Business Context and Reporting Period
This Form 8-K was filed by Western Gas Equity Partners, LP (the "Partnership") on June 13, 2016. The filing reports the entry into a material definitive underwriting agreement regarding a secondary offering of common units. The Partnership is a Delaware limited partnership, and its general partner, Western Gas Equity Holdings, LLC, is an indirect, wholly owned subsidiary of Anadarko Petroleum Corporation.
Key Financial Metrics and Transaction Details
- Transaction Type: Secondary offering of common units by a selling unitholder (Western Gas Resources, Inc.).
- Units Offered: 12,500,000 firm units with an option for up to 1,875,000 additional units.
- Underwriters: Goldman, Sachs & Co. and Morgan Stanley & Co. LLC.
- Proceeds: Total net proceeds to the Selling Unitholder are approximately $476 million (before estimated offering expenses).
- Partnership Impact: The Partnership will not receive any proceeds from this offering.
- Closing Date: Expected on June 17, 2016, subject to customary conditions.
Material Changes
The filing does not report changes to the Partnership's operating revenue, profit, or cash flow. The material change is the dilution of existing unitholders' ownership percentage due to the issuance of new units by the Selling Unitholder. The Partnership's capital structure will change as a result of the increased number of outstanding common units, though the Partnership's balance sheet will not be directly impacted by the proceeds.
Outlook, Risks, and Contingencies
The offering is expected to close on June 17, 2016, subject to customary closing conditions. The Underwriting Agreement includes customary representations, warranties, and indemnification provisions where the Partnership and General Partner agree to indemnify the Underwriters against certain liabilities. The filing notes that the Selling Unitholder and General Partner are affiliates of Anadarko Petroleum Corporation, and the Underwriters have provided and may continue to provide investment banking services to the Partnership.
Investor Verification Checklist
- Verify the final closing date of the offering (expected June 17, 2016).
- Confirm the final number of units sold, including whether the 30-day option for 1,875,000 additional units was exercised.
- Review the Prospectus Supplement filed on June 15, 2016, for the specific offering price per unit.
- Assess the impact of the increased share count on the Partnership's distribution per unit.
- Note that the Partnership receives no capital from this transaction; proceeds go solely to Western Gas Resources, Inc.