Western Midstream Partners, LP (Form: 10-Q, Received: 08/09/2021 16:16:06)

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to


WESTERN MIDSTREAM PARTNERS, LP
WESTERN MIDSTREAM OPERATING, LP
(Exact name of registrant as specified in its charter)


	Commission file number:	State or other jurisdiction of incorporation or organization:	I.R.S. Employer Identification No.:
Western Midstream Partners, LP	001-35753	Delaware	46-0967367
Western Midstream Operating, LP	001-34046	Delaware	26-1075808

Address of principal executive offices:

Zip Code:

Registrant’s telephone number, including area code:

Western Midstream Partners, LP

9950 Woodloch Forest Drive, Suite 2800

The Woodlands,

Texas

77380

(832)

636-1009

Western Midstream Operating, LP

9950 Woodloch Forest Drive, Suite 2800

The Woodlands,

Texas

77380

(832)

636-1009

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol

Name of exchange
on which registered

Common units outstanding as of August 5, 2021:

Western Midstream Partners, LP

Common units

WES

New York Stock Exchange

413,076,510

Western Midstream Operating, LP

None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Western Midstream Partners, LP

Yes

Western Midstream Operating, LP

Yes

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Western Midstream Partners, LP

Yes

Western Midstream Operating, LP

Yes

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Western Midstream Partners, LP

Large Accelerated Filer

Accelerated Filer

Non-accelerated Filer

Smaller Reporting Company

Emerging Growth Company

☐

Western Midstream Operating, LP

Large Accelerated Filer

Accelerated Filer

Non-accelerated Filer

Smaller Reporting Company

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.


Western Midstream Partners, LP			¨
Western Midstream Operating, LP			¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Western Midstream Partners, LP

Yes

☐

Western Midstream Operating, LP

Yes

☐

FILING FORMAT

This quarterly report on Form 10-Q is a combined report being filed by two separate registrants: Western Midstream Partners, LP and Western Midstream Operating, LP. Western Midstream Operating, LP is a consolidated subsidiary of Western Midstream Partners, LP that has publicly traded debt, but does not have any publicly traded equity securities. Information contained herein related to any individual registrant is filed by such registrant solely on its own behalf. Each registrant makes no representation as to information relating exclusively to the other registrant.

Part I, Item 1 of this quarterly report includes separate financial statements (i.e., consolidated statements of operations, consolidated balance sheets, consolidated statements of equity and partners’ capital, and consolidated statements of cash flows) for Western Midstream Partners, LP and Western Midstream Operating, LP. The accompanying Notes to Consolidated Financial Statements, which are included under Part I, Item 1 of this quarterly report, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, which is included under Part I, Item 2 of this quarterly report, are presented on a combined basis for each registrant, with any material differences between the registrants disclosed separately.


TABLE OF CONTENTS
		PAGE
PART I		FINANCIAL INFORMATION (UNAUDITED)
	Item 1.	Financial Statements
		Western Midstream Partners, LP
		Consolidated Statements of Operations for the three and six months ended June 30 , 2021 and 2020	7
		Consolidated Balance Sheets as of June 30 , 2021, and December 31, 2020	8
		Consolidated Statements of Equity and Partners’ Capital for the three and six months ended June 3 0 , 2021 and 2020	9
		Consolidated Statements of Cash Flows for the six months ended June 30 , 2021 and 2020	10
		Western Midstream Operating, LP
		Consolidated Statements of Operations for the three and six months ended June 30 , 2021 and 2020	11
		Consolidated Balance Sheets as of June 30 , 2021, and December 31, 2020	12
		Consolidated Statements of Equity and Partners’ Capital for the three and six months ended June 3 0 , 2021 and 2020	13
		Consolidated Statements of Cash Flows for the six months ended June 30 , 2021 and 2020	14
		Notes to Consolidated Financial Statements	15
		Note 1. Description of Business and Basis of Presentation	15
		Note 2. Revenue from Contracts with Customers	18
		Note 3. Acquisitions and Divestitures	20
		Note 4. Partnership Distributions	21
		Note 5. Equity and Partners’ Capital	22
		Note 6. Related-Party Transactions	23
		Note 7. Equity Investments	28
		Note 8. Property, Plant, and Equipment	29
		Note 9. Goodwill	30
		Note 10. Selected Components of Working Capital	31
		Note 11. Debt and Interest Expense	32
		Note 12. Commitments and Contingencies	34

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
		Cautionary Note Regarding Forward-Looking Statements	35
		Executive Summary	37
		Outlook	40
		Acquisitions and Divestitures	40

		Results of Operations	41
		Operating Results	41
		Key Performance Metrics	50
		Liquidity and Capital Resources	56
		Items Affecting the Comparability of Financial Results with WES Operating	61
		Critical Accounting Estimates	62

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	62
	Item 4.	Controls and Procedures	63
PART II		OTHER INFORMATION
	Item 1.	Legal Proceedings	64
	Item 1A.	Risk Factors	64
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	66
	Item 5.	Other Information	66
	Item 6.	Exhibits	69

Table of Contents

COMMONLY USED TERMS AND DEFINITIONS

Unless the context otherwise requires, references to “we,” “us,” “our,” “WES,” “the Partnership,” or “Western Midstream Partners, LP” refer to Western Midstream Partners, LP (formerly Western Gas Equity Partners, LP) and its subsidiaries. As used in this Form 10-Q, the terms and definitions below have the following meanings:

AESC: Anadarko Energy Services Company, a subsidiary of Occidental.

Anadarko: Anadarko Petroleum Corporation and its subsidiaries, excluding our general partner, which became a wholly owned subsidiary of Occidental upon closing of the Occidental Merger on August 8, 2019.

Anadarko note receivable: The 30-year $260.0 million note established in May 2008 between WES Operating as the lender and Anadarko as the borrower. The note bore interest at a fixed annual rate of 6.50%, payable quarterly. Following the Occidental Merger, Occidental became the ultimate counterparty. On September 11, 2020, the Partnership and Occidental entered into a Unit Redemption Agreement, pursuant to which (i) WES Operating transferred and assigned its interest in the Anadarko note receivable to its limited partners on a pro-rata basis, transferring 98% of its interest in (and accrued interest owed under) the Anadarko note receivable to the Partnership and the remaining 2% to WGRAH, a subsidiary of Occidental, (ii) the Partnership subsequently assigned the 98% interest in (and accrued interest owed under) the Anadarko note receivable to Anadarko, which Anadarko canceled and retired immediately upon receipt, in exchange for which Occidental caused certain of its subsidiaries to transfer an aggregate of 27,855,398 common units of the Partnership to the Partnership, and (iii) the Partnership canceled such common units immediately upon receipt.

Barrel or Bbl: 42 U.S. gallons measured at 60 degrees Fahrenheit.

Bbls/d: Barrels per day.

Board of Directors: The board of directors of WES’s general partner.

Cactus II: Cactus II Pipeline LLC.

Chipeta: Chipeta Processing, LLC.

Condensate: A natural-gas liquid with a low vapor pressure compared to drip condensate, mainly composed of propane, butane, pentane, and heavier hydrocarbon fractions.

Cryogenic: The process by which liquefied gases are used to bring natural-gas volumes to very low temperatures (below approximately -238 degrees Fahrenheit) to separate natural-gas liquids from natural gas. Through cryogenic processing, more natural-gas liquids are extracted as compared to traditional refrigeration methods.

DBM: Delaware Basin Midstream, LLC.

DBM water systems: The produced-water gathering and disposal systems in West Texas.

DJ Basin complex: The Platte Valley system, Wattenberg system, Lancaster plant, Latham plant, and Wattenberg processing plant.

EBITDA: Earnings before interest, taxes, depreciation, and amortization. For a definition of “Adjusted EBITDA,” see Key Performance Metrics under Part I, Item 2 of this Form 10-Q.

Exchange Act: The Securities Exchange Act of 1934, as amended.

Fixed-Rate Senior Notes: WES Operating’s fixed-rate 3.100% Senior Notes due 2025, 4.050% Senior Notes due 2030, and 5.250% Senior Notes due 2050, issued in January 2020.

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Floating-Rate Senior Notes: WES Operating’s floating-rate Senior Notes due 2023.

Fort Union: Fort Union Gas Gathering, LLC.

Fractionation: The process of applying various levels of high pressure and low temperature to separate a stream of natural-gas liquids into ethane, propane, normal butane, isobutane, and natural gasoline for end-use sale.

FRP: Front Range Pipeline LLC.

GAAP: Generally accepted accounting principles in the United States.

General partner: Western Midstream Holdings, LLC, the general partner of the Partnership.

Hydraulic fracturing: The high-pressure injection of fluids into the wellbore to create fractures in rock formations, stimulating the production of oil or gas.

Imbalance: Imbalances result from (i) differences between gas and NGLs volumes nominated by customers and gas and NGLs volumes received from those customers and (ii) differences between gas and NGLs volumes received from customers and gas and NGLs volumes delivered to those customers.

LIBOR: London Interbank Offered Rate.

Marcellus Interest: The 33.75% interest in the Larry’s Creek, Seely, and Warrensville gas-gathering systems and related facilities located in northern Pennsylvania.

MBbls/d: Thousand barrels per day.

Mcf: Thousand cubic feet.

MGR: Mountain Gas Resources, LLC.

MGR assets: The Red Desert complex and the Granger straddle plant.

Mi Vida: Mi Vida JV LLC.

MLP: Master limited partnership.

MMcf: Million cubic feet.

MMcf/d: Million cubic feet per day.

Mont Belvieu JV: Enterprise EF78 LLC.

Natural-gas liquid(s) or NGL(s): The combination of ethane, propane, normal butane, isobutane, and natural gasolines that, when removed from natural gas, become liquid under various levels of pressure and temperature.

Occidental: Occidental Petroleum Corporation and, as the context requires, its subsidiaries, excluding our general partner.

Occidental Merger: Occidental’s acquisition by merger of Anadarko pursuant to the Agreement and Plan of Merger, dated as of May 9, 2019, by and among Occidental, Baseball Merger Sub 1, Inc., and Anadarko, which closed on August 8, 2019.

Panola: Panola Pipeline Company, LLC.

Produced water: Byproduct associated with the production of crude oil and natural gas that often contains a number of dissolved solids and other materials found in oil and gas reservoirs.

Purchase Program: The buyback program announced in November 2020, pursuant to which we may purchase up to $250.0 million in aggregate value of our common units through December 31, 2021. The common units may be purchased from time to time in the open market at prevailing market prices or in privately negotiated transactions.

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Ranch Westex: Ranch Westex JV LLC.

RCF: WES Operating’s $2.0 billion senior unsecured revolving credit facility that matures in February 2025.

Red Bluff Express: Red Bluff Express Pipeline, LLC.

Red Desert complex: The Patrick Draw processing plant, the Red Desert processing plant, associated gathering lines, and related facilities.

Related parties: Occidental and the Partnership’s equity interests in Fort Union (until divested in October 2020), White Cliffs, Rendezvous, the Mont Belvieu JV, TEP, TEG, FRP, Whitethorn LLC, Cactus II, Saddlehorn, Panola, Mi Vida, Ranch Westex, and Red Bluff Express.

Rendezvous: Rendezvous Gas Services, LLC.

Residue: The natural gas remaining after the unprocessed natural-gas stream has been processed or treated.

Saddlehorn: Saddlehorn Pipeline Company, LLC.

SEC: U.S. Securities and Exchange Commission.

Services Agreement: That certain amended and restated Services, Secondment, and Employee Transfer Agreement, dated as of December 31, 2019, by and among Occidental, Anadarko, and WES Operating GP.

Springfield system: The Springfield gas-gathering system and Springfield oil-gathering system.

TEFR Interests: The interests in TEP, TEG, and FRP.

TEG: Texas Express Gathering LLC.

TEP: Texas Express Pipeline LLC.

Term loan facility: WES Operating’s senior unsecured credit facility entered into in December 2018, which was repaid and terminated in January 2020.

WES Operating: Western Midstream Operating, LP, formerly known as Western Gas Partners, LP, and its subsidiaries.

WES Operating GP: Western Midstream Operating GP, LLC, the general partner of WES Operating.

West Texas complex: The DBM complex and DBJV and Haley systems.

WGRAH: WGR Asset Holding Company LLC.

WGRI: Western Gas Resources, Inc., a subsidiary of Occidental.

White Cliffs: White Cliffs Pipeline, LLC.

Whitethorn LLC: Whitethorn Pipeline Company LLC.

Whitethorn: A crude-oil and condensate pipeline, and related storage facilities, owned by Whitethorn LLC.

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PART I. FINANCIAL INFORMATION (UNAUDITED)

Item 1. Financial Statements

WESTERN MIDSTREAM PARTNERS, LP

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)



	Three Months Ended June 30,				Six Months Ended June 30,
thousands except per-unit amounts	2021		2020		2021		2020
Revenues and other
Service revenues – fee based	$	618,985	$	642,628	$	1,191,260	$	1,344,024
Service revenues – product based	27,803		7,000		59,455		22,921
Product sales	72,256		21,736		143,061		78,385
Other	87		391		329		738
Total revenues and other (1)	719,131		671,755		1,394,105		1,446,068
Equity income, net – related parties	58,666		54,415		110,831		115,762
Operating expenses
Cost of product	78,044		18,602		167,013		121,872
Operation and maintenance	153,028		145,186		293,360		304,377
General and administrative	44,448		36,423		89,564		76,888
Property and other taxes	17,967		19,395		32,351		37,871
Depreciation and amortization	137,849		119,805		268,402		252,124
Long-lived asset and other impairments	12,738		10,150		27,604		165,935
Goodwill impairment	—		—		—		441,017
Total operating expenses (2)	444,074		349,561		878,294		1,400,084
Gain (loss) on divestiture and other, net	1,225		(2,843)		642		(2,883)
Operating income (loss)	334,948		373,766		627,284		158,863
Interest income – Anadarko note receivable	—		4,225		—		8,450
Interest expense	(95,290)		(94,654)		(193,783)		(183,240)
Gain (loss) on early extinguishment of debt	—		1,395		(289)		8,740
Other income (expense), net	84		1,653		(1,123)		(108)
Income (loss) before income taxes	239,742		286,385		432,089		(7,295)
Income tax expense (benefit)	1,465		5,044		2,577		764
Net income (loss)	238,277		281,341		429,512		(8,059)
Net income (loss) attributable to noncontrolling interests	7,018		8,304		12,462		(24,569)
Net income (loss) attributable to Western Midstream Partners, LP	$	231,259	$	273,037	$	417,050	$	16,510
Limited partners’ interest in net income (loss):
Net income (loss) attributable to Western Midstream Partners, LP	$	231,259	$	273,037	$	417,050	$	16,510

General partner interest in net (income) loss	(4,964)		(5,461)		(8,957)		(330)
Limited partners’ interest in net income (loss) (3)	226,295		267,576		408,093		16,180
Net income (loss) per common unit – basic and diluted (3)	$	0.55	$	0.60	$	0.99	$	0.04
Weighted-average common units outstanding – basic and diluted	413,070		443,973		413,087		443,972

_________________________________________________________________________________________

(1)Total revenues and other includes related-party amounts of $415.4 million and $793.7 million for the three and six months ended June 30, 2021, respectively, and $473.4 million and $955.8 million for the three and six months ended June 30, 2020, respectively. See Note 6.

(2)Total operating expenses includes related-party amounts of $29.0 million and $68.8 million for the three and six months ended June 30, 2021, respectively, and $18.5 million and $151.1 million for the three and six months ended June 30, 2020, respectively. See Note 6.

(3)See Note 5.

See accompanying Notes to Consolidated Financial Statements.

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WESTERN MIDSTREAM PARTNERS, LP

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)




thousands except number of units	June 30, 2021		December 31, 2020
ASSETS
Current assets
Cash and cash equivalents	$	305,573	$	444,922
Accounts receivable, net	519,116		452,880
Other current assets	61,562		45,262
Total current assets	886,251		943,064
Property, plant, and equipment
Cost	12,677,327		12,641,745
Less accumulated depreciation	4,087,362		3,931,800
Net property, plant, and equipment	8,589,965		8,709,945
Goodwill	4,783		4,783
Other intangible assets	760,576		776,409
Equity investments	1,195,456		1,224,813
Other assets (1)	189,268		171,013
Total assets (2)	$	11,626,299	$	11,830,027
LIABILITIES, EQUITY, AND PARTNERS’ CAPITAL
Current liabilities
Accounts and imbalance payables	$	246,790	$	210,691
Short-term debt	588,373		438,870
Accrued ad valorem taxes	35,570		41,427
Accrued liabilities	255,938		269,947

Total current liabilities	1,126,671		960,935
Long-term liabilities
Long-term debt	6,835,838		7,415,832

Deferred income taxes	23,468		22,195
Asset retirement obligations	267,624		260,283
Other liabilities	319,825		275,570
Total long-term liabilities	7,446,755		7,973,880
Total liabilities (3)	8,573,426		8,934,815
Equity and partners’ capital
Common units (413,076,351 and 413,839,863 units issued and outstanding at June 30, 2021, and December 31, 2020, respectively)	2,927,066		2,778,339
General partner units (9,060,641 units issued and outstanding at June 30, 2021, and December 31, 2020)	(13,923)		(17,208)

Total partners’ capital	2,913,143		2,761,131
Noncontrolling interests	139,730		134,081
Total equity and partners’ capital	3,052,873		2,895,212
Total liabilities, equity, and partners’ capital	$	11,626,299	$	11,830,027

________________________________________________________________________________________

(1)Other assets includes $7.7 million and $4.2 million of NGLs line-fill inventory as of June 30, 2021, and December 31, 2020, respectively. Other assets also includes $60.3 million and $71.9 million of materials and supplies inventory as of June 30, 2021, and December 31, 2020, respectively.

(2)Total assets includes related-party amounts of $1.6 billion as of June 30, 2021, and December 31, 2020, which includes related-party Accounts receivable, net of $278.9 million and $291.3 million as of June 30, 2021, and December 31, 2020, respectively. See Note 6.

(3)Total liabilities includes related-party amounts of $222.8 million and $164.7 million as of June 30, 2021, and December 31, 2020, respectively. See Note 6.

See accompanying Notes to Consolidated Financial Statements.

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WESTERN MIDSTREAM PARTNERS, LP

CONSOLIDATED STATEMENTS OF EQUITY AND PARTNERS’ CAPITAL

(UNAUDITED)


	Partners’ Capital
thousands	Common Units		General Partner Units		Noncontrolling Interests		Total
Balance at December 31, 2020	$	2,778,339	$	(17,208)	$	134,081	$	2,895,212
Net income (loss)	181,798		3,993		5,444		191,235
Distributions to Chipeta noncontrolling interest owner	—		—		(276)		(276)
Distributions to noncontrolling interest owner of WES Operating	—		—		(2,551)		(2,551)
Distributions to Partnership unitholders	(128,447)		(2,818)		—		(131,265)
Unit repurchases (1)	(16,241)		—		—		(16,241)
Contributions of equity-based compensation from Occidental	3,210		—		—		3,210
Equity-based compensation expense	3,524		—		—		3,524
Net contributions from (distributions to) related parties	1,627		—		—		1,627
Other	(2,355)		—		—		(2,355)
Balance at March 31, 2021	$	2,821,455	$	(16,033)	$	136,698	$	2,942,120
Net income (loss)	226,295		4,964		7,018		238,277
Distributions to Chipeta noncontrolling interest owner	—		—		(1,245)		(1,245)
Distributions to noncontrolling interest owner of WES Operating	—		—		(2,741)		(2,741)
Distributions to Partnership unitholders	(130,115)		(2,854)		—		(132,969)

Contributions of equity-based compensation from Occidental	2,375		—		—		2,375
Equity-based compensation expense	4,746		—		—		4,746
Net contributions from (distributions to) related parties	2,881		—		—		2,881
Other	(571)		—		—		(571)
Balance at June 30, 2021	$	2,927,066	$	(13,923)	$	139,730	$	3,052,873

_________________________________________________________________________________________

(1)See Note 5.


	Partners’ Capital
thousands	Common Units		General Partner Units		Noncontrolling Interests		Total













































Balance at December 31, 2019	$	3,209,947	$	(14,224)	$	149,570	$	3,345,293
Net income (loss)	(251,396)		(5,131)		(32,873)		(289,400)

Distributions to Chipeta noncontrolling interest owner	—		—		(1,738)		(1,738)
Distributions to noncontrolling interest owner of WES Operating	—		—		(5,807)		(5,807)
Distributions to Partnership unitholders	(276,151)		(5,635)		—		(281,786)
Acquisitions from related parties	(3,987)		—		3,987		—
Contributions of equity-based compensation from Occidental	4,105		—		—		4,105
Equity-based compensation expense	1,129		—		—		1,129
Net contributions from (distributions to) related parties (1)	489		—		20,000		20,489


Balance at March 31, 2020	$	2,684,136	$	(24,990)	$	133,139	$	2,792,285
Net income (loss)	267,576		5,461		8,304		281,341

Distributions to Chipeta noncontrolling interest owner	—		—		(1,037)		(1,037)
Distributions to noncontrolling interest owner of WES Operating	—		—		(2,869)		(2,869)
Distributions to Partnership unitholders	(138,075)		(2,818)		—		(140,893)

Contributions of equity-based compensation from Occidental	3,562		—		—		3,562
Equity-based compensation expense	2,115		—		—		2,115
Net contributions from (distributions to) related parties	1,343		—		—		1,343
Other	(330)		—		—		(330)
Balance at June 30, 2020	$	2,820,327	$	(22,347)	$	137,537	$	2,935,517

_________________________________________________________________________________________

(1)See Services Agreement within Note 6.

See accompanying Notes to Consolidated Financial Statements.

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WESTERN MIDSTREAM PARTNERS, LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



	Six Months Ended June 30,
thousands	2021		2020
Cash flows from operating activities
Net income (loss)	$	429,512	$	(8,059)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	268,402		252,124
Long-lived asset and other impairments	27,604		165,935
Goodwill impairment	—		441,017
Non-cash equity-based compensation expense	13,855		10,911
Deferred income taxes	1,273		799
Accretion and amortization of long-term obligations, net	4,002		4,297
Equity income, net – related parties	(110,831)		(115,762)
Distributions from equity-investment earnings – related parties	110,763		124,156
(Gain) loss on divestiture and other, net	(642)		2,883
(Gain) loss on early extinguishment of debt	289		(8,740)

Cash paid to settle interest-rate swaps	—		(12,763)
Other	41		710
Changes in assets and liabilities:
(Increase) decrease in accounts receivable, net	(69,164)		(200,136)
Increase (decrease) in accounts and imbalance payables and accrued liabilities, net	39,291		72,323
Change in other items, net	(734)		9,304
Net cash provided by operating activities	713,661		738,999
Cash flows from investing activities
Capital expenditures	(137,928)		(313,065)
Acquisitions from related parties	(2,000)		—

Contributions to equity investments – related parties	(3,508)		(16,064)
Distributions from equity investments in excess of cumulative earnings – related parties	21,373		13,340

Proceeds from the sale of assets to third parties	8,003		—
(Increase) decrease in materials and supplies inventory and other	7,656		(39,212)
Net cash used in investing activities	(106,404)		(355,001)
Cash flows from financing activities
Borrowings, net of debt issuance costs	100,000		3,586,173
Repayments of debt	(531,085)		(3,583,149)
Increase (decrease) in outstanding checks	(29,102)		(4,686)


Distributions to Partnership unitholders (1)	(264,234)		(422,679)
Distributions to Chipeta noncontrolling interest owner	(1,521)		(2,775)
Distributions to noncontrolling interest owner of WES Operating	(5,292)		(8,676)
Net contributions from (distributions to) related parties	4,508		21,832

Finance lease payments (2)	(3,639)		(10,262)
Unit repurchases	(16,241)		—
Net cash provided by (used in) financing activities	(746,606)		(424,222)
Net increase (decrease) in cash and cash equivalents	(139,349)		(40,224)
Cash and cash equivalents at beginning of period	444,922		99,962
Cash and cash equivalents at end of period	$	305,573	$	59,738
Supplemental disclosures


Interest paid, net of capitalized interest	$	188,280	$	163,362
Taxes paid (reimbursements received)	932		(384)
Accrued capital expenditures	27,592		43,191

_________________________________________________________________________________________

(1)See Note 6.

(2)For the six months ended June 30, 2020, includes related-party payments of $6.4 million.

See accompanying Notes to Consolidated Financial Statements.

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WESTERN MIDSTREAM OPERATING, LP

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)



	Three Months Ended June 30,				Six Months Ended June 30,
thousands	2021		2020		2021		2020
Revenues and other
Service revenues – fee based	$	618,985	$	642,628	$	1,191,260	$	1,344,024
Service revenues – product based	27,803		7,000		59,455		22,921
Product sales	72,256		21,736		143,061		78,385
Other	87		391		329		738
Total revenues and other (1)	719,131		671,755		1,394,105		1,446,068
Equity income, net – related parties	58,666		54,415		110,831		115,762
Operating expenses
Cost of product	78,044		18,602		167,013		121,872
Operation and maintenance	153,028		145,186		293,360		304,377
General and administrative	42,848		35,242		87,078		74,300
Property and other taxes	17,967		19,395		32,351		37,871
Depreciation and amortization	137,849		119,805		268,402		252,124
Long-lived asset and other impairments	12,738		10,150		27,604		165,935
Goodwill impairment	—		—		—		441,017
Total operating expenses (2)	442,474		348,380		875,808		1,397,496
Gain (loss) on divestiture and other, net	1,225		(2,843)		642		(2,883)
Operating income (loss)	336,548		374,947		629,770		161,451
Interest income – Anadarko note receivable	—		4,225		—		8,450
Interest expense	(95,290)		(94,654)		(193,783)		(183,240)
Gain (loss) on early extinguishment of debt	—		1,395		(289)		8,740
Other income (expense), net	82		1,651		(1,128)		(112)
Income (loss) before income taxes	241,340		287,564		434,570		(4,711)
Income tax expense (benefit)	1,465		5,044		2,577		764
Net income (loss)	239,875		282,520		431,993		(5,475)
Net income (loss) attributable to noncontrolling interest	2,264		2,706		3,897		(24,959)
Net income (loss) attributable to Western Midstream Operating, LP	$	237,611	$	279,814	$	428,096	$	19,484

________________________________________________________________________________________

(2)Total operating expenses includes related-party amounts of $29.6 million and $69.9 million for the three and six months ended June 30, 2021, respectively, and $18.7 million and $151.1 million for the three and six months ended June 30, 2020, respectively. See Note 6.

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

WESTERN MIDSTREAM OPERATING, LP

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)




thousands except number of units	June 30, 2021		December 31, 2020
ASSETS
Current assets
Cash and cash equivalents	$	300,761	$	418,537
Accounts receivable, net	519,116		407,549
Other current assets	60,400		43,244
Total current assets	880,277		869,330
Property, plant, and equipment
Cost	12,677,327		12,641,745
Less accumulated depreciation	4,087,362		3,931,800
Net property, plant, and equipment	8,589,965		8,709,945
Goodwill	4,783		4,783
Other intangible assets	760,576		776,409
Equity investments	1,195,456		1,224,813
Other assets (1)	189,268		171,013
Total assets (2)	$	11,620,325	$	11,756,293
LIABILITIES, EQUITY, AND PARTNERS’ CAPITAL
Current liabilities
Accounts and imbalance payables	$	275,191	$	210,532
Short-term debt	588,373		438,870
Accrued ad valorem taxes	35,570		41,427
Accrued liabilities	222,181		230,833

Total current liabilities	1,121,315		921,662
Long-term liabilities
Long-term debt	6,835,838		7,415,832
Deferred income taxes	23,468		22,195
Asset retirement obligations	267,624		260,283
Other liabilities	319,825		275,570
Total long-term liabilities	7,446,755		7,973,880
Total liabilities (3)	8,568,070		8,895,542
Equity and partners’ capital
Common units (318,675,578 units issued and outstanding at June 30, 2021, and December 31, 2020)	3,020,327		2,831,199



Total partners’ capital	3,020,327		2,831,199
Noncontrolling interest	31,928		29,552
Total equity and partners’ capital	3,052,255		2,860,751
Total liabilities, equity, and partners’ capital	$	11,620,325	$	11,756,293

_________________________________________________________________________________________

(2)Total assets includes related-party amounts of $1.6 billion and $1.5 billion as of June 30, 2021, and December 31, 2020, respectively, which includes related-party Accounts receivable, net of $278.9 million and $246.1 million as of June 30, 2021, and December 31, 2020, respectively. See Note 6.

(3)Total liabilities includes related-party amounts of $251.0 million and $164.3 million as of June 30, 2021, and December 31, 2020, respectively. See Note 6.

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

WESTERN MIDSTREAM OPERATING, LP

CONSOLIDATED STATEMENTS OF EQUITY AND PARTNERS’ CAPITAL

(UNAUDITED)



thousands	Common Units		Noncontrolling Interest		Total
Balance at December 31, 2020	$	2,831,199	$	29,552	$	2,860,751
Net income (loss)	190,485		1,633		192,118
Distributions to Chipeta noncontrolling interest owner	—		(276)		(276)
Distributions to WES Operating unitholders	(127,470)		—		(127,470)
Contributions of equity-based compensation from Occidental	3,210		—		3,210
Contributions of equity-based compensation from WES	10,826		—		10,826
Net contributions from (distributions to) related parties	1,627		—		1,627

Balance at March 31, 2021	$	2,909,877	$	30,909	$	2,940,786
Net income (loss)	237,611		2,264		239,875
Distributions to Chipeta noncontrolling interest owner	—		(1,245)		(1,245)
Distributions to WES Operating unitholders	(137,030)		—		(137,030)
Contributions of equity-based compensation from Occidental	2,375		—		2,375
Contributions of equity-based compensation from WES	4,613		—		4,613
Net contributions from (distributions to) related parties	2,881		—		2,881

Balance at June 30, 2021	$	3,020,327	$	31,928	$	3,052,255



thousands	Common Units		Noncontrolling Interest		Total








































Balance at December 31, 2019	$	3,286,620	$	55,199	$	3,341,819
Net income (loss)	(260,330)		(27,665)		(287,995)
Distributions to Chipeta noncontrolling interest owner	—		(1,738)		(1,738)
Distributions to WES Operating unitholders	(290,314)		—		(290,314)
Acquisitions from related parties	(3,987)		3,987		—
Contributions of equity-based compensation from Occidental	4,105		—		4,105
Net contributions from (distributions to) related parties (1)	20,489		—		20,489

Balance at March 31, 2020	$	2,756,583	$	29,783	$	2,786,366
Net income (loss)	279,814		2,706		282,520
Distributions to Chipeta noncontrolling interest owner	—		(1,037)		(1,037)
Distributions to WES Operating unitholders	(143,404)		—		(143,404)

Contributions of equity-based compensation from Occidental	3,562		—		3,562
Net contributions from (distributions to) related parties	1,343		—		1,343
Balance at June 30, 2020	$	2,897,898	$	31,452	$	2,929,350

_______________________________________________________________________________________

(1)See Services Agreement within Note 6.

