Western Midstream Partners 10Q 2022 Q3 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended September 30, 2022


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

For the transition period from to


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


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

Address of principal executive offices:

Zip Code:

Registrant’s telephone number, including area code:

Western Midstream Partners, LP

9950 Woodloch Forest Drive, Suite 2800

The Woodlands,

Texas

77380

(346)

786-5000

Western Midstream Operating, LP

9950 Woodloch Forest Drive, Suite 2800

The Woodlands,

Texas

77380

(346)

786-5000

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

Title of each class

Trading symbol

Name of exchange
on which registered

Common units outstanding as of October 28, 2022:

Western Midstream Partners, LP

Common units

WES

New York Stock Exchange

385,069,991

Western Midstream Operating, LP

None

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

Western Midstream Partners, LP

Yes

Western Midstream Operating, LP

Yes

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

Western Midstream Partners, LP

Yes

Western Midstream Operating, LP

Yes

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

Western Midstream Partners, LP

Large Accelerated Filer

Accelerated Filer

Non-accelerated Filer

Smaller Reporting Company

Emerging Growth Company

☐

Western Midstream Operating, LP

Large Accelerated Filer

Accelerated Filer

Non-accelerated Filer

Smaller Reporting Company

Emerging Growth Company

☐

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


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

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

Western Midstream Partners, LP

Yes

☐

Western Midstream Operating, LP

Yes

☐

FILING FORMAT

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

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


TABLE OF CONTENTS
		PAGE
PART I		FINANCIAL INFORMATION (UNAUDITED)
	Item 1.	Financial Statements
		Western Midstream Partners, LP
		Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021	7
		Consolidated Balance Sheets as of September 30, 2022, and December 31, 2021	8
		Consolidated Statements of Equity and Partners’ Capital for the three and nine months ended September 30, 2022 and 2021	9
		Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021	11
		Western Midstream Operating, LP
		Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021	12
		Consolidated Balance Sheets as of September 30, 2022, and December 31, 2021	13
		Consolidated Statements of Equity and Partners’ Capital for the three and nine months ended September 30, 2022 and 2021	14
		Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021	16
		Notes to Consolidated Financial Statements	17
		Note 1. Description of Business and Basis of Presentation	17
		Note 2. Revenue from Contracts with Customers	20
		Note 3. Acquisitions and Divestitures	22
		Note 4. Partnership Distributions	23
		Note 5. Equity and Partners’ Capital	24
		Note 6. Related-Party Transactions	25
		Note 7. Equity Investments	30
		Note 8. Property, Plant, and Equipment	31

		Note 9. Selected Components of Working Capital	32
		Note 10. Debt and Interest Expense	33
		Note 11. Commitments and Contingencies	35

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
		Cautionary Note Regarding Forward-Looking Statements	36
		Executive Summary	38
		Outlook	40
		Acquisitions and Divestitures	41

		Results of Operations	41
		Operating Results	41
		Key Performance Metrics	49
		Liquidity and Capital Resources	55
		Items Affecting the Comparability of Financial Results with WES Operating	59
		Critical Accounting Estimates	60

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	61
	Item 4.	Controls and Procedures	61
PART II		OTHER INFORMATION
	Item 1.	Legal Proceedings	62
	Item 1A.	Risk Factors	63
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	63
	Item 5.	Other Information	63
	Item 6.	Exhibits	65

Table of Contents

COMMONLY USED TERMS AND DEFINITIONS

Unless the context otherwise requires, references to “we,” “us,” “our,” “WES,” “the Partnership,” or “Western Midstream Partners, LP” refer to Western Midstream Partners, LP (formerly Western Gas Equity Partners, LP) and its subsidiaries. As used in this Form 10-Q, the terms and definitions below have the following meanings:

Anadarko: Anadarko Petroleum Corporation and its subsidiaries, excluding our general partner, which became a wholly owned subsidiary of Occidental upon closing of the Occidental Merger on August 8, 2019.

Barrel or Bbl: 42 U.S. gallons measured at 60 degrees Fahrenheit.

Bbls/d: Barrels per day.

Board: The board of directors of WES’s general partner.

Cactus II: Cactus II Pipeline LLC.

Chipeta: Chipeta Processing, LLC.

Condensate: A natural-gas liquid with a low vapor pressure compared to drip condensate, mainly composed of propane, butane, pentane, and heavier hydrocarbon fractions.

Cryogenic: The process by which liquefied gases are used to bring natural-gas volumes to very low temperatures (below approximately -238 degrees Fahrenheit) to separate natural-gas liquids from natural gas. Through cryogenic processing, more natural-gas liquids are extracted as compared to traditional refrigeration methods.

DBM: Delaware Basin Midstream, LLC.

DBM water systems: DBM’s produced-water gathering and disposal systems in West Texas.

DJ Basin complex: The Platte Valley system, Wattenberg system, Lancaster plant, Latham plant, and Wattenberg processing plant.

EBITDA: Earnings before interest, taxes, depreciation, and amortization. For a definition of “Adjusted EBITDA,” see Key Performance Metrics under Part I, Item 2 of this Form 10-Q.

Exchange Act: The Securities Exchange Act of 1934, as amended.

Fixed-Rate Senior Notes: WES Operating’s fixed-rate 3.100% Senior Notes due 2025, 4.050% Senior Notes due 2030, and 5.250% Senior Notes due 2050, issued in January 2020.

Floating-Rate Senior Notes: WES Operating’s floating-rate Senior Notes due 2023.

Fort Union: Fort Union Gas Gathering, LLC.

Fractionation: The process of applying various levels of high pressure and low temperature to separate a stream of natural-gas liquids into ethane, propane, normal butane, isobutane, and natural gasoline for end-use sale.

FRP: Front Range Pipeline LLC.

GAAP: Generally accepted accounting principles in the United States.

General partner: Western Midstream Holdings, LLC, the general partner of the Partnership.

Hydraulic fracturing: The high-pressure injection of fluids into the wellbore to create fractures in rock formations, stimulating the production of oil or gas.

Imbalance: Imbalances result from (i) differences between gas and NGLs volumes nominated by customers and gas and NGLs volumes received from those customers and (ii) differences between gas and NGLs volumes received from customers and gas and NGLs volumes delivered to those customers.

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LIBOR: London Interbank Offered Rate.

Marcellus Interest: The 33.75% interest in the Larry’s Creek, Seely, and Warrensville gas-gathering systems and related facilities located in northern Pennsylvania.

MBbls/d: Thousand barrels per day.

Mcf: Thousand cubic feet.

MGR: Mountain Gas Resources, LLC.

MGR assets: The Red Desert complex and the Granger straddle plant.

Mi Vida: Mi Vida JV LLC.

MLP: Master limited partnership.

MMcf: Million cubic feet.

MMcf/d: Million cubic feet per day.

Mont Belvieu JV: Enterprise EF78 LLC.

Natural-gas liquid(s) or NGL(s): The combination of ethane, propane, normal butane, isobutane, and natural gasolines that, when removed from natural gas, become liquid under various levels of pressure and temperature.

NYMEX: New York Mercantile Exchange.

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

Occidental Merger: Occidental’s acquisition by merger of Anadarko pursuant to the Agreement and Plan of Merger, dated as of May 9, 2019, by and among Occidental, Baseball Merger Sub 1, Inc., and Anadarko, which closed on August 8, 2019.

Panola: Panola Pipeline Company, LLC.

Produced water: Byproduct associated with the production of crude oil and natural gas that often contains a number of dissolved solids and other materials found in oil and gas reservoirs.

Ranch Westex: Ranch Westex JV LLC.

RCF: WES Operating’s $2.0 billion senior unsecured revolving credit facility.

Red Bluff Express: Red Bluff Express Pipeline, LLC.

Red Desert complex: The Patrick Draw and Red Desert processing plants, which are currently inactive, associated gathering lines, and related facilities.

Related parties: Occidental, the Partnership’s equity interests (see Note 7—Equity Investments in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q), and the Partnership and WES Operating for transactions that eliminate upon consolidation.

Rendezvous: Rendezvous Gas Services, LLC.

Residue: The natural gas remaining after the unprocessed natural-gas stream has been processed or treated.

Saddlehorn: Saddlehorn Pipeline Company, LLC.

SEC: U.S. Securities and Exchange Commission.

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Services Agreement: That certain amended and restated Services, Secondment, and Employee Transfer Agreement, dated as of December 31, 2019, by and among Occidental, Anadarko, and WES Operating GP.

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

SOFR: Secured Overnight Financing Rate.

TEFR Interests: The interests in TEP, TEG, and FRP.

TEG: Texas Express Gathering LLC.

TEP: Texas Express Pipeline LLC.

WES Operating: Western Midstream Operating, LP, formerly known as Western Gas Partners, LP, and its subsidiaries.

WES Operating GP: Western Midstream Operating GP, LLC, the general partner of WES Operating.

West Texas complex: The DBM complex and DBJV and Haley systems.

WGRAH: WGR Asset Holding Company LLC.

White Cliffs: White Cliffs Pipeline, LLC.

Whitethorn LLC: Whitethorn Pipeline Company LLC.

Whitethorn: A crude-oil and condensate pipeline, and related storage facilities, owned by Whitethorn LLC.

$1.0 billion Purchase Program: In February 2022, we announced a buyback program of up to $1.0 billion of our common units through December 31, 2024. In November 2022, the Board authorized an increase in the $1.0 billion Purchase Program to $1.25 billion. The common units may be purchased from time to time in the open market at prevailing market prices or in privately negotiated transactions.

$250.0 million Purchase Program: In November 2020, we announced a buyback program of up to $250.0 million of our common units through December 31, 2021. The common units were purchased from time to time in the open market at prevailing market prices or in privately negotiated transactions. As of December 31, 2021, the entire $250.0 million authorized program had been fulfilled.

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PART I. FINANCIAL INFORMATION (UNAUDITED)

Item 1. Financial Statements

WESTERN MIDSTREAM PARTNERS, LP

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)



	Three Months Ended September 30,				Nine Months Ended September 30,
thousands except per-unit amounts	2022		2021		2022		2021
Revenues and other
Service revenues – fee based	$	666,555	$	650,482	$	1,954,105	$	1,841,742
Service revenues – product based	91,356		28,812		202,721		88,267
Product sales	79,430		84,298		314,755		227,359
Other	227		248		703		577
Total revenues and other (1)	837,568		763,840		2,472,284		2,157,945
Equity income, net – related parties	41,317		48,506		139,388		159,337
Operating expenses
Cost of product	106,833		83,232		328,237		250,245
Operation and maintenance	190,514		140,838		487,643		434,198
General and administrative	48,185		50,409		144,635		139,973
Property and other taxes	19,390		13,641		60,494		45,992
Depreciation and amortization	156,837		139,002		430,455		407,404
Long-lived asset and other impairments	4		1,594		94		29,198

Total operating expenses (2)	521,763		428,716		1,451,558		1,307,010
Gain (loss) on divestiture and other, net	(104)		(364)		(884)		278
Operating income (loss)	357,018		383,266		1,159,230		1,010,550

Interest expense	(83,106)		(93,257)		(249,333)		(287,040)
Gain (loss) on early extinguishment of debt	—		(24,655)		91		(24,944)
Other income (expense), net	56		110		117		(1,013)
Income (loss) before income taxes	273,968		265,464		910,105		697,553
Income tax expense (benefit)	387		1,826		3,683		4,403
Net income (loss)	273,581		263,638		906,422		693,150
Net income (loss) attributable to noncontrolling interests	7,836		7,913		25,643		20,375
Net income (loss) attributable to Western Midstream Partners, LP	$	265,745	$	255,725	$	880,779	$	672,775
Limited partners’ interest in net income (loss):
Net income (loss) attributable to Western Midstream Partners, LP	$	265,745	$	255,725	$	880,779	$	672,775

General partner interest in net (income) loss	(6,244)		(5,527)		(19,794)		(14,484)
Limited partners’ interest in net income (loss) (3)	259,501		250,198		860,985		658,291
Net income (loss) per common unit – basic (3)	$	0.67	$	0.61	$	2.16	$	1.60
Net income (loss) per common unit – diluted (3)	$	0.66	$	0.61	$	2.15	$	1.59
Weighted-average common units outstanding – basic (3)	388,906		411,909		398,343		412,690
Weighted-average common units outstanding – diluted (3)	390,318		412,714		399,545		413,150

_________________________________________________________________________________________

(1)Total revenues and other includes related-party amounts of $476.5 million and $1.4 billion for the three and nine months ended September 30, 2022, respectively, and $431.7 million and $1.2 billion for the three and nine months ended September 30, 2021, respectively. See Note 6.

(2)Total operating expenses includes related-party amounts of $(4.5) million and $(33.3) million for the three and nine months ended September 30, 2022, respectively, and $22.7 million and $91.5 million for the three and nine months ended September 30, 2021, respectively. See Note 6.

(3)See Note 5.

See accompanying Notes to Consolidated Financial Statements.

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WESTERN MIDSTREAM PARTNERS, LP

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)




thousands except number of units	September 30, 2022		December 31, 2021
ASSETS
Current assets
Cash and cash equivalents	$	159,093	$	201,999
Accounts receivable, net	650,922		436,513
Other current assets	86,285		46,252
Total current assets	896,300		684,764
Property, plant, and equipment
Cost	13,236,499		12,846,078
Less accumulated depreciation	4,696,816		4,333,171
Net property, plant, and equipment	8,539,683		8,512,907
Goodwill	4,783		4,783
Other intangible assets	720,992		744,742
Equity investments	1,142,103		1,167,187
Other assets (1)	168,721		158,696
Total assets (2)	$	11,472,582	$	11,273,079
LIABILITIES, EQUITY, AND PARTNERS’ CAPITAL
Current liabilities
Accounts and imbalance payables	$	492,776	$	326,061
Short-term debt	2,030		505,932
Accrued ad valorem taxes	61,492		44,955
Accrued liabilities	189,625		263,249

Total current liabilities	745,923		1,140,197
Long-term liabilities
Long-term debt	7,027,361		6,400,616

Deferred income taxes	14,182		12,425
Asset retirement obligations	310,500		298,275
Other liabilities	368,930		325,806
Total long-term liabilities	7,720,973		7,037,122
Total liabilities (3)	8,466,896		8,177,319
Equity and partners’ capital
Common units (385,586,841 and 402,993,919 units issued and outstanding at September 30, 2022, and December 31, 2021, respectively)	2,868,665		2,966,955
General partner units (9,060,641 units issued and outstanding at September 30, 2022, and December 31, 2021)	(1,112)		(8,882)

Total partners’ capital	2,867,553		2,958,073
Noncontrolling interests	138,133		137,687
Total equity and partners’ capital	3,005,686		3,095,760
Total liabilities, equity, and partners’ capital	$	11,472,582	$	11,273,079

________________________________________________________________________________________

(1)Other assets includes $9.3 million and $9.8 million of NGLs line-fill inventory as of September 30, 2022, and December 31, 2021, respectively. Other assets also includes $61.3 million and $56.2 million of materials and supplies inventory as of September 30, 2022, and December 31, 2021, respectively.

(2)Total assets includes related-party amounts of $1.5 billion and $1.4 billion as of September 30, 2022, and December 31, 2021, respectively, which includes related-party Accounts receivable, net of $327.3 million and $180.2 million as of September 30, 2022, and December 31, 2021, respectively. See Note 6.

