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 “for the three months ended June 30, 2024” refer to the comparison of the three months ended June 30, 2024, to the three months ended March 31, 2024; and any increases or decreases “for the six months ended June 30, 2024” refer to the comparison of the six months ended June 30, 2024, to the six months ended June 30, 2023.

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 decreased by 2 MMcf/d for the three months ended June 30, 2024, primarily due to (i) lower volumes at the Marcellus Interest systems due to the sale of the asset during the second quarter of 2024 and (ii) lower volumes at the Chipeta complex. These decreases were offset partially by higher volumes at the West Texas and DJ Basin complexes due to increased production in the areas.

Total throughput attributable to WES for natural-gas assets increased by 808 MMcf/d for the six months ended June 30, 2024, 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, and (iii) higher volumes on the Red Bluff Express pipeline due to the addition of a new receipt point into the pipeline.

Crude-oil and NGLs assets

Total throughput attributable to WES for crude-oil and NGLs assets decreased by 50 MBbls/d for the three months ended June 30, 2024, primarily due to the divestiture of Whitethorn LLC and Saddlehorn in the first quarter of 2024, partially offset by higher volumes at the DBM oil system due to increased production in the area.

Total throughput attributable to WES for crude-oil and NGLs assets decreased by 79 MBbls/d for the six months ended June 30, 2024, primarily due to the divestiture of Whitethorn LLC, Mont Belvieu JV, and Saddlehorn in the first quarter of 2024. These decreases were offset partially by (i) higher volumes at the DBM and DJ Basin oil systems resulting from increased production in the areas and (ii) higher volumes on the Thunder Creek NGL pipeline, which was acquired as part of the Meritage acquisition.

Produced-water assets

Total throughput attributable to WES for produced-water assets decreased by 46 MBbls/d for the three months ended June 30, 2024, due to fluctuations in produced water used for recycling activities in the upstream operations of our producers.

Total throughput attributable to WES for produced-water assets increased by 153 MBbls/d for the six months ended June 30, 2024, due to higher production.

Service Revenues

Service revenues – fee based

Service revenues – fee based increased by $12.5 million for the three months ended June 30, 2024, primarily due to increases of (i) $11.8 million and $6.4 million at the West Texas and DJ Basin complexes, respectively, as a result of increased throughput and electricity-related rates billed to customers, partially offset by a decrease in deficiency fees, and (ii) $4.1 million at the DBM oil system primarily due to increased throughput. These increases were offset partially by a decrease of $9.0 million at the Marcellus Interest systems due to the sale of the asset during the second quarter of 2024.

Service revenues – fee based increased by $265.7 million for the six months ended June 30, 2024, primarily due to increases of (i) $95.2 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, (ii) $89.3 million at the Powder River Basin complex attributable to the acquisition of Meritage, (iii) $50.2 million and $16.3 million at the DBM water and DBM oil systems as a result of increased throughput and a higher average fee resulting from a cost-of-service rate redetermination effective January 1, 2024, and (iv) $41.9 million at the DJ Basin complex primarily due to increased throughput. These increases were offset partially by decreases of (i) $12.3 million at the Brasada complex due to a change in contract terms effective July 1, 2023, partially offset by increased throughput, (ii) $5.6 million at the Granger complex due to a contract expiration in the fourth quarter of 2023, and (iii) $4.2 million at the Marcellus Interest systems due to the sale of the asset during the second quarter of 2024.

Service revenues – product based

Service revenues – product based decreased by $5.3 million for the three months ended June 30, 2024, primarily due to a decrease of $2.6 million at the West Texas complex due to the contract mix of product-related electricity reimbursements from customers, partially offset by increased average prices.

Service revenues – product based increased by $34.4 million for the six months ended June 30, 2024, primarily due to increases of (i) $24.4 million at the West Texas complex due to increased volumes sold, (ii) $3.7 million at the DBM water systems due to increased skim-oil average prices and volumes sold, (iii) $2.6 million at the Powder River Basin complex attributable to the acquisition of Meritage, and (iv) $2.5 million at the DJ Basin complex primarily due to increased throughput.

Product Sales

Natural-gas sales

Natural-gas sales increased by $5.7 million for the three months ended June 30, 2024, primarily due to an increase of $4.5 million at the DJ Basin complex as a result of increased volumes sold.

Natural-gas sales increased by $2.1 million for the six months ended June 30, 2024, primarily due to an increase of $3.4 million at the DJ Basin complex as a result of changes in contract mix during 2024.

NGLs sales

NGLs sales increased by $5.1 million for the three months ended June 30, 2024, primarily due to an increase of $10.9 million at the DJ Basin complex due to contract mix and increased volumes sold, partially offset by decreased average prices. This increase was offset partially by decreases of (i) $2.2 million at the DBM water systems due to decreased skim-oil volumes and (ii) $1.6 million at the Granger complex.

NGLs sales increased by $18.6 million for the six months ended June 30, 2024, primarily due to increases of (i) $14.1 million at the Powder River Basin complex attributable to the acquisition of Meritage, (ii) $3.3 million at the DBM water systems due to increased skim-oil prices, (iii) $2.6 million at the DJ Basin complex due to increased volumes sold, partially offset by decreased average prices, and (iv) $2.1 million at the Granger complex. These increases were offset partially by a decrease of $5.3 million at the West Texas complex due to decreased average prices, partially offset by increased volumes.

