Western Midstream Partners LP

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

(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 refer to the comparison of the three months ended March 31, 2024, to the three months ended December 31, 2023, or to the three months ended March 31, 2023, as applicable.

Throughput

(1)Represents our share of average throughput for investments accounted for under the equity method of accounting.

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

Natural-gas assets

Total throughput attributable to WES for natural-gas assets increased by 114 MMcf/d compared to the three months ended December 31, 2023, primarily due to (i) higher volumes at the West Texas and DJ Basin complexes due to increased production in the areas, (ii) higher volumes at the Powder River Basin complex due to the Meritage acquisition, and (iii) higher volumes on the Red Bluff Express pipeline due to the addition of a new receipt point into the pipeline. These increases were offset partially by lower volumes at the Granger complex due to a contract expiration in the fourth quarter of 2023.

Total throughput attributable to WES for natural-gas assets increased by 883 MMcf/d compared to the three months ended March 31, 2023, primarily due to (i) higher volumes at the Powder River Basin complex due to the Meritage acquisition, (ii) higher volumes at the West Texas and DJ Basin complexes due to increased production in the areas, (iii) higher volumes at the MIGC and Marcellus Interest systems and the Chipeta and Brasada complexes, (iv) higher volumes on the Red Bluff Express pipeline due to the addition of a new receipt point into the pipeline, and (v) higher volumes at the Springfield gas-gathering system due to new third-party production. These increases were offset partially by lower volumes at the Granger complex due to a contract expiration in the fourth quarter of 2023.

Crude-oil and NGLs assets

Total throughput attributable to WES for crude-oil and NGLs assets decreased by 137 MBbls/d compared to the three months ended December 31, 2023, primarily due to the divestiture of Whitethorn LLC, Mont Belvieu JV, Saddlehorn, and Panola in the first quarter of 2024.

Total throughput attributable to WES for crude-oil and NGLs assets decreased by 46 MBbls/d compared to the three months ended March 31, 2023, primarily due to the divestiture of Whitethorn LLC, Mont Belvieu JV, Saddlehorn, and Panola in the first quarter of 2024. These decreases were offset partially by (i) higher volumes on the Thunder Creek NGL pipeline which was acquired as part of the Meritage acquisition and (ii) higher volumes at the DBM and DJ Basin oil systems resulting from increased production in the areas.

Produced-water assets

Total throughput attributable to WES for produced-water assets increased by 72 MBbls/d and 169 MBbls/d compared to the three months ended December 31, 2023, and March 31, 2023, respectively, due to higher production.

Service Revenues

Service revenues – fee based

Service revenues – fee based increased by $17.4 million compared to the three months ended December 31, 2023, primarily due to increases of (i) $16.5 million at the West Texas complex as a result of a higher average fee resulting from a cost-of-service rate redetermination effective January 1, 2024, increased throughput, and increased deficiency fees on certain contracts with increasing throughput minimums, (ii) $13.4 million at the DBM water systems due to a higher average fee resulting from a cost-of-service rate redetermination effective January 1, 2024, and increased throughput, (iii) $6.3 million at the Powder River Basin complex as a result of increased throughput attributable to the acquisition of Meritage, and (iv) $5.9 million at the DJ Basin complex due to increased throughput. These increases were offset partially by decreases of (i) $12.6 million at the Springfield system primarily due to an annual cost-of-service rate adjustment that increased revenue during the fourth quarter of 2023, (ii) $7.4 million at the DJ Basin oil system primarily due to an annual cost-of-service rate adjustment that increased revenue during the fourth quarter of 2023, partially offset by increased throughput, and (iii) $2.3 million at the Granger complex primarily due to a contract expiration in the fourth quarter of 2023.

Service revenues – fee based increased by $133.4 million compared to the three months ended March 31, 2023, primarily due to increases of (i) $48.9 million at the Powder River Basin complex attributable to the acquisition of Meritage, (ii) $45.8 million at the West Texas complex as a result of increased throughput, a higher average fee resulting from a cost-of-service rate redetermination effective January 1, 2024, and increased deficiency fees on certain contracts with increasing throughput minimums, (iii) $26.0 million at the DBM water systems as a result of increased throughput and a higher average fee resulting from a cost-of-service rate redetermination effective January 1, 2024, (iv) $20.4 million at the DJ Basin complex due to increased throughput, and (v) $6.7 million at the DBM oil system as a result of increased throughput and a higher average fee resulting from a cost-of-service rate redetermination effective January 1, 2024. These increases were offset partially by decreases of (i) $6.6 million at the Brasada complex due to a change in contract terms effective July 1, 2023, (ii) $2.8 million at the DJ Basin oil system primarily due to decreased deficiency fees on demand volumes, partially offset by increased throughput, and (iii) $2.3 million at the Granger complex primarily due to a contract expiration in the fourth quarter of 2023.