(3)Total liabilities includes related-party amounts of $326.8 million and $270.5 million as of September 30, 2022, and December 31, 2021, 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, 2021	$	2,966,955	$	(8,882)	$	137,687	$	3,095,760
Net income (loss)	301,934		6,783		8,953		317,670
Distributions to Chipeta noncontrolling interest owner	—		—		(1,984)		(1,984)
Distributions to noncontrolling interest owner of WES Operating	—		—		(2,805)		(2,805)
Distributions to Partnership unitholders	(131,786)		(2,963)		—		(134,749)
Unit repurchases (1)	(5,149)		—		—		(5,149)
Contributions of equity-based compensation from Occidental	1,949		—		—		1,949
Equity-based compensation expense	5,794		—		—		5,794
Net contributions from (distributions to) related parties	409		—		—		409
Other	(6,088)		—		—		(6,088)
Balance at March 31, 2022	$	3,134,018	$	(5,062)	$	141,851	$	3,270,807
Net income (loss)	299,550		6,767		8,854		315,171
Distributions to Chipeta noncontrolling interest owner	—		—		(1,198)		(1,198)
Distributions to noncontrolling interest owner of WES Operating	—		—		(6,007)		(6,007)
Distributions to Partnership unitholders	(201,667)		(4,530)		—		(206,197)
Unit repurchases (1)	(74,068)		—		—		(74,068)
Contributions of equity-based compensation from Occidental	241		—		—		241
Equity-based compensation expense	6,797		—		—		6,797
Net contributions from (distributions to) related parties	375		—		—		375
Other	(918)		—		—		(918)
Balance at June 30, 2022	$	3,164,328	$	(2,825)	$	143,500	$	3,305,003
Net income (loss)	259,501		6,244		7,836		273,581
Distributions to Chipeta noncontrolling interest owner	—		—		(1,838)		(1,838)
Distributions to noncontrolling interest owner of WES Operating	—		—		(11,365)		(11,365)
Distributions to Partnership unitholders	(193,213)		(4,531)		—		(197,744)
Unit repurchases (1)	(367,858)		—		—		(367,858)
Contributions of equity-based compensation from Occidental	81		—		—		81
Equity-based compensation expense	6,383		—		—		6,383
Net contributions from (distributions to) related parties	377		—		—		377
Other	(934)		—		—		(934)
Balance at September 30, 2022	$	2,868,665	$	(1,112)	$	138,133	$	3,005,686

_________________________________________________________________________________________

(1)See Note 5.

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, 2020	$	2,778,339	$	(17,208)	$	134,081	$	2,895,212
Net income (loss)	181,798		3,993		5,444		191,235
Distributions to Chipeta noncontrolling interest owner	—		—		(276)		(276)
Distributions to noncontrolling interest owner of WES Operating	—		—		(2,551)		(2,551)
Distributions to Partnership unitholders	(128,447)		(2,818)		—		(131,265)
Unit repurchases (1)	(16,241)		—		—		(16,241)
Contributions of equity-based compensation from Occidental	3,210		—		—		3,210
Equity-based compensation expense	3,524		—		—		3,524
Net contributions from (distributions to) related parties	1,627		—		—		1,627
Other	(2,355)		—		—		(2,355)
Balance at March 31, 2021	$	2,821,455	$	(16,033)	$	136,698	$	2,942,120
Net income (loss)	226,295		4,964		7,018		238,277
Distributions to Chipeta noncontrolling interest owner	—		—		(1,245)		(1,245)
Distributions to noncontrolling interest owner of WES Operating	—		—		(2,741)		(2,741)
Distributions to Partnership unitholders	(130,115)		(2,854)		—		(132,969)
Contributions of equity-based compensation from Occidental	2,375		—		—		2,375
Equity-based compensation expense	4,746		—		—		4,746
Net contributions from (distributions to) related parties	2,881		—		—		2,881
Other	(571)		—		—		(571)
Balance at June 30, 2021	$	2,927,066	$	(13,923)	$	139,730	$	3,052,873
Net income (loss)	250,198		5,527		7,913		263,638
Distributions to Chipeta noncontrolling interest owner	—		—		(1,213)		(1,213)
Distributions to noncontrolling interest owner of WES Operating	—		—		(4,642)		(4,642)
Distributions to Partnership unitholders	(131,772)		(2,890)		—		(134,662)
Unit repurchases (1)	(88,125)		—		—		(88,125)
Contributions of equity-based compensation from Occidental	2,311		—		—		2,311
Equity-based compensation expense	4,668		—		—		4,668
Net contributions from (distributions to) related parties	2,165		—		—		2,165
Other	(567)		—		—		(567)
Balance at September 30, 2021	$	2,965,944	$	(11,286)	$	141,788	$	3,096,446

_________________________________________________________________________________________

(1)See Note 5.

See accompanying Notes to Consolidated Financial Statements.

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WESTERN MIDSTREAM PARTNERS, LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



	Nine Months Ended September 30,
thousands	2022		2021
Cash flows from operating activities
Net income (loss)	$	906,422	$	693,150
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	430,455		407,404
Long-lived asset and other impairments	94		29,198

Non-cash equity-based compensation expense	21,245		20,834
Deferred income taxes	1,757		2,275
Accretion and amortization of long-term obligations, net	5,359		5,873
Equity income, net – related parties	(139,388)		(159,337)
Distributions from equity-investment earnings – related parties	139,710		164,772
(Gain) loss on divestiture and other, net	884		(278)
(Gain) loss on early extinguishment of debt	(91)		24,944

Other	299		46
Changes in assets and liabilities:
(Increase) decrease in accounts receivable, net	(212,955)		(130,773)
Increase (decrease) in accounts and imbalance payables and accrued liabilities, net	65,069		56,495
Change in other items, net	(6,653)		(9,609)
Net cash provided by operating activities	1,212,207		1,104,994
Cash flows from investing activities
Capital expenditures (1)	(341,505)		(219,757)

Acquisitions from third parties	(41,018)		—
Contributions to equity investments – related parties	(8,899)		(3,683)
Distributions from equity investments in excess of cumulative earnings – related parties	41,058		30,075

Proceeds from the sale of assets to third parties	1,111		8,002
(Increase) decrease in materials and supplies inventory and other	(6,999)		(1,924)
Net cash used in investing activities	(356,252)		(187,287)
Cash flows from financing activities
Borrowings, net of debt issuance costs	1,389,010		400,000
Repayments of debt	(1,268,548)		(1,132,966)
Increase (decrease) in outstanding checks	1,459		(11,757)
Distributions to Partnership unitholders (2)	(538,690)		(398,896)
Distributions to Chipeta noncontrolling interest owner	(5,020)		(2,734)
Distributions to noncontrolling interest owner of WES Operating	(20,177)		(9,934)
Net contributions from (distributions to) related parties	1,161		6,673
Unit repurchases (2)	(447,075)		(104,366)
Other	(10,981)		(8,787)
Net cash provided by (used in) financing activities	(898,861)		(1,262,767)
Net increase (decrease) in cash and cash equivalents	(42,906)		(345,060)
Cash and cash equivalents at beginning of period	201,999		444,922
Cash and cash equivalents at end of period	$	159,093	$	99,862
Supplemental disclosures

Interest paid, net of capitalized interest	$	314,192	$	348,904
Income taxes paid (reimbursements received)	905		932
Accrued capital expenditures	71,955		29,085

_________________________________________________________________________________________

(1)Includes purchases from related parties of $2.0 million for the nine months ended September 30, 2021. See Note 6.

(2)Includes related-party amounts. See Note 6.

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

WESTERN MIDSTREAM OPERATING, LP

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)



	Three Months Ended September 30,				Nine Months Ended September 30,
thousands	2022		2021		2022		2021
Revenues and other
Service revenues – fee based	$	666,555	$	650,482	$	1,954,105	$	1,841,742
Service revenues – product based	91,356		28,812		202,721		88,267
Product sales	79,430		84,298		314,755		227,359
Other	227		248		703		577
Total revenues and other (1)	837,568		763,840		2,472,284		2,157,945
Equity income, net – related parties	41,317		48,506		139,388		159,337
Operating expenses
Cost of product	106,833		83,232		328,237		250,245
Operation and maintenance	190,514		140,838		487,643		434,198
General and administrative	47,783		50,689		142,871		137,767
Property and other taxes	19,390		13,641		60,494		45,992
Depreciation and amortization	156,837		139,002		430,455		407,404
Long-lived asset and other impairments	4		1,594		94		29,198

Total operating expenses (2)	521,361		428,996		1,449,794		1,304,804
Gain (loss) on divestiture and other, net	(104)		(364)		(884)		278
Operating income (loss)	357,420		382,986		1,160,994		1,012,756

Interest expense	(83,106)		(93,257)		(249,333)		(287,040)
Gain (loss) on early extinguishment of debt	—		(24,655)		91		(24,944)
Other income (expense), net	45		106		99		(1,022)
Income (loss) before income taxes	274,359		265,180		911,851		699,750
Income tax expense (benefit)	387		1,823		3,683		4,400
Net income (loss)	273,972		263,357		908,168		695,350
Net income (loss) attributable to noncontrolling interest	2,404		2,699		7,627		6,596
Net income (loss) attributable to Western Midstream Operating, LP	$	271,568	$	260,658	$	900,541	$	688,754

________________________________________________________________________________________

(2)Total operating expenses includes related-party amounts of $(3.7) million and $(30.9) million for the three and nine months ended September 30, 2022, respectively, and $23.7 million and $93.6 million for the three and nine months ended September 30, 2021, respectively. 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	September 30, 2022		December 31, 2021
ASSETS
Current assets
Cash and cash equivalents	$	150,329	$	195,598
Accounts receivable, net	650,922		436,513
Other current assets	85,431		44,421
Total current assets	886,682		676,532
Property, plant, and equipment
Cost	13,236,499		12,846,078
Less accumulated depreciation	4,696,816		4,333,171
Net property, plant, and equipment	8,539,683		8,512,907
Goodwill	4,783		4,783
Other intangible assets	720,992		744,742
Equity investments	1,142,103		1,167,187
Other assets (1)	168,076		158,696
Total assets (2)	$	11,462,319	$	11,264,847
LIABILITIES, EQUITY, AND PARTNERS’ CAPITAL
Current liabilities
Accounts and imbalance payables	$	527,444	$	374,443
Short-term debt	2,030		505,932
Accrued ad valorem taxes	61,492		44,955
Accrued liabilities	141,799		210,693

Total current liabilities	732,765		1,136,023
Long-term liabilities
Long-term debt	7,027,361		6,400,616
Deferred income taxes	14,182		12,425
Asset retirement obligations	310,500		298,275
Other liabilities	368,286		324,842
Total long-term liabilities	7,720,329		7,036,158
Total liabilities (3)	8,453,094		8,172,181
Equity and partners’ capital
Common units (318,675,578 units issued and outstanding at September 30, 2022, and December 31, 2021)	2,977,241		3,063,289



Total partners’ capital	2,977,241		3,063,289
Noncontrolling interest	31,984		29,377
Total equity and partners’ capital	3,009,225		3,092,666
Total liabilities, equity, and partners’ capital	$	11,462,319	$	11,264,847

_________________________________________________________________________________________

(3)Total liabilities includes related-party amounts of $361.2 million and $318.7 million as of September 30, 2022, and December 31, 2021, 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, 2021	$	3,063,289	$	29,377	$	3,092,666
Net income (loss)	315,772		2,636		318,408
Distributions to Chipeta noncontrolling interest owner	—		(1,984)		(1,984)
Distributions to WES Operating unitholders	(140,217)		—		(140,217)
Contributions of equity-based compensation from Occidental	1,949		—		1,949
Contributions of equity-based compensation from WES	5,663		—		5,663
Net contributions from (distributions to) related parties	409		—		409

Balance at March 31, 2022	$	3,246,865	$	30,029	$	3,276,894
Net income (loss)	313,201		2,587		315,788
Distributions to Chipeta noncontrolling interest owner	—		(1,198)		(1,198)
Distributions to WES Operating unitholders	(300,248)		—		(300,248)
Contributions of equity-based compensation from Occidental	241		—		241
Contributions of equity-based compensation from WES	6,652		—		6,652
Net contributions from (distributions to) related parties	375		—		375

Balance at June 30, 2022	$	3,267,086	$	31,418	$	3,298,504
Net income (loss)	271,568		2,404		273,972
Distributions to Chipeta noncontrolling interest owner	—		(1,838)		(1,838)
Distributions to WES Operating unitholders	(568,107)		—		(568,107)
Contributions of equity-based compensation from Occidental	81		—		81
Contributions of equity-based compensation from WES	6,236		—		6,236
Net contributions from (distributions to) related parties	377		—		377
Balance at September 30, 2022	$	2,977,241	$	31,984	$	3,009,225

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, 2020	$	2,831,199	$	29,552	$	2,860,751
Net income (loss)	190,485		1,633		192,118
Distributions to Chipeta noncontrolling interest owner	—		(276)		(276)
Distributions to WES Operating unitholders	(127,470)		—		(127,470)
Contributions of equity-based compensation from Occidental	3,210		—		3,210
Contributions of equity-based compensation from WES	10,826		—		10,826
Net contributions from (distributions to) related parties	1,627		—		1,627
Balance at March 31, 2021	$	2,909,877	$	30,909	$	2,940,786
Net income (loss)	237,611		2,264		239,875
Distributions to Chipeta noncontrolling interest owner	—		(1,245)		(1,245)
Distributions to WES Operating unitholders	(137,030)		—		(137,030)
Contributions of equity-based compensation from Occidental	2,375		—		2,375
Contributions of equity-based compensation from WES	4,613		—		4,613
Net contributions from (distributions to) related parties	2,881		—		2,881
Balance at June 30, 2021	$	3,020,327	$	31,928	$	3,052,255
Net income (loss)	260,658		2,699		263,357
Distributions to Chipeta noncontrolling interest owner	—		(1,213)		(1,213)
Distributions to WES Operating unitholders	(232,055)		—		(232,055)
Contributions of equity-based compensation from Occidental	2,311		—		2,311
Contributions of equity-based compensation from WES	4,539		—		4,539
Net contributions from (distributions to) related parties	2,165		—		2,165
Balance at September 30, 2021	$	3,057,945	$	33,414	$	3,091,359

See accompanying Notes to Consolidated Financial Statements.

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WESTERN MIDSTREAM OPERATING, LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



	Nine Months Ended September 30,
thousands	2022		2021
Cash flows from operating activities
Net income (loss)	$	908,168	$	695,350
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	430,455		407,404
Long-lived asset and other impairments	94		29,198

Non-cash equity-based compensation expense	20,822		27,874
Deferred income taxes	1,757		2,275
Accretion and amortization of long-term obligations, net	5,359		5,873
Equity income, net – related parties	(139,388)		(159,337)
Distributions from equity-investment earnings – related parties	139,710		164,772
(Gain) loss on divestiture and other, net	884		(278)
(Gain) loss on early extinguishment of debt	(91)		24,944

Other	299		46
Changes in assets and liabilities:
(Increase) decrease in accounts receivable, net	(212,955)		(176,104)
Increase (decrease) in accounts and imbalance payables and accrued liabilities, net	55,981		91,508
Change in other items, net	(6,666)		(9,336)
Net cash provided by operating activities	1,204,429		1,104,189
Cash flows from investing activities
Capital expenditures (1)	(341,505)		(219,757)

Acquisitions from third parties	(41,018)		—
Contributions to equity investments – related parties	(8,899)		(3,683)
Distributions from equity investments in excess of cumulative earnings – related parties	41,058		30,075

Proceeds from the sale of assets to third parties	1,111		8,002
(Increase) decrease in materials and supplies inventory and other	(6,999)		(1,924)
Net cash used in investing activities	(356,252)		(187,287)
Cash flows from financing activities
Borrowings, net of debt issuance costs	1,389,010		400,000
Repayments of debt	(1,268,548)		(1,132,966)
Increase (decrease) in outstanding checks	1,562		(11,699)
Distributions to WES Operating unitholders (2)	(1,008,572)		(496,555)
Distributions to Chipeta noncontrolling interest owner	(5,020)		(2,734)
Net contributions from (distributions to) related parties	1,161		6,673
Other	(3,039)		(5,295)
Net cash provided by (used in) financing activities	(893,446)		(1,242,576)
Net increase (decrease) in cash and cash equivalents	(45,269)		(325,674)
Cash and cash equivalents at beginning of period	195,598		418,537
Cash and cash equivalents at end of period	$	150,329	$	92,863
Supplemental disclosures


Interest paid, net of capitalized interest	$	314,192	$	348,904
Income taxes paid (reimbursements received)	905		932
Accrued capital expenditures	71,955		29,085

________________________________________________________________________________________

(1)Includes purchases from related parties of $2.0 million for the nine months ended September 30, 2021. See Note 6.

(2)Includes related-party amounts. See Note 6.