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

WESTERN MIDSTREAM OPERATING, LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



	Six Months Ended June 30,
thousands	2021		2020
Cash flows from operating activities
Net income (loss)	$	431,993	$	(5,475)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	268,402		252,124
Long-lived asset and other impairments	27,604		165,935
Goodwill impairment	—		441,017
Non-cash equity-based compensation expense	21,024		7,667
Deferred income taxes	1,273		799
Accretion and amortization of long-term obligations, net	4,002		4,297
Equity income, net – related parties	(110,831)		(115,762)
Distributions from equity-investment earnings – related parties	110,763		124,156
(Gain) loss on divestiture and other, net	(642)		2,883
(Gain) loss on early extinguishment of debt	289		(8,740)

Cash paid to settle interest-rate swaps	—		(12,763)
Other	41		710
Changes in assets and liabilities:
(Increase) decrease in accounts receivable, net	(111,567)		(173,522)
Increase (decrease) in accounts and imbalance payables and accrued liabilities, net	73,215		48,923
Change in other items, net	(1,591)		8,664
Net cash provided by operating activities	713,975		740,913
Cash flows from investing activities
Capital expenditures	(137,928)		(313,065)
Acquisitions from related parties	(2,000)		—

Contributions to equity investments – related parties	(3,508)		(16,064)
Distributions from equity investments in excess of cumulative earnings – related parties	21,373		13,340

Proceeds from the sale of assets to third parties	8,003		—
(Increase) decrease in materials and supplies inventory and other	7,656		(39,212)
Net cash used in investing activities	(106,404)		(355,001)
Cash flows from financing activities
Borrowings, net of debt issuance costs	100,000		3,586,173
Repayments of debt	(531,085)		(3,583,149)
Increase (decrease) in outstanding checks	(29,110)		(4,690)

Distributions to WES Operating unitholders (1)	(264,500)		(433,718)
Distributions to Chipeta noncontrolling interest owner	(1,521)		(2,775)
Net contributions from (distributions to) related parties	4,508		21,832

Finance lease payments (2)	(3,639)		(10,262)
Net cash provided by (used in) financing activities	(725,347)		(426,589)
Net increase (decrease) in cash and cash equivalents	(117,776)		(40,677)
Cash and cash equivalents at beginning of period	418,537		98,122
Cash and cash equivalents at end of period	$	300,761	$	57,445
Supplemental disclosures


Interest paid, net of capitalized interest	$	188,280	$	163,362
Taxes paid (reimbursements received)	932		(384)
Accrued capital expenditures	27,592		43,191

________________________________________________________________________________________

(1)See Note 6.

(2)For the six months ended June 30, 2020, includes related-party payments of $6.4 million.

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

General. Western Midstream Partners, LP is a Delaware master limited partnership formed in September 2012. Western Midstream Operating, LP (together with its subsidiaries, “WES Operating”) is a Delaware limited partnership formed in 2007 to acquire, own, develop, and operate midstream assets. Western Midstream Partners, LP owns, directly and indirectly, a 98.0% limited partner interest in WES Operating, and directly owns all of the outstanding equity interests of Western Midstream Operating GP, LLC, which holds the entire non-economic general partner interest in WES Operating.

For purposes of these consolidated financial statements, the “Partnership” refers to Western Midstream Partners, LP in its individual capacity or to Western Midstream Partners, LP and its subsidiaries, including Western Midstream Operating GP, LLC and WES Operating, as the context requires. “WES Operating GP” refers to Western Midstream Operating GP, LLC, individually as the general partner of WES Operating. The Partnership’s general partner, Western Midstream Holdings, LLC (the “general partner”), is a wholly owned subsidiary of Occidental Petroleum Corporation. “Occidental” refers to Occidental Petroleum Corporation, as the context requires, and its subsidiaries, excluding the general partner. “Anadarko” refers to Anadarko Petroleum Corporation and its subsidiaries, excluding Western Midstream Holdings, LLC. Anadarko became a wholly owned subsidiary of Occidental as a result of Occidental’s acquisition by merger of Anadarko on August 8, 2019. “Related parties” refers to Occidental (see Note 6), the Partnership’s investments accounted for under the equity method of accounting (see Note 7), and the Partnership and WES Operating for transactions that eliminate upon consolidation (see Note 6).

The Partnership is engaged in the business of gathering, compressing, treating, processing, and transporting natural gas; gathering, stabilizing, and transporting condensate, natural-gas liquids (“NGLs”), and crude oil; and gathering and disposing of produced water. In its capacity as a natural-gas processor, the Partnership also buys and sells natural gas, NGLs, and condensate on behalf of itself and as an agent for its customers under certain contracts. As of June 30, 2021, the Partnership’s assets and investments consisted of the following:


	Wholly Owned and Operated	Operated Interests	Non-Operated Interests	Equity Interests
Gathering systems (1)	17	2	3	1
Treating facilities	36	3	—	—
Natural-gas processing plants/trains	24	3	—	5
NGLs pipelines	2	—	—	5
Natural-gas pipelines	5	—	—	1
Crude-oil pipelines	3	1	—	4

_________________________________________________________________________________________

(1)Includes the DBM water systems.

These assets and investments are located in Texas, New Mexico, the Rocky Mountains (Colorado, Utah, and Wyoming), and North-central Pennsylvania.

Table of Contents

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Basis of presentation. The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and include the accounts of the Partnership and entities in which it holds a controlling financial interest, including WES Operating, WES Operating GP, proportionately consolidated interests, and equity investments (see table below). All significant intercompany transactions have been eliminated.

The following table outlines the ownership interests and the accounting method of consolidation used in the consolidated financial statements for entities not wholly owned:


	Percentage Interest
Full consolidation
Chipeta (1)	75.00	%
Proportionate consolidation (2)
Springfield system	50.10	%
Marcellus Interest systems	33.75	%
Equity investments (3)
Mi Vida JV LLC (“Mi Vida”)	50.00	%
Ranch Westex JV LLC (“Ranch Westex”)	50.00	%
Front Range Pipeline LLC (“FRP”)	33.33	%
Red Bluff Express Pipeline, LLC (“Red Bluff Express”)	30.00	%
Enterprise EF78 LLC (“Mont Belvieu JV”)	25.00	%
Rendezvous Gas Services, LLC (“Rendezvous”)	22.00	%
Texas Express Pipeline LLC (“TEP”)	20.00	%
Texas Express Gathering LLC (“TEG”)	20.00	%
Whitethorn Pipeline Company LLC (“Whitethorn LLC”)	20.00	%
Saddlehorn Pipeline Company, LLC (“Saddlehorn”)	20.00	%
Cactus II Pipeline LLC (“Cactus II”)	15.00	%
Panola Pipeline Company, LLC (“Panola”)	15.00	%
White Cliffs Pipeline, LLC (“White Cliffs”)	10.00	%

_________________________________________________________________________________________

(1)The 25% third-party interest in Chipeta Processing LLC (“Chipeta”) is reflected within noncontrolling interests in the consolidated financial statements. See Noncontrolling interests below.

(2)The Partnership proportionately consolidates its associated share of the assets, liabilities, revenues, and expenses attributable to these assets.

(3)Investments in non-controlled entities over which the Partnership exercises significant influence are accounted for under the equity method of accounting. “Equity-investment throughput” refers to the Partnership’s share of average throughput for these investments.

Certain information and note disclosures commonly included in annual financial statements have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, the accompanying consolidated financial statements and notes should be read in conjunction with the Partnership’s 2020 Form 10-K, as filed with the SEC on February 26, 2021. Management believes that the disclosures made are adequate to make the information not misleading.

Table of Contents

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

The consolidated financial results of WES Operating are included in the Partnership’s consolidated financial statements. Throughout these notes to consolidated financial statements, and to the extent material, any differences between the consolidated financial results of the Partnership and WES Operating are discussed separately. The Partnership’s consolidated financial statements differ from those of WES Operating primarily as a result of (i) the presentation of noncontrolling interest ownership (see Noncontrolling interests below), (ii) the elimination of WES Operating GP’s investment in WES Operating with WES Operating GP’s underlying capital account, (iii) the general and administrative expenses incurred by the Partnership, which are separate from, and in addition to, those incurred by WES Operating, (iv) the inclusion of the impact of Partnership equity balances and Partnership distributions, and (v) transactions between the Partnership and WES Operating that eliminate upon consolidation.

Presentation of the Partnership’s assets. The Partnership’s assets include assets owned and ownership interests accounted for by the Partnership under the equity method of accounting, through its 98.0% partnership interest in WES Operating, as of June 30, 2021 (see Note 7). The Partnership also owns and controls the entire non-economic general partner interest in WES Operating GP, and the Partnership’s general partner is owned by Occidental.

Use of estimates. In preparing financial statements in accordance with GAAP, management makes informed judgments and estimates that affect the reported amounts of assets, liabilities, revenues, and expenses. Management evaluates its estimates and related assumptions regularly, using historical experience and other reasonable methods. Changes in facts and circumstances or additional information may result in revised estimates, and actual results may differ from these estimates. Effects on the business, financial condition, and results of operations resulting from revisions to estimates are recognized when the facts that give rise to the revisions become known. The information included herein reflects all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the consolidated financial statements.

Noncontrolling interests. The Partnership’s noncontrolling interests in the consolidated financial statements consist of (i) the 25% third-party interest in Chipeta and (ii) the 2.0% Occidental subsidiary-owned limited partner interest in WES Operating. WES Operating’s noncontrolling interest in the consolidated financial statements consists of the 25% third-party interest in Chipeta. See Note 5.

Segments. The Partnership’s operations continue to be organized into a single operating segment, the assets of which gather, compress, treat, process, and transport natural gas; gather, stabilize, and transport condensate, NGLs, and crude oil; and gather and dispose of produced water in the United States.

Equity-based compensation. During the six months ended June 30, 2021, the Partnership issued 352,296 common units under the Western Gas Equity Partners, LP 2012 Long-Term Incentive Plan (“WES LTIP”). Compensation expense for the WES LTIP was $4.7 million and $8.3 million for the three and six months ended June 30, 2021, respectively, and $2.1 million and $3.2 million for the three and six months ended June 30, 2020, respectively.

On March 22, 2021, the Board of Directors approved the Western Midstream Partners, LP 2021 Long-Term Incentive Plan, which authorized the issuance of up to 9.5 million of the Partnership’s common units. This plan provides for the grant of unit options, unit appreciation rights, restricted units, phantom units, other unit-based awards, cash awards, and a unit award or a substitute award to employees and directors of the Partnership and its general partner. Affiliates of Occidental who held a majority of the Partnership’s outstanding common units as of March 22, 2021, approved the 2021 Long-Term Incentive Plan via written consent. On April 7, 2021, the Partnership mailed an information statement on Schedule 14C to its unitholders of record as of March 22, 2021. The 2021 Long-Term Incentive Plan became effective on April 27, 2021, which is 20 calendar days after the Partnership mailed out the information statement.

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Defined-contribution plan. Beginning in the first quarter of 2020, employees of the Partnership are eligible to participate in the Western Midstream Savings Plan, a defined-contribution benefit plan maintained by the Partnership. All regular employees may participate in the plan by making elective contributions that are matched by the Partnership, subject to certain limitations. The Partnership also makes other contributions based on plan guidelines. The Partnership recognized expense related to the plan of $6.1 million and $13.0 million for the three and six months ended June 30, 2021, respectively, and $4.0 million and $4.4 million for the three and six months ended June 30, 2020, respectively.

2. REVENUE FROM CONTRACTS WITH CUSTOMERS

The following table summarizes revenue from contracts with customers:



	Three Months Ended June 30,				Six Months Ended June 30,
thousands	2021		2020		2021		2020
Revenue from customers
Service revenues – fee based	$	572,607	$	581,452	$	1,102,020	$	1,223,373
Service revenues – product based	27,803		7,000		59,455		22,921
Product sales	72,256		21,736		143,061		78,385
Total revenue from customers	672,666		610,188		1,304,536		1,324,679
Revenue from other than customers
Lease revenue (1)	46,378		61,176		89,240		120,651

Other	87		391		329		738
Total revenues and other	$	719,131	$	671,755	$	1,394,105	$	1,446,068

_________________________________________________________________________________________

(1)Includes fixed- and variable-lease revenue from an operating and maintenance agreement entered into with Occidental. See Operating lease within Note 6.

Certain of the Partnership’s midstream services contracts have minimum-volume commitment demand fees and fees that require periodic rate redeterminations based on the related facility cost-of-service rate provisions. During the year ended December 31, 2020, and the six months ended June 30, 2021, the Partnership constrained revenue on certain cost-of-service agreements based on the status of commercial negotiations relating to a legal dispute with one of our contract counterparties. Future revenue reversals could occur to the extent the outcome of the legal proceedings and commercial negotiations differ from our current assumptions.

Table of Contents

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

2. REVENUE FROM CONTRACTS WITH CUSTOMERS

Contract balances. Receivables from customers, which are included in Accounts receivable, net on the consolidated balance sheets were $509.8 million and $428.2 million as of June 30, 2021, and December 31, 2020, respectively.

Contract assets primarily relate to (i) revenue accrued but not yet billed under cost-of-service contracts with fixed and variable fees and (ii) accrued deficiency fees the Partnership expects to charge customers once the related performance periods are completed. The following table summarizes activity related to contract assets from contracts with customers:




thousands
Contract assets balance at December 31, 2020	$	56,344

Additional estimated revenues recognized (1)	8,536

Contract assets balance at June 30, 2021	$	64,880



Contract assets at June 30, 2021
Other current assets	$	18,700
Other assets	46,180
Total contract assets from contracts with customers	$	64,880

_________________________________________________________________________________________

(1)Includes $4.0 million for the three months ended June 30, 2021.

Contract liabilities primarily relate to (i) aid-in-construction payments received from customers that must be recognized over the expected period of customer benefit, (ii) fixed and variable fees under cost-of-service contracts that are received from customers for which revenue recognition is deferred, and (iii) fees that are charged to customers for only a portion of the contract term and must be recognized as revenues over the expected period of customer benefit. The following table summarizes activity related to contract liabilities from contracts with customers:




thousands
Contract liabilities balance at December 31, 2020	$	266,937
Cash received or receivable, excluding revenues recognized during the period (1)	34,059

Revenues recognized that were included in the contract liability balance at the beginning of the period (2)	(8,068)

Contract liabilities balance at June 30, 2021	$	292,928



Contract liabilities at June 30, 2021
Accrued liabilities	$	16,261
Other liabilities	276,667
Total contract liabilities from contracts with customers	$	292,928

_________________________________________________________________________________________

(1)Includes $18.8 million for the three months ended June 30, 2021.

(2)Includes $(6.0) million for the three months ended June 30, 2021.

Table of Contents

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

2. REVENUE FROM CONTRACTS WITH CUSTOMERS

Transaction price allocated to remaining performance obligations. Revenues expected to be recognized from certain performance obligations that are unsatisfied (or partially unsatisfied) as of June 30, 2021, are presented in the following table. The Partnership applies the optional exemptions in Revenue from Contracts with Customers (Topic 606) and does not disclose consideration for remaining performance obligations with an original expected duration of one year or less or for variable consideration related to unsatisfied (or partially unsatisfied) performance obligations. Therefore, the following table represents only a portion of expected future revenues from existing contracts as most future revenues from customers are dependent on future variable customer volumes and, in some cases, variable commodity prices for those volumes.


thousands
Remainder of 2021	$	419,158
2022	1,058,996
2023	1,003,906
2024	975,004
2025	892,135
Thereafter	2,721,232
Total	$	7,070,431

3. ACQUISITIONS AND DIVESTITURES

Fort Union and Bison facilities. In October 2020, the Partnership (i) sold its 14.81% interest in Fort Union Gas Gathering, LLC (“Fort Union”), which was accounted for under the equity method of accounting, and (ii) entered into an option agreement to sell the Bison treating facility, located in Northeast Wyoming, to a third party. The Partnership received combined proceeds of $27.0 million, resulting in a net gain on sale of $21.0 million related to the Fort Union interest that was recorded in the fourth quarter of 2020 as Gain (loss) on divestiture and other, net in the consolidated statements of operations.

During the second quarter of 2021, the third party exercised its option to purchase the Bison treating facility and the sale closed. The Partnership received total proceeds of $8.0 million, $7.0 million in the fourth quarter of 2020 and $1.0 million when the sale closed in the second quarter of 2021, resulting in a net gain on sale of $5.4 million that was recorded as Gain (loss) on divestiture and other, net in the consolidated statements of operations.

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

4. PARTNERSHIP DISTRIBUTIONS

Partnership distributions. Under its partnership agreement, the Partnership distributes all of its available cash (beyond proper reserves as defined in its partnership agreement) to unitholders of record on the applicable record date within 55 days following each quarter’s end. The Board of Directors of the general partner (the “Board of Directors”) declared the following cash distributions to the Partnership’s unitholders for the periods presented:


thousands except per-unit amounts Quarters Ended	Total Quarterly Per-unit Distribution		Total Quarterly Cash Distribution		Distribution Date





2020
March 31	$	0.31100	$	140,893	May 2020
June 30	0.31100		140,900		August 2020
September 30	0.31100		132,255		November 2020
December 31	0.31100		131,265		February 2021
2021
March 31	$	0.31500	$	132,969	May 2021
June 30 (1)	0.31900		134,662		August 2021

_________________________________________________________________________________________

(1)The Board of Directors declared a cash distribution to the Partnership’s unitholders for the second quarter of 2021 of $0.31900 per unit, or $134.7 million in aggregate. The cash distribution is payable on August 13, 2021, to unitholders of record at the close of business on July 30, 2021, including the general partner units.

Available cash. The amount of available cash (beyond proper reserves as defined in our partnership agreement) generally is all cash on hand at the end of the quarter, plus, at the discretion of the general partner, working capital borrowings made subsequent to the end of such quarter, less the amount of cash reserves established by the general partner to provide for the proper conduct of the Partnership’s business, including reserves to fund future capital expenditures; to comply with applicable laws, debt instruments, or other agreements; or to provide funds for unitholder distributions for any one or more of the next four quarters. Working capital borrowings generally include borrowings made under a credit facility or similar financing arrangement and are intended to be repaid or refinanced within 12 months. In all cases, working capital borrowings are used solely for working capital purposes or to fund unitholder distributions.

WES Operating partnership distributions. WES Operating makes quarterly cash distributions to the Partnership and WGR Asset Holding Company LLC (“WGRAH”), a subsidiary of Occidental, in proportion to their share of limited partner interests in WES Operating. See Note 5. WES Operating made the following cash distributions to its limited partners for the periods presented:


thousands Quarters Ended	Total Quarterly Cash Distribution
2020
March 31	$	143,404
June 30	143,404
September 30	143,404
December 31	127,470
2021
March 31	$	137,030
June 30	140,217

Table of Contents

WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

5. EQUITY AND PARTNERS’ CAPITAL

Holdings of Partnership equity. The Partnership’s common units are listed on the New York Stock Exchange under the ticker symbol “WES.” As of June 30, 2021, Occidental held 202,781,578 common units, representing a 48.0% limited partner interest in the Partnership, and through its ownership of the general partner, Occidental indirectly held 9,060,641 general partner units, representing a 2.1% general partner interest in the Partnership. The public held 210,294,773 common units, representing a 49.9% limited partner interest in the Partnership.

In March 2021, an affiliate of Occidental sold 11,500,000 of the Partnership’s common units it held to the public through an underwritten offering, including 1,500,000 common units pursuant to the full exercise of the underwriters’ over-allotment option. The Partnership did not receive any proceeds from the public offering.

On September 11, 2020, the Partnership assigned its 98% interest in the 30-year $260.0 million note established in May 2008 between WES Operating and Anadarko (the “Anadarko note receivable”) to Anadarko, which Anadarko canceled and retired immediately upon receipt, in exchange for which Occidental caused certain of its subsidiaries to transfer an aggregate of 27,855,398 common units representing limited partner interests in the Partnership to the Partnership. The units were canceled by the Partnership immediately upon receipt. See Note 6.

Partnership equity repurchases. In November 2020, the Board of Directors authorized the Partnership to buy back up to $250.0 million of the Partnership’s common units through December 31, 2021 (the “Purchase Program”). The common units may be purchased from time to time in the open market at prevailing market prices or in privately negotiated transactions. During the six months ended June 30, 2021, the Partnership repurchased 1,115,808 common units on the open market for an aggregate purchase price of $16.2 million. The units were canceled by the Partnership immediately upon receipt. As of June 30, 2021, the Partnership had an authorized amount of $201.2 million remaining under the Purchase Program.

Holdings of WES Operating equity. As of June 30, 2021, (i) the Partnership, directly and indirectly through its ownership of WES Operating GP, owned a 98.0% limited partner interest and the entire non-economic general partner interest in WES Operating and (ii) Occidental, through its ownership of WGRAH, owned a 2.0% limited partner interest in WES Operating, which is reflected as a noncontrolling interest within the consolidated financial statements of the Partnership (see Note 1).

Partnership’s net income (loss) per common unit. The common and general partner unitholders’ allocation of net income (loss) attributable to the Partnership was equal to their cash distributions plus their respective allocations of undistributed earnings or losses in accordance with their weighted-average ownership percentage during each period using the two-class method.

The Partnership’s basic net income (loss) per common unit is calculated by dividing the limited partners’ interest in net income (loss) by the weighted-average number of common units outstanding during the period.

WES Operating’s net income (loss) per common unit. Net income (loss) per common unit for WES Operating is not calculated because it has no publicly traded units.

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

6. RELATED-PARTY TRANSACTIONS

Summary of related-party transactions. The following tables summarize material related-party transactions included in the Partnership’s consolidated financial statements:


Consolidated statements of operations
	Three Months Ended June 30,				Six Months Ended June 30,
thousands	2021		2020		2021		2020
Revenues and other
Service revenues – fee based	$	402,684	$	460,138	$	770,159	$	907,921
Service revenues – product based	3,658		1,168		8,163		4,146
Product sales	9,101		12,136		15,372		43,760
Total revenues and other	415,443		473,442		793,694		955,827
Equity income, net – related parties (1)	58,666		54,415		110,831		115,762
Operating expenses
Cost of product	18,937		5,967		36,584		83,870
Operation and maintenance	2,915		1,516		21,037		34,357
General and administrative (2)	7,102		10,994		11,195		32,849
Total operating expenses	28,954		18,477		68,816		151,076

Interest income – Anadarko note receivable	—		4,225		—		8,450

_________________________________________________________________________________________

(1)See Note 7.

(2)Includes (i) amounts charged by Occidental pursuant to the shared services agreement (see Services Agreement within this Note 6) and (ii) equity-based compensation expense allocated to the Partnership by Occidental, which is not reimbursed to Occidental and is reflected as a contribution to partners’ capital in the consolidated statements of equity and partners’ capital (see Incentive Plans within this Note 6).





Consolidated balance sheets

thousands	June 30, 2021		December 31, 2020
Assets
Accounts receivable, net	$	278,913	$	291,253
Other current assets	32,805		5,493

Equity investments (1)	1,195,456		1,224,813
Other assets	77,130		50,967
Total assets	1,584,304		1,572,526
Liabilities
Accounts and imbalance payables	8,538		6,664

Accrued liabilities	43,571		19,195
Other liabilities	170,721		138,796
Total liabilities	222,830		164,655

_________________________________________________________________________________________

(1)See Note 7.

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

6. RELATED-PARTY TRANSACTIONS


Consolidated statements of cash flows
	Six Months Ended June 30,
thousands	2021		2020
Distributions from equity-investment earnings – related parties	$	110,763	$	124,156
Acquisitions from related parties	(2,000)		—
Contributions to equity investments – related parties	(3,508)		(16,064)
Distributions from equity investments in excess of cumulative earnings – related parties	21,373		13,340


Distributions to Partnership unitholders (1)	(130,518)		(225,914)
Distributions to WES Operating unitholders (2)	(5,292)		(8,676)
Net contributions from (distributions to) related parties	4,508		21,832

Finance lease payments	—		(6,382)

_________________________________________________________________________________________

(1)Represents distributions paid to Occidental pursuant to the partnership agreement of the Partnership (see Note 4 and Note 5).

(2)Represents distributions paid to a certain subsidiary of Occidental pursuant to WES Operating’s partnership agreement (see Note 4 and Note 5).

The following tables summarize material related-party transactions for WES Operating (which are included in the Partnership’s consolidated financial statements) to the extent the amounts differ from the Partnership’s consolidated financial statements:


Consolidated statements of operations

	Three Months Ended June 30,				Six Months Ended June 30,
thousands	2021		2020		2021		2020
General and administrative (1)	$	7,699	$	11,168	$	12,286	$	32,906

_________________________________________________________________________________________

(1)Includes (i) amounts charged by Occidental pursuant to the shared services agreement (see Services Agreement within this Note 6), (ii) equity-based compensation expense allocated to WES Operating by Occidental, which is not reimbursed to Occidental and is reflected as a contribution to partners’ capital in the consolidated statements of equity and partners’ capital (see Incentive Plans within this Note 6), and (iii) an intercompany service fee between the Partnership and WES Operating.





Consolidated balance sheets
thousands	June 30, 2021		December 31, 2020
Accounts receivable, net	$	278,913	$	246,083
Accounts and imbalance payables (1)	37,006		6,664

_________________________________________________________________________________________

(1)As of June 30, 2021, includes balances related to transactions between the Partnership and WES Operating.


Consolidated statements of cash flows

	Six Months Ended June 30,
thousands		2021		2020

Distributions to WES Operating unitholders (1)		$	(264,500)	$	(433,718)

_________________________________________________________________________________________

(1)Represents distributions paid to the Partnership and a certain subsidiary of Occidental pursuant to WES Operating’s partnership agreement (see Note 4 and Note 5).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

6. RELATED-PARTY TRANSACTIONS

Related-party revenues. Related-party revenues include (i) amounts earned by the Partnership from services provided to Occidental and from the sale of natural gas, condensate, and NGLs to Occidental and (ii) income from the Partnership’s investments accounted for under the equity method of accounting (see Note 7).

Gathering and processing agreements. The Partnership has significant gathering and processing arrangements with affiliates of Occidental on most of its systems. While Occidental is the contracting counterparty of the Partnership, these arrangements with Occidental include not just Occidental-produced volumes, but also, in some instances, the volumes of other working-interest owners of Occidental who rely on the Partnership’s facilities and infrastructure to bring their volumes to market. Natural-gas throughput (excluding equity-investment throughput) attributable to production owned or controlled by Occidental was 36% and 35% for the three and six months ended June 30, 2021, respectively, and 43% and 42% for the three and six months ended June 30, 2020, respectively. Crude-oil and NGLs throughput (excluding equity-investment throughput) attributable to production owned or controlled by Occidental was 90% and 89% for the three and six months ended June 30, 2021, respectively, and 88% for the three and six months ended June 30, 2020. Produced-water throughput attributable to production owned or controlled by Occidental was 86% for the three and six months ended June 30, 2021, and 87% and 88% for the three and six months ended June 30, 2020, respectively.

The Partnership is currently involved in a dispute with Occidental regarding the calculation of the cost-of-service rates under an oil-gathering contract related to the Partnership’s DJ Basin oil-gathering system. If such dispute is resolved in a manner adverse to the Partnership, such resolution could have a negative impact on our financial condition and results of operations, including a reduction in rates and a non-cash charge to earnings.

In connection with the sale of its Eagle Ford assets in 2017, Anadarko remained the primary counterparty to the Partnership’s Brasada gas processing agreement and entered into an agency relationship with Sanchez Energy Corporation (“Sanchez”), now Mesquite Energy, Inc. (“Mesquite”) that allows Mesquite to process gas under such agreement. For this reason, Anadarko continues to be liable under the Brasada gas processing agreement through 2034 to the extent Mesquite does not perform. For all periods presented, Mesquite has performed Anadarko’s obligations under the Brasada gas processing agreement pursuant to its agency arrangement with Anadarko.

Further, in connection with the sale of its Uinta Basin assets in 2020, Kerr McGee Oil & Gas Onshore LP, a subsidiary of Occidental, retained the deficiency payment obligations under a gas processing agreement at the Chipeta plant. This contingent payment obligation extends through the earlier of October 1, 2022, or the termination of the processing agreement.

Commodity purchase and sale agreements. Through December 31, 2020, the Partnership purchased and sold a significant amount of natural gas and NGLs from and to Anadarko Energy Services Company (“AESC”), a marketing affiliate of Occidental. Prior to April 1, 2020, AESC acted as an agent on behalf of either the Partnership or the Partnership’s customers for third-party sales. Where AESC sold natural gas and NGLs on the Partnership’s customers’ behalf, the Partnership recognized associated service revenues and cost of product expense for the marketing services performed by AESC. When product sales were on the Partnership’s behalf, the Partnership recognized product sales revenues based on Occidental’s sales price to the third party and recorded the associated cost of product expense associated with the marketing activities provided by AESC. Effective April 1, 2020, changes to marketing-contract terms with AESC terminated AESC’s prior status as an agent of the Partnership for third-party sales and established AESC as a customer of the Partnership. Accordingly, the Partnership no longer recognizes service revenues and/or product sales revenues and the equivalent cost of product expense for the marketing services performed by AESC. This change has no impact to Operating income (loss), Net income (loss), the balance sheets, cash flows, or any non-GAAP metric used to evaluate the Partnership’s operations (see Key Performance Metrics under Part I, Item 2 of this Form 10-Q).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

6. RELATED-PARTY TRANSACTIONS

Marketing Transition Services Agreement. Effective December 31, 2019, certain subsidiaries of Anadarko entered into a transition services agreement (the “Marketing Transition Services Agreement”) to provide marketing-related services to certain of the Partnership’s subsidiaries through December 31, 2020, subject to the option to extend such services for an additional six-month period. The Marketing Transition Services Agreement was terminated on December 31, 2020. While the Partnership still has some marketing agreements with affiliates of Occidental, the Partnership began marketing and selling substantially all of its natural gas and NGLs directly to third parties beginning on January 1, 2021.

Operating lease. As a result of the surface-use and salt-water disposal agreements being amended under the CUA (see Related-party Commercial Agreement below), these agreements are now classified as operating leases and a $30.0 million right-of-use (“ROU”) asset, included in Other assets on the consolidated balance sheets, was recognized during the first quarter of 2021. The ROU asset will be amortized to Operation and maintenance expense over the remaining term of the agreements.

Effective December 31, 2019, an affiliate of Occidental and a wholly owned subsidiary of the Partnership, the lessor, entered into an operating and maintenance agreement pursuant to which Occidental provides operational and maintenance services with respect to a crude-oil gathering system and associated treating facilities owned by the Partnership through December 31, 2021. The agreement and underlying contracts include (i) fixed consideration, which is measured as the minimum-volume commitment for both gathering and treating, and (ii) variable consideration, which consists of all volumes above the minimum-volume commitment. Subsequent to the initial two-year term, the agreement provides for automatic one-year extensions, unless either party exercises its option to terminate the lease with advance notice. In April 2021, the Partnership exercised its option to terminate the operating and maintenance agreement with Occidental effective December 31, 2021. For the three and six months ended June 30, 2021, the Partnership recognized fixed-lease revenue of $44.0 million and $87.9 million, respectively, and variable-lease revenue of $2.4 million and $1.3 million, respectively, related to these agreements. For the three and six months ended June 30, 2020, the Partnership recognized fixed-lease revenue of $44.0 million and $87.9 million, respectively, and variable-lease revenue of $17.2 million and $32.8 million, respectively, related to these agreements, with such amounts included in Service revenues – fee based in the consolidated statements of operations.

Related-party expenses. Operation and maintenance expense includes amounts accrued for or paid to related parties for field-related costs provided by related parties at certain of the Partnership’s assets. A portion of general and administrative expense is paid by Occidental, which results in related-party transactions pursuant to the reimbursement provisions of the Partnership’s and WES Operating’s agreements with Occidental. Cost of product expense includes amounts related to certain continuing marketing arrangements with affiliates of Occidental, related-party imbalances, and transactions with affiliates accounted for under the equity method of accounting. See Commodity purchase and sale agreements and Marketing Transition Services Agreement in the sections above. Related-party expenses do not bear a direct relationship to related-party revenues, and third-party expenses do not bear a direct relationship to third-party revenues.

Services Agreement. General and administrative expense includes costs incurred pursuant to the agreement dated as of December 31, 2019, by and among Occidental, Anadarko, and WES Operating GP, under which Occidental has performed certain centralized corporate functions for the Partnership and WES Operating (“Services Agreement”).