Equity Income, Net – Related Parties

Equity income, net – related parties decreased by $5.4 million for the three months ended June 30, 2024, primarily due to the sale of several equity investments to third parties in the first quarter of 2024, see Note 3—Acquisitions and Divestitures.

Equity income, net – related parties decreased by $21.1 million for the six months ended June 30, 2024, primarily due to decreases of (i) $19.5 million resulting from the sale of several equity investments to third parties in the first quarter of 2024 and (ii) $4.9 million at TEP. See Note 3—Acquisitions and Divestitures.

Cost of Product and Operation and Maintenance Expenses

Residue purchases

Residue purchases decreased by $9.1 million for the three months ended June 30, 2024, primarily due to the contract mix of product-related electricity purchases and lower average prices at the West Texas complex.

Residue purchases decreased by $12.4 million for the six months ended June 30, 2024, primarily due to decreases of (i) $7.5 million at the West Texas complex due to the contract mix of product-related electricity purchases and lower average prices and (ii) $4.9 million at the Granger complex due to a contract expiration in the fourth quarter of 2023.

NGLs purchases

NGLs purchases decreased by $2.9 million for the three months ended June 30, 2024, primarily due to decreases of (i) $4.5 million at the West Texas complex attributable to lower average prices and volumes purchased and changes in line-fill inventory, and (ii) $1.8 million at the DBM water systems due to decreased skim-oil volumes. These decreases were offset partially by an increase of $6.0 million at the DJ Basin complex primarily due to increased volumes purchased and changes in line-fill inventory.

NGLs purchases increased by $37.2 million for the six months ended June 30, 2024, primarily due to increases of (i) $30.3 million at the West Texas complex primarily attributable to increased volumes purchased, (ii) $3.3 million at the DBM water systems due to increased skim-oil volumes and average prices, and (iii) $2.6 million at the Powder River Basin complex attributable to the acquisition of Meritage.

Other items

Other items increased by $19.9 million for the three months ended June 30, 2024, primarily due to increases of $9.3 million at the DJ Basin complex, $6.0 million at the West Texas complex, and $3.6 million at the Powder River Basin complex, attributable to changes in imbalance positions.

Other items decreased by $21.0 million for the six months ended June 30, 2024, primarily due to a decrease of $26.3 million at the West Texas complex due to changes in imbalance positions, partially offset by an increase of $5.8 million at the Powder River Basin complex attributable to the acquisition of Meritage and changes in imbalance positions.

Operation and maintenance expense

Operation and maintenance expense increased by $28.4 million for the three months ended June 30, 2024, primarily due to increases of (i) $11.1 million in equipment, materials, maintenance, and repair costs, (ii) $7.0 million in utility expense, (iii) $3.8 million in mechanical-integrity costs, and (iv) $3.0 million in contract labor and consulting expense.

Operation and maintenance expense increased by $60.6 million for the six months ended June 30, 2024, primarily due to increases of (i) $18.3 million in salaries and wages costs, (ii) $10.7 million in equipment, materials, maintenance, and repair costs, (iii) $9.6 million in utility expense, (iv) $7.6 million in chemical and treating services, (v) $6.3 million in equipment rental costs, (vi) $5.6 million in land-related costs, and (vii) $4.2 million in water-disposal costs.

Other Operating Expenses

General and administrative expenses

General and administrative expenses decreased by $4.9 million for the three months ended June 30, 2024, primarily due to a decrease in personnel costs.

General and administrative expenses increased by $26.3 million for the six months ended June 30, 2024, primarily due to increases of (i) $14.0 million in personnel costs and (ii) $8.2 million in information technology costs.

Property and other taxes

Property and other taxes increased by $3.5 million for the three months ended June 30, 2024, primarily due to a lower ad valorem property tax accrual recorded during the first quarter of 2024 related to the finalization of 2023 assessments at the DJ Basin complex.

Property and other taxes increased by $6.0 million for the six months ended June 30, 2024, 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 increased by $5.4 million for the three months ended June 30, 2024, primarily due to capital projects being placed into service at the West Texas complex.

Depreciation and amortization expense increased by $33.3 million for the six months ended June 30, 2024, primarily due to increases of (i) $31.1 million at the Powder River Basin complex attributable to the acquisition of Meritage and (ii) $10.8 million and $5.0 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 $10.1 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 six months ended June 30, 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 $4.0 million for the three months ended June 30, 2024, primarily due to decreases of (i) $5.7 million resulting from lower outstanding borrowings under the commercial paper program during the second quarter of 2024 and (ii) $1.4 million due to credit-rating related interest-rate changes and lower outstanding balances on certain senior notes due to debt repurchases. These decreases were offset partially by $2.9 million due to lower capitalized interest.

Interest expense increased by $17.2 million for the six months ended June 30, 2024, primarily due to increases of (i) $19.6 million of interest incurred on the 6.350% Senior Notes due 2029 that were issued during the third quarter of 2023, (ii) $12.1 million of interest incurred on the 6.150% Senior Notes due 2033 that were issued during the second 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) $10.5 million due to credit-rating related interest-rate changes and lower outstanding balances on certain senior notes due to debt repurchases, (ii) $7.5 million due to no outstanding borrowings under the RCF during 2024, and (iii) $2.7 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.