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

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

For purposes of these consolidated financial statements, the “Partnership” refers to Western Midstream Partners, LP in its individual capacity or to Western Midstream Partners, LP and its subsidiaries, including Western Midstream Operating GP, LLC and WES Operating, as the context requires. “WES Operating GP” refers to Western Midstream Operating GP, LLC, individually as the general partner of WES Operating. The Partnership’s general partner, Western Midstream Holdings, LLC (the “general partner”), is a wholly owned subsidiary of Occidental Petroleum Corporation. “Occidental” refers to Occidental Petroleum Corporation, as the context requires, and its subsidiaries, excluding the general partner. “Anadarko” refers to Anadarko Petroleum Corporation and its subsidiaries, excluding Western Midstream Holdings, LLC. Anadarko became a wholly owned subsidiary of Occidental as a result of Occidental’s acquisition by merger of Anadarko on August 8, 2019. “Related parties” refers to Occidental (see Note 6), the Partnership’s investments accounted for under the equity method of accounting (see Note 7), and the Partnership and WES Operating for transactions that eliminate upon consolidation (see Note 6).

The Partnership is engaged in the business of gathering, compressing, treating, processing, and transporting natural gas; gathering, stabilizing, and transporting condensate, natural-gas liquids (“NGLs”), and crude oil; and gathering and disposing of produced water. In its capacity as a natural-gas processor, the Partnership also buys and sells natural gas, NGLs, and condensate on behalf of itself and as an agent for its customers under certain contracts. As of September 30, 2022, the Partnership’s assets and investments consisted of the following:


	Wholly Owned and Operated	Operated Interests	Non-Operated Interests	Equity Interests
Gathering systems (1)	17	2	3	1
Treating facilities	37	3	—	—
Natural-gas processing plants/trains	25	3	—	3
NGLs pipelines	2	—	—	5
Natural-gas pipelines	6	—	—	1
Crude-oil pipelines	3	1	—	4

_________________________________________________________________________________________

(1)Includes the DBM water systems.

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

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

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

The following table outlines the ownership interests and the accounting method of consolidation used in the consolidated financial statements for entities not wholly owned (see Note 3 and Note 7):


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

_________________________________________________________________________________________

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

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

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

Certain information and note disclosures commonly included in annual financial statements have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, the accompanying consolidated financial statements and notes should be read in conjunction with the Partnership’s 2021 Form 10-K, as filed with the SEC on February 23, 2022. Management believes that the disclosures made are adequate to make the information not misleading.

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

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.

Presentation of the Partnership’s assets. The Partnership’s assets include assets owned and ownership interests accounted for by the Partnership under the equity method of accounting, through its 98.0% partnership interest in WES Operating, as of September 30, 2022 (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.

Use of estimates. In preparing financial statements in accordance with GAAP, management makes informed judgments and estimates that affect the reported amounts of assets, liabilities, revenues, and expenses. Management evaluates its estimates and related assumptions regularly, using historical experience and other reasonable methods. Changes in facts and circumstances or additional information may result in revised estimates, and actual results may differ from these estimates. Effects on the business, financial condition, and results of operations resulting from revisions to estimates are recognized when the facts that give rise to the revisions become known. The information included herein reflects all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the consolidated financial statements, and certain prior-period amounts have been reclassified to conform to the current-year presentation.

Noncontrolling interests. The Partnership’s noncontrolling interests in the consolidated financial statements consist of (i) the 25% third-party interest in Chipeta and (ii) the 2.0% Occidental subsidiary-owned limited partner interest in WES Operating. WES Operating’s noncontrolling interest in the consolidated financial statements consists of the 25% third-party interest in Chipeta. See Note 5.

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

Equity-based compensation. During the nine months ended September 30, 2022, the Partnership issued 575,279 common units under its long-term incentive plans. Compensation expense was $6.4 million and $19.0 million for the three and nine months ended September 30, 2022, respectively, and $4.7 million and $12.9 million for the three and nine months ended September 30, 2021, respectively.

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

2. REVENUE FROM CONTRACTS WITH CUSTOMERS

The following table summarizes revenue from contracts with customers:



	Three Months Ended September 30,				Nine Months Ended September 30,
thousands	2022		2021		2022		2021
Revenue from customers
Service revenues – fee based	$	666,555	$	605,967	$	1,954,105	$	1,707,987
Service revenues – product based	91,356		28,812		202,721		88,267
Product sales	79,430		84,298		314,755		227,359
Total revenue from customers	837,341		719,077		2,471,581		2,023,613
Revenue from other than customers
Lease revenue (1)	—		44,515		—		133,755
Other	227		248		703		577
Total revenues and other	$	837,568	$	763,840	$	2,472,284	$	2,157,945

_________________________________________________________________________________________

(1)Includes fixed- and variable-lease revenue from an operating and maintenance agreement entered into with Occidental. See Operating leases within Note 6.

Contract balances. Receivables from customers, which are included in Accounts receivable, net on the consolidated balance sheets were $646.5 million and $424.6 million as of September 30, 2022, and December 31, 2021, respectively.

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




thousands
Contract assets balance at December 31, 2021	$	22,557
Amounts transferred to Accounts receivable, net that were included in the contract assets balance at the beginning of the period (1)	(1,849)
Additional estimated revenues recognized (2)	20,532

Contract assets balance at September 30, 2022	$	41,240



Contract assets at September 30, 2022
Other current assets	$	22,813
Other assets	18,427
Total contract assets from contracts with customers	$	41,240

_________________________________________________________________________________________

(1)Includes $(1.5) million for the three months ended September 30, 2022.

(2)Includes $8.1 million for the three months ended September 30, 2022.

Table of Contents

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

2. REVENUE FROM CONTRACTS WITH CUSTOMERS

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




thousands
Contract liabilities balance at December 31, 2021	$	313,146
Cash received or receivable, excluding revenues recognized during the period (1)	56,230

Revenues recognized that were included in the contract liability balance at the beginning of the period (2)	(16,447)

Contract liabilities balance at September 30, 2022	$	352,929



Contract liabilities at September 30, 2022
Accrued liabilities	$	19,223
Other liabilities	333,706
Total contract liabilities from contracts with customers	$	352,929

_________________________________________________________________________________________

(1)Includes $28.2 million for the three months ended September 30, 2022.

(2)Includes $(2.5) million for the three months ended September 30, 2022.

Transaction price allocated to remaining performance obligations. Revenues expected to be recognized from certain performance obligations that are unsatisfied (or partially unsatisfied) as of September 30, 2022, are presented in the following table. The Partnership applies the optional exemptions in Revenue from Contracts with Customers (Topic 606) and does not disclose consideration for remaining performance obligations with an original expected duration of one year or less or for variable consideration related to unsatisfied (or partially unsatisfied) performance obligations. Therefore, the following table represents only a portion of expected future revenues from existing contracts as most future revenues from customers are dependent on future variable customer volumes and, in some cases, variable commodity prices for those volumes.


thousands
Remainder of 2022	$	270,626
2023	1,045,627
2024	1,019,350
2025	935,624
2026	808,051
Thereafter	2,175,329
Total	$	6,254,607

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

3. ACQUISITIONS AND DIVESTITURES

Ranch Westex. In September 2022, the Partnership acquired the remaining 50% interest in Ranch Westex JV LLC (“Ranch Westex”) from a third party for $41.0 million. Subsequent to the acquisition, the Partnership is the sole owner and operator of the asset and Ranch Westex will be included as part of the operations of the West Texas complex.

Cactus II. In November 2022, the Partnership sold its 15.00% interest in Cactus II to two third parties for $264.8 million, which includes a $1.8 million pro-rata distribution through closing. Total proceeds are expected to be received during the fourth quarter of 2022.

Bison facility. In October 2020, the Partnership entered into an option agreement to sell the Bison treating facility, located in Northeast Wyoming, to a third party. During the second quarter of 2021, the third party exercised its option to purchase the Bison treating facility and the sale closed. The Partnership received total proceeds of $8.0 million, $7.0 million in the fourth quarter of 2020 and $1.0 million when the sale closed in the second quarter of 2021, resulting in a net gain on sale of $5.4 million that was recorded as Gain (loss) on divestiture and other, net in the consolidated statements of operations.

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

4. PARTNERSHIP DISTRIBUTIONS

Partnership distributions. Under its partnership agreement, the Partnership distributes all of its available cash (beyond proper reserves as defined in its partnership agreement) to unitholders of record on the applicable record date within 55 days following each quarter’s end. The Board of Directors of the general partner (the “Board”) declared the following cash distributions to the Partnership’s unitholders for the periods presented:


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





2021
March 31	$	0.31500	$	132,969	May 14, 2021	April 30, 2021
June 30	0.31900		134,662		August 13, 2021	July 30, 2021
September 30	0.32300		134,862		November 12, 2021	November 1, 2021
December 31	0.32700		134,749		February 14, 2022	January 31, 2022
2022
March 31	$	0.50000	$	206,197	May 13, 2022	May 2, 2022
June 30	0.50000		197,744		August 12, 2022	August 1, 2022
September 30	0.50000		197,065		November 14, 2022	October 31, 2022

Available cash. 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.

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. WES Operating made the following cash distributions to its limited partners for the periods presented:

thousands

Quarters Ended

Total Quarterly
Cash Distribution

Distribution
Date

2021

March 31

137,030

May 2021

June 30

140,217

August 2021

September 30

140,217

November 2021

December 31

140,217

February 2022

2022

March 31

213,513

May 2022

June 30

213,513

August 2022

September 30

213,513

November 2022

In addition to the distributions above, during the nine months ended September 30, 2022 and 2021, WES Operating made distributions of $441.3 million and $91.8 million, respectively, to the Partnership and WGRAH. The Partnership used its portion of the distribution to repurchase common units. See Note 5.

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5. EQUITY AND PARTNERS’ CAPITAL

Holdings of Partnership equity. The Partnership’s common units are listed on the New York Stock Exchange under the ticker symbol “WES.” As of September 30, 2022, Occidental held 190,281,578 common units, representing a 48.2% limited partner interest in the Partnership, and through its ownership of the general partner, Occidental indirectly held 9,060,641 general partner units, representing a 2.3% general partner interest in the Partnership. The public held 195,305,263 common units, representing a 49.5% limited partner interest in the Partnership.

In March 2021, an affiliate of Occidental sold 11,500,000 of the Partnership’s common units it held through an underwritten offering, including 1,500,000 common units pursuant to the full exercise of the underwriters’ over-allotment option. The Partnership did not receive any proceeds from the public offering.

Partnership equity repurchases. In February 2022, the Board authorized the Partnership to buy back up to $1.0 billion of the Partnership’s common units through December 31, 2024 (the “$1.0 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 nine months ended September 30, 2022, the Partnership repurchased 17,982,357 common units, which includes 10,000,000 common units repurchased from Occidental, for an aggregate purchase price of $447.1 million. The units were canceled immediately upon receipt. As of September 30, 2022, the Partnership had an authorized amount of $552.9 million remaining under the program. In November 2022, the Board authorized an increase in the $1.0 billion Purchase Program to $1.25 billion.

In November 2020, the Board authorized the Partnership to buy back up to $250.0 million of the Partnership’s common units through December 31, 2021 (the “$250.0 million Purchase Program”). The common units were purchased from time to time in the open market at prevailing market prices or in privately negotiated transactions. During the nine months ended September 30, 2021, the Partnership repurchased 5,586,419 common units on the open market for an aggregate purchase price of $104.4 million. The units were canceled by the Partnership immediately upon receipt. As of December 31, 2021, the entire $250.0 million authorized program had been fulfilled.

Holdings of WES Operating equity. As of September 30, 2022, (i) the Partnership, directly and indirectly through its ownership of WES Operating GP, owned a 98.0% limited partner interest and the entire non-economic general partner interest in WES Operating and (ii) Occidental, through its ownership of WGRAH, owned a 2.0% limited partner interest in WES Operating, which is reflected as a noncontrolling interest within the consolidated financial statements of the Partnership (see Note 1).

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

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

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5. EQUITY AND PARTNERS’ CAPITAL

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



	Three Months Ended September 30,				Nine Months Ended September 30,
thousands except per-unit amounts	2022		2021		2022		2021
Net income (loss)
Limited partners’ interest in net income (loss)	$	259,501	$	250,198	$	860,985	$	658,291
Weighted-average common units outstanding
Basic	388,906		411,909		398,343		412,690
Dilutive effect of non-vested phantom units	1,412		805		1,202		460
Diluted	390,318		412,714		399,545		413,150
Excluded due to anti-dilutive effect	108		4		597		700
Net income (loss) per common unit
Basic	$	0.67	$	0.61	$	2.16	$	1.60
Diluted	$	0.66	$	0.61	$	2.15	$	1.59

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.

6. RELATED-PARTY TRANSACTIONS

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


Consolidated statements of operations

	Three Months Ended September 30,				Nine Months Ended September 30,
thousands	2022		2021		2022		2021
Revenues and other
Service revenues – fee based	$	431,944	$	418,520	$	1,275,474	$	1,188,679
Service revenues – product based	24,246		1,499		48,297		9,662
Product sales	20,323		11,662		38,232		27,034
Total revenues and other	476,513		431,681		1,362,003		1,225,375
Equity income, net – related parties (1)	41,317		48,506		139,388		159,337
Operating expenses
Cost of product (2)	(7,771)		17,384		(39,462)		53,968
Operation and maintenance	3,231		3,497		3,874		24,534
General and administrative (3)	81		1,808		2,289		13,003
Total operating expenses	(4,459)		22,689		(33,299)		91,505

_________________________________________________________________________________________

(1)See Note 7.

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

(3)Includes equity-based compensation expense allocated to the Partnership by Occidental, which is not reimbursed to Occidental and is reflected as a contribution to partners’ capital in the consolidated statements of equity and partners’ capital (see Incentive Plans within this Note 6). Balances for the three and nine months ended September 30, 2021, also include amounts charged by Occidental pursuant to the shared services agreement (see Services Agreement within this Note 6).

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6. RELATED-PARTY TRANSACTIONS





Consolidated balance sheets
thousands	September 30, 2022		December 31, 2021
Assets
Accounts receivable, net	$	327,285	$	180,205
Other current assets	18,486		12,490

Equity investments (1)	1,142,103		1,167,187
Other assets	45,544		45,494
Total assets	1,533,418		1,405,376
Liabilities
Accounts and imbalance payables	65,484		49,242

Accrued liabilities	7,439		13,914
Other liabilities	253,912		207,365
Total liabilities	326,835		270,521

_________________________________________________________________________________________

(1)See Note 7.


Consolidated statements of cash flows

	Nine Months Ended September 30,
thousands	2022		2021
Distributions from equity-investment earnings – related parties	$	139,710	$	164,772
Capital expenditures	—		(2,000)

Contributions to equity investments – related parties	(8,899)		(3,683)
Distributions from equity investments in excess of cumulative earnings – related parties	41,058		30,075
Distributions to Partnership unitholders (1)	(260,774)		(195,205)
Distributions to WES Operating unitholders (2)	(20,177)		(9,934)
Net contributions from (distributions to) related parties	1,161		6,673

Unit repurchases from Occidental (3)	(252,500)		—

_________________________________________________________________________________________

(1)Represents 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).

(3)Represents common units repurchased from Occidental (see Note 5).

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6. RELATED-PARTY TRANSACTIONS

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


Consolidated statements of operations

	Three Months Ended September 30,				Nine Months Ended September 30,
thousands	2022		2021		2022		2021
General and administrative (1)	$	795	$	2,775	$	4,662	$	15,061

_________________________________________________________________________________________

(1)Includes (i) an intercompany service fee between the Partnership and WES Operating and (ii) equity-based compensation expense allocated to WES Operating by Occidental, which is not reimbursed to Occidental and is reflected as a contribution to partners’ capital in the consolidated statements of equity and partners’ capital (see Incentive Plans within this Note 6). Balances for the three and nine months ended September 30, 2021, also include amounts charged by Occidental pursuant to the shared services agreement (see Services Agreement within this Note 6).