Pursuant to the Services Agreement, which was amended and restated on December 31, 2019, specified employees of Occidental were seconded to WES Operating GP to provide, under the direction, supervision, and control of the general partner, (i) operating and routine maintenance service and (ii) corporate, administrative, and other services, with respect to the assets owned and operated by the Partnership. Occidental was reimbursed for the services provided by the seconded employees. In January 2020, pursuant to the Services Agreement, Occidental made a one-time cash contribution of $20.0 million to WES Operating for anticipated transition costs required to establish stand-alone human resources and information technology functions. In late March 2020, seconded employees’ employment was transferred to the Partnership. Occidental continues to provide certain limited administrative and operational services to the Partnership, with most services expected to be fully transitioned to the Partnership by December 31, 2021.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

6. RELATED-PARTY TRANSACTIONS

Incentive Plans. General and administrative expense includes non-cash equity-based compensation expense allocated to the Partnership by Occidental for awards granted to the executive officers of the general partner and to other employees prior to their employment with the Partnership under (i) the Anadarko Petroleum Corporation 2012 Omnibus Incentive Compensation Plan, as amended and restated, (ii) Occidental’s 2015 Long-Term Incentive Plan, and (iii) Occidental’s Phantom Share Unit Award Plan (collectively referred to as the “Incentive Plans”). General and administrative expense includes allocated expense related to the Incentive Plans of $2.4 million and $5.6 million for the three and six months ended June 30, 2021, respectively, and $3.6 million and $7.7 million for the three and six months ended June 30, 2020, respectively. These amounts are reflected as contributions to partners’ capital in the consolidated statements of equity and partners’ capital.

Construction Reimbursement Agreements. From time to time, the Partnership enters into construction reimbursement agreements with Occidental providing that the Partnership will manage the construction of certain midstream infrastructure for Occidental in the Partnership’s areas of operation. Such arrangements generally provide for a reimbursement of costs incurred by the Partnership on a cost or cost-plus basis.

Related-party Commercial Agreement. During the first quarter of 2021, an affiliate of Occidental and certain wholly owned subsidiaries of the Partnership entered into a Commercial Understanding Agreement (“CUA”). Under the CUA, certain West Texas surface-use and salt-water disposal agreements were amended to reduce usage fees owed by the Partnership in exchange for the forgiveness of certain deficiency fees owed by Occidental and other unrelated contractual amendments. The present value of the reduced usage fees under the CUA was $30.0 million.

Anadarko note receivable. In May 2008, WES Operating loaned $260.0 million to Anadarko in exchange for a 30-year note that bore interest at a fixed annual rate and was classified as interest income in the consolidated statements of operations. On September 11, 2020, the Partnership and Occidental entered into a Unit Redemption Agreement, pursuant to which WES Operating transferred the note receivable to Anadarko, which Anadarko immediately canceled and retired upon receipt.

Purchases from related parties. During the fourth quarter of 2020, a subsidiary of the Partnership entered into an agreement to purchase three electrical substations located in the DJ Basin from a subsidiary of Occidental for $2.0 million. This purchase was recorded as an Accrued capital expenditure as of December 31, 2020, and cash was paid in January of 2021.

Concentration of credit risk. Occidental was the only customer from which revenues exceeded 10% of consolidated revenues for all periods presented in the consolidated statements of operations.

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7. EQUITY INVESTMENTS

The following table presents the financial statement impact of the Partnership’s equity investments for the six months ended June 30, 2021:


thousands	Balance at December 31, 2020		Other-than-temporary impairment expense (1)		Equity income, net		Contributions		Distributions		Distributions in excess of cumulative earnings (2)		Balance at June 30, 2021
White Cliffs	$	45,623	$	—	$	626	$	—	$	(336)	$	(3,551)	$	42,362
Rendezvous	28,198		—		(986)		—		(643)		(1,407)		25,162
Mont Belvieu JV	98,874		—		17,953		—		(17,972)		(1,403)		97,452
TEG	16,661		—		2,222		—		(2,235)		(210)		16,438
TEP	195,189		—		19,001		—		(17,198)		(4,491)		192,501
FRP	199,881		—		18,343		—		(18,430)		(3,973)		195,821
Whitethorn LLC	156,729		—		4,529		172		(4,281)		(2,640)		154,509
Cactus II	173,921		—		13,242		3,336		(10,669)		—		179,830
Saddlehorn	111,717		—		17,518		—		(16,605)		—		112,630
Panola	20,867		—		994		—		(993)		(463)		20,405
Mi Vida	55,031		—		3,996		—		(4,048)		(2,245)		52,734
Ranch Westex	18,898		(11,560)		6,152		—		(9,647)		(969)		2,874
Red Bluff Express	103,224		—		7,241		—		(7,706)		(21)		102,738
Total	$	1,224,813	$	(11,560)	$	110,831	$	3,508	$	(110,763)	$	(21,373)	$	1,195,456

_________________________________________________________________________________________

(1)Recorded in Long-lived asset and other impairments in the consolidated statements of operations.

(2)Distributions in excess of cumulative earnings, classified as investing cash flows in the consolidated statements of cash flows, are calculated on an individual-investment basis.

The investment balance in Ranch Westex at June 30, 2021, was $37.1 million less than the Partnership’s underlying equity in Ranch Westex’s net assets. During the second quarter of 2021, the Partnership recognized an impairment loss of $11.6 million that resulted from a decline in value below the carrying value, which was determined to be other than temporary in nature. This investment was impaired to its estimated fair value of $2.9 million, using the income approach and Level-3 fair value inputs, due to a reduction in estimated future cash flows resulting from lower forecasted producer throughput.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

8. PROPERTY, PLANT, AND EQUIPMENT

A summary of the historical cost of property, plant, and equipment is as follows:




thousands	Estimated Useful Life	June 30, 2021		December 31, 2020
Land	N/A	$	10,955	$	9,696
Gathering systems – pipelines	30 years	5,318,588		5,231,212
Gathering systems – compressors	15 years	2,141,652		2,096,905
Processing complexes and treating facilities	25 years	3,362,779		3,424,368
Transportation pipeline and equipment	6 to 45 years	168,205		168,205
Produced-water disposal systems	20 years	863,583		831,719
Assets under construction	N/A	88,280		176,834
Other	3 to 40 years	723,285		702,806
Total property, plant, and equipment		12,677,327		12,641,745
Less accumulated depreciation		4,087,362		3,931,800
Net property, plant, and equipment		$	8,589,965	$	8,709,945

The cost of property classified as “Assets under construction” is excluded from capitalized costs being depreciated. These amounts represent property that is not yet placed into productive service as of the respective balance sheet date.

Long-lived asset and other impairments. During the six months ended June 30, 2021, the Partnership recognized impairments of $27.6 million, primarily attributable to (i) $14.0 million of impairments at the DJ Basin complex due to cancellation of projects and (ii) an $11.6 million other-than-temporary impairment of the Partnership’s investment in Ranch Westex (see Note 7).

During the six months ended June 30, 2020, the Partnership recognized impairments of $165.9 million, primarily due to $149.4 million of impairments for assets located in Wyoming and Utah. These assets were impaired to estimated fair values of $112.2 million. The Partnership assesses whether events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The fair value of assets with impairment triggers were measured using the income approach and Level-3 fair value inputs. The income approach was based on the Partnership’s projected future earnings before interest, taxes, depreciation, and amortization (“EBITDA”) and free cash flows, which requires significant assumptions including, among others, future throughput volumes based on current expectations of producer activity and operating costs. These impairments were primarily triggered by reductions in estimated future cash flows resulting from lower forecasted producer throughput and lower commodity prices. The remaining impairments of $16.5 million were primarily at the DJ Basin complex due to cancellation of projects and impairments of rights-of-way.

Potential future long-lived asset impairments. As of June 30, 2021, it is reasonably possible that future commodity-price declines, prolonged depression of commodity prices, changes to producers’ drilling plans in response to lower prices, and potential producer bankruptcies could result in future long-lived asset impairments. For example, on April 29, 2020, the Partnership received notice that Sanchez, in its bankruptcy, is attempting to reject a number of midstream and downstream agreements with commercial counterparties, including Sanchez’s Springfield gathering agreements and agreements obligating Sanchez to deliver the gas volumes gathered by the Springfield system to our Brasada processing plant. On May 6, 2021, the Bankruptcy Court issued an opinion determining, among other things, that Sanchez’s Springfield gathering agreements were rejected, but that such agreements contain covenants running with the land that survive rejection, thus preserving the acreage dedication to the Partnership’s Springfield system. Depending on the ultimate outcome of the Partnership’s continuing efforts to defend its contractual rights in the bankruptcy proceeding, as well as the Partnership’s ongoing commercial discussions, the Partnership’s South Texas assets could be impaired.

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(UNAUDITED)

9. GOODWILL

Goodwill is recorded when the purchase price of a business acquired exceeds the fair market value of the tangible and separately measurable intangible net assets. Goodwill also includes the allocated historic carrying value of midstream goodwill attributed to the Partnership’s assets previously acquired from Anadarko. The Partnership’s goodwill has been allocated to two reporting units: (i) gathering and processing and (ii) transportation.

The Partnership evaluates goodwill for impairment at the reporting-unit level on an annual basis, as of October 1, or more often as facts and circumstances warrant. An initial qualitative assessment is performed to determine the likelihood of whether goodwill is impaired and if deemed necessary based on this assessment, a quantitative assessment is then performed. If the quantitative assessment indicates that the carrying value of the reporting unit, including goodwill, exceeds its fair value, a goodwill impairment is recorded for the amount by which the reporting unit’s carrying value exceeds its fair value.

During the three months ended March 31, 2020, the Partnership performed an interim goodwill impairment test due to a significant decline in the trading price of the Partnership’s common units, triggered by the combined impacts from the global outbreak of COVID-19 and the oil-market disruption resulting from significantly lower global demand and corresponding oversupply of crude oil. The Partnership primarily used the market approach and Level-3 inputs to estimate the fair value of its two reporting units. The market approach was based on multiples of EBITDA and the Partnership’s projected future EBITDA. The EBITDA multiples were based on current and historic multiples for comparable midstream companies of similar size and business profit to the Partnership. The EBITDA projections require significant assumptions including, among others, future throughput volumes based on current expectations of producer activity and operating costs. The reasonableness of the market approach was tested against an income approach that was based on a discounted cash-flow analysis. Key assumptions in this analysis include the use of an appropriate discount rate, terminal-year multiples, and estimated future cash flows, including estimates of throughput, capital expenditures, operating, and general and administrative costs. The Partnership also reviewed the reasonableness of the total fair value of both reporting units to the market capitalization as of March 31, 2020, and the reasonableness of an implied acquisition premium. Impairment determinations involve significant assumptions and judgments, and differing assumptions regarding any of these inputs could have a significant effect on the valuations. As a result of the interim impairment test, the Partnership recognized a goodwill impairment of $441.0 million during the first quarter of 2020, which reduced the carrying value of goodwill for the gathering and processing reporting unit to zero. Goodwill allocated to the transportation reporting unit of $4.8 million as of March 31, 2020, was not impaired. Recurring goodwill impairment assessments have indicated no further impairment.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

10. SELECTED COMPONENTS OF WORKING CAPITAL

A summary of accounts receivable, net is as follows:


	The Partnership				WES Operating


thousands	June 30, 2021		December 31, 2020		June 30, 2021		December 31, 2020
Trade receivables, net	$	519,109	$	452,718	$	519,109	$	407,547
Other receivables, net	7		162		7		2
Total accounts receivable, net	$	519,116	$	452,880	$	519,116	$	407,549

A summary of other current assets is as follows:


	The Partnership				WES Operating


thousands	June 30, 2021		December 31, 2020		June 30, 2021		December 31, 2020
NGLs inventory	$	3,088	$	882	$	3,088	$	882
Imbalance receivables	21,532		12,976		21,532		12,976
Prepaid insurance	2,436		8,131		1,274		6,113
Contract assets	18,700		5,338		18,700		5,338
Other	15,806		17,935		15,806		17,935
Total other current assets	$	61,562	$	45,262	$	60,400	$	43,244

A summary of accrued liabilities is as follows:


	The Partnership				WES Operating


thousands	June 30, 2021		December 31, 2020		June 30, 2021		December 31, 2020
Accrued interest expense	$	138,808	$	137,307	$	138,808	$	137,307
Short-term asset retirement obligations	15,719		20,215		15,719		20,215
Short-term remediation and reclamation obligations	6,101		2,950		6,101		2,950
Income taxes payable	3,771		3,399		3,771		3,399
Contract liabilities	16,261		31,477		16,261		31,477
Other	75,278		74,599		41,521		35,485
Total accrued liabilities	$	255,938	$	269,947	$	222,181	$	230,833

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11. DEBT AND INTEREST EXPENSE

WES Operating is the borrower for all outstanding debt and is expected to be the borrower for all future debt issuances. The following table presents the outstanding debt:


	June 30, 2021						December 31, 2020
thousands	Principal		Carrying Value		Fair Value (1)		Principal		Carrying Value		Fair Value (1)
Short-term debt
4.000% Senior Notes due 2022	$	580,917	$	580,671	$	590,880	$	—	$	—	$	—
5.375% Senior Notes due 2021	—		—		—		431,081		430,606		436,241
Finance lease liabilities	7,702		7,702		7,702		8,264		8,264		8,264
Total short-term debt	$	588,619	$	588,373	$	598,582	$	439,345	$	438,870	$	444,505

Long-term debt
4.000% Senior Notes due 2022	$	—	$	—	$	—	$	580,917	$	580,555	$	597,568
Floating-Rate Senior Notes due 2023	239,978		239,147		240,340		239,978		238,879		235,066
3.100% Senior Notes due 2025	1,000,000		993,702		1,058,006		1,000,000		992,900		1,028,614
3.950% Senior Notes due 2025	500,000		495,400		520,301		500,000		494,866		512,807
4.650% Senior Notes due 2026	500,000		496,973		536,802		500,000		496,708		524,880
4.500% Senior Notes due 2028	400,000		395,878		429,015		400,000		395,617		415,454
4.750% Senior Notes due 2028	400,000		396,744		435,221		400,000		396,555		418,786
4.050% Senior Notes due 2030	1,200,000		1,189,867		1,349,104		1,200,000		1,189,407		1,342,996
5.450% Senior Notes due 2044	600,000		593,666		646,910		600,000		593,598		607,234
5.300% Senior Notes due 2048	700,000		687,155		746,038		700,000		687,048		694,172
5.500% Senior Notes due 2048	350,000		342,600		382,457		350,000		342,543		343,928
5.250% Senior Notes due 2050	1,000,000		983,609		1,161,033		1,000,000		983,512		1,100,375

Finance lease liabilities	21,097		21,097		21,097		23,644		23,644		23,644
Total long-term debt	$	6,911,075	$	6,835,838	$	7,526,324	$	7,494,539	$	7,415,832	$	7,845,524

_________________________________________________________________________________________

(1)Fair value is measured using the market approach and Level-2 fair value inputs.

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11. DEBT AND INTEREST EXPENSE

Debt activity. The following table presents the debt activity for the six months ended June 30, 2021:


thousands	Carrying Value













Balance at December 31, 2020	$	7,854,702
RCF borrowings	100,000
Repayments of RCF borrowings	(100,000)
Repayment of 5.375% Senior Notes due 2021	(431,081)
Finance lease liabilities	(3,109)
Other	3,699
Balance at June 30, 2021	$	7,424,211

WES Operating Senior Notes. In mid-January 2020, WES Operating issued the Fixed-Rate 3.100% Senior Notes due 2025, 4.050% Senior Notes due 2030, and 5.250% Senior Notes due 2050 (collectively referred to as the “Fixed-Rate Senior Notes”) and the Floating-Rate Senior Notes due 2023 (the “Floating-Rate Senior Notes”). Including the effects of the issuance prices, underwriting discounts, and interest-rate adjustments, the effective interest rates of the Senior Notes due 2025, 2030, and 2050, were 4.542%, 5.424%, and 6.629%, respectively, at June 30, 2021, and were 3.287%, 4.168%, and 5.362%, respectively, at June 30, 2020. The interest rate on the Floating-Rate Senior Notes was 2.29% and 2.66% at June 30, 2021 and 2020, respectively. The effective interest rate of these notes is subject to adjustment from time to time due to a change in credit rating.

During the first quarter of 2021, WES Operating redeemed the total principal amount outstanding of the 5.375% Senior Notes due 2021 at par value, pursuant to the optional redemption terms in WES Operating’s indenture. As of June 30, 2021, the 4.000% Senior Notes due 2022 were classified as short-term debt on the consolidated balance sheet due to management’s intent to retire the notes within the next twelve months. At June 30, 2021, WES Operating was in compliance with all covenants under the relevant governing indentures.

Revolving credit facility. WES Operating’s $2.0 billion senior unsecured revolving credit facility (“RCF”) is expandable to a maximum of $2.5 billion, and matures in February 2025 for each extending lender. The non-extending lender’s commitments mature in February 2024 and represent $100.0 million out of $2.0 billion of total commitments from all lenders.

As of June 30, 2021, there were no outstanding borrowings and $5.1 million of outstanding letters of credit, resulting in $2.0 billion of available borrowing capacity under the RCF. As of June 30, 2021 and 2020, the interest rate on any outstanding RCF borrowings was 1.60% and 1.66%, respectively. The facility-fee rate was 0.25% at June 30, 2021 and 2020. At June 30, 2021, WES Operating was in compliance with all covenants under the RCF.

Term loan facility. In January 2020, WES Operating repaid the outstanding borrowings with proceeds from the issuance of the Fixed-Rate Senior Notes and Floating-Rate Senior Notes and terminated its $3.0 billion senior unsecured credit facility (“Term loan facility”), see WES Operating Senior Notes above. During the first quarter of 2020, a loss of $2.3 million was recognized for the early termination of the Term loan facility.

Finance lease liabilities. The Partnership subleased equipment from Occidental via finance leases through April 2020. During the first quarter of 2020, the Partnership entered into finance leases with third parties for equipment and vehicles extending through 2029, with future lease payments of $33.1 million as of June 30, 2021.

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WESTERN MIDSTREAM PARTNERS, LP AND WESTERN MIDSTREAM OPERATING, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

11. DEBT AND INTEREST EXPENSE

Interest expense. The following table summarizes the amounts included in interest expense:



	Three Months Ended June 30,				Six Months Ended June 30,
thousands	2021		2020		2021		2020
Third parties
Long-term and short-term debt	$	(92,487)	$	(89,650)	$	(188,209)	$	(179,419)
Finance lease liabilities	(292)		(388)		(590)		(793)
Amortization of debt issuance costs and commitment fees	(3,179)		(3,462)		(6,517)		(6,589)
Capitalized interest	668		(1,154)		1,533		3,604
Total interest expense – third parties	(95,290)		(94,654)		(193,783)		(183,197)
Related parties

Finance lease liabilities	—		—		—		(43)
Total interest expense – related parties	—		—		—		(43)
Interest expense	$	(95,290)	$	(94,654)	$	(193,783)	$	(183,240)

12. COMMITMENTS AND CONTINGENCIES

Environmental obligations. The Partnership is subject to various environmental-remediation obligations arising from federal, state, and local regulations regarding air and water quality, hazardous and solid waste disposal, and other environmental matters. As of June 30, 2021, and December 31, 2020, the consolidated balance sheets included $11.3 million and $8.2 million, respectively, of liabilities for remediation and reclamation obligations. The current portion of these amounts is included in Accrued liabilities, and the long-term portion of these amounts is included in Other liabilities. The recorded obligations do not include any anticipated insurance recoveries. The majority of payments related to these obligations are expected to be made over the next five years.

Litigation and legal proceedings. From time to time, the Partnership is involved in legal, tax, regulatory, and other proceedings in various forums regarding performance, contracts, and other matters that arise in the ordinary course of business. Management is not aware of any such proceeding for which the final disposition could have a material adverse effect on the Partnership’s financial condition, results of operations, or cash flows.

Other commitments. The Partnership has payment obligations, or commitments, that include, among other things, a revolving credit facility, other third-party long-term debt, obligations related to the Partnership’s capital spending programs, pipeline commitments, and various operating and finance leases. The payment obligations related to the Partnership’s capital spending programs, the majority of which is expected to be paid in the next twelve months, primarily relate to construction, expansion, and asset-integrity projects at the West Texas complex, DBM water systems, DJ Basin complex, and DBM oil system.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion analyzes our financial condition and results of operations and should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements, wherein WES Operating is fully consolidated, and which are included under Part I, Item 1 of this quarterly report, and the historical consolidated financial statements, and the notes thereto, which are included under Part II, Item 8 of the 2020 Form 10-K as filed with the SEC on February 26, 2021.

The Partnership’s assets include assets owned and ownership interests accounted for by us under the equity method of accounting, through our 98.0% partnership interest in WES Operating, as of June 30, 2021 (see Note 7—Equity Investments in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q). We also own and control the entire non-economic general partner interest in WES Operating GP, and our general partner is owned by Occidental.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

We have made in this Form 10-Q, and may make in other public filings, press releases, and statements by management, forward-looking statements concerning our operations, economic performance, and financial condition. These forward-looking statements include statements preceded by, followed by, or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “estimates,” “projects,” “target,” “goal,” “plans,” “objective,” “should,” or similar expressions or variations on such expressions. These statements discuss future expectations, contain projections of results of operations or financial condition, or include other “forward-looking” information.

Although we and our general partner believe that the expectations reflected in our forward-looking statements are reasonable, neither we nor our general partner can provide any assurance that such expectations will prove correct. These forward-looking statements involve risks and uncertainties. Important factors that could cause actual results to differ materially from expectations include, but are not limited to, the following:

•our ability to pay distributions to our unitholders;

•our assumptions about the energy market;

•future throughput (including Occidental production) that is gathered or processed by, or transported through our assets;

•our operating results;

•competitive conditions;

•technology;

•the availability of capital resources to fund acquisitions, capital expenditures, and other contractual obligations, and our ability to access financing through the debt or equity capital markets;

•the supply of, demand for, and price of, oil, natural gas, NGLs, and related products or services;

•commodity-price risks inherent in percent-of-proceeds, percent-of-product, and keep-whole contracts;

•weather and natural disasters;

•inflation;

•the availability of goods and services;

•general economic conditions, internationally, domestically, or in the jurisdictions in which we are doing business;

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•federal, state, and local laws and state-approved voter ballot initiatives, including those laws or ballot initiatives that limit producers’ hydraulic-fracturing activities or other oil and natural-gas development or operations;

•environmental liabilities;

•legislative or regulatory changes, including changes affecting our status as a partnership for federal income tax purposes;

•changes in the financial or operational condition of Occidental;

•the creditworthiness of Occidental or our other counterparties, including financial institutions, operating partners, and other parties;

•changes in Occidental’s capital program, corporate strategy, or other desired areas of focus;

•our commitments to capital projects;

•our ability to access liquidity under the RCF;

•our ability to repay debt;

•the impact from disruptions caused by winter storm Uri or the recent blizzard in the state of Colorado or resolution of litigation or other disputes;

•conflicts of interest among us, our general partner and its related parties, including Occidental, with respect to, among other things, the allocation of capital and operational and administrative costs, and our future business opportunities;

•our ability to maintain and/or obtain rights to operate our assets on land owned by third parties;

•our ability to acquire assets on acceptable terms from third parties;

•non-payment or non-performance of significant customers, including under gathering, processing, transportation, and disposal agreements;

•the timing, amount, and terms of future issuances of equity and debt securities;

•the outcome of pending and future regulatory, legislative, or other proceedings or investigations, and continued or additional disruptions in operations that may occur as we and our customers comply with any regulatory orders or other state or local changes in laws or regulations;

•the economic uncertainty from the worldwide outbreak of the coronavirus (“COVID-19”); and

•other factors discussed below, in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” included in the 2020 Form 10-K, in our quarterly reports on Form 10-Q, and in our other public filings and press releases.

Risk factors and other factors noted throughout or incorporated by reference in this Form 10-Q could cause actual results to differ materially from those contained in any forward-looking statement. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

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EXECUTIVE SUMMARY

We are a midstream energy company organized as a publicly traded partnership, 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. In our capacity as a natural-gas processor, we also buy and sell natural gas, NGLs, and condensate on behalf of ourselves and as an agent for our customers under certain contracts. To provide superior midstream service, we focus on ensuring the reliability and performance of our systems, creating sustainable cost efficiencies, enhancing our safety culture, and protecting the environment. We own or have investments in assets located in Texas, New Mexico, the Rocky Mountains (Colorado, Utah, and Wyoming), and North-central Pennsylvania. As of June 30, 2021, our assets and investments consisted of the following:


	Wholly Owned and Operated	Operated Interests	Non-Operated Interests	Equity Interests
Gathering systems (1)	17	2	3	1
Treating facilities	36	3	—	—
Natural-gas processing plants/trains	24	3	—	5
NGLs pipelines	2	—	—	5
Natural-gas pipelines	5	—	—	1
Crude-oil pipelines	3	1	—	4

_________________________________________________________________________________________

(1)Includes the DBM water systems.

Significant financial and operational events during the six months ended June 30, 2021, included the following:

•WES Operating redeemed the total principal amount outstanding of the 5.375% Senior Notes due 2021 at par value, pursuant to the optional redemption terms in WES Operating’s indenture.

•We repurchased 1,115,808 common units for an aggregate purchase price of $16.2 million during the six months ended June 30, 2021.

•Our second-quarter 2021 per-unit distribution of $0.31900 increased $0.004 from the first-quarter 2021 per-unit distribution of $0.31500.

•Natural-gas throughput attributable to WES totaled 4,265 MMcf/d and 4,157 MMcf/d for the three and six months ended June 30, 2021, respectively, representing a 5% increase and 6% decrease compared to the three months ended March 31, 2021, and six months ended June 30, 2020, respectively.

•Crude-oil and NGLs throughput attributable to WES totaled 687 MBbls/d and 645 MBbls/d for the three and six months ended June 30, 2021, respectively, representing a 14% increase and 13% decrease compared to the three months ended March 31, 2021, and six months ended June 30, 2020, respectively.

•Produced-water throughput attributable to WES totaled 688 MBbls/d and 642 MBbls/d for the three and six months ended June 30, 2021, respectively, representing a 16% increase and 12% decrease compared to the three months ended March 31, 2021, and six months ended June 30, 2020, respectively.

•Gross margin was $503.2 million and $958.7 million for the three and six months ended June 30, 2021, respectively, representing a 10% increase and 11% decrease compared to the three months ended March 31, 2021, and six months ended June 30, 2020, respectively. See Key Performance Metrics within this Item 2.

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•Adjusted gross margin for natural-gas assets (as defined under the caption Key Performance Metrics within this Item 2) averaged $1.21 per Mcf and $1.20 per Mcf for the three and six months ended June 30, 2021, respectively, representing a 2% increase and 4% increase compared to the three months ended March 31, 2021, and six months ended June 30, 2020, respectively.

•Adjusted gross margin for crude-oil and NGLs assets (as defined under the caption Key Performance Metrics within this Item 2) averaged $2.40 per Bbl and $2.43 per Bbl for the three and six months ended June 30, 2021, respectively, representing a 2% decrease compared to the three months ended March 31, 2021, and six months ended June 30, 2020.

•Adjusted gross margin for produced-water assets (as defined under the caption Key Performance Metrics within this Item 2) averaged $0.92 per Bbl for the three and six months ended June 30, 2021, representing no change and a 5% decrease compared to the three months ended March 31, 2021, and six months ended June 30, 2020, respectively.

The following table provides additional information on throughput for the periods presented below:



	Three Months Ended				Six Months Ended

	June 30, 2021	March 31, 2021	Inc/ (Dec)		June 30, 2021	June 30, 2020	Inc/ (Dec)
Throughput for natural-gas assets (MMcf/d)
Delaware Basin	1,244	1,133	10	%	1,189	1,349	(12)	%
DJ Basin	1,413	1,344	5	%	1,379	1,368	1	%
Equity investments	457	439	4	%	448	451	(1)	%
Other	1,310	1,279	2	%	1,296	1,435	(10)	%
Total throughput for natural-gas assets	4,424	4,195	5	%	4,312	4,603	(6)	%
Throughput for crude-oil and NGLs assets (MBbls/d)
Delaware Basin	184	162	14	%	173	197	(12)	%
DJ Basin	98	82	20	%	90	120	(25)	%
Equity investments	386	337	15	%	361	395	(9)	%
Other	33	35	(6)	%	34	43	(21)	%
Total throughput for crude-oil and NGLs assets	701	616	14	%	658	755	(13)	%
Throughput for produced-water assets (MBbls/d)
Delaware Basin	702	607	16	%	655	745	(12)	%



Total throughput for produced-water assets	702	607	16	%	655	745	(12)	%

Weather-related impacts. In February 2021, the U.S. experienced winter storm Uri, bringing extreme cold temperatures, ice, and snow to the central U.S., including Texas, and in March 2021, Colorado experienced a historic blizzard. Winter storm Uri adversely affected our volumes for approximately ten days and the blizzard in Colorado likewise disrupted our assets in that state. We estimate the impact of these weather events to have reduced net income and Adjusted EBITDA (as defined under the caption Key Performance Metrics within this Item 2) for the six months ended June 30, 2021, by approximately $30 million due to lower volumes, the impact of commodity-prices, and higher operating expenses related to utilities. The estimated impact of the adverse winter weather on our operations and financial results may change and those changes may be material. Any additional inclement weather in the future, or other adverse conditions, including resolution of litigation and other legal disputes and the COVID-19 pandemic and resulting mitigation factors, may have an adverse impact on our operations and financial results.

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COVID-19. During 2020, the global outbreak of COVID-19 caused a sharp decline in the worldwide demand for oil, natural gas, and NGLs, which contributed significantly to commodity-price declines and oversupplied commodities markets. These market dynamics have had an adverse impact on producers that provide throughput into our systems, and we have experienced decreased throughput at many of our locations.

Additionally, many of our employees have been and may continue to be subject to pandemic-related work-from-home requirements, which require us to take additional actions to ensure that the number of personnel accessing our network remotely does not lead to excessive cyber-security risk levels. Similarly, we are working continually to ensure operational changes that we have made to promote the health and safety of our personnel during this pandemic do not unduly disrupt intracompany communications and key business processes. We consider our risk-mitigation efforts adequate; however, the ultimate impact of the ongoing pandemic is unpredictable, with direct and indirect impacts to our business.

WES continues to monitor the COVID-19 situation closely, and as state and federal governments issue additional guidance, we will update our own policies in response to ensure the safety and health of our workforce and communities. The federal government has provided guidance to states on how to safely return personnel to the workplace, which we are following as our workforce returns to WES locations. All WES facilities, including field locations, have been conducting enhanced routine cleaning and disinfecting of common areas and frequently touched surfaces using CDC- and EPA-approved products. Our return-to-work protocols include daily required application-based health self-assessments that must be completed prior to accessing WES work locations.

Commodity purchase and sale agreements. Effective April 1, 2020, changes to marketing-contract terms with AESC terminated AESC’s prior status as an agent of the Partnership for third-party sales and established AESC as a customer of the Partnership. Accordingly, we no longer recognize service revenues and/or product sales revenues and the equivalent cost of product expense for the marketing services performed by AESC. Year-over-year variances for the six months ended June 30, 2021, include the following impacts related to this change (i) decrease of $45.9 million in Service revenues – fee based, (ii) decrease of $21.2 million in Product sales, and (iii) decrease of $67.1 million in Cost of product expense. These changes had no impact to Operating income (loss), Net income (loss), the balance sheets, cash flows, or any non-GAAP metric used to evaluate our operations (see Key Performance Metrics within this Item 2). See Note 6—Related-Party Transactions in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

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OUTLOOK

We expect our business to continue to be affected by the below-described key trends and uncertainties. Our expectations are based on assumptions made by us and information currently available to us. To the extent our underlying assumptions about, or interpretations of, available information prove incorrect, our actual results may vary materially from expected results.

Impact of crude-oil, natural-gas, and NGLs prices. Crude-oil, natural-gas, and NGLs prices can fluctuate significantly, and have done so over time. Commodity-price fluctuations affect the level of our customers’ activities and our customers’ allocations of capital within their own asset portfolios. During the first quarter of 2020, oil and natural-gas prices decreased significantly, driven by the expectation of increased supply and sharp declines in demand resulting from the worldwide macroeconomic downturn that followed the global outbreak of COVID-19. For example, NYMEX West Texas Intermediate crude-oil daily settlement prices ranged from a high of $63.27 per barrel in January 2020 to a low below $20.00 per barrel in April 2020. Although commodity prices have rebounded to pre-pandemic levels, the extent and duration of the recent commodity-price volatility cannot be predicted, and potential impacts to our business include the following:

•We have exposure to increased credit risk to the extent any of our customers, including Occidental, is in financial distress. See Liquidity and Capital Resources—Credit risk within this Item 2 for additional information.

