HOUSTON, Jan. 6, 2020 /PRNewswire/ -- Today Western
Midstream Partners, LP (NYSE: WES) ("WES" or the "Partnership") and
Occidental Petroleum Corporation (NYSE: OXY) ("Occidental")
announced the execution of several agreements that will enable WES
to fully operate as a stand-alone business, consistent with WES's
and Occidental's joint effort to establish WES as an independent
midstream company. WES fully expects to continue its long-term and
meaningful relationship with Occidental. These new agreements
support WES's ongoing and focused pursuit of third-party growth
opportunities and underscore the importance of WES's commitment to
leverage its existing midstream infrastructure to attract
additional Occidental and third-party volumes.
"Over the last few months, WES and Occidental have worked
together to execute agreements that are supportive of both
companies' intent to operate and report as two separate and
distinct entities," said Chief Executive Officer, Michael Ure. "We are excited about the
operational changes that are enabled by these agreements and the
governance changes that will inure to the benefit of WES and its
stakeholders. Taking into account the anticipated economic impact
of these recently executed agreements, we have refined our 2020
outlook that was announced with our Q3 2019 results and currently
expect 2020 Adjusted EBITDA between $1.875
billion and $1.975 billion and
2020 total capital expenditures between $875
million and $950
million."
Key terms of the newly executed agreements
include:
- The December 2019 transfer of
employment of WES's management team from Occidental to WES, which
ensures independent managerial control of WES's strategic
initiatives and day-to-day operations.
- The December 2019 secondment of
specifically identified WES-dedicated employees of Occidental who
will be under the direct supervision of WES management prior to
their transfer from Occidental to WES, which will occur during
2020.
- The provision of limited administrative shared services by
Occidental to WES for an initial two-year period.
- The meaningful expansion of WES unitholders' rights to replace
WES's general partner under an amended limited partnership
agreement.
- A $20 million cash contribution
by Occidental to WES during the first quarter of 2020 in
recognition of WES's historical financial support of existing
administrative infrastructure, thereby significantly defraying
anticipated transition costs required to establish stand-alone
human resources and information technology functions at WES.
- New long-term oil and gas gathering acreage dedications by
Occidental, covering approximately 21,000 acres in Weld County, Colorado, supported by minimum
volume commitments and complemented by previously executed DJ Basin
gas-processing dedications will be put in place.
Ure continued, "We strongly believe that the formal
identification of a WES-dedicated workforce enhances employee
focus, which in turn empowers employees to deliver operational
efficiencies and improved customer service, establishes heightened
accountability, and positions WES, beginning in 2020, to directly
align compensation incentives for all WES-dedicated employees with
WES's internally developed midstream performance targets."
"The execution of these new agreements was the result of
diligent work between and among WES and Occidental legal, finance,
and operations groups," said Chief Financial Officer, Mike Pearl. "We firmly believe that the
resulting governance and employment changes establish an
appropriate realignment of incentives that now will be based solely
on WES's performance as an independent midstream company, which we
view as critical to sustaining long-term value creation for all of
our stakeholders."
The above-described related-party agreements with Occidental
were reviewed and approved by the Special Committee, which includes
only independent members of the board of directors of WES's general
partner. The Special Committee was advised by Bracewell LLP, as
legal counsel, and by Lazard, as financial advisor. Concurrent with
the execution of these new agreements, WES's general partner
adopted an amended and restated agreement of limited partnership
providing unaffiliated public unitholders significantly expanded
rights to remove the WES general partner.
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, natural gas
liquids, and crude oil; and gathering and disposing of produced
water for Occidental and third-party 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 agent
for its customers under certain of its contracts.
For more information about Western Midstream Partners, LP,
please visit www.westernmidstream.com.
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 to have been 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 the ability to establish
WES as an independent midstream company; realize the expected
benefits from the new and amended agreements with Occidental and
the concomitant workforce separation; meet financial guidance or
distribution growth expectations; the ability to safely and
efficiently operate WES's assets; the supply of, demand for, and
price of oil, natural gas, NGLs, and related products or services;
the 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 and Form 10-Q filed with the Securities and Exchange
Commission and in its other public filings and press releases.
Western Midstream Partners, LP undertakes no obligation to publicly
update or revise any forward-looking statements, except as required
by law.
WESTERN MIDSTREAM CONTACTS
Kristen Shults
Vice President, Investor Relations and Communications
Kristen.Shults@westernmidstream.com
832.636.6000
Jack Spinks
Manager, Investor Relations
Jack.Spinks@westernmidstream.com
832.636.6000
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SOURCE Western Midstream Partners, LP