Consolidated balance sheets
thousands	September 30, 2022		December 31, 2021

Other current assets	$	18,473	$	12,490
Other assets	44,899		45,494
Accounts and imbalance payables (1)	100,159		97,749
Accrued liabilities	7,122		13,597

_________________________________________________________________________________________

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


Consolidated statements of cash flows

	Nine Months Ended September 30,
thousands		2022		2021
Distributions to WES Operating unitholders (1)		$	(1,008,572)	$	(496,555)

_________________________________________________________________________________________

(1)Represents distributions paid to the Partnership and Occidental, through its ownership of WGRAH, pursuant to WES Operating’s partnership agreement. Includes distributions made from WES Operating to the Partnership that were used by the Partnership to repurchase common units. See Note 4 and Note 5.

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

Gathering and processing agreements. The Partnership has significant gathering, processing, and produced-water disposal arrangements with affiliates of Occidental on most of its systems. While Occidental is the contracting counterparty of the Partnership, these arrangements with Occidental include not just Occidental-produced volumes, but also, in some instances, the volumes of other working-interest owners of Occidental who rely on the Partnership’s facilities and infrastructure to bring their volumes to market. Natural-gas throughput (excluding equity-investment throughput) attributable to production owned or controlled by Occidental was 35% and 36% for the three and nine months ended September 30, 2022, respectively, and 38% and 36% for the three and nine months ended September 30, 2021, respectively. Crude-oil and NGLs throughput (excluding equity-investment throughput) attributable to production owned or controlled by Occidental was 88% for the three and nine months ended September 30, 2022, and 88% and 89% for the three and nine months ended September 30, 2021, respectively. Produced-water throughput attributable to production owned or controlled by Occidental was 75% and 80% for the three and nine months ended September 30, 2022, respectively, and 89% and 87% for the three and nine months ended September 30, 2021, respectively.

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6. RELATED-PARTY TRANSACTIONS

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

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

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

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

Operating leases. As a result of the surface-use and salt-water disposal agreements being amended under the CUA (see Related-party commercial agreement below), these agreements are now classified as operating leases and a $30.0 million right-of-use (“ROU”) asset, included in Other assets on the consolidated balance sheets, was recognized during the first quarter of 2021. The ROU asset is being amortized to Operation and maintenance expense over the remaining term of the agreements.

Effective December 31, 2019, an affiliate of Occidental and a wholly owned subsidiary of the Partnership, the lessor, entered into an operating and maintenance agreement pursuant to which Occidental provided operational and maintenance services with respect to a crude-oil gathering system and associated treating facilities owned by the Partnership through December 31, 2021. The agreement and underlying contracts included (i) fixed consideration, which was measured as the minimum-volume commitment for both gathering and treating, and (ii) variable consideration, which consisted of all volumes above the minimum-volume commitment. For the three and nine months ended September 30, 2021, the Partnership recognized fixed-lease revenue of $43.9 million and $131.9 million, respectively, and variable-lease revenue of $0.6 million and $1.9 million, respectively, related to these agreements, with such amounts included in Service revenues – fee based in the consolidated statements of operations.

Related-party expenses. Operation and maintenance expense includes amounts accrued for or paid to related parties for field-related costs provided by related parties at certain of the Partnership’s assets. A portion of general and administrative expense is paid by Occidental, which results in related-party transactions pursuant to the reimbursement provisions of the Partnership’s and WES Operating’s agreements with Occidental. Cost of product expense includes amounts related to certain continuing marketing arrangements with affiliates of Occidental, related-party imbalances, and transactions with affiliates accounted for under the equity method of accounting. See Marketing Transition Services Agreement in the sections above. Related-party expenses do not bear a direct relationship to related-party revenues, and third-party expenses do not bear a direct relationship to third-party revenues.

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6. RELATED-PARTY TRANSACTIONS

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

Incentive Plans. General and administrative expense includes non-cash equity-based compensation expense allocated to the Partnership by Occidental for awards granted to the executive officers of the general partner and to other employees prior to their employment with the Partnership under (i) the Anadarko Petroleum Corporation 2012 Omnibus Incentive Compensation Plan, as amended and restated, (ii) Occidental’s 2015 Long-Term Incentive Plan, and (iii) Occidental’s Phantom Share Unit Award Plan (collectively referred to as the “Incentive Plans”). General and administrative expense includes costs related to the Incentive Plans of $0.1 million and $2.3 million for the three and nine months ended September 30, 2022, respectively, and $2.3 million and $7.9 million for the three and nine months ended September 30, 2021, respectively. These amounts are reflected as contributions to partners’ capital in the consolidated statements of equity and partners’ capital.

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

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

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

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

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7. EQUITY INVESTMENTS

The following table presents the financial statement impact of the Partnership’s equity investments for the nine months ended September 30, 2022:


thousands	Balance at December 31, 2021		Equity income, net		Contributions		Distributions		Distributions in excess of cumulative earnings (1)		Acquisitions and Divestitures		Balance at September 30, 2022
White Cliffs	$	40,753	$	539	$	—	$	(103)	$	(2,760)	$	—	$	38,429
Rendezvous	22,075		(1,910)		—		(534)		(2,074)		—		17,557
Mont Belvieu JV	96,728		21,651		—		(21,765)		(3,378)		—		93,236
TEG	16,116		4,832		75		(4,849)		(21)		—		16,153
TEP	188,925		32,457		—		(32,646)		(2,733)		—		186,003
FRP	196,632		34,074		455		(34,384)		(2,364)		—		194,413
Whitethorn LLC	149,690		(2,736)		255		3,553		(1,565)		—		149,197
Cactus II	171,294		10,903		—		(11,028)		(7,567)		—		163,602
Saddlehorn	110,441		15,813		—		(15,470)		(5,150)		—		105,634
Panola	20,044		1,688		—		(1,454)		(864)		—		19,414
Mi Vida	51,763		8,256		—		(7,209)		(3,105)		—		49,705
Ranch Westex	979		3,392		—		(3,392)		(8,376)		7,397		—
Red Bluff Express	101,747		10,429		8,114		(10,429)		(1,101)		—		108,760
Total	$	1,167,187	$	139,388	$	8,899	$	(139,710)	$	(41,058)	$	7,397	$	1,142,103

_________________________________________________________________________________________

(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.

In September 2022, the Partnership acquired the remaining 50% interest in Ranch Westex from a third party. Subsequent to the acquisition, the Partnership is the sole owner and operator of the asset and Ranch Westex is no longer accounted for under the equity method of accounting. See Note 3.

During the nine months ended September 30, 2021, the Partnership recognized an impairment loss on its investment in Ranch Westex of $11.8 million that resulted from a decline in value below the carrying value, which was determined to be other than temporary in nature. This investment was impaired to its estimated fair value of $2.9 million, using the income approach and Level-3 fair value inputs, due to a reduction in estimated future cash flows resulting from lower forecasted producer throughput.

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8. PROPERTY, PLANT, AND EQUIPMENT

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




thousands	Estimated Useful Life	September 30, 2022		December 31, 2021
Land	N/A	$	10,983	$	10,955
Gathering systems – pipelines	30 years	5,466,010		5,386,003
Gathering systems – compressors	15 years	2,247,871		2,172,953
Processing complexes and treating facilities	25 years	3,413,159		3,375,317
Transportation pipeline and equipment	4 to 48 years	172,256		169,356
Produced-water disposal systems	20 years	912,599		882,527
Assets under construction	N/A	228,418		98,473
Other	3 to 40 years	785,203		750,494
Total property, plant, and equipment		13,236,499		12,846,078
Less accumulated depreciation		4,696,816		4,333,171
Net property, plant, and equipment		$	8,539,683	$	8,512,907

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

Long-lived asset and other impairments. During the nine months ended September 30, 2021, the Partnership recognized impairments of $29.2 million, primarily attributable to (i) $14.1 million of impairments at the DJ Basin complex due to cancellation of projects and (ii) an $11.8 million other-than-temporary impairment of the Partnership’s investment in Ranch Westex (see Note 7).

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9. SELECTED COMPONENTS OF WORKING CAPITAL

A summary of accounts receivable, net is as follows:


	The Partnership				WES Operating


thousands	September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
Trade receivables, net	$	644,516	$	431,649	$	644,516	$	431,649
Other receivables, net	6,406		4,864		6,406		4,864
Total accounts receivable, net	$	650,922	$	436,513	$	650,922	$	436,513

A summary of other current assets is as follows:


	The Partnership				WES Operating


thousands	September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
NGLs inventory	$	2,652	$	3,370	$	2,652	$	3,370
Imbalance receivables	38,682		25,309		38,682		25,309
Prepaid insurance	14,279		10,369		13,438		8,538
Contract assets	22,813		5,307		22,813		5,307
Other	7,859		1,897		7,846		1,897
Total other current assets	$	86,285	$	46,252	$	85,431	$	44,421

A summary of accrued liabilities is as follows:


	The Partnership				WES Operating


thousands	September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
Accrued interest expense	$	60,960	$	131,177	$	60,960	$	131,177
Short-term asset retirement obligations	7,456		9,934		7,456		9,934
Short-term remediation and reclamation obligations	6,515		7,454		6,515		7,454
Income taxes payable	3,443		1,516		3,443		1,516
Contract liabilities	19,223		27,763		19,223		27,763
Accrued payroll and benefits	40,989		41,311		—		20
Other	51,039		44,094		44,202		32,829
Total accrued liabilities	$	189,625	$	263,249	$	141,799	$	210,693

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10. DEBT AND INTEREST EXPENSE

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


	September 30, 2022						December 31, 2021
thousands	Principal		Carrying Value		Fair Value (1)		Principal		Carrying Value		Fair Value (1)
Short-term debt
4.000% Senior Notes due 2022	$	—	$	—	$	—	$	502,246	$	502,138	$	505,153

Finance lease liabilities	2,030		2,030		2,030		3,794		3,794		3,794
Total short-term debt	$	2,030	$	2,030	$	2,030	$	506,040	$	505,932	$	508,947

Long-term debt
Floating-Rate Senior Notes due 2023	$	213,138	$	213,000	$	211,778	$	213,138	$	212,642	$	213,072
3.100% Senior Notes due 2025	730,706		727,637		680,853		732,106		728,096		764,815
3.950% Senior Notes due 2025	399,163		396,598		373,318		399,163		395,928		418,506
4.650% Senior Notes due 2026	474,242		472,027		441,417		474,242		471,629		516,473
4.500% Senior Notes due 2028	400,000		396,557		357,866		400,000		396,145		437,673
4.750% Senior Notes due 2028	400,000		397,237		363,431		400,000		396,938		444,550
4.050% Senior Notes due 2030	1,200,000		1,191,089		1,022,784		1,200,000		1,190,339		1,323,595
5.450% Senior Notes due 2044	600,000		593,842		497,942		600,000		593,733		717,804
5.300% Senior Notes due 2048	700,000		687,435		575,740		700,000		687,265		844,223
5.500% Senior Notes due 2048	350,000		342,751		285,661		350,000		342,659		418,907
5.250% Senior Notes due 2050	1,000,000		983,884		811,100		1,000,000		983,709		1,183,514
RCF	625,000		625,000		625,000		—		—		—
Finance lease liabilities	304		304		304		1,533		1,533		1,533
Total long-term debt	$	7,092,553	$	7,027,361	$	6,247,194	$	6,470,182	$	6,400,616	$	7,284,665

_________________________________________________________________________________________

(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)

10. DEBT AND INTEREST EXPENSE

Debt activity. The following table presents the debt activity for the nine months ended September 30, 2022:


thousands	Carrying Value











Balance at December 31, 2021	$	6,906,548
RCF borrowings	1,390,000
Repayments of RCF borrowings	(765,000)

Repayment of 4.000% Senior Notes due 2022	(502,246)

Repayment of 3.100% Senior Notes due 2025	(1,400)


Finance lease liabilities	(2,992)
Other	4,481
Balance at September 30, 2022	$	7,029,391

WES Operating Senior Notes. In mid-January 2020, WES Operating issued the Fixed-Rate 3.100% Senior Notes due 2025, 4.050% Senior Notes due 2030, and 5.250% Senior Notes due 2050 (collectively referred to as the “Fixed-Rate Senior Notes”) and the Floating-Rate Senior Notes due 2023 (the “Floating-Rate Senior Notes”). Including the effects of the issuance prices, underwriting discounts, and interest-rate adjustments, the effective interest rates of the Senior Notes due 2025, 2030, and 2050, were 3.790%, 4.671%, and 5.869%, respectively, at September 30, 2022, and were 4.542%, 5.424%, and 6.629%, respectively, at September 30, 2021. The interest rate on the Floating-Rate Senior Notes was 3.56% and 2.23% at September 30, 2022 and 2021, respectively. The effective interest rate of these notes is subject to adjustment from time to time due to a change in credit rating.

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

During the third quarter of 2021, WES Operating purchased and retired $500.0 million of certain of its senior notes via a tender offer. For the three months ended September 30, 2021, losses of $24.7 million were recognized for the early retirement of these notes. During the first quarter of 2021, WES Operating redeemed the total principal amount outstanding of the 5.375% Senior Notes due 2021 at par value, pursuant to the optional redemption terms in WES Operating’s indenture.

As of September 30, 2022, the Floating-Rate Senior Notes 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. As of September 30, 2022, WES Operating was in compliance with all covenants under the relevant governing indentures.

Revolving credit facility. In June 2022, WES Operating entered into an amendment to its $2.0 billion senior unsecured revolving credit facility (“RCF”), which is expandable to a maximum of $2.5 billion, to, among other things, (i) extend the maturity date applicable to the loans and commitments of certain lenders totaling $1.6 billion to February 2026, (ii) provide for the ability of WES Operating to extend the maturity date by one year on up to two additional occasions, (iii) provide that loans under the RCF with a fixed interest rate for a specified period bear interest based on the Secured Overnight Financing Rate (“SOFR”) instead of the London Interbank Offered Rate (“LIBOR”), and (iv) include an additional level of pricing if WES Operating’s senior unsecured debt rating is less than or equal to BB/Ba2/BB (Standard and Poor’s / Moody’s Investors Service / Fitch Ratings). The non-extending lender’s commitments mature in February 2025 and represent $400.0 million out of $2.0 billion of total commitments from all lenders.

As of September 30, 2022, there were $625.0 million of outstanding borrowings and $5.1 million of outstanding letters of credit, resulting in $1.4 billion of available borrowing capacity under the RCF. As of September 30, 2022 and 2021, the interest rate on any outstanding RCF borrowings was 4.65% and 1.58%, respectively. The facility-fee rate was 0.25% at September 30, 2022 and 2021. As of September 30, 2022, WES Operating was in compliance with all covenants under the RCF.

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

10. DEBT AND INTEREST EXPENSE

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



	Three Months Ended September 30,				Nine Months Ended September 30,
thousands	2022		2021		2022		2021

Long-term and short-term debt	$	(81,554)	$	(90,913)	$	(243,559)	$	(279,122)
Finance lease liabilities	(23)		(218)		(96)		(808)
Commitment fees and amortization of debt-related costs	(3,049)		(3,147)		(9,149)		(9,664)
Capitalized interest	1,520		1,021		3,471		2,554


Interest expense	$	(83,106)	$	(93,257)	$	(249,333)	$	(287,040)

11. COMMITMENTS AND CONTINGENCIES

Environmental obligations. The Partnership is subject to various environmental-remediation obligations arising from federal, state, and local regulations regarding air and water quality, hazardous and solid waste disposal, and other environmental matters. As of September 30, 2022, and December 31, 2021, the consolidated balance sheets included $8.3 million and $10.1 million, respectively, of liabilities for remediation and reclamation obligations. The current portion of these amounts is included in Accrued liabilities, and the long-term portion of these amounts is included in Other liabilities. The majority of payments related to these obligations are expected to be made over the next year.

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

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

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

The following discussion analyzes our financial condition and results of operations and should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements, wherein WES Operating is fully consolidated, and which are included under Part I, Item 1 of this quarterly report, and the historical consolidated financial statements, and the notes thereto, which are included under Part II, Item 8 of the 2021 Form 10-K as filed with the SEC on February 23, 2022.