•An extended period of diminished earnings may restrict our ability to fully access our RCF, which contains various customary covenants, certain events of default, and a maximum consolidated leverage ratio based on Adjusted EBITDA (as defined in the covenant) related to the trailing twelve-month period. Further, any future waivers or amendments to the RCF also may trigger pricing increases for available credit. See Liquidity and Capital Resources—Debt and credit facilities within this Item 2 for additional information.

•As of June 30, 2021, it is reasonably possible that future commodity-price declines, prolonged depression of commodity prices, changes to producers’ drilling plans in response to lower prices, and potential producer bankruptcies could result in future long-lived asset impairments.

To the extent producers continue with development plans in our areas of operation, we will continue to connect new wells or production facilities to our systems to maintain throughput on our systems and mitigate the impact of production declines. However, our success in connecting additional wells or production facilities is dependent on the activity levels of our customers. Additionally, we will continue to evaluate the crude-oil, NGLs, and natural-gas price environments and adjust our capital spending plans to reflect our customers’ anticipated activity levels, while maintaining appropriate liquidity and financial flexibility.

ACQUISITIONS AND DIVESTITURES

Fort Union and Bison facilities. In October 2020, we (i) sold our 14.81% interest in Fort Union, which was accounted for under the equity method of accounting, and (ii) entered into an option agreement to sell the Bison treating facility, located in Northeast Wyoming, to a third party.

During the second quarter of 2021, the third party exercised its option to purchase the Bison treating facility and the sale closed. We received total proceeds of $8.0 million, $7.0 million in the fourth quarter of 2020 and $1.0 million when the sale closed in the second quarter of 2021, resulting in a net gain on sale of $5.4 million that was recorded as Gain (loss) on divestiture and other, net in the consolidated statements of operations. See Note 3—Acquisitions and Divestitures in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q for further information.

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RESULTS OF OPERATIONS

OPERATING RESULTS

In November 2020, the SEC issued a final rule to modernize and simplify Management’s Discussion and Analysis and certain financial disclosure requirements in SEC Regulation S-K. As permitted by this final rule, the analysis herein reflects the optional approach to discuss results of operations on a sequential-quarter basis, which we believe will provide information that is most useful to investors in assessing our quarterly results of operations going forward. In addition, as required by the final rule, we have continued to include a comparison of the current year-to-date period to the prior year-to-date period.

For purposes of the following discussion, any increases or decreases “for the three months ended June 30, 2021” refer to the comparison of the three months ended June 30, 2021, to the three months ended March 31, 2021; and any increases or decreases “for the six months ended June 30, 2021” refer to the comparison of the six months ended June 30, 2021, to the six months ended June 30, 2020.

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



	Three Months Ended				Six Months Ended

thousands	June 30, 2021		March 31, 2021		June 30, 2021		June 30, 2020
Total revenues and other (1)	$	719,131	$	674,974	$	1,394,105	$	1,446,068
Equity income, net – related parties	58,666		52,165		110,831		115,762
Total operating expenses (1)	444,074		434,220		878,294		1,400,084
Gain (loss) on divestiture and other, net	1,225		(583)		642		(2,883)
Operating income (loss)	334,948		292,336		627,284		158,863
Interest income – Anadarko note receivable	—		—		—		8,450
Interest expense	(95,290)		(98,493)		(193,783)		(183,240)
Gain (loss) on early extinguishment of debt	—		(289)		(289)		8,740
Other income (expense), net	84		(1,207)		(1,123)		(108)
Income (loss) before income taxes	239,742		192,347		432,089		(7,295)
Income tax expense (benefit)	1,465		1,112		2,577		764
Net income (loss)	238,277		191,235		429,512		(8,059)
Net income (loss) attributable to noncontrolling interests	7,018		5,444		12,462		(24,569)
Net income (loss) attributable to Western Midstream Partners, LP (2)	$	231,259	$	185,791	$	417,050	$	16,510
Key performance metrics (3)
Adjusted gross margin	$	677,236	$	614,624	$	1,291,860	$	1,388,272
Adjusted EBITDA	491,126		443,110		934,236		1,028,028
Free cash flow	379,776		213,822		593,598		423,210

_________________________________________________________________________________________

(1)Total revenues and other includes amounts earned from services provided to related parties and from the sale of residue gas and NGLs to related parties. Total operating expenses includes amounts charged by related parties for services and reimbursements of amounts paid by related parties to third parties on our behalf. 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.

(3)Adjusted gross margin, Adjusted EBITDA, and Free cash flow are defined under the caption Key Performance Metrics within this Item 2. For reconciliations of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with GAAP, see Key Performance Metrics—Reconciliation of non-GAAP financial measures within this Item 2.

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Throughput



	Three Months Ended				Six Months Ended

	June 30, 2021	March 31, 2021	Inc/ (Dec)		June 30, 2021	June 30, 2020	Inc/ (Dec)
Throughput for natural-gas assets (MMcf/d)
Gathering, treating, and transportation	534	519	3	%	527	547	(4)	%
Processing	3,433	3,237	6	%	3,337	3,605	(7)	%
Equity investments (1)	457	439	4	%	448	451	(1)	%
Total throughput	4,424	4,195	5	%	4,312	4,603	(6)	%
Throughput attributable to noncontrolling interests (2)	159	150	6	%	155	164	(5)	%
Total throughput attributable to WES for natural-gas assets	4,265	4,045	5	%	4,157	4,439	(6)	%
Throughput for crude-oil and NGLs assets (MBbls/d)
Gathering, treating, and transportation	315	279	13	%	297	360	(18)	%
Equity investments (3)	386	337	15	%	361	395	(9)	%
Total throughput	701	616	14	%	658	755	(13)	%
Throughput attributable to noncontrolling interests (2)	14	12	17	%	13	15	(13)	%
Total throughput attributable to WES for crude-oil and NGLs assets	687	604	14	%	645	740	(13)	%
Throughput for produced-water assets (MBbls/d)
Gathering and disposal	702	607	16	%	655	745	(12)	%
Throughput attributable to noncontrolling interests (2)	14	12	17	%	13	15	(13)	%
Total throughput attributable to WES for produced-water assets	688	595	16	%	642	730	(12)	%

_________________________________________________________________________________________

(1)Represents the 14.81% share of average Fort Union throughput (until divested in October 2020), 22% share of average Rendezvous throughput, 50% share of average Mi Vida and Ranch Westex throughput, and 30% share of average Red Bluff Express throughput.

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

(3)Represents the 10% share of average White Cliffs throughput; 25% share of average Mont Belvieu JV throughput; 20% share of average TEG, TEP, Whitethorn, and Saddlehorn throughput; 33.33% share of average FRP throughput; and 15% share of average Panola and Cactus II throughput.

Natural-gas assets

Gathering, treating, and transportation throughput increased by 15 MMcf/d for the three months ended June 30, 2021, primarily due to increased production in areas around the Marcellus Interest systems.

Gathering, treating, and transportation throughput decreased by 20 MMcf/d for the six months ended June 30, 2021, primarily due to (i) production declines and the impact of winter storm Uri at the Springfield gas-gathering system and (ii) lower throughput at the Bison treating facility due to production declines in the area. These decreases were offset partially by increased production in areas around the Marcellus Interest systems.

Processing throughput increased by 196 MMcf/d for the three months ended June 30, 2021, primarily due to (i) increased production and recovery from the impact of winter storm Uri during the first quarter of 2021 at the West Texas complex, (ii) increased production in areas around the DJ Basin complex, and (iii) higher throughput at the Chipeta complex.

Processing throughput decreased by 268 MMcf/d for the six months ended June 30, 2021, primarily due to (i) lower production and the impact of winter storm Uri at the West Texas complex, (ii) the Granger straddle plant being held idle beginning in the third quarter of 2020, and (iii) lower throughput at the Chipeta and Granger complexes due to production declines in the area.

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Equity-investment throughput increased by 18 MMcf/d for the three months ended June 30, 2021, primarily due to increased volumes at the Mi Vida plant and on Red Bluff Express.

Equity-investment throughput decreased by 3 MMcf/d for the six months ended June 30, 2021, primarily due to (i) decreased volumes at the Rendezvous system due to production declines in the area and (ii) decreased volumes at the Fort Union system, which was sold to a third party during the fourth quarter of 2020. These decreases were offset partially by increased volumes on Red Bluff Express resulting from increased pipeline commitments.

Crude-oil and NGLs assets

Gathering, treating, and transportation throughput increased by 36 MBbls/d for the three months ended June 30, 2021, primarily due to (i) increased production and recovery from the impact of winter storm Uri during the first quarter of 2021 at the DBM oil system and (ii) increased production in areas around the DJ Basin oil system.

Gathering, treating, and transportation throughput decreased by 63 MBbls/d for the six months ended June 30, 2021, primarily due to (i) lower throughput at the DJ Basin oil system due to production declines in the area and (ii) lower throughput at the DBM oil system resulting from lower production and the impact of winter storm Uri.

Equity-investment throughput increased by 49 MBbls/d for the three months ended June 30, 2021, primarily due to increased volumes on the Whitethorn and Saddlehorn pipelines, TEP, FRP, and Mont Belvieu JV.

Equity-investment throughput decreased by 34 MBbls/d for the six months ended June 30, 2021, primarily due to decreased volumes on the Whitethorn pipeline, partially offset by increased volumes on the Saddlehorn pipeline.

Produced-water assets

Gathering and disposal throughput increased by 95 MBbls/d for the three months ended June 30, 2021, due to increased throughput at the DBM water systems resulting from higher production and recovery from the impact of winter storm Uri during the first quarter of 2021.

Gathering and disposal throughput decreased by 90 MBbls/d for the six months ended June 30, 2021, due to decreased throughput at the DBM water systems resulting from lower production and the impact of winter storm Uri.

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Service Revenues



	Three Months Ended						Six Months Ended

thousands except percentages	June 30, 2021		March 31, 2021		Inc/ (Dec)		June 30, 2021		June 30, 2020		Inc/ (Dec)
Service revenues – fee based	$	618,985	$	572,275	8	%	$	1,191,260	$	1,344,024	(11)	%
Service revenues – product based	27,803		31,652		(12)	%	59,455		22,921		159	%
Total service revenues	$	646,788	$	603,927	7	%	$	1,250,715	$	1,366,945	(9)	%

Service revenues – fee based

Service revenues – fee based increased by $46.7 million for the three months ended June 30, 2021, primarily due to increases of (i) $16.8 million at the West Texas complex, $8.4 million at the DBM water systems, and $4.3 million at the DBM oil system resulting from increased throughput, including recovery from the impact of winter storm Uri in the first quarter of 2021, and (ii) $14.1 million at the DJ Basin complex from increased throughput.

Service revenues – fee based decreased by $152.8 million for the six months ended June 30, 2021, primarily due to decreases of (i) $45.9 million, resulting from a change in accounting for the marketing contracts with AESC effective April 1, 2020 (see Executive Summary—Commodity purchase and sale agreements within this Item 2), (ii) $28.7 million at the DBM oil system due to decreased throughput, including the impact of winter storm Uri, and lower lease revenue under the operating and maintenance agreement with Occidental, (iii) $24.5 million at the DBM water systems resulting from decreased throughput, including the impact of winter storm Uri, and a lower average fee resulting from a cost-of-service rate redetermination effective January 1, 2021, (iv) $20.8 million at the West Texas complex from decreased throughput, including the impact of winter storm Uri, (v) $20.7 million at the DJ Basin complex due to decreased throughput on certain fee-based contracts, and (vi) $7.1 million at the Bison treating facility due to decreased throughput and the expiration of a minimum-volume commitment contract in the fourth quarter of 2020.

Service revenues – product based

Service revenues – product based decreased by $3.8 million for the three months ended June 30, 2021, primarily due to a decrease of $3.2 million at the Hilight system attributable to increased prices in the first quarter of 2021 due to the impact of winter storms in the area.

Service revenues – product based increased by $36.5 million for the six months ended June 30, 2021, primarily due to increases of (i) $13.3 million at the West Texas complex due to an increase in electricity-related rates billed to customers during winter storm Uri, (ii) $9.2 million at the DJ Basin complex due to increased third-party volumes, and (iii) $4.8 million at the Hilight system and $3.9 million at the Granger complex due to increased prices.

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Product Sales



	Three Months Ended						Six Months Ended

thousands except percentages and per-unit amounts	June 30, 2021		March 31, 2021		Inc/ (Dec)		June 30, 2021		June 30, 2020		Inc/ (Dec)
Natural-gas sales	$	14,195	$	21,419	(34)	%	$	35,614	$	16,723	113	%
NGLs sales	58,061		49,386		18	%	107,447		61,662		74	%
Total Product sales	$	72,256	$	70,805	2	%	$	143,061	$	78,385	83	%
Per-unit gross average sales price:
Natural gas (per Mcf)	$	2.65	$	5.98	(56)	%	$	4.26	$	1.22	NM
NGLs (per Bbl)	27.16		28.42		(4)	%	27.73		11.76		136	%

_________________________________________________________________________________________

NM—Not meaningful

Natural-gas sales

Natural-gas sales decreased by $7.2 million for the three months ended June 30, 2021, primarily due to decreases of (i) $13.4 million at the West Texas complex attributable to a decrease in average prices and (ii) $3.8 million at the MGR assets attributable to a decrease in average prices and volumes sold. These decreases were offset partially by an increase of $9.0 million at the DJ Basin complex attributable to an increase in volumes, partially offset by decreased average prices.

Natural-gas sales increased by $18.9 million for the six months ended June 30, 2021, primarily due to increases of (i) $22.4 million at the West Texas complex and $5.1 million at the MGR assets attributable to increases in average prices and (ii) $1.8 million resulting from a change in accounting for the marketing contracts with AESC effective April 1, 2020 (see Executive Summary—Commodity purchase and sale agreements within this Item 2). These increases were offset partially by a decrease of $11.1 million at the DJ Basin complex attributable to a decrease in volumes sold, partially offset by increased average prices.

NGLs sales

NGLs sales increased by $8.7 million for the three months ended June 30, 2021, primarily due to an increase of $8.0 million at the West Texas complex attributable to an increase in volumes sold, partially offset by a decrease in average prices.

NGLs sales increased by $45.8 million for the six months ended June 30, 2021, primarily due to increases of (i) $47.8 million at the West Texas complex attributable to an increase in average prices, partially offset by decreased volumes sold, (ii) $9.4 million at the Chipeta complex and $5.7 million at the Granger complex attributable to increases in average prices, and (iii) $4.9 million at the DJ Basin complex attributable to an increase in average prices and volumes sold. These increases were offset partially by a decrease of $23.0 million resulting from a change in accounting for the marketing contracts with AESC effective April 1, 2020 (see Executive Summary—Commodity purchase and sale agreements within this Item 2).

Equity Income, Net – Related Parties



	Three Months Ended						Six Months Ended

thousands except percentages	June 30, 2021		March 31, 2021		Inc/ (Dec)		June 30, 2021		June 30, 2020		Inc/ (Dec)
Equity income, net – related parties	$	58,666	$	52,165	12	%	$	110,831	$	115,762	(4)	%

Equity income, net – related parties increased by $6.5 million for the three months ended June 30, 2021, primarily due to (i) an increase in equity income at Mont Belvieu JV from higher volumes and a load-reduction electricity credit received related to winter storm Uri and (ii) higher volumes at FRP.

Equity income, net – related parties decreased by $4.9 million for the six months ended June 30, 2021, primarily due to (i) a decrease in equity income from Whitethorn LLC related to commercial activities and lower volumes and (ii) lower volumes at White Cliffs. These decreases were offset partially by an increase in equity income from higher volumes at Saddlehorn and Red Bluff Express.

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Cost of Product and Operation and Maintenance Expenses



	Three Months Ended						Six Months Ended

thousands except percentages	June 30, 2021		March 31, 2021		Inc/ (Dec)		June 30, 2021		June 30, 2020		Inc/ (Dec)
NGLs purchases	$	42,305	$	30,919	37	%	$	73,224	$	92,781	(21)	%
Residue purchases	23,019		57,904		(60)	%	80,923		33,160		144	%
Other	12,720		146		NM		12,866		(4,069)		NM
Cost of product	78,044		88,969		(12)	%	167,013		121,872		37	%
Operation and maintenance	153,028		140,332		9	%	293,360		304,377		(4)	%
Total Cost of product and Operation and maintenance expenses	$	231,072	$	229,301	1	%	$	460,373	$	426,249	8	%

NGLs purchases

NGLs purchases increased by $11.4 million for the three months ended June 30, 2021, primarily due to an increase of $8.2 million at the West Texas complex attributable to purchased-volume increases, partially offset by an average-price decrease.

NGLs purchases decreased by $19.6 million for the six months ended June 30, 2021, primarily due to a decrease of $61.1 million resulting from a change in accounting for the marketing contracts with AESC effective April 1, 2020 (see Executive Summary—Commodity purchase and sale agreements within this Item 2), partially offset by increases of $18.4 million at the West Texas complex, $12.9 million at the DJ Basin complex, $4.8 million at the Chipeta complex, and $3.5 million at the Granger complex attributable to average-price increases.

Residue purchases

Residue purchases decreased by $34.9 million for the three months ended June 30, 2021, primarily due to decreases of $19.3 million at the West Texas complex, $4.1 million at the DJ Basin complex, $3.7 million at the Hilight system, $2.4 million at the MGR assets, and $2.3 million at the Granger complex attributable to average-price decreases.

Residue purchases increased by $47.8 million for the six months ended June 30, 2021, primarily due to increases of $35.4 million at the West Texas complex, $4.9 million at the Chipeta complex, $4.6 million at the Hilight system, and $4.0 million at the MGR assets attributable to average-price increases. These increases were offset partially by a decrease of $5.2 million resulting from a change in accounting for the marketing contracts with AESC effective April 1, 2020 (see Executive Summary—Commodity purchase and sale agreements within this Item 2).

Other items

Other items increased by $12.6 million for the three months ended June 30, 2021, primarily due to increases of (i) $9.8 million at the DJ Basin complex and (ii) $3.6 million at the West Texas complex, primarily attributable to changes in imbalance positions.

Other items increased by $16.9 million for the six months ended June 30, 2021, primarily due to an increase of $28.8 million at the West Texas complex, primarily attributable to changes in imbalance positions, partially offset by a decrease of $11.9 million at the DJ Basin complex due to changes in imbalance positions.

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Operation and maintenance expense

Operation and maintenance expense increased by $12.7 million for the three months ended June 30, 2021, primarily due to an increase of $9.1 million at the DJ Basin complex due to an environmental liability of $4.1 million recorded in the second quarter of 2021, as well as increased surface maintenance and plant repairs, and field-related expenses.

Operation and maintenance expense decreased by $11.0 million for the six months ended June 30, 2021, primarily due to decreases of (i) $10.7 million at the West Texas complex, primarily attributable to reduced salaries and wages, surface maintenance and plant repairs, and safety expense, partially offset by increased utilities expense primarily resulting from the impact of winter storm Uri and (ii) $6.7 million at the DBM water systems attributable to lower disposal fees resulting from reduced volumes and lower surface-use fees, partially offset by increased utilities expense and surface maintenance and plant repairs, including the impact of winter storm Uri. These decreases were offset partially by an increase of $5.3 million at the DBM oil system, primarily attributable to increases in field-related expenses and utilities expense primarily resulting from the impact of winter storm Uri.

Other Operating Expenses



	Three Months Ended						Six Months Ended

thousands except percentages	June 30, 2021		March 31, 2021		Inc/ (Dec)		June 30, 2021		June 30, 2020		Inc/ (Dec)
General and administrative	$	44,448	$	45,116	(1)	%	$	89,564	$	76,888	16	%
Property and other taxes	17,967		14,384		25	%	32,351		37,871		(15)	%
Depreciation and amortization	137,849		130,553		6	%	268,402		252,124		6	%
Long-lived asset and other impairments	12,738		14,866		(14)	%	27,604		165,935		(83)	%
Goodwill impairment	—		—		NM		—		441,017		NM
Total other operating expenses	$	213,002	$	204,919	4	%	$	417,921	$	973,835	(57)	%

General and administrative expenses

General and administrative expenses increased by $12.7 million for the six months ended June 30, 2021, primarily due to (i) a $6.3 million increase in personnel costs primarily related to increased bonus-related contributions under our employee savings plan, (ii) a $5.3 million increase in contract and consulting costs primarily related to information technology services and fees, and (iii) a $3.7 million increase in corporate expenses and professional fees.

Property and other taxes

Property and other taxes increased by $3.6 million for the three months ended June 30, 2021, due to ad valorem tax increases at the DJ Basin complex and DJ Basin oil system, primarily due to favorable differences between actual and estimated tax payments related to the 2020 fiscal year recognized in the first quarter of 2021.

Property and other taxes decreased by $5.5 million for the six months ended June 30, 2021, primarily due to ad valorem tax decreases at the West Texas and DJ Basin complexes, and DJ Basin oil system due to favorable differences between actual and estimated tax payments related to the 2020 fiscal year.

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Depreciation and amortization expense

Depreciation and amortization expense increased by $7.3 million for the three months ended June 30, 2021, primarily due to increases of (i) $3.2 million at a transportation asset in Southwest Wyoming, primarily as a result of downward asset retirement obligation revisions made in the first quarter of 2021 and (ii) $2.3 million at the MGR assets and Hilight system due to an acceleration of depreciation expense.

Depreciation and amortization expense increased by $16.3 million for the six months ended June 30, 2021, primarily due to increases of (i) $13.1 million at the DJ Basin complex, primarily as a result of a change in estimate for asset retirement obligations for the Third Creek gathering system in the comparative prior period, (ii) $5.6 million at the West Texas complex resulting from capital projects being placed into service, and (iii) $4.5 million related to depreciation for capitalized information technology implementation costs related to the stand-up of WES as an independent organization. These increases were offset partially by decreases of (i) $8.4 million due to the sale of the Bison treating facility and (ii) $3.3 million at a transportation asset in Southwest Wyoming, primarily as a result of downward asset retirement obligation revisions made in the first quarter of 2021.

Long-lived asset and other impairment expense

Long-lived asset and other impairment expense for the three months ended June 30, 2021, was primarily due to an $11.6 million other-than-temporary impairment of our investment in Ranch Westex.

Long-lived asset and other impairment expense for the three months ended March 31, 2021, was primarily due to $13.5 million of impairments at the DJ Basin complex due to cancellation of projects.

Long-lived asset and other impairment expense for the six months ended June 30, 2020, was primarily due to (i) $149.4 million of impairments for assets located in Wyoming and Utah and (ii) impairments at the DJ Basin complex due to cancellation of projects and impairments of rights-of-way.

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

Goodwill impairment expense

During the three months ended March 31, 2020, an interim goodwill impairment test was performed due to significant unit-price declines triggered by the combined impacts from the global outbreak of COVID-19 and the oil-market disruption. As a result of the interim impairment test, a goodwill impairment of $441.0 million was recognized for the gathering and processing reporting unit. For additional information, see Note 9—Goodwill in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

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Interest Income – Anadarko Note Receivable and Interest Expense



	Three Months Ended						Six Months Ended

thousands except percentages	June 30, 2021		March 31, 2021		Inc/ (Dec)		June 30, 2021		June 30, 2020		Inc/ (Dec)

Interest income – Anadarko note receivable	$	—	$	—	—	%	$	—	$	8,450	(100)	%

Third parties
Long-term and short-term debt	$	(92,487)	$	(95,722)	(3)	%	$	(188,209)	$	(179,419)	5	%
Finance lease liabilities	(292)		(298)		(2)	%	(590)		(793)		(26)	%
Amortization of debt issuance costs and commitment fees	(3,179)		(3,338)		(5)	%	(6,517)		(6,589)		(1)	%
Capitalized interest	668		865		23	%	1,533		3,604		(57)	%
Related parties

Finance lease liabilities	—		—		—	%	—		(43)		(100)	%
Interest expense	$	(95,290)	$	(98,493)	(3)	%	$	(193,783)	$	(183,240)	6	%

Interest income

Interest income - Anadarko note receivable decreased by $8.5 million for the six months ended June 30, 2021, due to the exchange of the Anadarko note receivable under the Unit Redemption Agreement in September 2020. See Note 6—Related-Party Transactions in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

Interest expense

Interest expense decreased by $3.2 million for the three months ended June 30, 2021, primarily due to lower interest incurred on the 5.375% Senior Notes due 2021 that were called on March 1, 2021.

Interest expense increased by $10.5 million for the six months ended June 30, 2021, primarily due to (i) $23.8 million of additional interest incurred from higher effective interest rates resulting from credit-rating downgrades on the 3.100% Senior Notes due 2025, 4.050% Senior Notes due 2030, and 5.250% Senior Notes due 2050 and (ii) a decrease of $2.1 million in capitalized interest due to decreased capital expenditures. These increases were offset partially by decreases of (i) $11.0 million due to lower outstanding balances on the 5.375% Senior Notes due 2021 that were called on March 1, 2021, 4.000% Senior Notes due 2022, and Floating-Rate Senior Notes due 2023 and (ii) $4.1 million due to lower outstanding borrowings under the RCF in 2021. See Liquidity and Capital Resources—Debt and credit facilities within this Item 2.

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Income Tax Expense (Benefit)



	Three Months Ended								Six Months Ended

thousands except percentages	June 30, 2021			March 31, 2021			Inc/ (Dec)		June 30, 2021			June 30, 2020		Inc/ (Dec)
Income (loss) before income taxes	$	239,742		$	192,347		25	%	$	432,089		$	(7,295)	NM
Income tax expense (benefit)	1,465			1,112			32	%	2,577			764		NM
Effective tax rate	1		%	1		%			1		%	NM

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.

For all periods presented, the variance from the federal statutory rate primarily was due to our Texas margin tax liability.

KEY PERFORMANCE METRICS



	Three Months Ended						Six Months Ended

thousands except percentages and per-unit amounts	June 30, 2021		March 31, 2021		Inc/ (Dec)		June 30, 2021		June 30, 2020		Inc/ (Dec)
Adjusted gross margin for natural-gas assets	$	469,409	$	432,389	9	%	$	901,798	$	925,842	(3)	%
Adjusted gross margin for crude-oil and NGLs assets	150,317		133,145		13	%	283,462		333,595		(15)	%
Adjusted gross margin for produced-water assets	57,510		49,090		17	%	106,600		128,835		(17)	%
Adjusted gross margin	677,236		614,624		10	%	1,291,860		1,388,272		(7)	%
Per-Mcf Adjusted gross margin for natural-gas assets (1)	1.21		1.19		2	%	1.20		1.15		4	%
Per-Bbl Adjusted gross margin for crude-oil and NGLs assets (2)	2.40		2.45		(2)	%	2.43		2.48		(2)	%
Per-Bbl Adjusted gross margin for produced-water assets (3)	0.92		0.92		—	%	0.92		0.97		(5)	%
Adjusted EBITDA	491,126		443,110		11	%	934,236		1,028,028		(9)	%
Free cash flow	379,776		213,822		78	%	593,598		423,210		40	%

_________________________________________________________________________________________

(1)Average for period. Calculated as Adjusted gross margin for natural-gas assets, divided by total throughput (MMcf/d) attributable to WES for natural-gas assets.

(2)Average for period. Calculated as Adjusted gross margin for crude-oil and NGLs assets, divided by total throughput (MBbls/d) attributable to WES for crude-oil and NGLs assets.

(3)Average for period. Calculated as Adjusted gross margin for produced-water assets, divided by total throughput (MBbls/d) attributable to WES for produced-water assets.

Adjusted gross margin. We define Adjusted gross margin attributable to Western Midstream Partners, LP (“Adjusted gross margin”) as total revenues and other (less reimbursements for electricity-related expenses recorded as revenue), less cost of product, plus distributions from equity investments, and excluding the noncontrolling interest owners’ proportionate share of revenues and cost of product. We believe Adjusted gross margin is an important performance measure of our operations’ profitability and performance as compared to other companies in the midstream industry. Cost of product expenses include (i) costs associated with the purchase of natural gas and NGLs pursuant to our percent-of-proceeds, percent-of-product, and keep-whole contracts, (ii) costs associated with the valuation of gas and NGLs imbalances, and (iii) costs associated with our obligations under certain contracts to redeliver a volume of natural gas to shippers, which is thermally equivalent to condensate retained by us and sold to third parties.

To facilitate investor and industry analyst comparisons between us and our peers, we also disclose per-Mcf Adjusted gross margin for natural-gas assets, per-Bbl Adjusted gross margin for crude-oil and NGLs assets, and per-Bbl Adjusted gross margin for produced-water assets.

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Adjusted gross margin increased by $62.6 million for the three months ended June 30, 2021, primarily due to (i) increased throughput at the West Texas and DJ Basin complexes and the DBM water, DBM oil, and DJ Basin oil systems and (ii) an increase in distributions from Mont Belvieu JV.

Adjusted gross margin decreased by $96.4 million for the six months ended June 30, 2021, primarily due to (i) decreased throughput and lower lease revenue under the operating and maintenance agreement with Occidental at the DBM oil system, (ii) decreased throughput and a lower average fee resulting from a cost-of-service rate redetermination effective January 1, 2021, at the DBM water systems, (iii) decreased throughput at the West Texas complex, (iv) decreased throughput on certain fee-based contracts at the DJ Basin complex, and (v) a decrease in distributions from Whitethorn LLC.

Per-Mcf Adjusted gross margin for natural-gas assets increased by $0.02 for the three months ended June 30, 2021, primarily due to increased throughput at the DJ Basin complex, which has a higher-than-average per-Mcf margin as compared to our other natural-gas assets.

Per-Mcf Adjusted gross margin for natural-gas assets increased by $0.05 for the six months ended June 30, 2021, primarily due to a higher cost-of-service rate effective January 1, 2021, at the West Texas complex, partially offset by decreased throughput on certain fee-based contracts at the DJ Basin complex, which has a higher-than-average per-Mcf margin as compared to our other natural-gas assets.

Per-Bbl Adjusted gross margin for crude-oil and NGLs assets decreased by $0.05 for the three months ended June 30, 2021, primarily due to (i) increased volumes on the Whitethorn pipeline, which has a lower-than-average per-Bbl margin as compared to our other crude-oil and NGLs assets and (ii) a decrease in distributions from White Cliffs and FRP. These decreases were offset partially by an increase in distributions from Mont Belvieu JV.

Per-Bbl Adjusted gross margin for crude-oil and NGLs assets decreased by $0.05 for the six months ended June 30, 2021, primarily due to decreased throughput and lower lease revenue under the operating and maintenance agreement with Occidental at the DBM oil system, which has a higher-than-average per-Bbl margin as compared to our other crude-oil and NGLs assets, partially offset by a higher cost-of-service rate effective January 1, 2021, at the DJ Basin oil system.

Per-Bbl Adjusted gross margin for produced-water assets decreased by $0.05 for the six months ended June 30, 2021, primarily due to a lower average fee resulting from a cost-of-service rate redetermination effective January 1, 2021.

Adjusted EBITDA. We define Adjusted EBITDA attributable to Western Midstream Partners, LP (“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. We believe the presentation of Adjusted EBITDA provides information useful to investors in assessing our financial condition and results of operations and that Adjusted EBITDA is a widely accepted financial indicator of a company’s ability to incur and service debt, fund capital expenditures, and make distributions. Adjusted EBITDA is a supplemental financial measure that management and external users of our consolidated financial statements, such as industry analysts, investors, commercial banks, and rating agencies, use, among other measures, to assess the following:

•our operating performance as compared to other publicly traded partnerships in the midstream industry, without regard to financing methods, capital structure, or historical cost basis;

•the ability of our assets to generate cash flow to make distributions; and

•the viability of acquisitions and capital expenditures and the returns on investment of various investment opportunities.

Adjusted EBITDA increased by $48.0 million for the three months ended June 30, 2021, primarily due to (i) a $44.2 million increase in total revenues and other, (ii) a $10.9 million decrease in cost of product (net of lower of cost or market inventory adjustments), and (iii) a $9.8 million increase in distributions from equity investments. These amounts were offset partially by (i) a $12.7 million increase in operation and maintenance expenses and (ii) a $3.6 million increase in property taxes.