Service revenues – product based

Service revenues – product based increased by $17.2 million compared to the three months ended December 31, 2023, primarily due to increases of $12.4 million at the West Texas complex as a result of increased volumes sold and $2.4 million at the DJ Basin complex due to increased average prices.

Service revenues – product based increased by $19.9 million compared to the three months ended March 31, 2023, primarily due to increases of $14.8 million at the West Texas complex primarily due to increased volumes sold and $2.4 million at the DBM water systems due to increased volumes sold and average prices.

Product Sales

Natural-gas sales

Natural-gas sales decreased by $11.0 million compared to the three months ended December 31, 2023, primarily due to decreases of (i) $8.3 million at the West Texas complex as a result of decreased volumes sold and average prices and (ii) $2.8 million at the DJ Basin complex as a result of decreased volumes sold.

Natural-gas sales increased by $0.4 million compared to the three months ended March 31, 2023, primarily due to an increase of $2.7 million at the DJ Basin complex as a result of increased average prices, partially offset by decreased volumes sold. This increase was offset partially by a decrease of $2.2 million at the West Texas complex due to decreased average prices, partially offset by increased volumes sold.

NGLs sales

NGLs sales increased by $5.6 million compared to the three months ended December 31, 2023, primarily due to increases of (i) $3.7 million and $1.6 million at the DJ Basin and Chipeta complexes, respectively, due to increased average prices and (ii) $2.4 million at the Powder River Basin complex as a result of increased volumes sold attributable to the acquisition of Meritage. These increases were offset partially by a decrease of $8.2 million at the West Texas complex due to a mix in contract structures, partially offset by increased average prices.

NGLs sales decreased by $0.2 million compared to the three months ended March 31, 2023, primarily due to decreases of $7.7 million and $5.8 million at the DJ Basin and West Texas complexes, respectively, due to decreased average prices, partially offset by increased volumes sold. These decreases were offset partially by increases of (i) $6.4 million at the Powder River Basin complex attributable to the acquisition of Meritage, (ii) $2.5 million at the DBM water systems due to increased skim-oil volumes sold and average prices, and (iii) $2.4 million at the Chipeta complex due to increased volumes sold.

Equity Income, Net – Related Parties

Equity income, net – related parties decreased by $3.3 million compared to the three months ended December 31, 2023, primarily due to decreases of $6.9 million at Mont Belvieu JV and $2.2 million at Saddlehorn due to the divestment of our interests in the first quarter of 2024. These decreases were partially offset by an increase of $4.8 million at Whitethorn LLC due to commercial activities prior to the divestment of our interest in the first quarter of 2024.

Equity income, net – related parties decreased by $6.2 million compared to the three months ended March 31, 2023, primarily due to decreases of $6.8 million at Mont Belvieu JV due to the divestment of our interest in the first quarter of 2024 and $2.9 million at TEP. These decreases were partially offset by increases of $1.9 million and $1.8 million at Red Bluff Express and FRP, respectively.

Cost of Product and Operation and Maintenance Expenses

Residue purchases

Residue purchases decreased by $6.4 million compared to the three months ended March 31, 2023, primarily due to decreases of (i) $5.1 million at the Granger complex due to a contract expiration in the fourth quarter of 2023 and (ii) $1.9 million at the West Texas complex due to lower average prices.

NGLs purchases

NGLs purchases increased by $10.1 million compared to the three months ended December 31, 2023, primarily due to increased volumes purchased at the West Texas complex.

NGLs purchases increased by $18.6 million compared to the three months ended March 31, 2023, primarily due to increases of (i) $16.7 million at the West Texas complex attributable to increased volumes purchased, (ii) $2.4 million at the Powder River Basin complex attributable to the acquisition of Meritage, and (iii) $2.3 million at the DBM water systems due to increased skim-oil volumes and average prices. These increases were offset partially by a decrease of $5.2 million at the DJ Basin complex primarily due to a change in contract mix during the first quarter of 2024.