The Partnership’s assets include assets owned and ownership interests accounted for by us under the equity method of accounting, through our 98.0% partnership interest in WES Operating, as of September 30, 2022 (see Note 7—Equity Investments in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q). We also own and control the entire non-economic general partner interest in WES Operating GP, and our general partner is owned by Occidental.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

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

•our ability to pay distributions to our unitholders;

•our assumptions about the energy market;

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

•our operating results;

•competitive conditions;

•technology;

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

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

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

•weather and natural disasters;

•inflation;

•the availability of goods and services;

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

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

•environmental liabilities;

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

•changes in the financial or operational condition of Occidental;

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

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

•our commitments to capital projects;

•our ability to access liquidity under the RCF;

•our ability to repay debt;

•the resolution of litigation or other disputes;

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

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

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

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

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

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

•cyber attacks or security breaches; and

•other factors discussed below, in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” included in the 2021 Form 10-K, in our quarterly reports on Form 10-Q, and in our other public filings and press releases.

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

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EXECUTIVE SUMMARY

We are a midstream energy company organized as a publicly traded partnership, engaged in the business of gathering, compressing, treating, processing, and transporting natural gas; gathering, stabilizing, and transporting condensate, NGLs, and crude oil; and gathering and disposing of produced water. In our capacity as a natural-gas processor, we also buy and sell natural gas, NGLs, and condensate on behalf of ourselves and as an agent for our customers under certain contracts. To provide superior midstream service, we focus on ensuring the reliability and performance of our systems, creating sustainable cost efficiencies, enhancing our safety culture, and protecting the environment. We own or have investments in assets located in Texas, New Mexico, the Rocky Mountains (Colorado, Utah, and Wyoming), and North-central Pennsylvania. As of September 30, 2022, our assets and investments consisted of the following:


	Wholly Owned and Operated	Operated Interests	Non-Operated Interests	Equity Interests
Gathering systems (1)	17	2	3	1
Treating facilities	37	3	—	—
Natural-gas processing plants/trains	25	3	—	3
NGLs pipelines	2	—	—	5
Natural-gas pipelines	6	—	—	1
Crude-oil pipelines	3	1	—	4

_________________________________________________________________________________________

(1)Includes the DBM water systems.

Significant financial and operational events during the nine months ended September 30, 2022, included the following:

•WES Operating redeemed the $502.2 million total principal amount outstanding of the 4.000% Senior Notes due 2022 at par value.

•We repurchased 17,982,357 common units, which includes 10,000,000 common units repurchased from Occidental, for an aggregate purchase price of $447.1 million.

•Our third-quarter 2022 per-unit distribution is unchanged from the second-quarter 2022 per-unit distribution of $0.50000.

•In September 2022, we acquired the remaining 50% interest in Ranch Westex from a third party for $41.0 million (see Acquisitions and Divestitures within this Item 2).

•Natural-gas throughput attributable to WES totaled 4,274 MMcf/d and 4,201 MMcf/d for the three and nine months ended September 30, 2022, respectively, representing no change compared to the three months ended June 30, 2022, and a 2% increase compared to the nine months ended September 30, 2021, respectively.

•Crude-oil and NGLs throughput attributable to WES totaled 715 MBbls/d and 686 MBbls/d for the three and nine months ended September 30, 2022, respectively, representing a 7% increase and a 6% increase compared to the three months ended June 30, 2022, and nine months ended September 30, 2021, respectively.

•Produced-water throughput attributable to WES totaled 877 MBbls/d and 831 MBbls/d for the three and nine months ended September 30, 2022, respectively, representing a 2% increase and a 23% increase compared to the three months ended June 30, 2022, and nine months ended September 30, 2021, respectively.

•Gross margin was $573.9 million and $1,713.6 million for the three and nine months ended September 30, 2022, respectively, representing a 3% decrease and a 14% increase compared to the three months ended June 30, 2022, and nine months ended September 30, 2021, respectively. See Key Performance Metrics within this Item 2.

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•Adjusted gross margin for natural-gas assets (as defined under the caption Key Performance Metrics within this Item 2) averaged $1.33 per Mcf and $1.34 per Mcf for the three and nine months ended September 30, 2022, respectively, representing a 2% decrease and an 8% increase compared to the three months ended June 30, 2022, and nine months ended September 30, 2021, respectively.

•Adjusted gross margin for crude-oil and NGLs assets (as defined under the caption Key Performance Metrics within this Item 2) averaged $2.33 per Bbl and $2.44 per Bbl for the three and nine months ended September 30, 2022, respectively, representing a 9% decrease and a 1% decrease compared to the three months ended June 30, 2022, and nine months ended September 30, 2021, respectively.

•Adjusted gross margin for produced-water assets (as defined under the caption Key Performance Metrics within this Item 2) averaged $0.94 per Bbl for the three and nine months ended September 30, 2022, representing a 4% increase and a 1% increase compared to the three months ended June 30, 2022, and nine months ended September 30, 2021, respectively.

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



	Three Months Ended				Nine Months Ended

	September 30, 2022	June 30, 2022	Inc/ (Dec)		September 30, 2022	September 30, 2021	Inc/ (Dec)
Throughput for natural-gas assets (MMcf/d)
Delaware Basin	1,536	1,493	3	%	1,452	1,217	19	%
DJ Basin	1,326	1,336	(1)	%	1,328	1,375	(3)	%
Equity investments	473	516	(8)	%	490	447	10	%
Other	1,100	1,082	2	%	1,088	1,248	(13)	%
Total throughput for natural-gas assets	4,435	4,427	—	%	4,358	4,287	2	%
Throughput for crude-oil and NGLs assets (MBbls/d)
Delaware Basin	199	198	1	%	196	177	11	%
DJ Basin	81	83	(2)	%	84	89	(6)	%
Equity investments	411	360	14	%	382	358	7	%
Other	39	39	—	%	38	34	12	%
Total throughput for crude-oil and NGLs assets	730	680	7	%	700	658	6	%
Throughput for produced-water assets (MBbls/d)
Delaware Basin	895	882	1	%	848	687	23	%



Total throughput for produced-water assets	895	882	1	%	848	687	23	%

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OUTLOOK

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

Impact of crude-oil, natural-gas, and NGLs prices. Crude-oil, natural-gas, and NGLs prices can fluctuate significantly, and have done so over time. Commodity-price fluctuations affect the level of our customers’ activities and our customers’ allocations of capital within their own asset portfolios. During 2020, oil and natural-gas prices were negatively impacted by the worldwide macroeconomic downturn that followed the global outbreak of COVID-19. In 2021, prices began to increase and in the first quarter of 2022, commodity prices increased significantly in connection with the war in Ukraine. For example, NYMEX West Texas Intermediate crude-oil daily settlement prices during 2021 ranged from a low of $47.62 per barrel in January 2021 to a high of $84.65 per barrel in October 2021, and prices during the nine months ended September 30, 2022, ranged from a low of $76.08 per barrel in January 2022 to a high of $123.70 per barrel in March 2022. The extent and duration of the recent commodity-price volatility cannot be predicted.

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

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

Impact of interest rates. Overall, short- and long-term interest rates increased during 2021 and have continued to increase during 2022, resulting in increased interest expense on RCF borrowings and the Floating-Rate Senior Notes. Any future increases in interest rates likely will result in additional increases in financing costs. Additionally, as with other yield-oriented securities, our unit price could be impacted by our implied distribution yield relative to market interest rates. Therefore, changes in interest rates, either positive or negative, may affect the yield requirements of investors who invest in our units, and a rising interest-rate environment could have an adverse impact on our unit price and our ability to issue additional equity, or increase the cost of issuing equity, to make acquisitions, to reduce debt, or for other purposes. However, we expect our cost of capital to remain competitive, as our competitors face similar interest-rate dynamics.

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ACQUISITIONS AND DIVESTITURES

Ranch Westex. In September 2022, we acquired the remaining 50% interest in Ranch Westex from a third party for $41.0 million. Subsequent to the acquisition, (i) we are the sole owner and operator of the asset, (ii) Ranch Westex is no longer accounted for under the equity method of accounting, and (iii) it will be included as part of the operations of the West Texas complex.

Cactus II. In November 2022, we sold our 15.00% interest in Cactus II to two third parties for $264.8 million, which includes a $1.8 million pro-rata distribution through closing. Total proceeds are expected to be received during the fourth quarter of 2022.

Bison facility. In October 2020, we entered into an option agreement to sell the Bison treating facility, located in Northeast Wyoming, to a third party. During the second quarter of 2021, the third party exercised its option to purchase the Bison treating facility and the sale closed. See Note 3—Acquisitions and Divestitures in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q for further information.

RESULTS OF OPERATIONS

OPERATING RESULTS

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



	Three Months Ended				Nine Months Ended

thousands	September 30, 2022		June 30, 2022		September 30, 2022		September 30, 2021
Total revenues and other (1)	$	837,568	$	876,419	$	2,472,284	$	2,157,945
Equity income, net – related parties	41,317		48,464		139,388		159,337
Total operating expenses (1)	521,763		526,345		1,451,558		1,307,010
Gain (loss) on divestiture and other, net	(104)		(1,150)		(884)		278
Operating income (loss)	357,018		397,388		1,159,230		1,010,550

Interest expense	(83,106)		(80,772)		(249,333)		(287,040)
Gain (loss) on early extinguishment of debt	—		91		91		(24,944)
Other income (expense), net	56		(45)		117		(1,013)
Income (loss) before income taxes	273,968		316,662		910,105		697,553
Income tax expense (benefit)	387		1,491		3,683		4,403
Net income (loss)	273,581		315,171		906,422		693,150
Net income (loss) attributable to noncontrolling interests	7,836		8,854		25,643		20,375
Net income (loss) attributable to Western Midstream Partners, LP (2)	$	265,745	$	306,317	$	880,779	$	672,775

_________________________________________________________________________________________

(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 September 30, 2022” refer to the comparison of the three months ended September 30, 2022, to the three months ended June 30, 2022; and any increases or decreases “for the nine months ended September 30, 2022” refer to the comparison of the nine months ended September 30, 2022, to the nine months ended September 30, 2021.

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Throughput



	Three Months Ended				Nine Months Ended

	September 30, 2022	June 30, 2022	Inc/ (Dec)		September 30, 2022	September 30, 2021	Inc/ (Dec)
Throughput for natural-gas assets (MMcf/d)
Gathering, treating, and transportation	418	410	2	%	411	477	(14)	%
Processing	3,544	3,501	1	%	3,457	3,363	3	%
Equity investments (1)	473	516	(8)	%	490	447	10	%
Total throughput	4,435	4,427	—	%	4,358	4,287	2	%
Throughput attributable to noncontrolling interests (2)	161	157	3	%	157	155	1	%
Total throughput attributable to WES for natural-gas assets	4,274	4,270	—	%	4,201	4,132	2	%
Throughput for crude-oil and NGLs assets (MBbls/d)
Gathering, treating, and transportation	319	320	—	%	318	300	6	%
Equity investments (3)	411	360	14	%	382	358	7	%
Total throughput	730	680	7	%	700	658	6	%
Throughput attributable to noncontrolling interests (2)	15	14	7	%	14	13	8	%
Total throughput attributable to WES for crude-oil and NGLs assets	715	666	7	%	686	645	6	%
Throughput for produced-water assets (MBbls/d)
Gathering and disposal	895	882	1	%	848	687	23	%
Throughput attributable to noncontrolling interests (2)	18	18	—	%	17	14	21	%
Total throughput attributable to WES for produced-water assets	877	864	2	%	831	673	23	%

_________________________________________________________________________________________

(1)Represents the 22% share of average Rendezvous throughput, 50% share of average Mi Vida throughput, 50% share of average Ranch Westex throughput through August 2022 (see Acquisitions and Divestitures within this Item 2), and 30% share of average Red Bluff Express throughput.

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

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

Natural-gas assets

Gathering, treating, and transportation throughput increased by 8 MMcf/d for the three months ended September 30, 2022, primarily due to higher volumes at the MIGC system, partially offset by production declines in areas around the Marcellus Interest and Springfield gas-gathering systems.

Gathering, treating, and transportation throughput decreased by 66 MMcf/d for the nine months ended September 30, 2022, primarily due to (i) decreased volumes at the Bison treating facility, which was sold to a third party during the second quarter of 2021, and (ii) production declines in areas around the Marcellus Interest systems.

Processing throughput increased by 43 MMcf/d for the three months ended September 30, 2022, primarily due to higher volumes at the West Texas and Chipeta complexes due to increased production in the area. These increases were offset partially by lower volumes at the Brasada complex due to downstream issues causing volumes to be diverted away from the plant in the third quarter of 2022.

Processing throughput increased by 94 MMcf/d for the nine months ended September 30, 2022, primarily due to higher volumes at the West Texas complex due to increased production in the area and the impact of winter storm Uri during the first quarter of 2021. This increase was offset partially by (i) lower volumes due to production declines in areas around the DJ Basin and Granger complexes and (ii) lower volumes at the Brasada complex due to downstream issues causing volumes to be diverted away from the plant in the third quarter of 2022.

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Equity-investment throughput decreased by 43 MMcf/d for the three months ended September 30, 2022, primarily due to (i) decreased volumes at the Ranch Westex plant, which we acquired in the third quarter of 2022 and is included as part of the West Texas complex subsequent to the acquisition (see Acquisitions and Divestitures within this Item 2), and (ii) decreased volumes on Red Bluff Express.

Equity-investment throughput increased by 43 MMcf/d for the nine months ended September 30, 2022, primarily due to increased volumes on Red Bluff Express and at the Mi Vida plant due to increased production in the area and the impact of winter storm Uri during the first quarter of 2021. These increases were offset partially by (i) decreased volumes at the Ranch Westex plant, which we acquired in the third quarter of 2022 and is included as part of the West Texas complex subsequent to the acquisition (see Acquisitions and Divestitures within this Item 2), and (ii) decreased volumes at the Rendezvous system due to production declines in the area.

Crude-oil and NGLs assets

Gathering, treating, and transportation throughput increased by 18 MBbls/d for the nine months ended September 30, 2022, primarily due to higher volumes at the DBM oil system resulting from increased production in the area and the impact of winter storm Uri during the first quarter of 2021.

Equity-investment throughput increased by 51 MBbls/d for the three months ended September 30, 2022, primarily due to increased volumes on the Whitethorn and Cactus II pipelines.

Equity-investment throughput increased by 24 MBbls/d for the nine months ended September 30, 2022, primarily due to increased volumes on FRP resulting from increased pipeline commitments, partially offset by decreased volumes on the Whitethorn pipeline.

Produced-water assets

Gathering and disposal throughput increased by 13 MBbls/d for the three months ended September 30, 2022, due to new third-party connections brought online at the end of the second quarter of 2022.

Gathering and disposal throughput increased by 161 MBbls/d for the nine months ended September 30, 2022, due to (i) higher production, (ii) new third-party connections brought online during the fourth quarter of 2021 and in 2022, and (iii) the impact of winter storm Uri during the first quarter of 2021.

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Service Revenues



	Three Months Ended						Nine Months Ended

thousands except percentages	September 30, 2022		June 30, 2022		Inc/ (Dec)		September 30, 2022		September 30, 2021		Inc/ (Dec)
Service revenues – fee based	$	666,555	$	655,952	2	%	$	1,954,105	$	1,841,742	6	%
Service revenues – product based	91,356		70,498		30	%	202,721		88,267		130	%
Total service revenues	$	757,911	$	726,450	4	%	$	2,156,826	$	1,930,009	12	%

Service revenues – fee based

Service revenues – fee based increased by $10.6 million for the three months ended September 30, 2022, primarily due to increases of (i) $5.7 million at the West Texas complex attributable to increased throughput and (ii) $4.8 million at the DBM water systems due to increased deficiency fees and contract mix.

Service revenues – fee based increased by $112.4 million for the nine months ended September 30, 2022, primarily due to increases of (i) $63.3 million at the West Texas complex due to increased throughput, including the impact of winter storm Uri during the first quarter of 2021, partially offset by a lower average fee resulting from a cost-of-service rate redetermination effective January 1, 2022, and (ii) $47.4 million and $40.6 million at the DBM oil and DBM water systems, respectively, due to increased throughput, including the impact of winter storm Uri during the first quarter of 2021, and increased deficiency fees. These increases were offset partially by decreases of (i) $22.9 million at the DJ Basin complex due to decreased throughput, partially offset by increased deficiency fees, and (ii) $18.9 million due to revenue recorded in the third quarter of 2021 that was previously constrained.