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Adjusted EBITDA decreased by $93.8 million for the six months ended June 30, 2021, primarily due to (i) a $52.0 million decrease in total revenues and other, (ii) a $45.3 million increase in cost of product (net of lower of cost or market inventory adjustments), (iii) a $9.7 million increase in general and administrative expenses excluding non-cash equity-based compensation expense, and (iv) a $5.4 million decrease in distributions from equity investments. These amounts were offset partially by (i) an $11.0 million decrease in operation and maintenance expenses and (ii) a $5.5 million decrease in property taxes. The above-described variances in cost of product and total revenues and other include the impacts resulting from a change in accounting for the marketing contracts with AESC effective April 1, 2020, which had no net impact on Adjusted EBITDA (see Executive Summary—Commodity purchase and sale agreements within this Item 2).

Free cash flow. We define “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. Management considers Free cash flow an appropriate metric for assessing capital discipline, cost efficiency, and balance-sheet strength. Although Free cash flow is the metric used to assess WES’s ability to make distributions to unitholders, this measure should not be viewed as indicative of the actual amount of cash that is available for distributions or planned for distributions for a given period. Instead, Free cash flow should be considered indicative of the amount of cash that is available for distributions, debt repayments, and other general partnership purposes.

Free cash flow increased by $166.0 million for the three months ended June 30, 2021, primarily due to an increase of $190.6 million in net cash provided by operating activities, partially offset by (i) an increase of $18.4 million in capital expenditures and (ii) an increase of $3.3 million in contributions to equity investments.

Free cash flow increased by $170.4 million for the six months ended June 30, 2021, primarily due to (i) a decrease of $175.1 million in capital expenditures, (ii) a decrease of $12.6 million in contributions to equity investments, and (iii) an $8.0 million increase in distributions from equity investments in excess of cumulative earnings. These amounts were offset partially by a decrease of $25.3 million in net cash provided by operating activities.

See Capital Expenditures and Historical Cash Flow within this Item 2 for further information.

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Reconciliation of non-GAAP financial measures. Adjusted gross margin, Adjusted EBITDA, and Free cash flow are not defined in GAAP. The GAAP measure used by us that is most directly comparable to Adjusted gross margin is gross margin. Net income (loss) and net cash provided by operating activities are the GAAP measures used by us that are most directly comparable to Adjusted EBITDA. The GAAP measure used by us that is most directly comparable to Free cash flow is net cash provided by operating activities. Our non-GAAP financial measures of Adjusted gross margin, Adjusted EBITDA, and Free cash flow should not be considered as alternatives to the GAAP measures of gross margin, net income (loss), net cash provided by operating activities, or any other measure of financial performance presented in accordance with GAAP. Adjusted gross margin, Adjusted EBITDA, and Free cash flow have important limitations as analytical tools because they exclude some, but not all, items that affect gross margin, net income (loss), and net cash provided by operating activities. Adjusted gross margin, Adjusted EBITDA, and Free cash flow should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Our definitions of Adjusted gross margin, Adjusted EBITDA, and Free cash flow may not be comparable to similarly titled measures of other companies in our industry, thereby diminishing their utility as comparative measures.

Management compensates for the limitations of Adjusted gross margin, Adjusted EBITDA, and Free cash flow as analytical tools by reviewing the comparable GAAP measures, understanding the differences between Adjusted gross margin, Adjusted EBITDA, and Free cash flow compared to (as applicable) gross margin, net income (loss), and net cash provided by operating activities, and incorporating this knowledge into its decision-making processes. We believe that investors benefit from having access to the same financial measures that our management considers in evaluating our operating results.

The following tables present (i) a reconciliation of the GAAP financial measure of gross margin to the non-GAAP financial measure of Adjusted gross margin, (ii) a reconciliation of the GAAP financial measures of net income (loss) and net cash provided by operating activities to the non-GAAP financial measure of Adjusted EBITDA, and (iii) a reconciliation of the GAAP financial measure of net cash provided by operating activities to the non-GAAP financial measure of Free cash flow:



	Three Months Ended				Six Months Ended

thousands	June 30, 2021		March 31, 2021		June 30, 2021		June 30, 2020
Reconciliation of Gross margin to Adjusted gross margin
Total revenues and other	$	719,131	$	674,974	$	1,394,105	$	1,446,068
Less:
Cost of product	78,044		88,969		167,013		121,872
Depreciation and amortization	137,849		130,553		268,402		252,124
Gross margin	503,238		455,452		958,690		1,072,072
Add:
Distributions from equity investments	70,947		61,189		132,136		137,496
Depreciation and amortization	137,849		130,553		268,402		252,124
Less:
Reimbursed electricity-related charges recorded as revenues	17,585		17,312		34,897		40,828
Adjusted gross margin attributable to noncontrolling interests (1)	17,213		15,258		32,471		32,592
Adjusted gross margin	$	677,236	$	614,624	$	1,291,860	$	1,388,272
Adjusted gross margin for natural-gas assets	$	469,409	$	432,389	$	901,798	$	925,842
Adjusted gross margin for crude-oil and NGLs assets	150,317		133,145		283,462		333,595
Adjusted gross margin for produced-water assets	57,510		49,090		106,600		128,835

_________________________________________________________________________________________

(1)For all periods presented, includes (i) the 25% third-party interest in Chipeta and (ii) the 2.0% Occidental subsidiary-owned limited partner interest in WES Operating, which collectively represent WES’s noncontrolling interests.

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	Three Months Ended				Six Months Ended

thousands	June 30, 2021		March 31, 2021		June 30, 2021		June 30, 2020
Reconciliation of Net income (loss) to Adjusted EBITDA
Net income (loss)	$	238,277	$	191,235	$	429,512	$	(8,059)
Add:
Distributions from equity investments	70,947		61,189		132,136		137,496
Non-cash equity-based compensation expense	7,121		6,734		13,855		10,911
Interest expense	95,290		98,493		193,783		183,240
Income tax expense	1,465		1,112		2,577		5,044
Depreciation and amortization	137,849		130,553		268,402		252,124
Impairments (1)	12,738		14,866		27,604		606,952
Other expense	30		1,218		1,248		1,950
Less:
Gain (loss) on divestiture and other, net	1,225		(583)		642		(2,883)
Gain (loss) on early extinguishment of debt	—		(289)		(289)		8,740
Equity income, net – related parties	58,666		52,165		110,831		115,762
Interest income – Anadarko note receivable	—		—		—		8,450
Other income	84		—		84		1,652
Income tax benefit	—		—		—		4,280
Adjusted EBITDA attributable to noncontrolling interests (2)	12,616		10,997		23,613		25,629
Adjusted EBITDA	$	491,126	$	443,110	$	934,236	$	1,028,028
Reconciliation of Net cash provided by operating activities to Adjusted EBITDA
Net cash provided by operating activities	$	452,111	$	261,550	$	713,661	$	738,999
Interest (income) expense, net	95,290		98,493		193,783		174,790

Accretion and amortization of long-term obligations, net	(1,914)		(2,088)		(4,002)		(4,297)
Current income tax expense (benefit)	749		555		1,304		(35)
Other (income) expense, net	(84)		1,207		1,123		(412)
Cash paid to settle interest-rate swaps	—		—		—		12,763
Distributions from equity investments in excess of cumulative earnings – related parties	9,232		12,141		21,373		13,340
Changes in assets and liabilities:
Accounts receivable, net	38,982		30,182		69,164		200,136
Accounts and imbalance payables and accrued liabilities, net	(55,758)		16,467		(39,291)		(72,323)
Other items, net	(34,866)		35,600		734		(9,304)
Adjusted EBITDA attributable to noncontrolling interests (2)	(12,616)		(10,997)		(23,613)		(25,629)
Adjusted EBITDA	$	491,126	$	443,110	$	934,236	$	1,028,028
Cash flow information
Net cash provided by operating activities	$	452,111	$	261,550	$	713,661	$	738,999
Net cash used in investing activities	(59,932)		(46,472)		(106,404)		(355,001)
Net cash provided by (used in) financing activities	(142,982)		(603,624)		(746,606)		(424,222)

_________________________________________________________________________________________

(1)Includes goodwill impairment for the six months ended June 30, 2020. See Note 9—Goodwill in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

(2)For all periods presented, includes (i) the 25% third-party interest in Chipeta and (ii) the 2.0% Occidental subsidiary-owned limited partner interest in WES Operating, which collectively represent WES’s noncontrolling interests.

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	Three Months Ended				Six Months Ended

thousands	June 30, 2021		March 31, 2021		June 30, 2021		June 30, 2020
Reconciliation of Net cash provided by operating activities to Free cash flow
Net cash provided by operating activities	$	452,111	$	261,550	$	713,661	$	738,999
Less:
Capital expenditures	78,145		59,783		137,928		313,065
Contributions to equity investments – related parties	3,422		86		3,508		16,064
Add:
Distributions from equity investments in excess of cumulative earnings – related parties	9,232		12,141		21,373		13,340
Free cash flow	$	379,776	$	213,822	$	593,598	$	423,210
Cash flow information
Net cash provided by operating activities	$	452,111	$	261,550	$	713,661	$	738,999
Net cash used in investing activities	(59,932)		(46,472)		(106,404)		(355,001)
Net cash provided by (used in) financing activities	(142,982)		(603,624)		(746,606)		(424,222)

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LIQUIDITY AND CAPITAL RESOURCES

Our primary cash uses include quarterly distributions, debt service, capital expenditures, and customary operating expenses. Our sources of liquidity as of June 30, 2021, included cash and cash equivalents, cash flows generated from operations, available borrowing capacity under the RCF, and potential issuances of additional equity or debt securities. We believe that cash flows generated from these sources will be sufficient to satisfy our short-term working capital requirements and long-term capital-expenditure and debt service requirements. The amount of future distributions to unitholders will depend on our results of operations, financial condition, capital requirements, and other factors, and will be determined by the Board of Directors on a quarterly basis. We may rely on external financing sources, including equity and debt issuances, to fund capital expenditures and future acquisitions. However, we also may use operating cash flows to fund capital expenditures or acquisitions, which could result in borrowings under the RCF to pay distributions or to fund other short-term working capital requirements.

Under our partnership agreement, we distribute all of our available cash (beyond proper reserves as defined in our partnership agreement) within 55 days following each quarter’s end. Our cash flow and resulting ability to make cash distributions are dependent on our ability to generate cash flow from operations. Generally, our available cash is our cash on hand at the end of a quarter after the payment of our expenses and the establishment of cash reserves and cash on hand resulting from working capital borrowings made after the end of the quarter. The general partner establishes cash reserves to provide for the proper conduct of our business, including (i) reserves to fund future capital expenditures, (ii) to comply with applicable laws, debt instruments, or other agreements, or (iii) to provide funds for unitholder distributions for any one or more of the next four quarters. We have made cash distributions to our unitholders each quarter since our initial public offering in 2012. The Board of Directors declared a cash distribution to unitholders for the second quarter of 2021 of $0.31900 per unit, or $134.7 million in the aggregate. The cash distribution is payable on August 13, 2021, to our unitholders of record at the close of business on July 30, 2021.

In November 2020, we announced a buyback program of up to $250.0 million of our common units through December 31, 2021. The common units may be purchased from time to time in the open market at prevailing market prices or in privately negotiated transactions. The timing and amount of purchases under the program will be determined based on ongoing assessments of capital needs, our financial performance, the market price of the common units, and other factors, including organic growth and acquisition opportunities and general market conditions. The program does not obligate us to purchase any specific dollar amount or number of units and may be suspended or discontinued at any time. During the six months ended June 30, 2021, we repurchased 1,115,808 common units on the open market for an aggregate purchase price of $16.2 million. We canceled the units immediately upon receipt. As of June 30, 2021, we had an authorized amount of $201.2 million remaining under the Purchase Program.

Management continuously monitors our leverage position and coordinates our capital expenditures and quarterly distributions with expected cash inflows and projected debt service requirements. We will continue to evaluate funding alternatives, including additional borrowings and the issuance of debt or equity securities, to secure funds as needed or to refinance maturing debt balances with longer-term debt issuances. Our ability to generate cash flows is subject to a number of factors, some of which are beyond our control. Read Risk Factors under Part II, Item 1A of this Form 10-Q.

Working capital. Working capital is an indication of liquidity and potential needs for short-term funding. Working capital requirements are driven by changes in accounts receivable and accounts payable and other factors such as credit extended to, and the timing of collections from, our customers, and the level and timing of our spending for acquisitions, maintenance, and other capital activities. As of June 30, 2021, we had a $240.4 million working capital deficit, which we define as the amount by which current liabilities exceed current assets. Our working capital deficit was primarily due to the 4.000% Senior Notes due 2022 of $580.7 million being classified as short-term debt on the consolidated balance sheet as of June 30, 2021. As of June 30, 2021, there was $2.0 billion available for borrowing under the RCF. See Note 10—Selected Components of Working Capital and Note 11—Debt and Interest Expense in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

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Capital expenditures. Our business is capital intensive, requiring significant investment to maintain and improve existing facilities or to develop new midstream infrastructure. Capital expenditures includes maintenance capital expenditures, which include those expenditures required to maintain existing operating capacity and service capability of our assets, such as to replace system components and equipment that have been subject to significant use over time, become obsolete, or reached the end of their useful lives, to remain in compliance with regulatory or legal requirements, or to complete additional well connections to maintain existing system throughput and related cash flows; and expansion capital expenditures, which include expenditures to construct new midstream infrastructure and expenditures incurred to extend the useful lives of our assets, reduce costs, increase revenues, or increase system throughput or capacity from current levels, including well connections that increase existing system throughput.

Capital expenditures in the consolidated statements of cash flows reflect capital expenditures on a cash basis, when payments are made. Capital incurred is presented on an accrual basis. Acquisitions and capital expenditures as presented in the consolidated statements of cash flows and capital incurred were as follows:


	Six Months Ended June 30,

thousands	2021		2020
Acquisitions (1)	$	2,000	$	—
Capital expenditures (2)	137,928		313,065
Capital incurred (2)	142,758		215,172

_________________________________________________________________________________________

(1)For information regarding equipment purchases from related parties, 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 the six months ended June 30, 2021 and 2020, included $1.5 million and $3.6 million, respectively, of capitalized interest.

Capital expenditures decreased by $175.1 million for the six months ended June 30, 2021, primarily due to decreases of (i) $79.7 million at the West Texas complex primarily attributable to decreases in facility expansion and pipeline projects, (ii) $48.4 million at the DJ Basin complex primarily related to the completion of Latham Train II that commenced operations in the first quarter of 2020 and decreases in pipeline, well connection, and compression projects, (iii) $26.0 million at the DBM oil system primarily related to the completion of the Loving ROTF Trains III and IV that commenced operations during the first and third quarters of 2020, respectively, and decreases in pipeline and well connection projects, and (iv) $15.9 million at the DBM water systems primarily due to reduced construction of additional water-disposal facilities and gathering projects.

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Historical cash flow. The following table and discussion present a summary of our net cash flows provided by (used in) operating, investing, and financing activities:


	Six Months Ended June 30,

thousands	2021		2020
Net cash provided by (used in):
Operating activities	$	713,661	$	738,999
Investing activities	(106,404)		(355,001)
Financing activities	(746,606)		(424,222)
Net increase (decrease) in cash and cash equivalents	$	(139,349)	$	(40,224)

Operating activities. Net cash provided by operating activities decreased for the six months ended June 30, 2021, primarily due to (i) lower cash operating income, (ii) lower distributions from equity investments, (iii) higher interest expense, and (iv) lower interest income. These decreases were offset partially by (i) the impact of changes in assets and liabilities and (ii) cash paid during the six months ended June 30, 2020, to settle interest-rate swaps. Refer to Operating Results within this Item 2 for a discussion of our results of operations as compared to the prior period.

Investing activities. Net cash used in investing activities for the six months ended June 30, 2021, included the following:

•$137.9 million of capital expenditures, primarily related to construction, expansion, and asset-integrity projects at the West Texas complex, DBM water systems, DJ Basin complex, and DBM oil system;

•$3.5 million of capital contributions primarily paid to Cactus II;

•$2.0 million of acquisitions from related parties;

•$21.4 million of distributions received from equity investments in excess of cumulative earnings;

•$8.0 million related to the sale of the Bison treating facility; and

•$7.7 million of decreases to materials and supplies inventory.

Net cash used in investing activities for the six months ended June 30, 2020, included the following:

•$313.1 million of capital expenditures, primarily related to construction and expansion at the West Texas and DJ Basin complexes, DBM water systems, and DBM oil system;

•$39.2 million of increases to materials and supplies inventory;

•$16.1 million of capital contributions primarily paid to Cactus II and FRP for construction activities; and

•$13.3 million of distributions received from equity investments in excess of cumulative earnings.

Financing activities. Net cash used in financing activities for the six months ended June 30, 2021, included the following:

•$531.1 million to redeem the total principal amount outstanding of WES Operating’s 5.375% Senior Notes due 2021 and repay borrowings under the RCF;

•$264.2 million of distributions paid to WES unitholders;

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•$29.1 million of decreases in outstanding checks due mostly to ad valorem tax payments made at the end of 2020;

•$16.2 million of unit repurchases;

•$5.3 million of distributions paid to the noncontrolling interest owner of WES Operating;

•$3.6 million of finance lease payments;

•$1.5 million of distributions paid to the noncontrolling interest owner of Chipeta;

•$100.0 million of borrowings under the RCF, which were used for general partnership purposes; and

•$4.5 million of contributions from related parties.

Net cash provided by financing activities for the six months ended June 30, 2020, included the following:

•$3.0 billion of repayments of outstanding borrowings under the Term loan facility;

•$430.0 million of repayments of outstanding borrowings under the RCF;

•$422.7 million of distributions paid to WES unitholders;

•$153.1 million to purchase and retire portions of WES Operating’s 5.375% Senior Notes due 2021, 4.000% Senior Notes due 2022, and Floating-Rate Senior Notes via open-market repurchases;

•$10.3 million of finance lease payments;

•$8.7 million of distributions paid to the noncontrolling interest owner of WES Operating;

•$2.8 million of distributions paid to the noncontrolling interest owner of Chipeta;

•$3.5 billion of net proceeds from the Fixed-Rate Senior Notes and Floating-Rate Senior Notes issued in January 2020, which were used to repay the $3.0 billion outstanding borrowings under the Term loan facility, repay outstanding amounts under the RCF, and for general partnership purposes;

•$125.0 million of borrowings under the RCF, which were used for general partnership purposes; and

•$20.0 million of a one-time cash contribution from Occidental received in January 2020, pursuant to the Services Agreement, for anticipated transition costs required to establish stand-alone human resources and information technology functions.

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Debt and credit facilities. As of June 30, 2021, the carrying value of outstanding debt was $7.4 billion. See Note 11—Debt and Interest Expense in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

WES Operating Senior Notes. In mid-January 2020, WES Operating issued the Fixed-Rate 3.100% Senior Notes due 2025, 4.050% Senior Notes due 2030, and 5.250% Senior Notes due 2050 and the Floating-Rate Senior Notes due 2023. Including the effects of the issuance prices, underwriting discounts, and interest-rate adjustments, the effective interest rates of the Senior Notes due 2025, 2030, and 2050, were 4.542%, 5.424%, and 6.629%, respectively, at June 30, 2021. The interest rate on the Floating-Rate Senior Notes was 2.29% at June 30, 2021. The effective interest rate of these notes is subject to adjustment from time to time due to a change in credit rating.

We may, from time to time, seek to retire, rearrange, or amend some or all of our outstanding debt or debt agreements through cash purchases, exchanges, open-market repurchases, privately negotiated transactions, tender offers, or otherwise. Such transactions, if any, will depend on prevailing market conditions, our liquidity position and requirements, contractual restrictions, and other factors. The amounts involved may be material.

Revolving credit facility. WES Operating’s $2.0 billion senior unsecured revolving credit facility is expandable to a maximum of $2.5 billion, and matures in February 2025 for each extending lender. The non-extending lender’s commitments mature in February 2024 and represent $100.0 million out of $2.0 billion of total commitments from all lenders.

As of June 30, 2021, there were no outstanding borrowings and $5.1 million of outstanding letters of credit, resulting in $2.0 billion of available borrowing capacity under the RCF. At June 30, 2021, the interest rate on any outstanding RCF borrowings was 1.60% and the facility-fee rate was 0.25%. At June 30, 2021, WES Operating was in compliance with all covenants under the RCF.

The RCF contains certain covenants that limit, among other things, WES Operating’s ability, and that of certain of its subsidiaries, to incur additional indebtedness, grant certain liens, merge, consolidate, or allow any material change in the character of its business, enter into certain related-party transactions and use proceeds other than for partnership purposes. The RCF also contains various customary covenants, certain events of default, and a maximum consolidated leverage ratio as of the end of each fiscal quarter (which is defined as the ratio of consolidated indebtedness as of the last day of a fiscal quarter to Consolidated EBITDA for the most-recent four-consecutive fiscal quarters ending on such day) of 5.0 to 1.0, or a consolidated leverage ratio of 5.5 to 1.0 with respect to quarters ending in the 270-day period immediately following certain acquisitions. As a result of certain covenants contained in the RCF, our capacity to borrow under the RCF may be limited.

Finance lease liabilities. During the first quarter of 2020, WES entered into finance leases with third parties for equipment and vehicles extending through 2029. As of June 30, 2021, we have future lease payments of $4.4 million for the remainder of 2021 and a total of $28.7 million in years thereafter.

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Credit risk. We bear credit risk through exposure to non-payment or non-performance by our counterparties, including Occidental, financial institutions, customers, and other parties. Generally, non-payment or non-performance results from a customer’s inability to satisfy payables to us for services rendered, minimum-volume-commitment deficiency payments owed, or volumes owed pursuant to gas-imbalance agreements. We examine and monitor the creditworthiness of customers and may establish credit limits for customers. A substantial portion of our throughput is sourced from producers, including Occidental, that recently received credit-rating downgrades. We are subject to the risk of non-payment or late payment by producers for gathering, processing, transportation, and disposal fees. Additionally, we continue to evaluate counterparty credit risk and, in certain circumstances, are exercising our rights to request adequate assurance.

We expect our exposure to the concentrated risk of non-payment or non-performance to continue for as long as our commercial relationships with Occidental generate a significant portion of our revenues. While Occidental is our contracting counterparty, gathering and processing arrangements with affiliates of Occidental on most of our systems include not just Occidental-produced volumes, but also, in some instances, the volumes of other working-interest owners of Occidental who rely on our facilities and infrastructure to bring their volumes to market. We also are party to agreements with Occidental under which Occidental is required to indemnify us for certain environmental claims, losses arising from rights-of-way claims, failures to obtain required consents or governmental permits, and income taxes with respect to the assets previously acquired from Anadarko. See Note 6—Related-Party Transactions in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

Our ability to make cash distributions to our unitholders may be adversely impacted if Occidental becomes unable to perform under the terms of gathering, processing, transportation, and disposal agreements; the contribution agreements; or the Services Agreement.

ITEMS AFFECTING THE COMPARABILITY OF FINANCIAL RESULTS WITH WES OPERATING

Our consolidated financial statements include the consolidated financial results of WES Operating. Our results of operations do not differ materially from the results of operations and cash flows of WES Operating, which are reconciled below.

Reconciliation of net income (loss). The differences between net income (loss) attributable to WES and WES Operating are reconciled as follows:



	Three Months Ended				Six Months Ended

thousands	June 30, 2021		March 31, 2021		June 30, 2021		June 30, 2020
Net income (loss) attributable to WES	$	231,259	$	185,791	$	417,050	$	16,510
Limited partner interests in WES Operating not held by WES (1)	4,754		3,811		8,565		390
General and administrative expenses (2)	1,600		886		2,486		2,588
Other income (expense), net	(2)		(3)		(5)		(4)


Net income (loss) attributable to WES Operating	$	237,611	$	190,485	$	428,096	$	19,484

_________________________________________________________________________________________

(1)Represents the portion of net income (loss) allocated to the limited partner interests in WES Operating not held by WES. A subsidiary of Occidental held a 2.0% limited partner interest in WES Operating for all periods presented.

(2)Represents general and administrative expenses incurred by WES separate from, and in addition to, those incurred by WES Operating.

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Reconciliation of net cash provided by (used in) operating and financing activities. The differences between net cash provided by (used in) operating and financing activities for WES and WES Operating are reconciled as follows:



	Six Months Ended June 30,
thousands	2021		2020
WES net cash provided by operating activities	$	713,661	$	738,999

General and administrative expenses (1)	2,486		2,588
Non-cash equity-based compensation expense	7,169		(3,244)
Changes in working capital	(9,336)		2,574
Other income (expense), net	(5)		(4)



WES Operating net cash provided by operating activities	$	713,975	$	740,913

WES net cash provided by (used in) financing activities	$	(746,606)	$	(424,222)
Distributions to WES unitholders (2)	264,234		422,679
Distributions to WES from WES Operating (3)	(259,208)		(425,042)
Increase (decrease) in outstanding checks	(8)		(4)

Unit repurchases	16,241		—


WES Operating net cash provided by (used in) financing activities	$	(725,347)	$	(426,589)

_________________________________________________________________________________________

(1)Represents general and administrative expenses incurred by WES separate from, and in addition to, those incurred by WES Operating.

(2)Represents distributions to WES common unitholders paid under WES’s partnership agreement. See Note 4—Partnership Distributions and Note 5—Equity and Partners’ Capital in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

(3)Difference attributable to elimination in consolidation of WES Operating’s distributions on partnership interests owned by WES. See Note 4—Partnership Distributions and Note 5—Equity and Partners’ Capital in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

Noncontrolling interest. WES Operating’s noncontrolling interest consists of the 25% third-party interest in Chipeta. See Note 1—Description of Business and Basis of Presentation in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

WES Operating distributions. WES Operating distributes all of its available cash on a quarterly basis to WES Operating unitholders in proportion to their share of limited partner interests in WES Operating. See Note 4—Partnership Distributions in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q.

CRITICAL ACCOUNTING ESTIMATES

The preparation of consolidated financial statements in accordance with GAAP requires management to make informed judgments and estimates that affect the amounts of assets and liabilities as of the date of the financial statements and the amounts of revenues and expenses recognized during the periods reported. There have been no significant changes to our critical accounting estimates from those disclosed in our annual report on Form 10-K for the fiscal year ended December 31, 2020.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Commodity-price risk. Certain of our processing services are provided under percent-of-proceeds and keep-whole agreements. Under percent-of-proceeds agreements, we receive a specified percentage of the net proceeds from the sale of residue and/or NGLs. Under keep-whole agreements, we keep 100% of the NGLs produced, and the processed natural gas, or value of the natural gas, is returned to the producer, and because some of the gas is used and removed during processing, we compensate the producer for the amount of gas used and removed in processing by supplying additional gas or by paying an agreed-upon value for the gas used.

For the six months ended June 30, 2021, 93% of our wellhead natural-gas volume (excluding equity investments) and 100% of our crude-oil and produced-water throughput (excluding equity investments) were serviced under fee-based contracts. A 10% increase or decrease in commodity prices would not have a material impact on our operating income (loss), financial condition, or cash flows for the next twelve months, excluding the effect of the below-described imbalances.

We bear a limited degree of commodity-price risk with respect to settlement of natural-gas imbalances that arise from differences in gas volumes received into our systems and gas volumes delivered by us to customers, and for instances where actual liquids recovery or fuel usage varies from contractually stipulated amounts. Natural-gas volumes owed to or by us that are subject to monthly cash settlement are valued according to the terms of the contract as of the balance sheet dates and generally reflect market-index prices. Other natural-gas volumes owed to or by us are valued at our weighted-average cost of natural gas as of the balance sheet dates and are settled in-kind. Our exposure to the impact of changes in commodity prices on outstanding imbalances depends on the settlement timing of the imbalances. See Outlook under Part I, Item 2 and Risk Factors under Part II, Item 1A of this Form 10-Q.

Interest-rate risk. The Federal Open Market Committee decreased its target range for the federal funds rate twice in 2020 and as of June 30, 2021, there have been no changes to the target range in 2021. Any future increases in the federal funds rate likely will result in an increase in short-term financing costs. As of June 30, 2021, we had (i) no outstanding borrowings under the RCF that bear interest at a rate based on LIBOR or an alternative base rate at WES Operating’s option, and (ii) the Floating-Rate Senior Notes that bear interest at a rate based on LIBOR. While a 10% change in the applicable benchmark interest rate would not materially impact interest expense on our outstanding borrowings, it would impact the fair value of the senior notes at June 30, 2021.

Additional variable-rate debt may be issued in the future, either under the RCF or other financing sources, including commercial bank borrowings or debt issuances.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. The Chief Executive Officer and Chief Financial Officer of WES’s general partner and WES Operating GP (for purposes of this Item 4, “Management”) performed an evaluation of WES’s and WES Operating’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. WES’s and WES Operating’s disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports that are filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and to ensure that the information required to be disclosed in the reports that are filed or submitted under the Exchange Act is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, Management concluded that WES’s and WES Operating’s disclosure controls and procedures were effective as of June 30, 2021.

Changes in Internal Control Over Financial Reporting. There were no changes in WES’s or WES Operating’s internal control over financial reporting during the quarter ended June 30, 2021, that have materially affected, or are reasonably likely to materially affect, WES’s or WES Operating’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

On July 1, 2020, the U.S. Department of Justice, on behalf of the U.S. Environmental Protection Agency (the “EPA”), and the State of Colorado commenced an enforcement action in the United States District Court for the District of Colorado against Kerr-McGee Gathering LLC (“KMG”), a wholly owned subsidiary of WES, for alleged non-compliance with the leak detection and repair requirements of the federal Clean Air Act (“LDAR requirements”) at its Fort Lupton facility in the DJ Basin complex. KMG previously had been in negotiations with the EPA and the State of Colorado to resolve the alleged non-compliance at the Fort Lupton facility. Per the complaint, plaintiffs pray for injunctive relief, remedial action, and civil penalties. Management cannot reasonably estimate the outcome of this action at this time.

On August 12, 2019, Sanchez Energy Corporation and certain of its affiliated companies (collectively, “Sanchez”) filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas. While Sanchez holds a working interest in the acreage dedicated to our Springfield system, Sanchez also was the upstream operator for substantially all of the natural gas, crude oil, and NGLs that the Springfield system gathers and that WES processes in the Eagle Ford Shale Play. On April 29, 2020, we received notice that Sanchez filed a motion to reject a number of midstream and downstream agreements with commercial counterparties, including Sanchez’s Springfield gathering agreements and agreements obligating Sanchez to deliver the gas volumes gathered by the Springfield system to our Brasada processing plant. We objected to Sanchez’s rejection and instituted an adversary proceeding regarding such rejection. On May 6, 2021, the Bankruptcy Court issued an opinion determining, among other things, that Sanchez’s Springfield gathering agreements were rejected, but that such agreements contain covenants running with the land that survive rejection, thus preserving the acreage dedication to our Springfield system. We intend to continue defending our contractual rights in the bankruptcy proceeding and any other appropriate venue.

On May 15, 2020, Gavilan Resources LLC (“Gavilan”), an entity that owns a 25% working interest in the acreage where the Springfield gathering system and Brasada processing plant are located, also filed for Chapter 11 bankruptcy protection. As a part of this bankruptcy, Mesquite Energy, Inc. (the successor to Sanchez) (“Mesquite”) purchased Gavilan’s assets at auction. Gavilan did not assume and assign its agreements with Springfield as part of its asset sale. Instead, the assets sold to Mesquite remain subject to any covenants, servitudes, or similar agreements that could be equitable servitudes or covenants running with the land, pending a further order of the bankruptcy court.

We cannot make any assurances regarding the ultimate outcome of these Sanchez and Gavilan proceedings and their resulting impact on WES due to the uncertainties associated with the ongoing bankruptcy process.

