Business Context and Reporting Period
This Form 8-K, dated February 27, 2019, reports the completion of a merger and related transactions by Western Midstream Partners, LP (formerly Western Gas Equity Partners, LP) effective February 28, 2019. The filing details the consolidation of Western Gas Partners, LP (the Operating Partnership) into the Partnership, the conversion of equity interests, and the acquisition of additional midstream assets from Anadarko Petroleum Corporation (APC) and its subsidiaries.
Key Financial Metrics and Transaction Details
- Transaction Consideration: The Partnership paid approximately $1.814 billion in cash (net of an assumed intercompany note) and issued 45,760,201 Operating Common Units for the contribution of assets. Additionally, $193.9 million in cash was paid for the sale of Saddlehorn and Panola Pipeline interests.
- Financing: To fund the cash consideration, the Operating Partnership borrowed $2.0 billion under a Credit Agreement dated December 19, 2018.
- Exchange Ratio: Existing Operating Common Units were converted into Partnership Common Units at a ratio of 1.525 to 1.
- Ownership Structure Post-Merger: The Partnership owns a 98% limited partner interest in the Operating Partnership. APC, through WGR Asset Holding Company LLC, owns a 2% limited partner interest.
- Trading Symbol: Operating Common Units (WES) were delisted, and Partnership Common Units began trading under the symbol "WES" on the NYSE effective February 28, 2019.
Note: This filing does not provide specific revenue, profit, cash flow, or margin figures for the reporting period.
Material Changes Versus Prior Period
- Corporate Name Change: The registrant and its affiliates changed their names from "Western Gas" entities to "Western Midstream" entities (e.g., Western Gas Equity Partners, LP to Western Midstream Partners, LP).
- Asset Expansion: The Partnership acquired interests in the Anadarko Wattenberg Oil Complex, Anadarko DJ Oil Pipeline, Anadarko DJ Gas Processing, Wamsutter Pipeline, DBM Oil Services, Anadarko Pecos Midstream, Anadarko Mi Vida, APC Water Holdings 1, Saddlehorn Pipeline, and Panola Pipeline.
- Equity Restructuring: All outstanding Operating Class C Units were converted to Operating Common Units on a one-for-one basis. Incentive Distribution Rights (IDRs) and general partner units held by the Operating GP were converted into 105,624,704 Operating Common Units and a non-economic general partner interest.
- Debt Increase: The Partnership incurred $2.0 billion in new debt to finance the transaction.
Guidance, Outlook, and Risks
- Management Commentary: The filing confirms the approval of the Merger Agreement by unitholders at a special meeting on February 27, 2019, and the successful consummation of the transactions on February 28, 2019.
- Indemnification: An indemnification agreement was entered into with WGR Asset Holding Company LLC to protect the Operating GP against future claims related to the loan used to fund the transaction.
- Corporate Governance: The Board of Directors was reconstituted, with Steven D. Arnold, Milton Carroll, and James R. Crane appointed to the General Partner's board. An amended Code of Ethics was adopted for senior financial officers.
- Risks/Contingencies: The filing references the Credit Agreement and the Merger Agreement for full details on indebtedness and transaction terms. No specific forward-looking guidance or risk factors are detailed in this specific 8-K text beyond the transaction mechanics.
Investor Verification Checklist
- Verify the terms of the $2.0 billion Credit Agreement (Exhibit 10.3 referenced) to understand debt covenants and interest rates.
- Review the Merger Agreement (Exhibit 2.1) for details on the 1.525 exchange ratio and the specific assets acquired.
- Confirm the post-transaction ownership percentages (98% Partnership, 2% APC) and the elimination of IDRs.
- Check the delisting of the old "WES" ticker and the listing of the new "WES" ticker for the Partnership on the NYSE.
- Examine the Indemnification Agreement (Exhibit 10.1) regarding liabilities associated with the financing.