Western Midstream Partners, LP - Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K covers events occurring on December 31, 2019 (the "Effective Date"). Western Midstream Partners, LP ("WES") entered into a series of material definitive agreements with Occidental Petroleum Corporation ("Occidental"), Anadarko Petroleum Corporation ("Anadarko"), and its General Partner, Western Midstream Holdings, LLC. These transactions restructure the partnership's governance, economic interests, and operational service arrangements.
Key Financial Metrics and Debt Obligations
The filing does not provide specific revenue, profit, cash flow, or margin figures for the period. However, it details significant modifications to the company's debt structure:
- Revolving Credit Facility (RCF): WES exercised a one-year extension option, extending the maturity date of its senior unsecured revolving credit agreement to February 14, 2025.
- Term Loan: WES holds a $3.0 billion senior unsecured term loan credit agreement.
- Liquidity and Change of Control: Amendments to both the RCF and Term Loan modify change of control provisions. Specifically, the removal of the General Partner by limited partners will not constitute a change of control under these agreements, subject to certain conditions.
Material Changes Versus Prior Period
The filing outlines several material structural changes effective December 31, 2019:
- General Partner Interest Restructuring: WES canceled the non-economic general partner interest held by the General Partner and issued a new 2.0% economic general partner interest. In exchange, the General Partner transferred 2.0% of all issued and outstanding WES Common Units to WES, which were immediately canceled.
- Services Agreement: An amended and restated Services, Secondment, and Employee Transfer Agreement was executed. Occidental and Anadarko will continue providing administrative and operational services and seconding personnel to WES in exchange for monthly fees.
- Termination of Agreements: WES terminated various indemnification agreements with affiliates (WGR, WGRAH, KMWC, APMCH) and terminated omnibus agreements dated 2012 and 2008 with Anadarko.
- Governance Amendment: The Second Amended and Restated Agreement of Limited Partnership was executed, allowing a majority of unaffiliated limited partners to remove the General Partner with or without cause.
Guidance, Outlook, and Management Commentary
The filing does not contain forward-looking financial guidance, revenue outlook, or specific management commentary regarding future performance. The document focuses on the legal and structural execution of the agreements. The Special Committee of the Board of Directors, comprised solely of independent members, unanimously determined that the related-party agreements are in the best interests of WES and its limited partners.
Important Facts for Investor Verification
- Verify the impact of the 2.0% unit cancellation on the total outstanding unit count and per-unit economics.
- Confirm the specific terms of the monthly secondment and shared services fees payable to Anadarko under the new Services Agreement.
- Review the full text of the amended credit agreements (Exhibits 10.3 and 10.4) to understand the specific conditions under which the removal of the General Partner does not trigger a change of control.
- Assess the implications of the terminated indemnification agreements on WES's exposure to liabilities related to prior indebtedness.
- Monitor the execution of the Second Amended and Restated Partnership Agreement to ensure the new removal provisions for the General Partner are operational.