On October 29, 2020, WGR Operating, LP (“WGR”), on behalf of itself and derivatively on behalf of Mont Belvieu JV, filed suit against Enterprise Products Operating, LLC (“Enterprise”) and Mont Belvieu JV (as a nominal defendant) in the District Court of Harris County, Texas. Our lawsuit seeks a declaratory judgment regarding proper revenue allocation as set forth in the Operating Agreement between Mont Belvieu JV (of which WGR is a 25% owner) and Enterprise (the “Operating Agreement”) related to fractionation trains at the Mont Belvieu complex in Chambers County, Texas. Specifically, the Operating Agreement sets forth a revenue allocation structure, whereby revenue would be allocated to the various fracs at the Mont Belvieu complex in sequential order, with Fracs VII and VIII (which are owned by Mont Belvieu JV) following Fracs I through VI, but preceding any “Later Frac Facilities.” Subsequent to the construction of Fracs VII and VIII, Enterprise built Fracs IX, X, and XI, which it wholly owns, and has signaled its intention to treat such subsequent fracs as outside the Mont Belvieu revenue allocation. We do not believe Enterprise’s attempt to bypass the agreed-to revenue allocation is proper under the parties’ agreements and now seek judicial determination. We currently sue only for declaratory judgment to avoid potential future damages. We cannot make any assurances regarding the ultimate outcome of this proceeding and its resulting impact on WGR or WES.

Except as discussed above, we are not a party to any legal, regulatory, or administrative proceedings other than proceedings arising in the ordinary course of business. Management believes that there are no such proceedings for which a final disposition could have a material adverse effect on results of operations, cash flows, or financial condition, or for which disclosure is otherwise required by Item 103 of Regulation S-K.

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Item 1A. Risk Factors

Security holders and potential investors in our securities should carefully consider the risk factors included below and those set forth under Part I, Item 1A in our Form 10-K for the year ended December 31, 2020, together with all of the other information included in this document, and in our other public filings, press releases, and public discussions with management. Additionally, for a full discussion of the risks associated with Occidental’s business, see Item 1A under Part I in Occidental’s Form 10-K for the year ended December 31, 2020, Occidental’s quarterly reports on Form 10-Q and Occidental’s other public filings, press releases, and public discussions with Occidental management. We have identified the below risk factors as important factors that could cause our actual results to differ materially from those contained in any written or oral forward-looking statements made by us or on our behalf.

Because we are dependent on Occidental as our largest customer and the owner of our general partner, any development that materially and adversely affects Occidental’s operations, financial condition, or market reputation could have a material and adverse impact on us. Material adverse changes at Occidental could restrict our access to capital, make it more expensive to access the capital markets, or increase the costs of our borrowings.

We are dependent on Occidental as our largest customer and the owner of our general partner, and we expect to derive significant revenue from Occidental for the foreseeable future. As a result, any event, whether in our area of operations or otherwise, that adversely affects Occidental’s production, financial condition, leverage, market reputation, liquidity, results of operations, or cash flows may adversely affect our revenues and cash available for distribution. Accordingly, we are indirectly subject to the business risks of Occidental, including, but not limited to, the volatility of oil and natural-gas prices, the availability of capital on favorable terms to fund Occidental’s exploration and development activities, the political and economic uncertainties associated with Occidental’s foreign operations, transportation-capacity constraints, and shareholder activism.

Further, we are subject to the risk of non-payment or non-performance by Occidental, including with respect to our gathering and transportation agreements. For example, we are currently involved in a dispute with Occidental regarding the calculation of the cost-of-service rate under a gathering contract related to our DJ Basin oil system. If such dispute is resolved in a manner adverse to us, such resolution could have a negative impact on our financial condition and results of operations, including a reduction in rates and a non-cash charge to earnings. In addition, we cannot predict the extent to which Occidental’s business would be impacted if conditions in the energy industry were to deteriorate further, nor can we estimate the impact such conditions would have on Occidental’s ability to perform under our gathering and transportation agreements with Occidental. Accordingly, any material non-payment or non-performance by Occidental could reduce our ability to make distributions to our unitholders.

Any material limitations to our ability to access capital as a result of adverse changes at Occidental could limit our ability to obtain future financing on favorable terms, or at all, or could result in increased financing costs in the future. Similarly, material adverse changes at Occidental could adversely impact our unit price, thereby limiting our ability to raise capital through equity issuances or debt financing, or adversely affect our ability to engage in or expand or pursue our business activities, and also prevent us from engaging in certain transactions that might otherwise be considered beneficial to us.

See Occidental’s reports filed under the Securities and Exchange Act of 1934, as amended, with the SEC (which are not, and shall not be deemed to be, incorporated by reference herein), for a full discussion of the risks associated with Occidental’s business.

The tax treatment of publicly traded partnerships or an investment in our common units could be subject to potential legislative, judicial, or administrative changes and differing interpretations, possibly on a retroactive basis.

The current U.S. federal income tax treatment of publicly traded partnerships, including us, or an investment in our common units may be modified by administrative, legislative, or judicial interpretation at any time. From time to time, members of Congress propose and consider substantive changes to the existing U.S. federal income tax laws that would affect publicly traded partnerships. On April 21, 2021, Senator Wyden introduced the Clean Energy for America Act, which would eliminate the exception upon which we rely for our treatment as a publicly traded partnership for U.S. federal income tax purposes.

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Any modification to the U.S. federal income tax laws and interpretations thereof may or may not be retroactively applied and could make it more difficult or impossible to meet the exception for certain publicly traded partnerships to be treated as partnerships for U.S. federal income tax purposes or increase the amount of taxes payable by unitholders in publicly traded partnerships. You are urged to consult with your own tax advisor with respect to the status of regulatory or administrative developments and proposals and their potential effect on your investment in our common units.

Our profitability may be negatively impacted by inflation in the cost of labor, materials, and services.

Although inflation in the United States has been relatively low in recent years, the U.S. economy could experience a significant inflationary effect from, among other things, supply chain disruptions caused by, or governmental stimulus or fiscal policies adopted in response to, the COVID-19 crisis. While we cannot predict any future trends in the rate of inflation, the global COVID-19 pandemic has brought unprecedented uncertainty to the near-term economic outlook. A significant increase in inflation would raise our costs for labor, materials and services, and to the extent we are unable to recover higher costs through our commercial agreements, would negatively impact our profitability and cash flows available for distribution to unitholders.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth information with respect to repurchases made by WES of its common units in the open market under the Purchase Program during the second quarter of 2021:


Period	Total number of units purchased	Average price paid per unit		Total number of units purchased as part of publicly announced plans or programs (1)	Approximate dollar value of units that may yet be purchased under the plans or programs (1)
April 1-30, 2021	—	$	—	—	201,225,000
May 1-31, 2021	—	—		—	201,225,000
June 1-30, 2021	—	—		—	201,225,000
Total	—	—		—

______________________________________________________________________________________

(1)In November 2020, WES announced the Purchase Program, pursuant to which we may purchase up to $250.0 million in aggregate value of our common units through December 31, 2021. See Note 5—Equity and Partners’ Capital in the Notes to Consolidated Financial Statements under Part I, Item 1 of this Form 10-Q for additional details.

Item 5. Other Information

On August 5, 2021, the Board of Directors approved the Western Midstream Partners, LP Executive Severance Plan (the “Executive Severance Plan”) and the Western Midstream Partners, LP Executive Change in Control Severance Plan (the “CIC Severance Plan”). Both the Executive Severance Plan and the CIC Severance Plan became effective on August 5, 2021 (the “Effective Date”).

Executive Severance Plan

The Executive Severance Plan provides severance benefits to employees in the position of Vice President and above, which includes the Partnership’s named executive officers (the “ESP Participants”). The ESP Participants will be eligible for severance benefits under the Executive Severance Plan if their employment is terminated by the Partnership and its affiliates other than for “Cause” or if the ESP Participant resigns for “Good Reason” (as each of those terms is defined in the Executive Severance Plan).

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If an ESP Participant’s employment terminates without Cause or for Good Reason, subject to his or her timely execution and non-revocation of a release of claims, he or she will be eligible to receive the following severance benefits:

•An amount equal to a multiple of the ESP Participant’s highest annual base salary in effect at any time during the three-year period preceding the date of termination, to be paid within 60 days of such termination, with such multiple being 1.0 times for Vice Presidents, 1.5 times for Senior Vice Presidents, and 2.0 times for the Chief Executive Officer;

•An amount equal to a multiple of the ESP Participant’s annual target bonus for the year in which the termination occurs, to be paid within 60 days of such termination, with such multiple being 1.0 times for Vice Presidents, 1.5 times for Senior Vice Presidents, and 2.0 times for the Chief Executive Officer;

•An amount equal to the ESP Participant’s annual target bonus for the year in which the termination occurs, prorated based on the number of days the ESP Participant was an employee of the Partnership, to be paid within 60 days of such termination;

•Any accrued, but unused as of the date of the termination, vacation pay, to be paid within 60 days of such termination;

•Continued participation in the Partnership’s basic life, medical, and dental plans for up to 24 months following such termination;

•Outplacement services for up to nine months; and

•If the ESP Participant holds any long-term incentive awards granted on or after the Effective Date, such long-term incentive awards will vest as follows: for time-based awards, on a pro rata basis; for performance-based awards, on a pro-rata basis with the achievement of performance-based vesting conditions to be determined as set forth in the applicable award agreement.

CIC Severance Plan

The ESP Participants are also eligible for severance benefits under the CIC Severance Plan if their employment is terminated by the Partnership and its affiliates other than for “Cause” or if the ESP Participant resigns for “Good Reason” (as each of those terms is defined in the CIC Severance Plan), in each case, on or after the date 180 days prior to the consummation of a Change in Control and within two years after the consummation of the Change in Control (such period, the “Protection Period”).

If an ESP Participant’s employment terminates without Cause or for Good Reason during the Protection Period, subject to his or her timely execution and non-revocation of a release of claims, he or she will be eligible to receive the following severance benefits:

•An amount equal to a multiple of the ESP Participant’s highest annual base salary in effect at any time during the three-year period preceding the date of termination, to be paid within 60 days of such termination, with such multiple being 1.5 times for Vice Presidents, 2.0 times for Senior Vice Presidents, and 2.99 times for the Chief Executive Officer;

•An amount equal to a multiple of the ESP Participant’s annual target bonus for the year in which the termination occurs, to be paid within 60 days of such termination, with such multiple being 1.5 times for Vice Presidents, 2.0 times for Senior Vice Presidents, and 2.99 times for the Chief Executive Officer;

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•An amount with respect to the annual bonus for the year of termination, determined based on the greater of target performance and actual performance and prorated based on the number of days the ESP Participant was an employee of the Partnership, to be paid at the same time bonuses are paid to senior executives of the Partnership;

•Any accrued, but unused as of the date of the termination, vacation pay, to be paid within 60 days of such termination;

•Continued participation in the Partnership’s basic life, medical, and dental plans for up to 24 months following such termination;

•Outplacement services for up to nine months; and

•If the ESP Participant holds any long-term incentive awards granted on or after the Effective Date, such equity awards will vest in full, with performance-based awards vesting at the greater of target performance and actual performance, except that any individual performance goals that are not based on objective financial performance criteria will be deemed earned at target performance.

To the extent an ESP Participant is terminated during the portion of the Protection Period preceding a Change in Control and a Change in Control is not ultimately consummated, the ESP Participant will be entitled to only the severance benefits under the Executive Severance Plan described above.

Eligibility for benefits under both the Executive Severance Plan and the Executive CIC Severance Plan is conditioned upon the ESP Participant’s execution of a separation agreement containing certain waivers and releases and, at the discretion of the administrators of the plans, restrictive covenants. The foregoing summary is qualified in its entirety by reference to the Western Midstream Partners, LP Executive Severance Plan attached hereto as Exhibit 10.2 and incorporated herein by reference and the Western Midstream Partners, LP Executive Change in Control Severance Plan attached hereto as Exhibit 10.3 and incorporated herein by reference.

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Item 6. Exhibits

Exhibits designated by an asterisk (*) are filed herewith and those designated with asterisks (**) are furnished herewith; all exhibits not so designated are incorporated herein by reference to a prior filing as indicated.

Exhibit Index


Exhibit Number			Description
#	2.	1	Contribution Agreement and Agreement and Plan of Merger, dated as of November 7, 2018, by and among Anadarko Petroleum Corporation, Anadarko E&P Onshore LLC, APC Midstream Holdings, LLC, Western Gas Equity Partners, LP, Western Gas Equity Holdings, LLC, Western Gas Partners, LP, Western Gas Holdings, LLC, Clarity Merger Sub, LLC, WGR Asset Holding Company LLC, WGR Operating, LP, Kerr-McGee Gathering LLC, Kerr-McGee Worldwide Corporation and Delaware Basin Midstream, LLC (incorporated by reference to Exhibit 2.1 to Western Gas Equity Partners, LP’s Current Report on Form 8-K filed on November 8, 2018, File No. 001-35753).
	3.	1	Certificate of Limited Partnership of Western Gas Equity Partners, LP (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 of Western Gas Equity Partners, LP filed on November 5, 2012, File No. 333-184763).
	3.	2	Certificate of Amendment to Certificate of Limited Partnership of Western Gas Equity Partners, LP, effective as of February 28, 2019 (incorporated by reference to Exhibit 3.1 to Western Midstream Partners, LP’s Current Report on Form 8-K filed on February 28, 2019, File No. 001-35753).
	3.	3	Second Amended and Restated Agreement of Limited Partnership of Western Midstream Partners, LP, dated as of December 31, 2019 (incorporated by reference to Exhibit 3.1 to Western Midstream Partners, LP’s Current Report on Form 8-K filed on January 6, 2020, File No. 001-35753).
	3.	4	Certificate of Formation of Western Gas Equity Holdings, LLC (incorporated by reference to Exhibit 3.3 to Western Gas Equity Partners, LP’s Registration Statement on Form S-1 filed on November 5, 2012, File No. 333-184763).
	3.	5	Certificate of Amendment to Certificate of Formation of Western Gas Equity Holdings, LLC, effective as of February 28, 2019 (incorporated by reference to Exhibit 3.2 to Western Midstream Partners, LP’s Current Report on Form 8-K filed on February 28, 2019, File No. 001-35753).
	3.	6	Second Amended and Restated Limited Liability Company Agreement of Western Midstream Holdings, LLC, dated as of February 28, 2019 (incorporated by reference to Exhibit 3.7 to Western Midstream Partners, LP’s Current Report on Form 8-K filed on February 28, 2019, File No. 001-35753).
	3.	7	Amendment No. 1 to Second Amended and Restated Limited Liability Company Agreement of Western Midstream Holdings, LLC, dated February 28, 2019 (incorporated by reference to Exhibit 3.1 to Western Midstream Partners, LP’s Current Report on Form 8-K filed on March 26, 2019, File No. 001-35753).
	3.	8	Certificate of Limited Partnership of Western Gas Partners, LP (incorporated by reference to Exhibit 3.1 to Western Gas Partners, LP’s Registration Statement on Form S-1 filed on October 15, 2007, File No. 333-146700).
	3.	9	Third Amended and Restated Agreement of Limited Partnership of Western Midstream Operating, LP, dated as of February 28, 2019 (incorporated by reference to Exhibit 3.5 to Western Midstream Partners, LP’s Current Report on Form 8-K filed on February 28, 2019, File No. 001-35753).
	3.	10	Certificate of Formation of Western Gas Holdings, LLC (incorporated by reference to Exhibit 3.3 to Western Gas Partners, LP’s Registration Statement on Form S-1 filed on October 15, 2007, File No. 333-146700).
	3.	11	Certificate of Amendment to Certificate of Formation of Western Gas Holdings, LLC, effective as of February 28, 2019 (incorporated by reference to Exhibit 3.4 to Western Midstream Partners, LP’s Current Report on Form 8-K filed on February 28, 2019, File No. 001-35753).
	3.	12	Third Amended and Restated Limited Liability Company Agreement of Western Midstream Operating GP, LLC, dated as of February 28, 2019 (incorporated by reference to Exhibit 3.8 to Western Midstream Partners, LP’s Current Report on Form 8-K filed on February 28, 2019, File No. 001-35753).
	3.	13	Certificate of Merger of Clarity Merger Sub, LLC with and into Western Gas Partners, LP, effective as of February 28, 2019 (incorporated by reference to Exhibit 3.3 to Western Midstream Partners, LP’s Current Report on Form 8-K filed on February 28, 2019, File No. 001-35753).

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Exhibit Number			Description
	4.	1	Specimen Unit Certificate for the Common Units (incorporated by reference to Exhibit 4.1 to Western Gas Partners, LP’s Quarterly Report on Form 10-Q filed on June 13, 2008, File No. 001-34046).
	4.	2	Indenture, dated as of May 18, 2011, among Western Gas Partners, LP, as Issuer, the Subsidiary Guarantors named therein, as Guarantors, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to Western Gas Partners, LP’s Current Report on Form 8-K filed on May 18, 2011, File No. 001-34046).
	4.	3	First Supplemental Indenture, dated as of May 18, 2011, among Western Gas Partners, LP, as Issuer, the Subsidiary Guarantors named therein, as Guarantors, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.2 to Western Gas Partners, LP’s Current Report on Form 8-K filed on May 18, 2011, File No. 001-34046).
	4.	4	Form of 5.375% Senior Notes due 2021 (incorporated by reference to Exhibit 4.3, which is included as Exhibit A to Exhibit 4.2, to Western Gas Partners, LP’s Current Report on Form 8-K filed on May 18, 2011, File No. 001-34046).
	4.	5	Fourth Supplemental Indenture, dated as of June 28, 2012, among Western Gas Partners, LP, as Issuer, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to Western Gas Partners, LP’s Current Report on Form 8-K filed on June 28, 2012, File No. 001-34046).
	4.	6	Form of 4.000% Senior Notes due 2022 (incorporated by reference to Exhibit 4.2, which is included as Exhibit A to Exhibit 4.1, to Western Gas Partners, LP’s Current Report on Form 8-K filed on June 28, 2012, File No. 001-34046).
	4.	7	Sixth Supplemental Indenture, dated as of March 20, 2014, among Western Gas Partners, LP, as Issuer, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.2 to Western Gas Partners, LP’s Current Report on Form 8-K filed on March 20, 2014, File No. 001-34046).
	4.	8	Form of 5.450% Senior Notes due 2044 (incorporated by reference to Exhibit 4.4, which is included as Exhibit A to Exhibit 4.2, to Western Gas Partners, LP’s Current Report on Form 8-K filed on March 20, 2014, File No. 001-34046).
	4.	9	Seventh Supplemental Indenture, dated as of June 4, 2015, among Western Gas Partners, LP, as Issuer, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to Western Gas Partners, LP’s Current Report on Form 8-K filed on June 4, 2015, File No. 001-34046).
	4.	10	Form of 3.950% Senior Notes due 2025 (incorporated by reference to Exhibit 4.2, which is included as Exhibit A to Exhibit 4.1, to Western Gas Partners, LP’s Current Report on Form 8-K filed on June 4, 2015, File No. 001-34046).
	4.	11	Eighth Supplemental Indenture, dated as of July 12, 2016, among Western Gas Partners, LP, as Issuer, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to Western Gas Partners, LP’s Current Report on Form 8-K filed on July 12, 2016, File No. 001-34046).
	4.	12	Form of 4.650% Senior Notes due 2026 (incorporated by reference to Exhibit 4.2, which is included as Exhibit A to Exhibit 4.1, to Western Gas Partners, LP’s Current Report on Form 8-K filed on July 12, 2016, File No. 001-34046).
	4.	13	Ninth Supplemental Indenture, dated as of March 2, 2018, among Western Gas Partners, LP, as Issuer, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to Western Gas Partners, LP’s Current Report on Form 8-K filed on March 2, 2018, File No. 001-34046).
	4.	14	Form of 4.500% Senior Notes due 2028 (incorporated by reference to Exhibit 4.2, which is included as Exhibit A-1 to Exhibit 4.1, to Western Gas Partners, LP’s Current Report on Form 8-K filed on March 2, 2018, File No. 001-34046).
	4.	15	Form of 5.300% Senior Notes due 2048 (incorporated by reference to Exhibit 4.3, which is included as Exhibit A-2 to Exhibit 4.1, to Western Gas Partners, LP’s Current Report on Form 8-K filed on March 2, 2018, File No. 001-34046).
	4.	16	Tenth Supplemental Indenture, dated as of August 9, 2018, by and between Western Gas Partners, LP, as Issuer, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to Western Gas Partners, LP’s Current Report on Form 8-K filed on August 9, 2018, File No. 001-34046).
	4.	17	Form of 4.750% Senior Notes due 2028 (incorporated by reference to Exhibit 4.2, which is included as Exhibit A-1 to Exhibit 4.1, to Western Gas Partners, LP’s Current Report on Form 8-K filed on August 9, 2018, File No. 001-34046).
	4.	18	Form of 5.500% Senior Notes due 2048 (incorporated by reference to Exhibit 4.3, which is included as Exhibit A-2 to Exhibit 4.1, to Western Gas Partners, LP’s Current Report on Form 8-K filed on August 9, 2018, File No. 001-34046).

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Exhibit Number			Description
	4.	19	Eleventh Supplemental Indenture, dated as of January 13, 2020, by and between Western Midstream Operating, LP, as Issuer, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to Western Midstream Operating, LP’s Current Report on Form 8-K filed on January 13, 2020, File No. 001-34046).
	4.	20	Form of Floating Rate Senior Notes due 2023 (incorporated by reference to Exhibit 4.2, which is included as Exhibit A-1 to Exhibit 4.1 to Western Midstream Operating, LP’s Current Report on Form 8-K filed on January 13, 2020, File No. 001-34046).
	4.	21	Form of 3.100% Senior Notes due 2025 (incorporated by reference to Exhibit 4.3, which is included as Exhibit A-2 to Exhibit 4.1 to Western Midstream Operating, LP’s Current Report on Form 8-K filed on January 13, 2020, File No. 001-34046).
	4.	22	Form of 4.050% Senior Notes due 2030 (incorporated by reference to Exhibit 4.4, which is included as Exhibit A-3 to Exhibit 4.1 to Western Midstream Operating, LP’s Current Report on Form 8-K filed on January 13, 2020, File No. 001-34046).
	4.	23	Form of 5.250% Senior Notes due 2050 (incorporated by reference to Exhibit 4.5, which is included as Exhibit A-4 to Exhibit 4.1 to Western Midstream Operating, LP’s Current Report on Form 8-K filed on January 13, 2020, File No. 001-34046).
*	10.	1	Western Midstream Partners, LP 2021 Long-Term Incentive Plan.
*	10.	2	Western Midstream Partners, LP Executive Severance Plan .
*	10.	3	Western Midstream Partners, LP Executive Change in Control Severance Plan .






































*	31.	1	Certification of Chief Executive Officer and Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Western Midstream Partners, LP.

*	31.	2	Certification of Chief Executive Officer and Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Western Midstream Operating, LP.

**	32.	1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Western Midstream Partners, LP.
**	32.	2	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Western Midstream Operating, LP.
*	101.	INS	XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
*	101.	SCH	Inline XBRL Schema Document
*	101.	CAL	Inline XBRL Calculation Linkbase Document
*	101.	DEF	Inline XBRL Definition Linkbase Document
*	101.	LAB	Inline XBRL Label Linkbase Document
*	101.	PRE	Inline XBRL Presentation Linkbase Document
*	104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

______________________________________________________________________________________




#			Pursuant to Item 601(b)(2) of Regulation S-K, the registrant agrees to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.


			WESTERN MIDSTREAM PARTNERS, LP

August 9, 2021
			/s/ Michael P. Ure
			Michael P. Ure President, Chief Executive Officer and Chief Financial Officer Western Midstream Holdings, LLC (as general partner of Western Midstream Partners, LP)






			WESTERN MIDSTREAM OPERATING, LP

August 9, 2021
			/s/ Michael P. Ure
			Michael P. Ure President, Chief Executive Officer and Chief Financial Officer Western Midstream Operating GP, LLC (as general partner of Western Midstream Operating, LP)

EXHIBIT 10.1

WESTERN MIDSTREAM PARTNERS, LP

2021 LONG TERM INCENTIVE PLAN

SECTION 1. Purpose of the Plan

The Western Midstream Partners, LP 2021 Long Term Incentive Plan (the “Plan”) has been adopted by Western Midstream Holdings, LLC, a Delaware limited liability company (the “Company”) and general partner of Western Midstream Partners, LP (the “Partnership”). The purpose of the Plan is to promote the interests of the Partnership and its unitholders by strengthening its ability to attract, retain and motivate qualified individuals to serve as Directors and Employees.

SECTION 2. Definitions

The following terms shall have the meanings set forth in this Section 2:

“Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question. As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

“409A Award” means an Award that constitutes a “deferral of compensation” within the meaning of the 409A Regulations, whether by design, due to a subsequent modification in the terms and conditions of such Award or as a result of a change in applicable law following the date of grant of such Award, and that is not exempt from Section 409A of the Code pursuant to an applicable exemption.

“409A Regulations” means the applicable Treasury regulations and other interpretive guidance promulgated pursuant to Section 409A of the Code.

“Award” means an Option, Unit Appreciation Right, Restricted Unit, Phantom Unit, Other Unit-Based Award, Cash Award, a Unit Award or a Substitute Award granted under the Plan, and includes any tandem DERs granted with respect to a Phantom Unit.

“Award Agreement” means the written or electronic agreement by which an Award shall be evidenced, including applicable terms and conditions of the Award.

“Board” means the Board of Directors or Managers, as the case may be, of the Company.

“Cash Award” means an award denominated in cash.

“Change of Control” means, and shall be deemed to have occurred upon any of the following events:

(i) any “person” or “group” within the meaning of those terms as used in Sections 13(d) and 14(d)(2) of the Exchange Act, other than an Excluded Person (defined below), shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act), by way of merger, consolidation, recapitalization, reorganization or otherwise, of more than 50% of the combined voting power of the equity interests in the Company, unless as a result of such transaction, more than 50% of the outstanding voting power or the outstanding voting securities of the ultimate parent (the “Ultimate Parent”) of the surviving or resulting entity of the Company immediately after such transaction (the “Surviving Entity”) (or, if no Ultimate Parent exists, then the Surviving Entity) is, or will be, owned, directly or indirectly, by the Persons who were holders of the Company’s voting securities immediately before such transaction (such transaction, an “Excluded Business Combination”);

(ii) the equityholders of the Partnership approve, in one or a series of transactions, a plan of complete liquidation of the Partnership;

(iii) the sale, transfer or other disposition by the Partnership of all or substantially all of its assets in one or more transactions to any Person other than or an Affiliate of the Company or the Partnership, unless such sale, transfer or disposition is an Excluded Business Combination; or

(iv) the Company or an Affiliate of the Company ceases to be the general partner of the Partnership and a single “person” or “group” within the meaning of those terms as used in Sections 13(d) and 14(d)(2) of the Exchange Act, other than an Excluded Person, beneficially owns more than 50% of the combined voting power of the equity interests in the entity that is or becomes the general partner of the Partnership.

Notwithstanding the foregoing, (A) with respect to a 409A Award where a Change of Control would accelerate the timing of payment thereunder, the term “Change of Control” shall mean a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company as defined in Section 409A of the Code and the 409A Regulations, but only to the extent inconsistent with the above definition, and only to the minimum extent necessary to comply with Section 409A of the Code and the 409A Regulations as determined by the Committee and (B) in no event will any sale, transfer or other disposition by Occidental Petroleum Corporation (“Oxy”) or its Affiliates of Common Units (or other limited partner interests in the Partnership), regardless of amount, constitute a Change of Control hereunder (whether or not such sale, transfer or disposition would otherwise constitute a Change of Control). “Excluded Person” means the Partnership, the Company, Oxy or any respective Affiliate of the Company, the Partnership or Oxy.

“Code” means the Internal Revenue Code of 1986, as amended and in effect from time to time, and the temporary or final regulations of the Secretary of the United States Treasury adopted pursuant to the Code.

“Committee” means the Board or a committee of the Board appointed by the Board to administer the Plan.

“DER” means a contingent right, granted in tandem with a specific Phantom Unit, to receive with respect to each Phantom Unit subject to the Award an amount in cash. Units and/or Phantom Units equal in value to the distributions made by the Company with respect to a Unit during the period such Award is outstanding.

“Director” means a member of the Board who is not an Employee.

“Employee” means an employee of the Partnership, the Company, Anadarko Petroleum Corporation or any other Affiliate of the Company.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Fair Market Value” means the closing sales price of a Unit on the principal national securities exchange or other market in which trading in Units occurs on the applicable date (or, if there is no trading in the Units on such date, on the next preceding date on which there was trading) as reported in The Wall Street Journal (or other reporting service approved by the Committee). If Units are not traded on a national securities exchange or other market at the time a determination of fair market value is required to be made hereunder, the determination of fair market value shall be made in good faith by the Committee in such a manner as it deems appropriate, consistent with the requirements of Section 409A of the Code and the 409A Regulations.

“Option” means an option to purchase Units granted under the Plan.

“Other Unit-Based Award” means an Award granted pursuant to Section 6(e) of the Plan.

“Participant” means an Employee or Director granted an Award under the Plan.

“Person” means an individual or a corporation, limited liability company, partnership, joint venture, trust, unincorporated organization, association, governmental agency or political subdivision thereof or other entity.

“Phantom Unit” means a notional unit granted under the Plan that upon vesting entitles the Participant to receive a Unit or an amount of cash equal to the Fair Market Value of a Unit, as determined by the Committee in its discretion.

“Qualified Member” means a member of the Committee who is a “nonemployee director” within the meaning of Rule 16b-3(b)(3).

“Restricted Period” means the period established by the Committee with respect to an Award during which the Award remains subject to forfeiture and is either not exercisable by or payable to the Participant, as the case may be.

“Restricted Unit” means a Unit granted under the Plan that is subject to a Restricted Period.

“Rule 16b-3” means Rule 16b-3 promulgated by the SEC under the Exchange Act or any successor rule or regulation thereto as in effect from time to time.

“SEC” means the Securities and Exchange Commission, or any successor thereto.

“Substitute Award” means an award granted pursuant to Section 6(g) of the Plan.

“UDR” means a distribution made by the Partnership with respect to a Restricted Unit.

“Unit” means a common unit of the Partnership.

“Unit Appreciation Right” or “UAR” means a contingent right that entitles the holder to receive all or part of the excess of the Fair Market Value of a Unit on the exercise date of the UAR over the exercise price of the UAR. Such excess shall be paid in Units, cash or any combination thereof, in the discretion of the Committee.

“Unit Award” means a grant of a Unit that is not subject to a Restricted Period.

SECTION 3. Administration

(a) Authority of the Committee. The Plan shall be administered by the Committee. A majority of the Committee shall constitute a quorum, and the acts of the members of the Committee who are present at any meeting thereof at which a quorum is present, or acts unanimously approved by the members of the Committee in writing, shall be the acts of the Committee. Subject to the following and applicable law, the Committee, in its sole discretion, may delegate any or all of its powers and duties under the Plan, including the power to grant Awards under the Plan, to the Chief Executive Officer of the Company, subject to such limitations on such delegated powers and duties as the Committee may impose, if any. Upon any such delegation, all references in the Plan to the “Committee,” other than in Section 7, shall be deemed to include the Chief Executive Officer; provided, however, that such delegation shall not limit the Chief Executive Officer’s right to receive Awards under the Plan. Notwithstanding the foregoing, the Chief Executive Officer may not grant Awards to, or take any action with respect to any Award previously granted to, a person who is an officer subject to Rule 16b-3 or a Director. Subject to the terms of the Plan and applicable law, and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to a Participant; (iii) determine the number of Units to be covered by Awards; (iv) determine the terms and conditions of any Award; (v) determine whether, to what extent, and under what circumstances Awards may be settled, exercised, canceled, or forfeited; (vi) interpret and administer the Plan and any instrument or agreement relating to an Award made under the Plan; (vii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (viii) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan; and (ix) ensuring the payment of any Award or benefit hereunder is made in full compliance with the requirements of Section 409A of the Code and the 409A Regulations. The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan or

an Award Agreement in such manner and to such extent as the Committee deems necessary or appropriate. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive, and binding upon all Persons, including the Partnership, the Company, any Affiliate, any Participant, and any Participant’s beneficiary of any Award.

