- Transforms and significantly expands WES’s existing Powder
River Basin asset base with the addition of natural gas gathering
and processing facilities, increasing total natural gas processing
capacity to 440 MMcf/d.
- Diversifies customer base through long-term contracts, acreage
dedications, and minimum-volume commitments with investment grade
counterparties.
- Purchase price represents 5.0x - 6.0x 2024E pre-synergy
Adjusted EBITDA(1); incremental synergy opportunities identified in
2024 and beyond would further reduce forward-acquisition
multiple.
- Based on the expected Free cash flow(1) benefits of the
acquisition, management expects to recommend a Base Distribution
increase of $0.0125 per unit, or $0.05 per unit annualized,
following the closing of the transaction.
Western Midstream Partners, LP (“WES” or the “Partnership”)
(NYSE: WES) today announced that one of its operating subsidiaries
has signed an agreement to acquire Meritage Midstream Services II,
LLC (“Meritage”) in an all-cash transaction for a purchase price of
$885 million, subject to customary adjustments. Meritage, a
privately held midstream company headquartered in Denver, Colorado,
owns and operates a large-scale natural gas gathering and
processing business in the Powder River Basin of Wyoming.
Completion of the transaction is expected in the fourth quarter of
2023, subject to customary closing conditions and regulatory
approvals.
Meritage’s assets, located in Converse, Campbell, and Johnson
counties, Wyoming, include approximately 1,500 miles of high- and
low-pressure natural gas gathering pipelines, approximately 380
MMcf/d natural gas processing capacity, and the Thunder Creek NGL
pipeline; a 120 mile, 38 MBbl/d FERC-regulated NGL pipeline that
connects to Meritage’s processing facilities. The Meritage assets
are supported by more than 1.4 million dedicated acres from a
diverse set of majority investment grade counterparties, with an
average remaining contract life of approximately eight years.
Following the integration of the Meritage assets, WES will be well
positioned to compete for additional acreage dedications and
business development opportunities from offset producers in the
basin. WES expects the transaction to close during the fourth
quarter of 2023. Given the uncertain timing of closing within the
fourth quarter, WES is not updating its 2023 Adjusted EBITDA
guidance range at this time.
“We are excited to announce the transformation of our Powder
River Basin footprint with the acquisition of Meritage,” commented
Michael Ure, President and Chief Executive Officer of WES.
“The addition of the Meritage assets meaningfully expands the
financial and operational scale of our existing Powder River Basin
footprint by adding significant producer inventory and further
diversifying our growing G&P customer portfolio. The Powder
River Basin has attracted investment from some of the largest
E&P companies due to the basin’s multi-stacked pay horizon
potential. Throughout 2023, a combination of large, independent
E&Ps and well-capitalized, private companies have operated
thirteen to fourteen rigs, on average, throughout the basin.”
“The Meritage transaction provides another source of steady,
profitable growth for WES due to its long-term contracts with
expansive acreage dedications and minimum-volume commitments. Based
on the expected Free cash flow benefits of the acquisition,
management expects to recommend a Base Distribution increase of
$0.0125 per unit, or $0.05 per unit on an annualized basis,
following the closing of the transaction,” Mr. Ure concluded.
Nick Thomas, CEO of Meritage commented, “Since 2013, Meritage
has been hard at work building upon its brand as a leading
midstream operator in the Powder River Basin, expanding its
services into rich gas gathering, processing, and NGL transport.
Through the unwavering dedication of our team, we have developed a
best-in-class infrastructure platform driven by safe and
intelligent operations and founded on strong relationships with our
customers and stakeholders. Today’s announcement is a testament to
the many years of focused efforts, and I am extremely proud of our
team’s many accomplishments. We look forward to watching the
combined WES/Meritage team continue to advance this generational
asset.”
For additional details on WES’s acquisition of Meritage, please
refer to the slide presentation available under the “Events and
Presentations” tab at www.westernmidstream.com.
ADVISORS
Citi served as financial advisor and Gibson, Dunn & Crutcher
LLP served as legal advisor to WES. Jefferies LLC served as
financial advisor and Vinson & Elkins LLP served as legal
advisor to Meritage.
ABOUT MERITAGE MIDSTREAM SERVICES II, LLC
Based in Denver, Colorado, Meritage Midstream provides oil and
gas producers with a full complement of midstream services through
affiliated companies that operate in the U.S. Meritage is currently
focused on Wyoming’s Powder River Basin. Capabilities include
natural gas gathering, compression, treating and processing; and
NGL transportation, fractionation and condensate handling. The
company’s senior management team has more than 250 years of
collective experience in the midstream business. Visit
www.meritagemidstream.com for more information.
ABOUT WESTERN MIDSTREAM
Western Midstream Partners, LP (“WES”) is a Delaware master
limited partnership formed to acquire, own, develop, and operate
midstream assets. With midstream assets located in the Rocky
Mountains, North-central Pennsylvania, Texas, and New Mexico, WES
is engaged in the business of gathering, compressing, treating,
processing, and transporting natural gas; gathering, stabilizing,
and transporting condensate, NGLs, and crude oil; and gathering and
disposing of produced water for its customers. In addition, in its
capacity as a processor of natural gas, WES also buys and sells
natural gas, NGLs, and condensate on behalf of itself and as an
agent for its customers under certain of its contracts.
For more information about Western Midstream Partners, LP and
Western Midstream Flash Feed updates, please visit
www.westernmidstream.com.
FORWARD LOOKING STATEMENTS
This news release contains forward-looking statements. WES’s
management believes that its expectations are based on reasonable
assumptions. No assurance, however, can be given that such
expectations will prove correct. A number of factors could cause
actual results to differ materially from the projections,
anticipated results, or other expectations expressed in this news
release. These factors include our ability to close and realize the
expected benefits from the Meritage acquisition; meet financial
guidance or distribution expectations; our ability to safely and
efficiently operate WES’s assets and integrate the Meritage assets
into our portfolio; the supply of, demand for, and price of oil,
natural gas, NGLs, and related products or services; our ability to
meet projected in-service dates for capital-growth projects;
construction costs or capital expenditures exceeding estimated or
budgeted costs or expenditures; and the other factors described in
the “Risk Factors” section of WES’s most-recent Form 10-K filed
with the Securities and Exchange Commission and other public
filings and press releases. WES undertakes no obligation to
publicly update or revise any forward-looking statements.
___________________________ (1)
WES defines Adjusted EBITDA as net income
(loss), plus (i) distributions from equity investments, (ii)
non-cash equity-based compensation expense, (iii) interest expense,
(iv)income tax expense, (v) depreciation and amortization, (vi)
impairments, and (vii) other expense (including lower of cost or
market inventory adjustments recorded in cost of product), less (i)
gain (loss) on divestiture and other, net, (ii) gain (loss) on
early extinguishment of debt, (iii) income from equity investments,
(iv) interest income, (v) income tax benefit, (vi) other income,
and (vii) the noncontrolling interest owners’ proportionate share
of revenues and expenses. WES defines Free cash flow as net cash
provided by operating activities less total capital expenditures
and contributions to equity investments, plus distributions from
equity investments in excess of cumulative earnings.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230903509454/en/
WESTERN MIDSTREAM CONTACTS
Daniel Jenkins Director, Investor Relations
Investors@westernmidstream.com 866-512-3523
Rhianna Disch Manager, Investor Relations
Investors@westernmidstream.com 866-512-3523
Western Midstream Partners (NYSE:WES)
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