Service revenues – product based

Service revenues – product based increased by $20.9 million for the three months ended September 30, 2022, primarily due to an increase of $22.9 million at the West Texas complex due to increased electricity-related rates billed to customers and contract mix, partially offset by a decrease of $1.5 million at the Chipeta complex due to pricing fluctuations.

Service revenues – product based increased by $114.5 million for the nine months ended September 30, 2022, primarily due to increases of (i) $68.7 million and $33.2 million at the West Texas and DJ Basin complexes, respectively, attributable to increased prices and changes in contract mix during the second quarter of 2022, and (ii) $4.2 million and $3.5 million at the DBM water systems and MGR assets, respectively, due to increases in pricing and volumes.

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Product Sales



	Three Months Ended						Nine Months Ended

thousands except percentages and per-unit amounts	September 30, 2022		June 30, 2022		Inc/ (Dec)		September 30, 2022		September 30, 2021		Inc/ (Dec)
Natural-gas sales	$	35,112	$	47,292	(26)	%	$	101,475	$	67,765	50	%
NGLs sales	44,318		102,444		(57)	%	213,280		159,594		34	%
Total Product sales	$	79,430	$	149,736	(47)	%	$	314,755	$	227,359	38	%
Per-unit gross average sales price:
Natural gas (per Mcf)	$	7.18	$	7.02	2	%	$	6.28	$	4.20	50	%
NGLs (per Bbl)	40.11		46.57		(14)	%	44.43		30.81		44	%

Natural-gas sales

Natural-gas sales decreased by $12.2 million for the three months ended September 30, 2022, primarily due to a decrease of $12.6 million at the West Texas complex attributable to a third-quarter 2022 contract modification where we are no longer the principal in the transaction (with an offsetting decrease in cost of product), partially offset by increased volumes sold.

Natural-gas sales increased by $33.7 million for the nine months ended September 30, 2022, primarily due to increases of (i) $48.8 million at the West Texas complex attributable to increased average prices and volumes sold, partially offset by a third-quarter 2022 contract modification as noted above, and (ii) $6.4 million at the MGR assets due to increased average prices. These increases were offset partially by a decrease of $18.5 million at the DJ Basin complex due to decreased volumes sold, partially offset by an increase in average prices.

NGLs sales

NGLs sales decreased by $58.1 million for the three months ended September 30, 2022, primarily due to a decrease of $56.7 million at the West Texas complex due to decreased average prices and volumes sold.

NGLs sales increased by $53.7 million for the nine months ended September 30, 2022, primarily due to increases of (i) $15.9 million at the Chipeta complex, $15.8 million at the West Texas complex, and $4.3 million at the DBM water systems attributable to increased average prices and volumes sold, and (ii) $9.3 million and $4.4 million at the DJ Basin and Granger complexes, respectively, due to an increase in average prices, partially offset by a decrease in volumes sold.

Equity Income, Net – Related Parties



	Three Months Ended						Nine Months Ended

thousands except percentages	September 30, 2022		June 30, 2022		Inc/ (Dec)		September 30, 2022		September 30, 2021		Inc/ (Dec)
Equity income, net – related parties	$	41,317	$	48,464	(15)	%	$	139,388	$	159,337	(13)	%

Equity income, net – related parties decreased by $7.1 million for the three months ended September 30, 2022, primarily due to decreases of (i) $2.6 million at Whitethorn LLC related to commercial activities, (ii) $2.1 million at Ranch Westex, which we acquired in the third quarter of 2022 and is included as part of the West Texas complex subsequent to the acquisition (see Acquisitions and Divestitures within this Item 2), and (iii) $1.8 million at Mi Vida related to increased operating expenses.

Equity income, net – related parties decreased by $19.9 million for the nine months ended September 30, 2022, primarily due to decreases of (i) $10.7 million at Saddlehorn due to decreases in revenues along with increases in operating expenses, (ii) $9.1 million at Whitethorn LLC due to decreases in volumes resulting in lower revenues, (iii) $5.9 million at Ranch Westex, which we acquired in the third quarter of 2022 and is included as part of the West Texas complex subsequent to the acquisition (see Acquisitions and Divestitures within this Item 2), and (iv) $3.4 million each at Cactus II and Mont Belvieu JV due to increases in operating expenses. These decreases were offset partially by an increase of $10.6 million at FRP and TEP due to increased volumes resulting in higher revenues.

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Cost of Product and Operation and Maintenance Expenses



	Three Months Ended						Nine Months Ended

thousands except percentages	September 30, 2022		June 30, 2022		Inc/ (Dec)		September 30, 2022		September 30, 2021		Inc/ (Dec)
Residue purchases	$	42,799	$	65,168	(34)	%	$	142,959	$	108,238	32	%
NGLs purchases	89,960		102,650		(12)	%	263,014		124,653		111	%
Other	(25,926)		(19,262)		35	%	(77,736)		17,354		NM
Cost of product	106,833		148,556		(28)	%	328,237		250,245		31	%
Operation and maintenance	190,514		168,153		13	%	487,643		434,198		12	%
Total Cost of product and Operation and maintenance expenses	$	297,347	$	316,709	(6)	%	$	815,880	$	684,443	19	%

_________________________________________________________________________________________

NM—Not meaningful

Residue purchases

Residue purchases decreased by $22.4 million for the three months ended September 30, 2022, primarily due to a decrease of $27.9 million at the West Texas complex attributable to a third-quarter 2022 contract modification where we are no longer the principal in the transaction (with an offsetting decrease in product sales). This decrease was offset partially by increases of (i) $2.6 million at the DJ Basin complex attributable to a change in contract mix, as well as increased average prices, and (ii) $1.7 million at the Chipeta complex due to increased volumes purchased and average prices.

Residue purchases increased by $34.7 million for the nine months ended September 30, 2022, primarily due to increases of (i) $21.9 million at the West Texas complex attributable to increased volumes purchased and average prices, as well as changes in contract mix during 2022, (ii) $9.0 million at the Chipeta complex due to increased volumes purchased and average prices, (iii) $6.2 million at the MGR assets primarily due to increased average prices, and (iv) $3.3 million at the Granger complex attributable to increased average prices. These increases were offset partially by a decrease of $4.9 million at the DJ Basin complex primarily due to a change in contract mix during the second quarter of 2022.

NGLs purchases

NGLs purchases decreased by $12.7 million for the three months ended September 30, 2022, primarily due to decreases of (i) $5.8 million at the West Texas complex attributable to lower volumes purchased and average prices, (ii) $2.4 million at the Brasada complex due to decreased volumes purchased, and (iii) $2.0 million at the Chipeta complex due to decreased average prices.

NGLs purchases increased by $138.4 million for the nine months ended September 30, 2022, primarily due to increases of (i) $80.1 million at the West Texas complex due to increased volumes purchased and average prices, as well as a change in contract mix during the second quarter of 2022, (ii) $49.5 million at the DJ Basin complex attributable to increased average prices and a change in contract mix during the second quarter of 2022, (iii) $4.2 million at the DBM water systems due to increased average prices, and (iv) $3.6 million at the Chipeta complex due to increased volumes purchased and average prices.

Other items

Other items decreased by $6.7 million for the three months ended September 30, 2022, primarily due to a decrease of $11.3 million at the West Texas complex attributable to changes in imbalance positions, partially offset by an increase of $6.2 million at the DJ Basin complex due to changes in imbalance positions.

Other items decreased by $95.1 million for the nine months ended September 30, 2022, primarily due to decreases of $53.1 million and $47.0 million at the West Texas and DJ Basin complexes, respectively, attributable to changes in imbalance positions. These decreases were offset partially by an increase of $5.7 million at the MGR assets attributable to changes in imbalance positions.

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Operation and maintenance expense

Operation and maintenance expense increased by $22.4 million for the three months ended September 30, 2022, primarily due to increases of (i) $10.1 million attributable to higher utility expense, (ii) $8.0 million in mechanical-integrity costs, (iii) $2.2 million due to higher field-area costs, (iv) $2.0 million in higher chemicals and treating services, and (v) $1.7 million due to higher maintenance and repair expense. These increases were offset partially by a decrease of $2.4 million due to lower regulatory and environmental expense.

Operation and maintenance expense increased by $53.4 million for the nine months ended September 30, 2022, primarily due to increases of (i) $13.0 million in higher chemicals and treating services, (ii) $11.5 million due to higher maintenance and repair expense, (iii) $8.2 million attributable to higher utility expense, (iv) $6.9 million in higher salaries and wages costs, (v) $6.7 million due to higher land-related costs, (vi) $6.5 million in mechanical-integrity costs, (vii) $5.4 million due to higher regulatory and environmental expense, (viii) $3.5 million in water-disposal costs, and (ix) $3.1 million in higher equipment rental costs. These increases were offset partially by decreases of $9.2 million attributable to lower contract labor and consulting expense and $6.0 million due to lower field-area costs.

Other Operating Expenses



	Three Months Ended						Nine Months Ended

thousands except percentages	September 30, 2022		June 30, 2022		Inc/ (Dec)		September 30, 2022		September 30, 2021		Inc/ (Dec)
General and administrative	$	48,185	$	47,848	1	%	$	144,635	$	139,973	3	%
Property and other taxes	19,390		22,662		(14)	%	60,494		45,992		32	%
Depreciation and amortization	156,837		139,036		13	%	430,455		407,404		6	%
Long-lived asset and other impairments	4		90		(96)	%	94		29,198		(100)	%

Total other operating expenses	$	224,416	$	209,636	7	%	$	635,678	$	622,567	2	%

General and administrative expenses

General and administrative expenses increased by $4.7 million for the nine months ended September 30, 2022, primarily due to an increase of $5.2 million in personnel costs, including increased bonus-related expenses and other miscellaneous employee expenses.

Property and other taxes

Property and other taxes decreased by $3.3 million for the three months ended September 30, 2022, primarily due to lower property values received across multiple tax jurisdictions, partially offset by an increase in the ad valorem property values for the DJ Basin complex.

Property and other taxes increased by $14.5 million for the nine months ended September 30, 2022, primarily due to increases in the state assessed portion of ad valorem property values resulting in increases for the DJ Basin complex.

Depreciation and amortization expense

Depreciation and amortization expense increased by $17.8 million for the three months ended September 30, 2022, primarily due to an acceleration of depreciation expense for revised service life assumptions of an asset in the DJ Basin complex.

Depreciation and amortization expense increased by $23.1 million for the nine months ended September 30, 2022, primarily due to (i) $15.2 million in the DJ Basin complex due to an acceleration of depreciation expense for revised service life assumptions, (ii) $4.9 million resulting from capital projects being placed into service, (iii) $4.1 million of increased expense at the Hilight system, and (iv) $3.3 million at a transportation asset in Southwest Wyoming primarily as a result of a change in estimate for asset retirement obligations. These increases were offset partially by a decrease in depreciation of $6.3 million at the MGR assets.

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Long-lived asset and other impairment expense

Long-lived asset and other impairment expense for the nine months ended September 30, 2021, was primarily due to (i) an $11.8 million other-than-temporary impairment of our investment in Ranch Westex and (ii) $14.1 million of impairments at the DJ Basin complex due to cancellation of projects.

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.

Interest Expense



	Three Months Ended						Nine Months Ended

thousands except percentages	September 30, 2022		June 30, 2022		Inc/ (Dec)		September 30, 2022		September 30, 2021		Inc/ (Dec)



Long-term and short-term debt	$	(81,554)	$	(78,577)	4	%	$	(243,559)	$	(279,122)	(13)	%
Finance lease liabilities	(23)		(31)		(26)	%	(96)		(808)		(88)	%
Commitment fees and amortization of debt-related costs	(3,049)		(3,068)		(1)	%	(9,149)		(9,664)		(5)	%
Capitalized interest	1,520		904		68	%	3,471		2,554		36	%



Interest expense	$	(83,106)	$	(80,772)	3	%	$	(249,333)	$	(287,040)	(13)	%

Interest expense

Interest expense increased by $2.3 million for the three months ended September 30, 2022, primarily due to higher outstanding borrowings under the RCF during the third quarter of 2022.

Interest expense decreased by $37.7 million for the nine months ended September 30, 2022, primarily due to decreases of (i) $16.2 million primarily due to the redemption of the total principal amount outstanding of the 4.000% Senior Notes due 2022 and 5.375% Senior Notes due 2021 during the second quarter of 2022 and first quarter of 2021, respectively, (ii) $11.6 million due to credit-rating related interest rate changes and a lower outstanding balance on the 3.100% Senior Notes due 2025, (iii) $11.4 million due to credit-rating related interest rate changes on the 4.050% Senior Notes due 2030 and 5.250% Senior Notes due 2050, and (iv) $2.7 million due to a lower outstanding balance on the 3.950% Senior Notes due 2025, a portion of which was repaid during the third quarter of 2021. These decreases were offset partially by an increase of $6.8 million due to higher outstanding borrowings under the RCF during 2022.

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

Income Tax Expense (Benefit)



	Three Months Ended								Nine Months Ended

thousands except percentages	September 30, 2022			June 30, 2022			Inc/ (Dec)		September 30, 2022			September 30, 2021			Inc/ (Dec)
Income (loss) before income taxes	$	273,968		$	316,662		(13)	%	$	910,105		$	697,553		30	%
Income tax expense (benefit)	387			1,491			(74)	%	3,683			4,403			(16)	%
Effective tax rate	—		%	—		%			—		%	1		%

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.

For all periods presented, the variance from the federal statutory rate was primarily due to our Texas margin tax liability.

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KEY PERFORMANCE METRICS



	Three Months Ended						Nine Months Ended

thousands except percentages and per-unit amounts	September 30, 2022		June 30, 2022		Inc/ (Dec)		September 30, 2022		September 30, 2021		Inc/ (Dec)
Adjusted gross margin for natural-gas assets	$	521,117	$	528,983	(1)	%	$	1,539,009	$	1,394,506	10	%
Adjusted gross margin for crude-oil and NGLs assets	153,225		155,686		(2)	%	457,158		432,401		6	%
Adjusted gross margin for produced-water assets	75,723		71,002		7	%	214,319		170,360		26	%
Adjusted gross margin	750,065		755,671		(1)	%	2,210,486		1,997,267		11	%
Per-Mcf Adjusted gross margin for natural-gas assets (1)	1.33		1.36		(2)	%	1.34		1.24		8	%
Per-Bbl Adjusted gross margin for crude-oil and NGLs assets (2)	2.33		2.57		(9)	%	2.44		2.46		(1)	%
Per-Bbl Adjusted gross margin for produced-water assets (3)	0.94		0.90		4	%	0.94		0.93		1	%
Adjusted EBITDA	524,824		548,318		(4)	%	1,612,192		1,465,816		10	%
Free cash flow	330,412		372,107		(11)	%	902,861		911,629		(1)	%

_________________________________________________________________________________________

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

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

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

Adjusted gross margin. We define Adjusted gross margin attributable to Western Midstream Partners, LP (“Adjusted gross margin”) as total revenues and other (less reimbursements for electricity-related expenses recorded as revenue), less cost of product, plus distributions from equity investments, and excluding the noncontrolling interest owners’ proportionate share of revenues and cost of product. We believe Adjusted gross margin is an important performance measure of our operations’ profitability and performance as compared to other companies in the midstream industry. Cost of product expenses include (i) costs associated with the purchase of natural gas and NGLs pursuant to our percent-of-proceeds, percent-of-product, and keep-whole contracts, (ii) costs associated with the valuation of gas and NGLs imbalances, and (iii) costs associated with our obligations under certain contracts to redeliver a volume of natural gas to shippers, which is thermally equivalent to condensate retained by us and sold to third parties. The electricity-related expenses included in our Adjusted gross margin definition relate to pass-through expenses that are reimbursed by certain customers (recorded as revenue with an offset recorded as Operation and maintenance expense).

To facilitate investor and industry analyst comparisons between us and our peers, 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.

