$	(1,321,696)	$	(526,486)

______________________________________________________________________________________




#			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.

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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

August 7, 2024
			/s/ Michael P. Ure
			Michael P. Ure President and Chief Executive Officer Western Midstream Holdings, LLC (as general partner of Western Midstream Partners, LP)

August 7, 2024
			/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

August 7, 2024
			/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)

August 7, 2024
			/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 Partners, LP - Quarter Report: 2024 June (Form 10-Q)

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