Other items

Other items decreased by $6.1 million compared to the three months ended December 31, 2023, primarily due to a decrease of $10.3 million at the West Texas complex due to changes in imbalance positions, partially offset by an increase of $4.2 million at the Powder River Basin complex due to changes in imbalance positions.

Other items decreased by $17.6 million compared to the three months ended March 31, 2023, primarily due to decreases of (i) $13.7 million at the West Texas complex due to changes in imbalance positions, partially offset by higher offload costs, and (ii) $2.7 million and $2.6 million at the Chipeta and DJ Basin complexes, respectively, attributable to changes in imbalance positions.

Operation and maintenance expense

Operation and maintenance expense decreased by $5.5 million compared to the three months ended December 31, 2023, primarily due to decreases of (i) $2.4 million in equipment rental costs, (ii) $2.0 million in each of utility expense and equipment maintenance and repair expense, (iii) $1.8 million in mechanical-integrity costs, and (iv) $1.7 million in land-related costs. These decreases were offset partially by an increase of $5.9 million in salaries and wages costs.

Operation and maintenance expense increased by $20.7 million compared to the three months ended March 31, 2023, primarily due to increases of (i) $11.4 million in salaries and wages costs, (ii) $4.6 million in utility expense, (iii) $2.9 million in chemical and treating services, and (iv) $2.9 million in land-related costs.

Other Operating Expenses

General and administrative expenses

General and administrative expenses decreased by $5.2 million compared to the three months ended December 31, 2023, primarily due to a decrease of $6.2 million in contract labor and consulting costs, partially offset by an increase of $1.1 million in personnel costs.

General and administrative expenses increased by $16.7 million compared to the three months ended March 31, 2023, primarily due to increases of (i) $7.1 million in personnel costs, (ii) $5.5 million in information technology costs, and (iii) $1.6 million in contract labor and consulting expense.

Property and other taxes

Property and other taxes decreased by $2.6 million compared to the three months ended December 31, 2023, primarily due to a decrease in the ad valorem property tax accrual related to the finalization of 2023 assessments at the DJ Basin complex.

Property and other taxes increased by $7.1 million compared to the three months ended March 31, 2023, primarily due to a lower ad valorem property tax accrual recorded during the first quarter of 2023 related to the finalization of 2022 assessments at the DJ Basin complex.

Depreciation and amortization expense

Depreciation and amortization expense decreased by $7.2 million compared to the three months ended December 31, 2023, primarily due to decreases of (i) $2.9 million at the DJ Basin complex due to updated salvage values and (ii) $1.7 million and $1.2 million at the Red Desert and Powder River Basin complexes, respectively, due to asset retirement obligation revisions.

Depreciation and amortization expense increased by $13.4 million compared to the three months ended March 31, 2023, primarily due to increases of (i) $15.1 million at the Powder River Basin complex attributable to the acquisition of Meritage and (ii) $4.8 million and $3.1 million at the West Texas complex and DBM water systems, respectively, primarily related to capital projects being placed into service. These increases were offset partially by a decrease of $7.9 million at the DJ Basin complex primarily due to acceleration of depreciation expense during 2023 and updated salvage values.

Long-lived asset and other impairment expense

Long-lived asset and other impairment expense for the three months ended March 31, 2023, was primarily due to a $52.1 million impairment for assets located in the Rockies.

For further information on Long-lived asset and other impairment expense, see Note 8—Property, Plant, and Equipmentin the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

Interest Expense

Interest expense decreased by $3.1 million compared to the three months ended December 31, 2023, primarily due to a decrease of $5.7 million resulting from no outstanding borrowings under the RCF during the first quarter of 2024, partially offset by an increase of $2.7 million due to borrowings on the commercial paper program that was established during the fourth quarter of 2023.

Interest expense increased by $12.8 million compared to the three months ended March 31, 2023, primarily due to increases of (i) $11.7 million of interest incurred on the 6.150% Senior Notes due 2033 that were issued during the second quarter of 2023, (ii) $9.8 million of interest incurred on the 6.350% Senior Notes due 2029 that were issued during the third quarter of 2023, and (iii) $5.7 million due to borrowings on the commercial paper program that was established during the fourth quarter of 2023. These increases were offset partially by decreases of (i) $4.5 million due to credit-rating related interest rate changes and lower outstanding balances on certain senior notes, (ii) $7.0 million due to no outstanding borrowings under the RCF during the first quarter of 2024, and (iii) $2.8 million due to higher capitalized interest. See Liquidity and Capital Resources—Debt and credit facilities within this Item 2.

Income Tax Expense (Benefit)

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.