(b) Manner and Exercise of Committee Authority. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive, and binding upon all Persons, including, without limitation, the Company, the Partnership, any Affiliate, any Participant, and any beneficiary of a Participant. The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting the power or authority of the Committee.

(c) Board Not Administering the Plan. In the event that the full Board is not acting as the Committee, the committee of the Board that is acting as the Committee for purposes of this Plan must comply with the requirements of this Section 3(c). At any time that a member of such Committee is not a Qualified Member, any action of the Committee relating to an Award granted or to be granted to a Participant who is then subject to Section 16 of the Exchange Act in respect of the Partnership may be taken either (i) by a subcommittee, designated by the Committee, composed solely of two or more Qualified Members, or (ii) by the Committee but with each such member who is not a Qualified Member abstaining or recusing himself or herself from such action; provided, however, that upon such abstention or recusal the Committee remains composed solely of two or more Qualified Members. Such action, authorized by such a subcommittee or by the Committee upon the abstention or recusal of such non-Qualified Member(s), shall be the action of the Committee for all purposes of the Plan.

(d) Limitation of Liability. The Committee and each member thereof shall be entitled to, in good faith, rely or act upon any report or other information furnished to him or her by any officer or employee of the Company, the Partnership or their Affiliates, the Company’s or the Partnership’s legal counsel, independent auditors, consultants or any other agents assisting in the administration of the Plan. Members of the Committee and any officer or employee of the Company, the Partnership or any of their Affiliates acting at the direction or on behalf of the Committee shall not be personally liable for any action or determination taken or made in good faith with respect to this Plan, and shall, to the fullest extent permitted by law, be indemnified and held harmless by the Company with respect to any such action or determination.

(e) Exemptions from Section 16(b) Liability. It is the intent of the Company that the grant of any Awards to, or other transaction by, a Participant who is subject to Section 16 of the Exchange Act shall be exempt from Section 16(b) of the Exchange Act pursuant to Rule 16b-3 or another applicable exemption (except for transactions acknowledged by the Participant in writing to be non-exempt). Accordingly, if any provision of the Plan or any Award Agreement does not comply with the requirements of Rule 16b-3 or such other exemption as then applicable to any such transaction, such provision shall be construed or deemed amended to the extent necessary to conform to the applicable requirements of Rule 16b-3 so that such Participant shall avoid liability under Section 16(b) of the Exchange Act.

SECTION 4. Units

(a) Limits on Units Deliverable. Subject to adjustment as provided in Section 4(c), the total aggregate number of Units that may be delivered with respect to Awards under the Plan is 9,500,000. Units withheld from an Award or surrendered by a Participant to satisfy the Company’s, Partnership’s or an Affiliate’s tax withholding obligations (including the withholding of Units with respect to Restricted Units) or to satisfy the payment of any exercise price with respect to the Award shall not be considered to be Units delivered under the Plan for this purpose. If any Award is forfeited, cancelled, exercised, settled in cash, or otherwise terminates or expires without the actual delivery of Units pursuant to such Award (the grant of Restricted Units is not a delivery of Units for this purpose), the Units subject to such Award shall again be available for Awards under the Plan (including Units not delivered in connection with the exercise of an Option or Unit Appreciation Right). There shall not be any limitation on the number of Awards that may be granted and paid in cash.

(b) Sources of Units Deliverable Under Awards. Any Units delivered pursuant to an Award shall consist, in whole or in part, of Units acquired in the open market, from the Company, the Partnership, any Affiliate or any other Person, or any combination of the foregoing, as determined by the Committee in its discretion.

(c) Anti-dilution Adjustments. Notwithstanding anything contained in Section 7, with respect to any “equity restructuring” event that could result in an additional compensation expense to the Company or the Partnership pursuant to the provisions of FASB Accounting Standards Codification, Topic 718 if adjustments to Awards with respect to such event were discretionary, the Committee shall equitably adjust the number and type of Units covered by each outstanding Award and the terms and conditions, including the exercise price and performance criteria (if any), of such Award to equitably reflect such restructuring event and shall adjust the number and type of Units (or other securities or property) with respect to which Awards may be granted after such event. With respect to any other similar event that would not result in an accounting charge under FASB Accounting Standards Codification, Topic 718 if the adjustment to Awards with respect to such event were subject to discretionary action, the Committee shall have complete discretion to adjust Awards in such manner as it deems appropriate with respect to such other event. In the event the Committee makes any adjustment pursuant to the foregoing provisions of this Section 4(c), the Committee shall make a corresponding and proportionate adjustment with respect to the maximum number of Units that may be delivered with respect to Awards under the Plan as provided in Section 4(a) and the kind of Units or other securities available for grant under the Plan.

(d) Additional Issuances. Except as hereinbefore expressly provided, the issuance by the Company or the Partnership of Units for cash, property, labor or services, upon direct sale, or upon the conversion of Units or obligations of the Company or the Partnership convertible into such Units, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of Units subject to Awards theretofore granted pursuant to the Plan.

SECTION 5. Eligibility

Any Employee or Director shall be eligible to be designated a Participant and receive an Award under the Plan. If the Units issuable pursuant to an Award are intended to be registered with the SEC on Form S-8, then only Employees and Directors of the Partnership or a parent or subsidiary of the Partnership (within the meaning of General Instruction A.1(a) to Form S-8) will be eligible to receive such an Award.

SECTION 6. Awards

(a) Options. The Committee may grant Options that are intended to comply with Section 1.409A-l(b)(5)(i)(A) of the 409A Regulations only to Employees or Directors performing services on the date of grant for the Partnership or a corporation or other type of entity in a chain of corporations or other entities in which each corporation or other entity has a “controlling interest” in another corporation or entity in the chain, starting with the Partnership and ending with the corporation or other entity for which the Employee or Director performs services. For purposes of this Section 6(a), “controlling interest” means (i) in the case of a corporation, ownership of stock possessing at least 50% of total combined voting power of all classes of stock of such corporation entitled to vote or at least 50% of the total value of shares of all classes of stock of such corporation; (ii) in the case of a partnership, ownership of at least 50% of the profits interest or capital interest of such partnership; (iii) in the case of a sole proprietorship, ownership of the sole proprietorship; or (iv) in the case of a trust or estate, ownership of an actuarial interest (as defined in Section 1.414(c)-2(b)(2)(ii) of the 409A Regulations) of at least 50% of such trust or estate. The Committee may grant Options that are otherwise exempt from or compliant with Section 409A of the Code to any eligible Employee or Director. The Committee shall have the authority to determine the number of Units to be covered by each Option, the purchase price therefore and the Restricted Period and other conditions and limitations applicable to the exercise of the Option, including the following terms and conditions and such additional terms and conditions, as the Committee shall determine, that are not inconsistent with the provisions of the Plan.

(i) Exercise Price. The exercise price per Unit purchasable under an Option that does not provide for the deferral of compensation under the 409A Regulations shall be determined by the Committee at the time the Option is granted but, except with respect to Substitute Awards, may not be less than the Fair Market Value of a Unit as of the date of grant of the Option. For purposes of this Section 6(a)(i), the Fair Market Value of a

Unit shall be determined as of the date of grant. The exercise price per Unit purchasable under an Option that does not provide for the deferral of compensation by reason of satisfying the short-term deferral rule set forth in the 409A Regulations or that is compliant with Section 409A of the Code shall be determined by the Committee at the time the Option is granted.

(ii) Time and Method of Exercise. The Committee shall determine the exercise terms and the Restricted Period with respect to an Option grant, which may include, without limitation, a provision for accelerated vesting upon the achievement of specified performance goals or other events, and the method or methods by which payment of the exercise price with respect to an Option may be made or deemed to have been made, which may include, without limitation, cash, check acceptable to the Company, withholding Units from the Award, a “cashless-broker” exercise through procedures approved by the Company, or any combination of the above methods, having a Fair Market Value on the exercise date equal to the relevant exercise price. Options shall in no event have a term longer than ten (10) years from the date of grant.

(iii) Forfeitures. Except as otherwise provided in the terms of the Award Agreement, upon termination of a Participant’s employment or service to the Company and its Affiliates or membership on the Board or the board of directors of an Affiliate, whichever is applicable, for any reason during the applicable Restricted Period, all unvested Options shall be forfeited by the Participant. The Committee may, in its discretion, waive in whole or in part such forfeiture with respect to a Participant’s Options; provided that the waiver contemplated under this Section 6(a)(iii) shall be effective only to the extent that such waiver will not cause the Participant’s Options that are designed to satisfy Section 409A of the Code to fail to satisfy such Section.

(b) Unit Appreciation Rights. The Committee may grant Unit Appreciation Rights that are intended to comply with Section 1.409A-l(b)(5)(i)(B) of the 409A Regulations only to Employees or Directors performing services on the date of grant for the Partnership or a corporation or other type of entity in a chain of corporations or other entities in which each corporation or other entity has a “controlling interest” in another corporation or entity in the chain, starting with the Partnership and ending with the corporation or other entity for which the Employee or Director performs services. For purposes of this Section 6(b), “controlling interest” means (i) in the case of a corporation, ownership of stock possessing at least 50% of total combined voting power of all classes of stock of such corporation entitled to vote or at least 50% of the total value of shares of all classes of stock of such corporation; (ii) in the case of a partnership, ownership of at least 50% of the profits interest or capital interest of such partnership; (iii) in the case of a sole proprietorship, ownership of the sole proprietorship; or (iv) in the case of a trust or estate, ownership of an actuarial interest (as defined in Section 1.414(c)-2(b)(2)(ii) of the 409A Regulations) of at least 50% of such trust or estate. The Committee may grant Unit Appreciation Rights that are otherwise exempt from or compliant with Section 409A of the Code to any eligible Employee or Director. The Committee shall have the authority to determine the Employees and Directors to whom Unit Appreciation Rights shall be granted, the number of Units to be covered by each grant, whether Units or cash shall be delivered upon exercise, the exercise price therefor and the conditions and limitations applicable to the exercise of the Unit Appreciation Rights, including the following terms and conditions and such additional terms and conditions as the Committee shall determine, that are not inconsistent with the provisions of the Plan.

(i) Exercise Price. The exercise price per Unit Appreciation Right that does not provide for the deferral of compensation under the 409A Regulations shall be determined by the Committee at the time the Unit Appreciation Right is granted but, except with respect to Substitute Awards, may not be less than the Fair Market Value of a Unit as of the date of grant of the Unit Appreciation Right. For purposes of this Section 6(b)(i), the Fair Market Value of a Unit shall be determined as of the date of grant. The exercise price per Unit Appreciation Right that does not provide for the deferral of compensation by reason of satisfying the short-term deferral rule set forth in the 409A Regulations or that is compliant with Section 409A of the Code shall be determined by the Committee at the time the Unit Appreciation Right is granted.

(ii) Time of Exercise. The Committee shall determine the Restricted Period and the time or times at which a Unit Appreciation Right may be exercised in whole or in part, which may include, without limitation, accelerated vesting upon the achievement of specified performance goals or other events.

(iii) Forfeitures. Except as otherwise provided in the terms of the Award Agreement, upon termination of a Participant’s employment with or service to the Company, the Partnership and their Affiliates or membership on the Board or the board of directors of an Affiliate, whichever is applicable, for any reason during the applicable Restricted Period, all outstanding Unit Appreciation Rights awarded to the Participant shall be automatically forfeited on such termination. The Committee may, in its discretion, waive in whole or in part such forfeiture with respect to a Participant’s Unit Appreciation Rights.

(c) Restricted Units and Phantom Units. The Committee shall have the authority to determine the Employees and Directors to whom Restricted Units and Phantom Units shall be granted, the number of Restricted Units or Phantom Units to be granted to each such Participant, the Restricted Period, the conditions under which the Restricted Units or Phantom Units may become vested or forfeited and such other terms and conditions as the Committee may establish with respect to such Awards.

(i) UDRs. To the extent provided by the Committee, in its discretion, a grant of Restricted Units may provide that the distributions made by the Company with respect to the Restricted Units shall be subject to the same forfeiture and other restrictions as the Restricted Unit and, if restricted, such distributions shall be held, without interest, until the Restricted Unit vests or is forfeited with the UDR being paid or forfeited at the same time, as the case may be. In addition, the Committee may provide that such distributions be used to acquire additional Restricted Units for the Participant. Such additional Restricted Units may be subject to such vesting and other terms as the Committee may prescribe. Absent such a restriction on the UDRs in the Award Agreement, UDRs shall be paid to the holder of the Restricted Unit without restriction at the same time as cash distributions are paid by the Partnership to its unitholders. Notwithstanding the foregoing, UDRs shall only be paid in a manner that is either exempt from or in compliance with Section 409A of the Code.

(ii) Forfeitures. Except as otherwise provided in the terms of the Restricted Units or Phantom Units Award Agreement, upon termination of a Participant’s employment with the Company and/or its Affiliates or membership on the Board, whichever is applicable, for any reason during the applicable Restricted Period, all outstanding, unvested Restricted Units and Phantom Units awarded to the Participant shall be automatically forfeited on such termination. The Committee may, in its discretion, waive in whole or in part such forfeiture with respect to a Participant’s Restricted Units and/or Phantom Units; provided that the waiver contemplated under this Section 6(c)(ii) shall be effective only to the extent that such waiver will not cause the Participant’s Restricted Units and/or Phantom Units that are designed to satisfy Section 409A of the Code to fail to satisfy such Section.

(iii) Lapse of Restrictions.

(A) Phantom Units. No later than the 15th calendar day following the vesting of each Phantom Unit, subject to the provisions of Section 8(b), the Participant shall be entitled to settlement of such Phantom Unit and shall receive one (1) Unit or an amount in cash equal to the Fair Market Value of a Unit (for purposes of this Section 6(c)(iii), as calculated on the last day of the Restricted Period), as determined by the Committee in its discretion.

(B) Restricted Units. Upon or as soon as reasonably practical following the vesting of each Restricted Unit, subject to satisfying the tax withholding obligations of Section 8(b), the Participant shall be entitled to have the restrictions removed from his or her Unit certificate so that the Participant then holds an unrestricted Unit.

(d) Unit Awards. The Committee shall have the authority to grant a Unit Award under the Plan to any Employee or Director in a number determined by the Committee in its discretion, as a bonus or additional compensation or in lieu of cash compensation the individual is otherwise entitled to receive, in such amounts as the Committee determines to be appropriate.

(e) Other Unit-Based Awards. The Committee is authorized, subject to limitations under applicable law, to grant to Participants such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Units, as deemed by the Committee to be consistent with the purposes of this

Plan, including, without limitation, convertible or exchangeable debt securities, other rights convertible or exchangeable into Units, purchase rights for Units, Awards with value and payment contingent upon performance of the Partnership or any other factors designated by the Committee, and Awards valued by reference to the book value of Units or the value of securities of or the performance of specified Affiliates of the Company or the Partnership. The Committee shall determine the terms and conditions of such Awards. Units delivered pursuant to an Award in the nature of a purchase right granted under this Section 6(e) shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including, without limitation, cash, Units, other Awards, or other property, as the Committee shall determine. Cash Awards, as an element of or supplement to, or independent of any other Award under this Plan, may also be granted pursuant to this Section 6(e).

(f) DERs. To the extent provided by the Committee, in its discretion, an Award (other than a Restricted Unit or Unit Award) may include a tandem DER grant, which may provide that such DERs shall be paid directly to the Participant, be reinvested into additional Awards, be credited to a bookkeeping account (with or without interest in the discretion of the Committee) subject to the same vesting restrictions as the tandem Award, or be subject to such other provisions or restrictions as determined by the Committee in its discretion. Absent a contrary provision in the Award Agreement, DERs shall be paid to the Participant without restriction at the same time as ordinary cash distributions are paid by the Partnership to its unitholders. Notwithstanding the foregoing, DERs shall only be paid in a manner that is either exempt from or in compliance with Section 409A of the Code.

(g) Substitute Awards. Awards may be granted under the Plan in substitution for similar awards held by individuals who become Employees or Directors as a result of a merger, consolidation or acquisition by the Partnership or an Affiliate of another entity or the assets of another entity. Such Substitute Awards that are Options or Unit Appreciation Rights may have exercise prices less than the Fair Market Value of a Unit on the date of the substitution if such substitution complies with Section 409A of the Code and the 409A Regulations and other applicable laws and exchange rules.

(h) Performance Awards. The right of a Participant to receive a grant, and the right of a Participant to exercise or receive a grant or settlement of any Award, and the timing thereof, may be subject to such performance conditions as may be specified by the Committee. The Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions, and may exercise its discretion to reduce or increase the amounts payable under any Award subject to performance conditions.

(i) General.

(i) Awards May Be Granted Separately or Together. Awards may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution for any other Award granted under the Plan or any award granted under any other plan of the Partnership or any Affiliate. Awards granted in addition to, in substitution for, or in tandem with other Awards or awards granted under any other plan of the Partnership or any Affiliate may be granted either at the same time as or at a different time from the grant of such other Awards or awards. If an Award is granted in substitution or exchange for another Award, the Committee shall require the surrender of such other Award in consideration for the grant of the new Award. Awards under the Plan may be granted in lieu of cash compensation, including in lieu of cash amounts payable under other plans of the Company, the Partnership, or any Affiliate, in which the value of Units subject to the Award is equivalent in value to the cash compensation, or in which the exercise price, grant price, or purchase price of the Award in the nature of a right that may be exercised is equal to the Fair Market Value of the underlying Units minus the value of the cash compensation surrendered. Awards granted pursuant to the preceding sentence shall be designed, awarded and settled in a manner that does not result in additional taxes under Section 409A the Code and the 409A Regulations.

(ii) Limits on Transfer of Awards.

(A) Except as provided in Paragraph (C) below, each Option and Unit Appreciation Right shall be exercisable only by the Participant during the Participant’s lifetime, or by the person to whom the Participant’s rights shall pass by will or the laws of descent and distribution.

(B) Except as provided in Paragraph (C) below, no Award and no right under any such Award may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company, the Partnership or any Affiliate.

(C) To the extent specifically provided by the Committee with respect to an Option or Unit Appreciation Right, an Option or Unit Appreciation Right may be transferred by a Participant without consideration to immediate family members or related family trusts, limited partnerships or similar entities or on such terms and conditions as the Committee may from time to time establish.

(iii) Term of Awards. The term of each Award shall be for such period as may be determined by the Committee.

(iv) Form and Timing of Payment under Awards; Deferrals. Subject to the terms of the Plan and any applicable Award Agreement, payments to be made by the Company, the Partnership, or any Affiliate upon the exercise of an Option or other Award or settlement of an Award may be made in such forms as the Committee shall determine, including without limitation cash, Units, other Awards or other property, and may be made in a single payment or transfer, in installments, or on a deferred basis; provided, however, that any such deferred payment will be set forth in the agreement evidencing such Award and/or otherwise made in a manner that will not result in additional taxes under the Code and the 409A Regulations. Except as otherwise provided herein, the settlement of any Award may be accelerated, and cash paid in lieu of Units in connection with such settlement, in the discretion of the Committee or upon occurrence of one or more specified events (in addition to a Change of Control). Installment or deferred payments may be required by the Committee (subject to Section 7(a) of the Plan, including the consent provisions thereof in the case of any deferral of an outstanding Award not provided for in the original Award Agreement) or permitted at the election of the Participant on terms and conditions established by the Committee and in compliance with Section 409A the Code and the 409A Regulations. Payments may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of DERs or other amounts in respect of installment or deferred payments denominated in Units. This Plan shall not constitute an “employee benefit plan” for purposes of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended.

(v) Issuance of Units. The Units or other securities of the Partnership delivered pursuant to an Award may be evidenced in any manner deemed appropriate by the Committee in its sole discretion, including, but not limited to, in the form of a certificate issued in the name of the Participant or by book entry, electronic or otherwise and shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the SEC, any stock exchange upon which such Units or other securities are then listed, and any applicable federal or state laws, and the Committee may cause a legend or legends to be inscribed on any such certificates to make appropriate reference to such restrictions.

(vi) Consideration for Grants. Awards may be granted for such consideration, including services, as the Committee shall determine.

(vii) Delivery of Units or other Securities and Payment by Participant of Consideration. Notwithstanding anything in the Plan or any Award Agreement to the contrary, delivery of Units pursuant to the exercise, vesting and/or settlement of an Award may be deferred for any period during which, in the good faith determination of the Committee, the Company is not reasonably able to obtain Units to deliver pursuant to such Award without violating applicable law or the applicable rules or regulations of any governmental agency or authority or securities exchange. No Units or other securities shall be delivered pursuant to any Award until payment in full of any amount required to be paid pursuant to the Plan or the applicable Award Agreement (including, without limitation, any exercise price or tax withholding) is received by the Company.

(viii) Additional Agreements. Each Employee or Director to whom an Award is granted under this Plan may be required to agree in writing, as a condition to the grant of such Award or otherwise, to subject an

Award that is exercised or settled following such Person’s termination of services with the Company, the Partnership or their Affiliates to a general release of claims and/or a noncompetition agreement in favor of the Company, the Partnership, and their Affiliates, with the terms and conditions of such agreement(s) to be determined in good faith by the Committee.

SECTION 7. Amendment and Termination

Except to the extent prohibited by applicable law:

(a) Amendments to the Plan. Except as required by the rules of the principal securities exchange on which the Units are traded and subject to Section 7(b) below, the Board or the Committee may amend, alter, suspend, discontinue, or terminate the Plan in any manner, including increasing the number of Units available for Awards under the Plan, without the consent of any Participant, other holder or beneficiary of an Award, or any other Person.

(b) Amendments to Awards. Subject to Section 7(a), the Committee may waive any conditions or rights under, amend any terms of, or alter any Award theretofore granted, provided no change, other than pursuant to Section 7(c), in any Award shall (i) materially reduce the rights or benefits of a Participant with respect to an Award without the consent of such Participant, and/or (ii) result in taxation to the Participant under Section 409A of the Code unless otherwise determined by the Board.

(c) Actions Upon the Occurrence of Certain Events. Upon the occurrence of a Change of Control; a recapitalization, reorganization, merger, consolidation, combination, exchange or other relevant and similar corporate event that is not a Change of Control; any change in applicable law or regulation affecting the Plan or Awards thereunder; or any change in accounting principles affecting the financial statements of the Partnership or the Company, the Committee, in its sole discretion, without the consent of any Participant or holder of the Award, and on such terms and conditions as it deems appropriate, may take any one or more of the following actions in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or an outstanding Award:

(i) provide for either (A) the termination of any Award in exchange for an amount of cash, if any, equal to the amount that would have been attained upon the exercise of such Award or realization of the Participant’s rights (and, for the avoidance of doubt, if as of the date of the occurrence of such transaction or event, the Committee determines in good faith that no amount would have been attained upon the exercise of such Award or realization of the Participant’s rights, then such Award may be terminated by the Company without payment) or (B) the replacement of such Award with other rights or property selected by the Committee in its sole discretion;

(ii) provide that such Award be assumed by the successor or survivor entity, or a parent or subsidiary thereof, or be exchanged for similar options, rights or awards covering the equity of the successor or survivor, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of equity interests and prices;

(iii) make adjustments in the number and type of Units (or other securities or property) subject to outstanding Awards, and in the number and kind of outstanding Awards or in the terms and conditions of (including the exercise price), and the vesting and performance criteria included in, outstanding Awards, or both;

(iv) provide that such Award shall be exercisable or payable, notwithstanding anything to the contrary in the Plan or the applicable Award Agreement; and

(v) provide that the Award cannot be exercised or become payable after such event, i.e., shall terminate upon such event.

Notwithstanding the foregoing, with respect to an above event that is an “equity restructuring” event that would be subject to a compensation expense pursuant FASB Accounting Standards Codification, Topic 718, the provisions in Section 4(c) shall control to the extent they are in conflict with the discretionary provisions of this Section 7.

SECTION 8. General Provisions

(a) No Rights to Award. No Person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Participants. The terms and conditions of Awards need not be the same with respect to each recipient.

(b) Tax Withholding. Unless other arrangements have been made that are acceptable to the Company or an Affiliate, the Partnership or Affiliate is authorized to deduct, withhold, or cause to be deducted or withheld, from any Award, from any payment due or transfer made under any Award or from any compensation or other amount owing to a Participant the amount (in cash, Units, Units that would otherwise be issued pursuant to such Award or other property) of any applicable taxes payable in respect of the grant or settlement of an Award, its exercise, the lapse of restrictions thereon, or any other payment or transfer under an Award or under the Plan and to take such other action as may be necessary in the opinion of the Company or Affiliate to satisfy its withholding obligations for the payment of such taxes. Notwithstanding the foregoing, with respect to any Participant who is subject to Rule 16b-3, such tax withholding automatically shall be effected by the Company either by (i) “netting” or withholding Units otherwise deliverable to the Participant on the vesting or payment of such Award, or (ii) requiring the Participant to pay an amount equal to the applicable taxes payable in cash.

(c) No Right to Employment or Services. The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of the Partnership, the Company or any Affiliate or to remain on the Board, as applicable. Furthermore, the Company or an Affiliate may at any time dismiss a Participant from employment free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan, any Award Agreement or other agreement.

(d) Governing Law. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of Texas without regard to its conflicts of laws principles.

(e) Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable law or, if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full force and effect.

(f) Other Laws. The Committee may refuse to issue or transfer any Units or other consideration under an Award if, in its sole discretion, it determines that the issuance or transfer of such Units or such other consideration might violate any applicable law or regulation, the rules of the principal securities exchange on which the Units are then traded, or entitle the Company or an Affiliate to recover the same under Section 16(b) of the Exchange Act, and any payment tendered to the Company by a Participant, other holder or beneficiary in connection with the exercise of such Award shall be promptly refunded to the relevant Participant, holder or beneficiary.

(g) Section 409A of the Code

(i) The Plan is intended to be administered, operated and construed in compliance with Section 409A of the Code and the 409A Regulations. Notwithstanding this or any other provision of the Plan to the contrary, the Board or the Committee may amend the Plan in any manner, or take any other action, that either of them determines, in its sole discretion, is necessary, appropriate or advisable to cause the Plan to comply with Section 409A of the Code and the 409A Regulations, Any such action, once taken, shall be deemed to be effective from the earliest date necessary to avoid a violation of Section 409A of the Code and the 409A Regulations and shall be final, binding and conclusive on all Participants and other individuals having or claiming any right or interest under the Plan.

(ii) Notwithstanding the provisions of the Plan or any Award Agreement, if the Participant is a “specified employee” as defined in the 409A Regulations at the time of his “separation from service” as defined

in the 409A Regulations, any portion of a cash or Unit-based Award granted pursuant to this Plan that would cause the acceleration of, or an addition to, any taxes pursuant to the 409A Regulations may not commence earlier than six (6) months after the date of such Participant’s separation from service.

(h) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any participating Affiliate and a Participant or any other Person, To the extent that any Person acquires a right to receive payments from the Company or any participating Affiliate pursuant to an Award, such right shall be no greater than the right of any general unsecured creditor of the Company or any participating Affiliate.

(i) No Fractional Units. No fractional Units shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional Units or whether such fractional Units or any rights thereto shall be canceled, terminated, or otherwise eliminated.

(j) Headings. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.

(k) Facility Payment. Any amounts payable hereunder to any person under legal disability or who, in the judgment of the Committee, is unable to manage properly his financial affairs, may be paid to the legal representative of such person, or may be applied for the benefit of such person in any manner that the Committee may select, and the Company shall be relieved of any further liability for payment of such amounts.

(l) Gender and Number. Words in the masculine gender shall include the feminine gender, the plural shall include the singular and the singular shall include the plural.

(m) Allocation of Costs. Nothing herein shall be deemed to override, amend, or modify any cost sharing arrangement, omnibus agreement, or other arrangement between the Company, the Partnership, and any Affiliate regarding the sharing of costs between those entities.

(n) Deferrals. The Committee may, to the extent permitted by applicable law, permit Participants to defer Awards under the Plan, Any such deferrals shall be subject to such terms, conditions and procedures that the Committee may establish from time to time in its sole discretion and consistent with the advance and subsequent deferral requirements of Section 409A of the Code.

(o) Unfunded Obligations. Any amounts (deferred or otherwise) to be paid to Participants pursuant to the Plan are unfunded obligations of the Company and or its Affiliates. Neither the Partnership nor the Company is required to segregate any monies from its general funds, to create any trusts or to make any special deposits with respect to such unfunded obligation. The Committee, in its sole discretion, may direct the Partnership or the Company to share with its Affiliates the costs of a portion of the Awards paid to Participants. Beneficial ownership of any investments, including trust investments which the Partnership or the Company may make to fulfill this obligation, shall at all times remain in the Partnership or the Company, as applicable. Any investments and the creation or maintenance of any trust or any Participant account shall not create or constitute a trust or a fiduciary relationship between the Committee, the Partnership, the Company or any Affiliate and a Participant, or otherwise create any vested or beneficial interest in any Participant or the Participant’s beneficiary or the Participant’s creditors in any assets of the Partnership, the Company or its Affiliates whatsoever. The Participants shall have no claim against the Partnership or the Company for any changes in the value of any assets which may be invested or reinvested by the Partnership or the Company with respect to the Plan.

(p) Forfeiture Events.

(i) If the Partnership or Company is required to prepare an accounting restatement due to the material noncompliance of the Partnership or Company, as a result of misconduct, with any financial reporting requirement under the securities laws, and if a Participant knowingly engaged in the misconduct, was grossly negligent with respect to such misconduct, or knowingly or grossly negligently failed to prevent the misconduct

(whether or not the Participant is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002), the Participant shall reimburse the Partnership or the Company the amount of any payment in settlement of an Award earned or accrued during the twelve month period following the first public issuance or filing with the SEC (whichever first occurred) of the financial document embodying such financial reporting requirement. Notwithstanding anything in this Plan or any Award Agreement or any other agreement between the Company and a Participant to the contrary, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”) has the effect of requiring certain executives of the Company to repay the Company, and for the Company to recoup from such executives, erroneously awarded amounts of incentive-based compensation. If, and only to the extent, the Act, any rules or regulations promulgated thereunder by the Securities and Exchange Commission or any similar federal or state law requires the Company to recoup any erroneously awarded incentive-based compensation (including Awards under this Plan) that the Company has paid or granted to an applicable Participant, even if the Participant has terminated his employment with the Company, the Partnership or any Affiliate, the Participant shall be required to promptly repay such erroneously awarded incentive compensation to the Company upon its written request.

(ii) The Committee may specify in an Award Agreement that the Participant’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, without limitation, termination of employment for cause, violation of material policies that may apply to the Participant, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the Participant, or other conduct by the Participant that is detrimental to the business or reputation of the Partnership, the Company or any Affiliate.

SECTION 9. Term of the Plan

The Plan shall be effective on the date it is approved by the unitholders of the Partnership and shall continue until the earliest of (a) the date it is terminated by the Board, (b) all Units available under the Plan have been paid to Participants, or (c) the tenth (10th) anniversary of the date the Plan is approved, as provided in this Section 9, with respect to any new Awards. However, any Award granted prior to such termination, and the authority of the Board or the Committee to amend, alter, adjust, suspend, discontinue, or terminate any such Award or to waive any conditions or rights under such Award, shall extend beyond such termination date.

EXHIBIT 10.2

WESTERN MIDSTREAM PARTNERS, LP
EXECUTIVE SEVERANCE PLAN

Establishment of Plan

As of the Effective Date, the Company adopted this Plan known as the Western Midstream Partners, LP Executive Severance Plan, as set forth in this document. The Plan was adopted to provide severance compensation to the Company’s eligible executives in the event of a qualifying termination of employment under the terms and conditions set forth herein.

