Business Context and Reporting Period
Company: Western Gas Equity Partners, LP (WES)
Filing Type: Form 8-K (Current Report)
Date of Report: October 8, 2018
Event: Entry into a Material Definitive Agreement (Item 1.01)
Key Financial Metrics
This filing reports a contractual agreement and does not contain specific financial statements, revenue figures, profit margins, cash flow data, debt levels, or liquidity metrics for the reporting period.
Material Changes and Agreement Details
On October 8, 2018, Delaware Basin Midstream, LLC (DBM), a wholly owned subsidiary of WES, entered into a Gas Gathering Agreement (GGA) with Anadarko E&P Onshore LLC (AEP), a subsidiary of Anadarko Petroleum Corporation.
- Scope: Provision of gas gathering services to AEP in the Delaware Basin, West Texas.
- Structure: The GGA consolidates and replaces three separate prior agreements between WES subsidiaries and AEP.
- Term: Runs through December 31, 2032, with automatic year-to-year renewal unless terminated.
- Dedication: Includes an acreage dedication from AEP for the life of the contract.
- Fee Structure:
- Through December 31, 2027: Calculated using a cost of service methodology.
- After December 31, 2027: Fixed fee with annual escalations.
Guidance, Outlook, and Risks
Confidential Treatment: WES intends to submit a request to the SEC for confidential treatment to redact certain portions of the GGA. The full agreement will be attached as an exhibit to a future periodic report.
Outlook: The agreement secures long-term gathering services and acreage dedication, providing revenue visibility through 2032 and beyond.
Risks: The filing notes that the summary is qualified in its entirety by reference to the full GGA.
Investor Verification Checklist
- Verify the specific acreage dedication terms once the redacted GGA is filed in the next periodic report.
- Confirm the exact cost of service methodology parameters applicable through 2027.
- Review the annual escalation rates applicable to the fixed fee period starting in 2028.
- Assess the impact of consolidating three prior agreements on current revenue recognition.