Adjusted gross margin decreased by $5.6 million for the three months ended September 30, 2022, primarily due to (i) lower NGLs prices, partially offset by an increase in NGLs volumes at the DJ Basin complex and (ii) a decrease in distributions from Mi Vida and Cactus II. These decreases were offset partially by (i) increased throughput and the impact of utilities costs, partially offset by lower NGLs volumes and prices at the West Texas complex, and (ii) increased throughput, contract mix, and increased deficiency fee revenues at the DBM water systems.

Adjusted gross margin increased by $213.2 million for the nine months ended September 30, 2022, primarily due to (i) strong plant performance and contract mix leading to increased product recoveries, coupled with higher commodity prices and increased throughput at the West Texas complex, partially offset by a lower average fee resulting from a cost-of-service rate redetermination effective January 1, 2022, and (ii) increased throughput and deficiency fee revenues at the DBM oil and DBM water systems. These increases were offset partially by (i) revenue recorded in the third quarter of 2021 that was previously constrained and (ii) a decrease in distributions from Whitethorn LLC.

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Per-Mcf Adjusted gross margin for natural-gas assets decreased by $0.03 for the three months ended September 30, 2022, primarily due to (i) a decrease in distributions from Mi Vida, (ii) lower NGLs prices, partially offset by an increase in NGLs volumes at the DJ Basin complex, and (iii) lower NGLs volumes and prices at the West Texas complex, partially offset by the impact of utilities costs.

Per-Mcf Adjusted gross margin for natural-gas assets increased by $0.10 for the nine months ended September 30, 2022, primarily due to strong plant performance and contract mix leading to increased product recoveries, coupled with higher commodity prices and increased throughput at the West Texas complex, which has a higher-than-average per-Mcf margin as compared to our other natural-gas assets.

Per-Bbl Adjusted gross margin for crude-oil and NGLs assets decreased by $0.24 for the three months ended September 30, 2022, primarily due to increased throughput and decreased distributions from the Whitethorn and Cactus II pipelines, which have a lower-than-average per-Bbl margin as compared to our other crude-oil and NGLs assets, partially offset by an increase in distributions from Saddlehorn.

Per-Bbl Adjusted gross margin for crude-oil and NGLs assets decreased by $0.02 for the nine months ended September 30, 2022, primarily due to (i) revenue recorded in the third quarter of 2021 that was previously constrained, (ii) a decrease in distributions from Saddlehorn and Whitethorn LLC, and (iii) increased throughput on FRP, which has a lower-than-average per-Bbl margin as compared to our other crude-oil and NGLs assets. These decreases were offset partially by increased throughput and increased deficiency fee revenues at the DBM oil system, which has a higher-than-average per-Bbl margin as compared to our other crude-oil and NGLs assets.

Per-Bbl Adjusted gross margin for produced-water assets increased by $0.04 for the three months ended September 30, 2022, primarily due to contract mix and an increase in deficiency fee revenues.

Per-Bbl Adjusted gross margin for produced-water assets increased by $0.01 for the nine months ended September 30, 2022, primarily due to deficiency fee revenues recorded in 2022.

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.

Adjusted EBITDA decreased by $23.5 million for the three months ended September 30, 2022, primarily due to (i) a $38.9 million decrease in total revenues and other, (ii) a $22.4 million increase in operation and maintenance expenses, and (iii) a $7.1 million decrease in distributions from equity investments. These amounts were offset partially by (i) a $41.8 million decrease in cost of product (net of lower of cost or market inventory adjustments) and (ii) a $3.3 million decrease in property taxes.

Adjusted EBITDA increased by $146.4 million for the nine months ended September 30, 2022, primarily due to a $314.3 million increase in total revenues and other. This amount was offset partially by (i) a $77.7 million increase in cost of product (net of lower of cost or market inventory adjustments), (ii) a $53.4 million increase in operation and maintenance expenses, (iii) a $14.5 million increase in property taxes, (iv) a $14.1 million decrease in distributions from equity investments, and (v) a $4.3 million increase in general and administrative expenses excluding non-cash equity-based compensation expense.

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

Free cash flow decreased by $41.7 million for the three months ended September 30, 2022, primarily due to a $42.8 million increase in capital expenditures, partially offset by a $1.8 million increase in net cash provided by operating activities.

Free cash flow decreased by $8.8 million for the nine months ended September 30, 2022, primarily due to (i) a $121.7 million increase in capital expenditures and (ii) a $5.2 million increase in contributions to equity investments. These amounts were offset partially by (i) a $107.2 million increase in net cash provided by operating activities and (ii) an $11.0 million increase in distributions from equity investments in excess of cumulative earnings.

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

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Reconciliation of non-GAAP financial measures. 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				Nine Months Ended

thousands	September 30, 2022		June 30, 2022		September 30, 2022		September 30, 2021
Reconciliation of Gross margin to Adjusted gross margin
Total revenues and other	$	837,568	$	876,419	$	2,472,284	$	2,157,945
Less:
Cost of product	106,833		148,556		328,237		250,245
Depreciation and amortization	156,837		139,036		430,455		407,404
Gross margin	573,898		588,827		1,713,592		1,500,296
Add:
Distributions from equity investments	58,957		66,016		180,768		194,847
Depreciation and amortization	156,837		139,036		430,455		407,404
Less:
Reimbursed electricity-related charges recorded as revenues	20,741		19,042		58,187		54,622
Adjusted gross margin attributable to noncontrolling interests (1)	18,886		19,166		56,142		50,658
Adjusted gross margin	$	750,065	$	755,671	$	2,210,486	$	1,997,267
Adjusted gross margin for natural-gas assets	$	521,117	$	528,983	$	1,539,009	$	1,394,506
Adjusted gross margin for crude-oil and NGLs assets	153,225		155,686		457,158		432,401
Adjusted gross margin for produced-water assets	75,723		71,002		214,319		170,360

_________________________________________________________________________________________

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

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	Three Months Ended				Nine Months Ended

thousands	September 30, 2022		June 30, 2022		September 30, 2022		September 30, 2021
Reconciliation of Net income (loss) to Adjusted EBITDA
Net income (loss)	$	273,581	$	315,171	$	906,422	$	693,150
Add:
Distributions from equity investments	58,957		66,016		180,768		194,847
Non-cash equity-based compensation expense	6,464		7,038		21,245		20,834
Interest expense	83,106		80,772		249,333		287,040
Income tax expense	387		1,491		3,683		4,403
Depreciation and amortization	156,837		139,036		430,455		407,404
Impairments	4		90		94		29,198
Other expense	165		181		346		1,252
Less:
Gain (loss) on divestiture and other, net	(104)		(1,150)		(884)		278
Gain (loss) on early extinguishment of debt	—		91		91		(24,944)
Equity income, net – related parties	41,317		48,464		139,388		159,337

Other income	58		—		164		193

Adjusted EBITDA attributable to noncontrolling interests (1)	13,406		14,072		41,395		37,448
Adjusted EBITDA	$	524,824	$	548,318	$	1,612,192	$	1,465,816
Reconciliation of Net cash provided by operating activities to Adjusted EBITDA
Net cash provided by operating activities	$	468,768	$	466,981	$	1,212,207	$	1,104,994
Interest (income) expense, net	83,106		80,772		249,333		287,040
Accretion and amortization of long-term obligations, net	(1,773)		(1,804)		(5,359)		(5,873)
Current income tax expense (benefit)	550		703		1,926		2,128
Other (income) expense, net	(56)		45		(117)		1,013

Distributions from equity investments in excess of cumulative earnings – related parties	15,651		15,482		41,058		30,075
Changes in assets and liabilities:
Accounts receivable, net	(66,875)		114,696		212,955		130,773
Accounts and imbalance payables and accrued liabilities, net	17,840		(97,201)		(65,069)		(56,495)
Other items, net	21,019		(17,284)		6,653		9,609
Adjusted EBITDA attributable to noncontrolling interests (1)	(13,406)		(14,072)		(41,395)		(37,448)
Adjusted EBITDA	$	524,824	$	548,318	$	1,612,192	$	1,465,816
Cash flow information
Net cash provided by operating activities	$	468,768	$	466,981	$	1,212,207	$	1,104,994
Net cash used in investing activities	(185,305)		(99,330)		(356,252)		(187,287)
Net cash provided by (used in) financing activities	(221,804)		(518,466)		(898,861)		(1,262,767)

_________________________________________________________________________________________

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	Three Months Ended				Nine Months Ended

thousands	September 30, 2022		June 30, 2022		September 30, 2022		September 30, 2021
Reconciliation of Net cash provided by operating activities to Free cash flow
Net cash provided by operating activities	$	468,768	$	466,981	$	1,212,207	$	1,104,994
Less:
Capital expenditures	150,148		107,386		341,505		219,757
Contributions to equity investments – related parties	3,859		2,970		8,899		3,683
Add:
Distributions from equity investments in excess of cumulative earnings – related parties	15,651		15,482		41,058		30,075
Free cash flow	$	330,412	$	372,107	$	902,861	$	911,629
Cash flow information
Net cash provided by operating activities	$	468,768	$	466,981	$	1,212,207	$	1,104,994
Net cash used in investing activities	(185,305)		(99,330)		(356,252)		(187,287)
Net cash provided by (used in) financing activities	(221,804)		(518,466)		(898,861)		(1,262,767)

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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 September 30, 2022, included cash and cash equivalents, cash flows generated from operations, available borrowing capacity under the RCF, and potential issuances of additional equity or debt securities. We believe that cash flows generated from these sources will be sufficient to satisfy our short-term working capital requirements and long-term capital-expenditure and debt-service requirements. The amount of future distributions to unitholders will depend on our results of operations, financial condition, capital requirements, and other factors, and will be determined by the Board on a quarterly basis. We may rely on external financing sources, including equity and debt issuances, to fund capital expenditures and future acquisitions. However, we also may use operating cash flows to fund capital expenditures or acquisitions, which could result in borrowings under the RCF to fund equity or other short-term working capital requirements.

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. We have made cash distributions to our unitholders each quarter since our initial public offering in 2012. The Board declared a cash distribution to unitholders for the third quarter of 2022 of $0.50000 per unit, or $197.1 million in the aggregate. The cash distribution is payable on November 14, 2022, to our unitholders of record at the close of business on October 31, 2022.

In February 2022, we announced a buyback program of up to $1.0 billion of our common units through December 31, 2024. In November 2022, the Board authorized an increase in the $1.0 billion Purchase Price Program to $1.25 billion. The common units may be purchased from time to time in the open market at prevailing market prices or in privately negotiated transactions. The timing and amount of purchases under the 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 nine months ended September 30, 2022, we repurchased 17,982,357 common units, which includes 10,000,000 common units repurchased from Occidental, for an aggregate purchase price of $447.1 million. The units were canceled immediately upon receipt. As of September 30, 2022, we had an authorized amount of $552.9 million remaining under the program.

Management continuously monitors our leverage position and coordinates our capital expenditures and equity requirements with expected cash inflows and projected debt-service requirements. We will continue to evaluate funding alternatives, including additional borrowings and the issuance of debt or equity securities, to secure funds as needed or to refinance maturing debt balances with longer-term debt issuances. Our ability to generate cash flows is subject to a number of factors, some of which are beyond our control. Read Risk Factors under Part II, Item 1A of this Form 10-Q.

Working capital. Working capital is an indication of liquidity and potential needs for short-term funding. Working capital requirements are driven by changes in accounts receivable and accounts payable and other factors such as credit extended to, and the timing of collections from, our customers, and the level and timing of our spending for acquisitions, maintenance, and other capital activities. As of September 30, 2022, we had a $150.4 million working capital surplus, which we define as the amount by which current assets exceed current liabilities. As of September 30, 2022, there was $1.4 billion available for borrowing under the RCF. 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.

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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:


	Nine Months Ended September 30,

thousands	2022		2021
Acquisitions	$	41,018	$	—
Capital expenditures (1)	341,505		219,757
Capital incurred (1)	377,650		224,080

_________________________________________________________________________________________

(1)For the nine months ended September 30, 2022 and 2021, included $3.5 million and $2.6 million, respectively, of capitalized interest.

Acquisitions for the nine months ended September 30, 2022, include the acquisition of the remaining 50% interest in Ranch Westex (see Acquisitions and Divestitures within this Item 2).

Capital expenditures increased by $121.7 million for the nine months ended September 30, 2022, primarily due to increases of (i) $107.7 million at the West Texas complex primarily attributable to facility expansion, including ongoing construction of Mentone Train III, and pipeline projects, and (ii) $13.1 million at the DBM oil system primarily related to an increase in pipeline, well connection, oil treating, and oil pumping projects. These increases were offset partially by a decrease of $7.3 million at the DJ Basin oil system primarily related to a decrease in pipeline projects.

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:


	Nine Months Ended September 30,

thousands	2022		2021
Net cash provided by (used in):
Operating activities	$	1,212,207	$	1,104,994
Investing activities	(356,252)		(187,287)
Financing activities	(898,861)		(1,262,767)
Net increase (decrease) in cash and cash equivalents	$	(42,906)	$	(345,060)

Operating activities. Net cash provided by operating activities increased for the nine months ended September 30, 2022, primarily due to (i) higher cash operating income and (ii) lower interest expense. These increases were partially offset by (i) the impact of changes in assets and liabilities and (ii) lower distributions from equity investments. Refer to Operating Results within this Item 2 for a discussion of our results of operations as compared to the prior periods.

Investing activities. Net cash used in investing activities for the nine months ended September 30, 2022, primarily included the following:

•$341.5 million of capital expenditures, primarily related to construction, expansion, and asset-integrity projects at the West Texas complex, DBM water systems, DJ Basin complex, and DBM oil system;

•$41.0 million of cash paid for the acquisition of the remaining 50% interest in Ranch Westex (see Acquisitions and Divestitures within this Item 2);

•$8.9 million of capital contributions primarily paid to Red Bluff Express;

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•$7.0 million of increases to materials and supplies inventory; and

•$41.1 million of distributions received from equity investments in excess of cumulative earnings.

Net cash used in investing activities for the nine months ended September 30, 2021, primarily included the following:

•$219.8 million of capital expenditures, primarily related to construction, expansion, and asset-integrity projects at the West Texas complex, DBM water systems, DJ Basin complex, and DBM oil system;

•$3.7 million of capital contributions primarily paid to Cactus II;

•$30.1 million of distributions received from equity investments in excess of cumulative earnings; and

•$8.0 million related to the sale of the Bison treating facility.

Financing activities. Net cash used in financing activities for the nine months ended September 30, 2022, primarily included the following:

•$765.0 million of repayments of outstanding borrowings under the RCF;

•$538.7 million of distributions paid to WES unitholders;

•$502.2 million to redeem the total principal amount outstanding of WES Operating’s 4.000% Senior Notes due 2022;

•$447.1 million of unit repurchases;

•$20.2 million of distributions paid to the noncontrolling interest owner of WES Operating;

•$5.0 million of distributions paid to the noncontrolling interest owner of Chipeta;

•$1,390.0 million of borrowings under the RCF, which were used for general partnership purposes and to redeem portions of certain of WES Operating’s senior notes; and

•$1.5 million of increases in outstanding checks.

Net cash used in financing activities for the nine months ended September 30, 2021, primarily included the following:

•$521.9 million to purchase and retire portions of certain of WES Operating’s senior notes via a tender offer;

•$431.1 million to redeem the total principal amount outstanding of WES Operating’s 5.375% Senior Notes due 2021;

•$398.9 million of distributions paid to WES unitholders;

•$180.0 million of repayments of outstanding borrowings under the RCF;

•$104.4 million of unit repurchases;

•$11.8 million of decreases in outstanding checks due mostly to ad valorem tax payments made at the end of 2020;

•$9.9 million of distributions paid to the noncontrolling interest owner of WES Operating;

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•$5.3 million of finance lease payments;

•$2.7 million of distributions paid to the noncontrolling interest owner of Chipeta;

•$400.0 million of borrowings under the RCF, which were used for general partnership purposes and to purchase and retire portions of certain of WES Operating’s senior notes via a tender offer; and

•$6.7 million of contributions from related parties.

Debt and credit facilities. As of September 30, 2022, the carrying value of outstanding debt was $7.0 billion. See Note 10—Debt and Interest Expense in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

WES Operating Senior Notes. In mid-January 2020, WES Operating issued the Fixed-Rate 3.100% Senior Notes due 2025, 4.050% Senior Notes due 2030, and 5.250% Senior Notes due 2050 and the Floating-Rate Senior Notes due 2023. Including the effects of the issuance prices, underwriting discounts, and interest-rate adjustments, the effective interest rates of the Senior Notes due 2025, 2030, and 2050, were 3.790%, 4.671%, and 5.869%, respectively, at September 30, 2022. The interest rate on the Floating-Rate Senior Notes was 3.56% at September 30, 2022. The effective interest rate of these notes is subject to adjustment from time to time due to a change in credit rating. In January 2022, Standard and Poor’s (“S&P”) upgraded WES Operating’s long-term debt from “BB+” to “BBB-.” As a result of this upgrade, annualized borrowing costs decreased by $7.9 million.

We may, from time to time, seek to retire, rearrange, or amend some or all of our outstanding debt or debt 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. The amounts involved may be material.

Revolving credit facility. In June 2022, WES Operating entered into an amendment to its $2.0 billion RCF, which is expandable to a maximum of $2.5 billion, to, among other things, (i) extend the maturity date applicable to the loans and commitments of certain lenders totaling $1.6 billion to February 2026, (ii) provide for the ability of WES Operating to extend the maturity date by one year on up to two additional occasions, (iii) provide that loans under the RCF with a fixed interest rate for a specified period bear interest based on SOFR instead of LIBOR, and (iv) include an additional level of pricing if WES Operating’s senior unsecured debt rating is less than or equal to BB/Ba2/BB (S&P / Moody’s Investors Service / Fitch Ratings). The non-extending lender’s commitments mature in February 2025 and represent $400.0 million out of $2.0 billion of total commitments from all lenders.

As of September 30, 2022, there were $625.0 million of outstanding borrowings and $5.1 million of outstanding letters of credit, resulting in $1.4 billion of available borrowing capacity under the RCF. As of September 30, 2022, the interest rate on any outstanding RCF borrowings was 4.65% and the facility-fee rate was 0.25%. As of September 30, 2022, WES Operating was in compliance with all covenants under the RCF.

The RCF contains certain covenants that limit, among other things, WES Operating’s ability, and that of certain of its subsidiaries, to incur additional indebtedness, grant certain liens, merge, consolidate, or allow any material change in the character of its business, enter into certain related-party transactions and use proceeds other than for partnership purposes. The RCF also contains various customary covenants, certain events of default, and a maximum consolidated leverage ratio as of the end of each fiscal quarter (which is defined as the ratio of consolidated indebtedness as of the last day of a fiscal quarter to Consolidated EBITDA for the most-recent four-consecutive fiscal quarters ending on such day) of 5.0 to 1.0, or a consolidated leverage ratio of 5.5 to 1.0 with respect to quarters ending in the 270-day period immediately following certain acquisitions. As a result of certain covenants contained in the RCF, our capacity to borrow under the RCF may be limited.

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Offload commitments. During the nine months ended September 30, 2022, we entered into offload agreements with third parties providing firm-processing capacity through 2025. As of September 30, 2022, we have future minimum payments under offload agreements totaling $4.2 million for the remainder of 2022 and a total of $27.4 million in years thereafter.

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

We expect our exposure to the concentrated risk of non-payment or non-performance to continue for as long as our commercial relationships with Occidental generate a significant portion of our revenues. While Occidental is our contracting counterparty, gathering and processing arrangements with affiliates of Occidental on most of our systems include not just Occidental-produced volumes, but also, in some instances, the volumes of other working-interest owners of Occidental who rely on our facilities and infrastructure to bring their volumes to market. See Note 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; the contribution agreements; or the Services Agreement.

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				Nine Months Ended

thousands	September 30, 2022		June 30, 2022		September 30, 2022		September 30, 2021
Net income (loss) attributable to WES	$	265,745	$	306,317	$	880,779	$	672,775
Limited partner interests in WES Operating not held by WES (1)	5,432		6,267		18,016		13,779
General and administrative expenses (2)	402		621		1,764		2,206
Other income (expense), net	(11)		(4)		(18)		(9)

Income taxes	—		—		—		3
Net income (loss) attributable to WES Operating	$	271,568	$	313,201	$	900,541	$	688,754

_________________________________________________________________________________________

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

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

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



	Nine Months Ended September 30,
thousands	2022		2021
WES net cash provided by operating activities	$	1,212,207	$	1,104,994
General and administrative expenses (1)	1,764		2,206
Non-cash equity-based compensation expense	(423)		7,040
Changes in working capital	(9,101)		(10,045)
Other income (expense), net	(18)		(9)
Income taxes	—		3

WES Operating net cash provided by operating activities	$	1,204,429	$	1,104,189

WES net cash provided by (used in) financing activities	$	(898,861)	$	(1,262,767)
Distributions to WES unitholders (2)	538,690		398,896
Distributions to WES from WES Operating (3)	(988,395)		(486,621)
Increase (decrease) in outstanding checks	103		58
Unit repurchases	447,075		104,366
Other	7,942		3,492
WES Operating net cash provided by (used in) financing activities	$	(893,446)	$	(1,242,576)

_________________________________________________________________________________________

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

(2)Represents distributions to WES common unitholders paid under WES’s partnership agreement. See Note 4—Partnership Distributions and Note 5—Equity and Partners’ Capital in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

(3)Difference attributable to elimination in consolidation of WES Operating’s distributions on partnership interests owned by WES. See Note 4—Partnership Distributions and Note 5—Equity and Partners’ Capital in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

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

WES Operating distributions. WES Operating distributes all of its available cash on a quarterly basis to WES Operating unitholders in proportion to their share of limited partner interests in WES Operating. See Note 4—Partnership Distributions in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

CRITICAL ACCOUNTING ESTIMATES

The preparation of consolidated financial statements in accordance with GAAP requires management to make informed judgments and estimates that affect the amounts of assets and liabilities as of the date of the financial statements and the amounts of revenues and expenses recognized during the periods reported. There have been no significant changes to our critical accounting estimates from those disclosed in our annual report on Form 10-K for the fiscal year ended December 31, 2021.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Commodity-price risk. Certain of our processing services are provided under percent-of-proceeds and keep-whole agreements. Under percent-of-proceeds agreements, we receive a specified percentage of the net proceeds from the sale of residue and/or NGLs. Under keep-whole agreements, we keep 100% of the NGLs produced, and the processed natural gas, or value of the natural gas, is returned to the producer, and because some of the gas is used and removed during processing, we compensate the producer for the amount of gas used and removed in processing by supplying additional gas or by paying an agreed-upon value for the gas used.

For the nine months ended September 30, 2022, 92% of our wellhead natural-gas volume (excluding equity investments) and 100% of our crude-oil and produced-water throughput (excluding equity investments) were serviced under fee-based contracts. A 10% increase or decrease in commodity prices would not have a material impact on our operating income (loss), financial condition, or cash flows for the next 12 months, excluding the effect of the below-described imbalances.

We bear a limited degree of commodity-price risk with respect to settlement of natural-gas and NGLs imbalances that arise from differences in gas volumes received into our systems and gas volumes delivered by us to customers, and for instances where actual liquids recovery or fuel usage varies from contractually stipulated amounts. Natural-gas and NGLs volumes owed to or by us that are subject to monthly cash settlement are valued according to the terms of the contract as of the balance sheet dates and generally reflect market-index prices. Other natural-gas and NGLs volumes owed to or by us are valued at our weighted-average cost as of the balance sheet dates and are settled in-kind. Our exposure to the impact of changes in commodity prices on outstanding imbalances depends on the settlement timing of the imbalances. See Outlook under Part I, Item 2 and Risk Factors under Part II, Item 1A of this Form 10-Q.

Interest-rate risk. The Federal Open Market Committee made no changes to its target range for the federal funds rate in 2021 and increased its target range five times during the nine months ended September 30, 2022. Any future increases in the federal funds rate likely will result in an increase in short-term financing costs. As of September 30, 2022, we had (i) $625.0 million of outstanding borrowings under the RCF that bear interest at a rate based on SOFR or an alternative base rate at WES Operating’s option, and (ii) the Floating-Rate Senior Notes that bear interest at a rate based on LIBOR. While a 10% change in the applicable benchmark interest rate would not materially impact interest expense on our outstanding borrowings at September 30, 2022, it would impact the fair value of the senior notes. In addition, the transition from LIBOR to SOFR as a result of reference rate reform is not expected to materially impact interest expense on our outstanding borrowings.

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

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. The Chief Executive Officer and Chief Financial Officer of WES’s general partner and WES Operating GP (for purposes of this Item 4, “Management”) performed an evaluation of WES’s and WES Operating’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. WES’s and WES Operating’s disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports that are filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and to ensure that the information required to be disclosed in the reports that are filed or submitted under the Exchange Act is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, Management concluded that WES’s and WES Operating’s disclosure controls and procedures were effective as of September 30, 2022.

Changes in Internal Control Over Financial Reporting. There were no changes in WES’s or WES Operating’s internal control over financial reporting during the quarter ended September 30, 2022, that have materially affected, or are reasonably likely to materially affect, WES’s or WES Operating’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

On July 1, 2020, the U.S. Department of Justice, on behalf of the U.S. Environmental Protection Agency (the “EPA”), and the State of Colorado commenced an enforcement action in the United States District Court for the District of Colorado against Kerr-McGee Gathering LLC (“KMG”), a wholly owned subsidiary of WES, for alleged non-compliance with the leak detection and repair requirements of the federal Clean Air Act (“LDAR requirements”) at its Fort Lupton facility in the DJ Basin complex. KMG previously had been in negotiations with the EPA and the State of Colorado to resolve the alleged non-compliance at the Fort Lupton facility. Per the complaint, plaintiffs pray for injunctive relief, remedial action, and civil penalties. We are currently exploring global resolution of the claims. While such resolution would likely include an injunctive relief component and payment of a civil penalty, which may exceed the disclosure threshold amount required by Item 103 of Regulation S-K, management believes the resolution of these claims will not have a material impact on WES’s results of operations, cash flows, or financial condition.

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

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

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Item 1A. Risk Factors

Security holders and potential investors in our securities should carefully consider the risk factor included below and those set forth under Part I, Item 1A in our Form 10-K for the year ended December 31, 2021, together with all of the other information included in this document, and in our other public filings, press releases, and public discussions with management. Additionally, for a full discussion of the risks associated with Occidental’s business, see Item 1A under Part I in Occidental’s Form 10-K for the year ended December 31, 2021, Occidental’s quarterly reports on Form 10-Q and Occidental’s other public filings, press releases, and public discussions with Occidental management. We have identified the below risk factors as important factors that could cause our actual results to differ materially from those contained in any written or oral forward-looking statements made by us or on our behalf.

Certain of our natural-gas processing agreements provide our producer customers with contractually specified NGL recoveries that, under expected operating conditions, may generate commodity price exposure and could, under certain circumstances, generate financial or physical-delivery obligations for us.

Under certain of our natural-gas processing agreements, we provide our producer customers with contractually specified NGL recoveries. To the extent actual recoveries exceed the contractually specified recoveries, we retain the excess NGL volumes and sell such volumes for our own account along with NGL and natural-gas volumes retained by us under our percent-of-proceeds and keep-whole processing agreements, bearing commodity-price risk on these volumes.

Conversely, if actual plant recoveries are below the contractually specified recoveries, we would still be obligated to deliver the contractually fixed amount of NGLs (or in some cases, the financial equivalent thereof) to such customers. For this reason, our inability to efficiently operate our natural-gas processing facilities could result in diminished NGL sale proceeds for our account, or could result in losses when we settle shortfalls between actual and contractually specified recoveries with our customers. Accordingly, the failure to achieve operational plant efficiency to support the contractually specified recoveries could negatively impact our profitability and cash flows available for distribution to unitholders.

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

The following table sets forth information with respect to repurchases made by WES of its common units in the open market under the $1.0 billion Purchase Program during the third quarter of 2022:


Period	Total number of units purchased	Average price paid per unit		Total number of units purchased as part of publicly announced plans or programs (1)	Approximate dollar value of units that may yet be purchased under the plans or programs (1)
July 1-31, 2022	13,800,805	$	25.08	13,800,805	$	574,641,000
August 1-31, 2022	195,855	26.44		195,855	569,463,000
September 1-30, 2022	671,135	24.64		671,135	552,925,000
Total	14,667,795	25.08		14,667,795

______________________________________________________________________________________

(1)In February 2022, WES announced the $1.0 billion Purchase Program, pursuant to which we may purchase up to $1.0 billion in aggregate value of our common units through December 31, 2024. In November 2022, the Board authorized an increase in the $1.0 billion Purchase Program to $1.25 billion. See Note 5—Equity and Partners’ Capital in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q for additional details.

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Item 5. Other Information

Effective on November 1, 2022, the Board adopted the amended and restated Western Midstream Partners, LP Executive Change in Control Severance Plan (the “A/R CIC Severance Plan”) and the amended and restated Western Midstream Partners, LP Executive Severance Plan (the “A/R Executive Severance Plan”). The A/R CIC Severance Plan amends and restates in its entirety the Western Midstream Partners, LP Executive Change in Control Severance Plan previously adopted on August 5, 2021 (the “Prior CIC Severance Plan”), which was filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021. As compared to the Prior CIC Severance Plan, the A/R CIC Severance Plan reflects certain updates and additions to plan definitions, including “Business Combination”, “Change in Control” (including, as updated, in connection with the aforementioned updates to the definition of “Business Combination”), “Good Reason”, and “Ultimate Parent”, as well as other administrative and clarifying changes. The foregoing description of the A/R CIC Severance Plan does not purport to be complete and is qualified in its entirety by the full text of the CIC Severance Plan, a copy of which is attached as Exhibit 10.1 hereto and incorporated by reference herein.

The A/R Executive Severance Plan amends and restates in its entirety the Western Midstream Partners, LP Executive Severance Plan previously adopted on August 5, 2021 (the “Prior Executive Severance Plan”), which was filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021. As compared to the Prior Executive Severance Plan, the A/R Executive Severance Plan reflects certain administrative and clarifying changes. The foregoing description of the Executive Severance Plan does not purport to be complete and is qualified in its entirety by the full text of the Executive Severance Plan, a copy of which is attached as Exhibit 10.2 hereto and incorporated by reference herein.

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Item 6. Exhibits

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

Exhibit Index


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

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

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Exhibit Number			Description
	4.	19	Form of Floating Rate Senior Notes due 2023 (incorporated by reference to Exhibit 4.2, which is included as Exhibit A-1 to Exhibit 4.1 to Western Midstream Operating, LP’s Current Report on Form 8-K filed on January 13, 2020, File No. 001-34046).
	4.	20	Form of 3.100% Senior Notes due 2025 (incorporated by reference to Exhibit 4.3, which is included as Exhibit A-2 to Exhibit 4.1 to Western Midstream Operating, LP’s Current Report on Form 8-K filed on January 13, 2020, File No. 001-34046).
	4.	21	Form of 4.050% Senior Notes due 2030 (incorporated by reference to Exhibit 4.4, which is included as Exhibit A-3 to Exhibit 4.1 to Western Midstream Operating, LP’s Current Report on Form 8-K filed on January 13, 2020, File No. 001-34046).
	4.	22	Form of 5.250% Senior Notes due 2050 (incorporated by reference to Exhibit 4.5, which is included as Exhibit A-4 to Exhibit 4.1 to Western Midstream Operating, LP’s Current Report on Form 8-K filed on January 13, 2020, File No. 001-34046).








































	10.	1	Western Midstream Partners, LP Executive Change in Control Severance Plan (Amended and Restated as of November 1, 2022).
	10.	2	Western Midstream Partners, LP Executive Severance Plan (Amended and Restated as of November 1, 2022).

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

______________________________________________________________________________________




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

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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

November 2, 2022
			/s/ Michael P. Ure
			Michael P. Ure President and Chief Executive Officer Western Midstream Holdings, LLC (as general partner of Western Midstream Partners, LP)

November 2, 2022
			/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

November 2, 2022
			/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)

November 2, 2022
			/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)

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Western Midstream Partners (WES) 10-Q2022 Q3 Quarterly report

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