ARTICLE I

Definitions and Interpretations

SECTION 1.01. Definitions. As used herein, the following words and phrases shall have the following respective meanings.

a.Accountant. The meaning set forth in Section 4.03(c).

b.Affiliate. Any corporation, partnership, limited liability company, limited liability partnership, association, trust or other organization that, directly or indirectly, controls, is controlled by, or is under common control with, the Company. For purposes of the preceding sentence, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any entity or organization, shall mean the possession, directly or indirectly, of the power (i) to vote more than 50% of the securities having ordinary voting power for the election of directors (or the equivalent) of the controlled entity or organization; or (ii) to direct or cause the direction of the management and policies of the controlled entity or organization, whether through the ownership of voting securities or by contract or otherwise. For the avoidance of doubt, each Subsidiary shall also be an Affiliate.

c.Annual Incentive Plan. The Western Midstream Partners, LP US Incentive Compensation Program (or any successor plan or program thereto) or any other annual incentive program maintained for the benefit of the Participants.

d.Base Salary. With respect to any Participant, the annual rate of base salary paid by the Company or any Subsidiary or Affiliate, to such Participant (including amounts that such Participant could have received in cash had he or she not elected to contribute to an employee benefit plan or a deferred compensation program maintained by the Company or any Subsidiary or Affiliate), excluding overtime pay, bonuses, employee benefits, all forms of incentive compensation and all other types of compensation and special payments. For purposes of Section 3.02, Base Salary shall mean such Participant’s highest Base Salary in effect at any time during the three-year period preceding the Participant’s Date of Termination (without regard to any material diminution in such Base Salary giving rise to Good Reason).

e.Board. The Board of Directors of the Company (which is the board of directors of the General Partner).

f.Cause. A Participant’s (i) conviction of any felony or of a misdemeanor involving moral turpitude, (ii) willful failure to perform the Participant’s duties or responsibilities, (iii) engaging in conduct which is injurious (monetarily or otherwise) to the Company or any of its Subsidiaries (including misuse of funds or other property), (iv) engaging in business activities which are in conflict with the business interests of the Company and its Subsidiaries, (v) insubordination, (vi) engaging in conduct which is in violation of any applicable policy or work rule of the Company or its Subsidiaries, (vii) engaging in conduct which is in violation of the Company’s (or its

Subsidiaries’) applicable safety rules or standards or which otherwise causes or may cause injury to another employee or any other person, or (viii) engaging in conduct which is in violation of any applicable Code of Business Conduct and Ethics or which is otherwise inappropriate in the office or work environment. For purposes of clause (ii) above, no act or failure to act, on the Participant’s part, shall be considered “willful” unless it is done, or omitted to be done, by the Participant in bad faith or without reasonable belief that the Participant’s action or omission was in the best interests of the Company and its Subsidiaries. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of legal counsel for the Company or its Subsidiaries shall be conclusively presumed to be done, or omitted to be done, by the Participant in good faith and in the best interests of the Company and its Subsidiaries.

g.CIC Plan. The Western Midstream Partners, LP Executive Change in Control Severance Plan.

h.COBRA. The Consolidated Omnibus Budget Reconciliation Act of 1985.

i.Code. The Internal Revenue Code of 1986.

j.Company. Western Midstream Partners, LP, a Delaware master limited partnership.

k.Continued Benefits. The meaning set forth in Section 3.02(a)(iii).

l.Date of Termination. With respect to any Participant, the date on which such Participant’s employment with the Company and its Affiliates is terminated, without the concurrent or immediate re-employment of such Participant by the Company or one of its Affiliates (or any successor thereto).

m.Effective Date. August 5, 2021.

n.Employee. Any individual who is designated on the U.S. dollar payroll of the Company or any Affiliate as a regular full-time employee of the Company or any Subsidiary. Notwithstanding the foregoing, “Employee” excludes:

i.any individual who is not on the U.S. dollar payroll of the Company or its Subsidiaries for whatever reason, including a worker that the Company or its Subsidiaries considers to be an independent contractor, a leased employee, a contractor or an agency or staffing worker;

ii.any individual not designated in the payroll records of the Company, or its Subsidiaries, or otherwise not considered by Company or its Subsidiaries, to be a regular full-time employee;

iii.any interim officer, or temporary or seasonal employee;

iv.any individual who is a participant in another severance plan or program sponsored by the Company or any of Subsidiary, solely to the extent such benefits exceed the benefits provided for under the Plan (it being understood that benefits under the CIC Plan due as a result of a qualifying termination of employment within the Protection Period (as defined therein) shall be in lieu of benefits under the Plan, except as otherwise expressly provided for in the CIC Plan with respect to a qualifying termination of employment during the Protection Period and prior to the consummation of a Change in Control (as defined therein));

v.any individual who is party to an individual written agreement with the Company or any Subsidiary providing for severance benefits (as defined in that agreement), solely to the extent such benefits exceed the benefits provided for under the Plan; and

vi.any employee whose employment terms and conditions are governed by a collective bargaining agreement or other agreement with any labor union, works council or other employee representative organization, unless such agreement expressly provides for coverage under the Plan.

o.ERISA. The Employee Retirement Income Security Act of 1974.

p.Exchange Act. The Securities Exchange Act of 1934.

q.General Partner. Western Midstream Holdings, LLC, the general partner of the Company, and its successors and permitted assigns as the general partner of the Company.

r.Good Reason. Good Reason means the occurrence of any of the following conditions, without the Participant’s consent, (i) the Participant’s duties and responsibilities as an employee and officer of the Company, taken as a whole with any new duties or responsibilities attendant to any change in role or function, are materially and adversely diminished, (ii) the Participant’s base salary is materially reduced, (iii) the aggregate value of the Participant’s base salary plus target annual bonus is materially reduced or (iv) the Participant is required to be based at a location more than 50 miles from the primary location where the Participant was based and performed services immediately prior to the change of location, except, in the case of each of clauses (ii) and (iii), for any such reduction that is applied generally and consistently to the Company’s executives; provided, however, that a termination of employment for Good Reason shall not be effective unless the Participant provides notice to the Plan Administrator at the address set forth in Section 8.02 of the existence of one or more of the foregoing conditions within 80 days following the initial existence of the condition(s), such condition(s) remains uncorrected for 30 days after receipt of such notice by the Plan Administrator and the date of the Participant’s termination of employment occurs within 120 days after the initial existence of such condition(s).

s.Other Source. The meaning set forth in Section 3.03(c).

t.Participant. A Tier I Employee, Tier II Employee, or Tier III Employee, as applicable, unless otherwise designated by the Plan Administrator pursuant to Section 2.02.

u.Payments. The meaning set forth in Section 4.03(a).

v.Person. Any person, entity or “group” within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act.

w.Plan. This Western Midstream Partners, LP Executive Severance Plan, as it may be amended or modified from time to time.

x.Plan Administrator. The Board or any committee thereof that the Board shall appoint.

y.Release Agreement. The meaning set forth in Section 3.02(b).

z.Release Condition. The meaning set forth in Section 3.02(b).

aa.Restricted Business. Means the business of: (i) gathering, compressing, treating, processing and transporting natural gas; (ii) gathering, stabilizing, and transporting condensate, natural gas liquids or crude oil; (iii) gathering and disposing of produced water; or (iv) any other business in which the Company or its

Subsidiaries was engaged, in any Restricted Territory, at the Date of Termination, or at any time within the 24-month period prior to, the Date of Termination. Notwithstanding the forgoing, “Restricted Business” shall not include any business that the Company (x) is not engaged in, or (y) has not taken definitive steps toward initiating, as of the Date of Termination.

bb. Restricted Territory. Means each county or similar geographic subdivision in which the Company (i) conducts business, or (ii) has taken definitive steps toward conducting business (including by having executed an agreement or letter of intent to acquire a business or assets, or through Board approval of capital expenditures), in each case as of the Date of Termination.

cc. Separation Benefits. The payments and benefits due pursuant to Section 3.02(a).

dd. Specified Employee. A “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, as determined under the Company’s established methodology for determining specified employees.

ee. Subsidiary. Any entity in which the Company, directly or indirectly, holds a majority of the voting power of such entity’s outstanding shares of capital stock or other voting interests, as applicable.

ff. Target Bonus. The Participant’s annual target bonus opportunity under the applicable Annual Incentive Plan for the year in which the Date of Termination occurs; provided, however, if the annual target bonus opportunity has not been established for the Participant for the year in which the Date of Termination occurs, the Target Bonus shall be based on the annual target bonus opportunity under the applicable Annual Incentive Plan for the year prior to the year in which the Date of Termination occurs, without regard to any material diminution in such bonus opportunity giving rise to Good Reason.

gg. Tier I Employee. An Employee who is the Chief Executive Officer of the Company.

hh. Tier II Employee. An Employee who is in the position of Senior Vice President or above (excluding the Tier I Employee).

ii. Tier III Employee. An Employee who is in the position of Vice President or above (excluding the Tier I Employee or any Tier II Employee).

jj. WARN Act. As applicable, the Worker Adjustment and Retraining Notification Act and any other similar U.S. Federal, state or other applicable law mandating the provision of notice to employees prior to termination of employment.

SECTION 1.02. Interpretations. Pronouns and other words of gender shall be read as gender- neutral. Words importing the singular only shall include the plural and vice versa. The words “include”, “includes” or “including” shall be deemed to be followed by the words “without limitation”. The titles and headings of the sections in the Plan are for convenience of reference only, and in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control. References to any statute shall be deemed to refer to such statute as may be amended from time to time and any rules, regulations other authoritative guidance promulgated thereunder by the appropriate governmental authority. References to a Person are also to its permitted successors and assigns (including, with respect to the Company, any successor or assignee to the Company’s business or assets who becomes bound by the Plan pursuant to Article VIII).

ARTICLE II

Eligibility

SECTION 2.01. Participation. Each Tier I Employee, Tier II Employee, and Tier III Employee shall be a Participant.

SECTION 2.02. Duration of Participation. A Participant shall cease to be a Participant upon the earliest to occur of the following: he or she (i) is no longer an Employee as defined herein or (ii) ceases to hold a position that qualifies him or her as a Tier I Employee, Tier II Employee, or Tier III Employee; provided, however, that in no event shall a cessation of participation under this Section 2.02 be effective earlier than 90 days following the Participant’s change to an ineligible position. Notwithstanding the foregoing, a Participant who is entitled, as a result of ceasing to be an Employee, to payment of Separation Benefits or any other amounts due under the Plan shall remain a Participant until all such Separation Benefits have been paid to the Participant.

ARTICLE III

Separation Benefits

SECTION 3.01. Termination of Employment.

a.Terminations That Give Rise to Separation Benefits Under This Plan. If a Participant’s employment with the Company or any Subsidiary is terminated for either of the following reasons, the Participant shall be eligible to receive Separation Benefits under the Plan:

i.a termination by the Company or any Subsidiary without Cause; or

ii.a termination by the Participant for Good Reason.

b.Terminations That Do Not Give Rise to Separation Benefits Under This Plan. If a Participant’s employment with the Company or any Subsidiary is terminated for any of the following reasons, the Participant shall not be entitled to Separation Benefits under the Plan:

i.a termination by the Company or any Subsidiary for Cause;

ii.a termination from the Company or any Subsidiary as a result of the Participant’s inability to perform the essential functions of his or her position with or without a reasonable accommodation that is required by law;

iii.the death of the Participant;

iv.a termination by the Participant due to retirement, or a termination by the Participant if the Participant has announced his or her retirement on or prior to the Effective Date; provided that a termination that otherwise meets the requirements of clause (i) or (ii) of Section 3.01(a) shall not be deemed to be a retirement for purposes of this Section 3.01(b); or

v.the voluntary termination by the Participant without Good Reason, including, for the avoidance of doubt, the termination of the Participant under any voluntary separation plan announced or implemented by the Company (except, for the avoidance of doubt, as otherwise expressly provided for in the CIC Plan with respect to a qualifying termination of employment during the Protection Period and prior to the consummation of a Change in Control (as defined therein).

For the avoidance of doubt, a Participant will not be deemed to have a termination of employment entitling the Participant to Separation Benefits if such Participant’s employment is transferred (i) between the Company and any Subsidiary or (ii) between any Subsidiary and any other Subsidiary.

SECTION 3.02. Separation Benefits.

a.Separation Benefits. If a Participant incurs a termination of employment described in Section 3.01(a) and satisfies the Release Condition, then the Company shall pay or provide, or cause to be paid or provided, the following:

i.Cash Severance:

A.Tier I Employee: An amount equal to 2.0 times the sum of (A) Base Salary and (B) Target Bonus;

B.Tier II Employee: An amount equal to 1.5 times the sum of (A) Base Salary and (B) Target Bonus; or

C.Tier III Employee: An amount equal to 1.0 times the sum of (A) Base Salary and (B) Target Bonus,

in each case, payable as a lump sum within 60 days following the Date of Termination;

ii.Pro Rata Bonus: A pro rata portion of the Participant’s annual bonus under the Annual Incentive Plan in respect of the year in which the Date of Termination occurs (determined by multiplying (A) the Target Bonus by (B) a fraction, the numerator of which is the number of days between (and inclusive of) the first day of the applicable Annual Incentive Plan year and the Date of Termination, and the denominator of which is the total number of days in the applicable Annual Incentive Plan year), such prorated bonus to be payable at the same time bonuses under the Annual Incentive Plan are paid to other senior executives of the Company (and in all events no later than March 15 of the calendar year following the calendar year in which the Date of Termination occurs);

iii.Welfare Benefits: Until the second anniversary of the Date of Termination, the Company shall maintain in full force and effect the basic life, medical and dental plans in which the Participant (and, as applicable, the Participant’s eligible dependents) were participating immediately prior to the Date of Termination, and shall permit the Participant (and, as applicable, the Participant’s eligible dependents) to continue participation in such plans through such two-year period, at the same rates and levels in accordance with the terms of such plans (the “Continued Benefits”), subject to the following:

A.The Participant’s continued participation must be possible under the general terms and provisions of such plans;

B.If the Participant’s continued participation in any such plan is barred due to the eligibility and participation requirements of such plan as then in effect or applicable tax regulations, the Company shall arrange to provide benefits substantially similar to those to which the Participant was entitled to receive under such plan prior to the Date of Termination, and in such event, appropriate adjustments shall be made so that the after-tax value thereof to

the Participant is similar to the after-tax value of the benefit plan in which participation is barred;

C.The Continued Benefits shall be subject to the application of any Medicare or other coordination of benefits provisions under the applicable medical or welfare benefit plan; and

D.The Continued Benefits are contractual only and are not to be considered a continuation of coverage as provided under COBRA;

iv.Long-Term Incentive Awards: If upon the Date of Termination, the Participant holds any awards granted under any equity plan maintained by the Company or its Affiliates that were granted after the Effective Date, including stock options, restricted stock units, performance units, and any other unit-based award, such awards shall become vested, exercisable, and payable upon such Date of Termination as set forth below, with such awards to be payable within 60 days following such Date of Termination (or, in the case of performance-based awards, on the payment date as per the terms of the applicable award agreement) or exercisable in the case of stock options for the post-termination exercise period set forth in such stock option agreement (which shall not be less than 90 days following the Date of Termination, or the remaining exercise period stated in the option award agreement, whichever is shorter):

A.With respect to time-based awards, the award shall vest on a pro rata basis on the Date of Termination, with the pro rata portion of the award determined by multiplying the number of shares subject to the award on the grant date by a fraction, the numerator of which is the number of days between (and inclusive of) the grant date and the Date of Termination, and the denominator of which is the total number of days in the vesting period; and

B.With respect to performance-based awards, the award shall vest on a pro-rata basis with the achievement of any performance conditions determined as set forth in the applicable award agreement (or, if no such treatment is provided, the performance conditions shall be based upon actual performance as determined by the Board) and the pro rata portion of the award shall be determined by multiplying the number of shares subject to the award on the grant date by a fraction, the numerator of which is the number of days between (and inclusive of) the grant date and the date of termination, and the denominator of which is the total number of days in the vesting period;

v.Outplacement: Outplacement services, at the Company’s sole cost, for up to nine months following the Date of Termination; and

vi.Accrued Vacation: Within 60 days following the Date of Termination, a cash payment equal to any banked vacation and vacation earned but not taken as of the Date of Termination.

b.Release Condition. In order to receive any of the payments and benefits outlined in this Section 3.02, the Participant must execute, deliver, and not revoke a separation agreement containing an effective waiver and release of all claims against the Company, its Affiliates and their respective representatives, and certain other persons and entities, and containing other provisions in the form required by the Plan Administrator (the “Release Agreement”) that becomes irrevocable in accordance with its terms within 55 days following the Date of

Termination (the “Release Condition”). The Plan Administrator may, in its discretion, require that the Release Agreement a Participant must execute and not revoke in satisfaction of the Release Condition include restrictive covenants in favor of the Company and its Affiliates (which may include a perpetual non-disclosure of confidential information provision, a non-disparagement provision, non-competition and employee, customer, prospective customer, supplier and vendor non-solicitation provisions, in each case that are effective from the date of Participant’s termination of employment and for no greater than 12 months thereafter and, with respect to the non-competition provision, that restrict the Participant from engaging in any Restricted Business during such period) in the form and subject to the terms approved by the Plan Administrator. If a Participant does not satisfy the Release Condition, the only payment under the Plan to which the Participant would be entitled is the payment for accrued vacation set forth in Section 3.02(a)(vi).

SECTION 3.03. Other Benefits Payable and Offset.

a.Accrued Benefits. The Separation Benefits shall be payable in addition to, and not in lieu of, other accrued or vested or earned but deferred compensation, rights, options or other benefits that are owed to a Participant upon or following his or her termination of employment, including accrued amounts or benefits previously earned and payable under any bonus or other compensation plans, stock option plan, equity ownership plan, equity purchase plan, life insurance plan, health plan, disability plan or similar or successor plan, and any business expenses required to be reimbursed under the applicable policies of the Company or any Subsidiary or any Affiliate.

b.Offsets. Notwithstanding the foregoing, any Separation Benefits paid under the Plan will be reduced, on a dollar-for-dollar basis, by the following, and such reduction shall be made without any change to the timing of payment in a manner that would violate Section 409A of the Code:

i.any payments made or to be made to the Participant to comply with, or satisfy liability under, the WARN Act requiring payments in connection with an involuntary termination of employment, plant shutdown or workforce reduction, including amounts paid in connection with paid leaves of absence, back pay, benefits and other payments intended to satisfy such liability or alleged liability; and

ii.any payment provided to Participant after the Date of Termination that Participant was not legally entitled to receive (e.g., salary continuation for a short period of time following the Date of Termination).

c.No Duplicative Benefits. In the event that monetary or nonmonetary severance and benefits are due from any other severance plan, program or agreement (“Other Source”), then the Plan Administrator will compare such severance and benefits to the severance and benefits due under the Plan and, where the severance and benefits are of the same nature or class, the Participant will be provided with the severance and benefits from the Other Source if such severance and benefits are, in the aggregate, greater than the severance and benefits provided under this Plan; provided, however, under no circumstances shall the Participant receive duplicate severance and benefits as determined by the Plan Administrator, with the result being that the Participant receives, in the aggregate, no less favorable severance and benefits than those due under the Plan. If the Participant is eligible to receive severance and benefits from any Other Source, the form and timing of payments under such Other Source will be determined as set forth by such Other Source, and the form and timing of any remaining severance and benefits payable under the Plan will be as described herein without any change in the timing of payment that would violate Section 409A of the Code. For the avoidance of doubt, (i) the Participant’s entitlement to any enhanced or additional severance benefits under Section 3.02(b)(ii) of the CIC Plan shall not be considered duplicative and shall be payable as contemplated in such plan; provided that entitlement to severance payments or benefits under any other provision of the CIC Plan shall be in lieu of the severance and benefits under this Plan and (ii) it is understood that the severance and benefits under the legacy Anadarko Petroleum Corporation Change of Control Severance Plan, to the extent applicable and payable to the Participant, shall be in lieu of the

severance and benefits under the Plan if greater, in the aggregate, than the severance and benefits provided under this Plan.

ARTICLE IV

Certain Tax Rules

SECTION 4.01. Tax Withholding; No Guarantee of Tax Consequences. The Company and its Subsidiaries and Affiliates shall have the power to deduct or withhold, or require the Participant to remit to the Company or its Subsidiaries or Affiliates, any amount deemed sufficient to satisfy U.S. Federal, state, local and non-U.S. taxes, as deemed necessary or appropriate by the Company or its Subsidiaries or Affiliates. No representation, commitment or guarantee is made that any amounts paid under the Plan will be excludable from the recipient’s gross income for any tax purpose, or that any other tax treatment will apply or be available to such Person.

SECTION 4.02. Six-Month Delay for Specified Employee. Notwithstanding any other provision to the contrary, if any Participant is a Specified Employee, no payments under the Plan that constitute nonqualified deferred compensation subject to Section 409A of the Code shall be made to such Participant prior to the date that is six months after the Date of Termination, or such earlier date upon which such amount can be paid or provided under Section 409A of the Code without being subject to additional taxes thereunder. Following any applicable six-month delay, all such delayed payments will be paid in a single lump sum on the earliest date permitted under Section 409A of the Code that is also a business day.

SECTION 4.03. Cutback of Parachute Payments.

a.Notwithstanding any other provision to the contrary, if a Participant is a “disqualified individual” (as defined in Section 280G of the Code) and any portion of the Separation Benefits or other payments and benefits the Participant is entitled to receive, has received or would receive in connection with a “change in ownership or control” as defined in Section 280G of the Code (a “Section 280G Transaction”) (such payments and benefits, collectively, the “Payments”) would constitute a “parachute payment” (as defined in Section 280G of the Code), then the Payments shall be either (i) reduced (but not below zero) so that the aggregate present value of the Payments will be one dollar ($1.00) less than three times such Participant’s “base amount” (as defined in Section 280G of the Code), such that no portion of the Payments shall be subject to the excise tax imposed by Section 4999 of the Code; or (ii) paid in full, whichever produces the better net after-tax result for such Participant (taking into account any applicable excise tax under Section 4999 of the Code and any other applicable tax).

b.The reduction of the Payments, if any, shall be made by reducing the Payments in the reverse order in which the Payments would be paid or provided (beginning with such payment or benefit that would be made last in time and continuing, to the extent necessary, through to such payment or benefit that would be made first in time), with any benefits exempt from Section 409A of the Code reduced first.

c.All determinations as to the Payments to be reduced and the amount of reduction shall be made by a nationally recognized certified public accounting firm selected by the Company (the “Accountant”), whose determination shall be conclusive and binding. It is expressly understood that in determining the amount of any reduction to the Payments, the Accountant shall conduct a “reasonable compensation” analysis under Section 280G of the Code, including a valuation of any applicable noncompetition or other covenant, and the Company and the Participant shall cooperate in good faith in connection with such valuation. All such determinations by the Accountant shall be at the Company’s expense.

d.If the Accountant, based on controlling precedent or substantial authority, determines that a Payment has been made or provided and, through error or otherwise, that Payment, when aggregated with other Payments used in determining if a “parachute payment” exists, exceeds one dollar ($1.00) less than three times the applicable Participant’s base amount, the Participant shall immediately repay such excess to the Company upon notification that an overpayment has been made. If the Accountant, based on controlling precedent or substantial authority, determines that a Payment has been reduced pursuant to this Section 4.03 that could have been fully paid or distributed, the Company (or applicable payor) shall promptly pay such amount to the Participant, together with interest at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code.

SECTION 4.04. Section 409A Considerations. Payments and benefits under the Plan are intended to be exempt from (to the maximum extent possible) or compliant with Section 409A of the Code, and the Company shall interpret and administer the Plan in accordance therewith. The Company may make amendments to the Plan or revise the timing of any payments to be made hereunder in accordance with Section 409A of the Code. Each payment made under the Plan (including each separate installment payment in the case of a series of installment payments) shall be deemed to be a separate payment for purposes of Section 409A of the Code. To the extent any payment subject to the Release Condition is payable during a specified period that spans two taxable years, then to the extent such payment is deemed to constitute nonqualified deferred compensation subject to Section 409A of the Code, such payment shall be made in the second taxable year. To the extent that any of the payments or benefits provided for under the Plan are deemed to constitute nonqualified deferred compensation benefits subject to Section 409A of the Code, references to “termination of employment”, “termination”, or words and phrases of similar import shall be deemed to refer to “separation from service” as defined in Section 409A of the Code, and shall be interpreted and applied in a manner that is consistent with the requirements of Section 409A of the Code. To the extent that any payments or benefits provided for under the Plan are deemed to be a substitute for nonqualified deferred compensation subject to Section 409A of the Code, then the payments and benefits payable hereunder shall be paid at the same time and in the same form as such substituted benefits and payments to the extent required to comply with Section 409A of the Code. To the extent that any reimbursements under the Plan are taxable to a Participant, any such reimbursement payment due to the Participant shall be paid to the Participant as promptly as practicable consistent with the Company’s practice following the Participant’s appropriate itemization and substantiation of expenses incurred, and in all events on or before the last day of the Participant’s taxable year following the taxable year in which the related expense was incurred. The in-kind benefits and reimbursements under the Plan are not subject to liquidation or exchange for another benefit, and the amount of such benefits or reimbursements that a Participant receives in one taxable year shall not affect the amount of such benefits or reimbursements that the Participant receives in any other taxable year. The Continued Benefits are intended to be provided in a manner that is intended to satisfy an exception to Section 409A of the Code, and therefore not be treated as an arrangement providing for nonqualified deferred compensation that is subject to taxation under Section 409A of the Code, or in a manner that otherwise complies with Section 409A of the Code, including (a) providing for the reimbursement of medical expenses incurred during the time period for which the Participant would be entitled to continuation coverage under a group health plan of the Company under COBRA or (b) providing that such benefits constitute the reimbursement or provision of in-kind benefits payable at a specified time or pursuant to a fixed schedule as permitted under Section 409A of the Code and the authoritative guidance thereunder.

ARTICLE V

Successor to Company

The Plan shall bind any successor of the Company, its assets or its businesses (whether direct or indirect, by purchase, merger, consolidation or otherwise), in the same manner and to the same extent that the Company would be obligated under the Plan if no succession had taken place.

In the case of any transaction in which a successor would not by the foregoing provision or by operation of law be bound by the Plan, the Company, as a condition precedent to such transaction, shall require such successor expressly and unconditionally to assume and agree to perform the Company’s obligations under the

Plan, in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

In addition, any successor of the Company must treat employment service with the Company or any Affiliate (irrespective of whether the Employee was a Participant at the time of such service) and the successor and its affiliates as continuous employment service with the Company and its Affiliates for all purposes of calculating Separation Benefits.

ARTICLE VI

Amendment and Termination

SECTION 6.01. Amendment and Termination. The Company expects the Plan to be permanent, but since future conditions affecting the Company or its Subsidiaries and its Affiliates cannot be anticipated or foreseen, the Board must necessarily and does hereby reserve the right to amend, modify or terminate the Plan at any time by action of the Plan Administrator; provided, however, that no amendment or modification that would adversely affect the rights or potential rights of any Participant or any termination of the Plan may be effective no earlier than the earlier to occur of (i) the one-year anniversary of such amendment, modification or termination and (ii) the date of the impacted Participant’s consent.

SECTION 6.02. Board Approval. Any amendment, suspension, discontinuation or termination of the Plan shall be approved by the Board.

ARTICLE VII

Miscellaneous

SECTION 7.01. Employment Status. This Plan does not constitute a contract of employment or impose on any Participant, the Company or any Subsidiary or Affiliate any obligation to retain the Participant as an Employee, to change the status of the Participant’s employment, or to change the policies of the Company or any Subsidiary or Affiliate regarding termination of employment. Nothing contained in the Plan will be construed as (a) an employment contract between the Company or any Subsidiary or Affiliate and any Employee; (b) a right of any Employee to be continued in the employment of the Company or its Subsidiaries or Affiliates; or (c) a limitation of the right of the Company or its Subsidiaries or Affiliates to discharge any Employee, with or without Cause, at any time. All Employees will be subject to discharge to the same extent as if the Plan had never been adopted.

SECTION 7.02. Special Compensation. Except as otherwise required by law or as specifically provided in any plan or program maintained by the Company, no payment under the Plan shall be included or taken into account in determining any benefit under any pension, thrift, profit sharing, group insurance, or other benefit plan maintained by the Company.

SECTION 7.03. Sources of Payment. The benefits provided under the Plan will be paid from the general assets of the Company and its Subsidiaries and Affiliates in accordance with the terms and provisions of the Plan. Nothing herein will be construed to require the Company or any Subsidiaries or Affiliate to maintain any trust, fund, or otherwise segregate any amount for the benefit of any Person. Furthermore, no Person with a claim for Separation Benefits hereunder will have any claim against, right to, security or other interest in, any fund, account, or assets of the Company or any Subsidiary or Affiliate.

SECTION 7.04. Non-Alienation. No payments, benefits or rights hereunder shall be subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, garnishment, charge, execution or levy of any kind, either voluntary or involuntary, by creditors of any Employee or any Employee’s beneficiary. Any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, attach, garnish, charge, execute or levy any payments, benefits or rights hereunder will be void and without effect.

SECTION 7.05. Beneficiary. If a Participant is entitled to receive Separation Benefits but dies prior to receiving entire payment of his Separation Benefits, the Participant’s remaining Separation Benefits shall be paid in accordance with the Participant’s beneficiary designation in accordance with the payment timing provisions set forth in Article III.

SECTION 7.06. Severability. Any provision in the Plan that is prohibited or unenforceable in any jurisdiction by reason of applicable law shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating or affecting the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

SECTION 7.07. Governing Law. The terms, conditions and provisions of the Plan will be construed, governed and enforced under the laws of Delaware, without regard to its conflicts of law provisions, except as may be preempted by ERISA or other controlling U.S. Federal law. The Plan is intended to be a “top hat” plan for purposes of ERISA, and shall be construed accordingly.

ARTICLE VIII

Administration and Claims Procedures

SECTION 8.01. Administration. The Plan Administrator shall have all powers necessary or proper to administer the Plan and to discharge its duties hereunder, and shall have authority to interpret the Plan, apply the provisions hereof, determine eligibility and make all other determinations necessary for the administration of the Plan. The Plan Administrator may establish such rules and procedures as may be necessary to enable it to discharge its duties hereunder. The Plan Administrator may allocate to others certain aspects of the management, operation and responsibilities of the Plan, including the employment of advisors and the delegation of any ministerial duties or functions, to qualified individuals or entities. In writing, or by custom, practice or in operation, the Plan Administrator may provide for the allocation or delegation of any of its duties hereunder to any Person. The Plan Administrator or its designee will also be authorized to engage or employ agents, attorneys, accountants, consultants, and other advisors which it deems to be necessary or appropriate to assist in discharging its duties hereunder.

SECTION 8.02. Claims Procedures. Generally, an employee who is eligible to receive benefits under the Plan does not have to file a claim for such benefits. If a claimant believes that he or she did not receive a benefit to which he or she is entitled, the claimant may file a written claim with the Plan Administrator at the following address stating all of the facts on which the claim is based:

Attention: Plan Administrator, Western Midstream Partners, LP Executive Severance Plan

Senior Human Resources Officer

9950 Woodloch Forest

Suite 9800

The Woodlands, TX 77380

Within 60 days following receipt of the claim, the Plan Administrator will:

•request any additional information needed to make a decision regarding the claim;

•pay benefits provided by the Plan; or

•send notification to the Claimant of a decision to deny the claim in whole or in part.

If additional information is requested or required in order to make a decision regarding a claim, the claimant will have 60 days from the date the claimant receives such a request to provide the information. The Plan Administrator’s decision to pay benefits or deny a claim in whole or in part will be postponed to allow the claimant to respond to the request. If the claimant does not provide the information within 60 days after the claimant receives the request, the claim will be denied unless the claimant has requested and been granted additional time to provide the information.

If the Plan Administrator denies a claim in whole or in part, the claimant will receive written notice of the denial within 60 days from the date any requested additional information was received. The notice will provide the following:

•the specific reasons for the denial of the claim (including the facts upon which the denial is based) and reference to any pertinent Plan provisions on which the denial is based;

•if applicable, a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material is necessary; and

•an explanation of the claims review appeal procedure including the name and address of the Person or committee to whom an appeal should be directed.

Within 60 days after the claimant receives the notice of denial from the Plan Administrator, the claimant may request a review of the claim by the Plan Administrator. The request must be in writing and must state the reason or reasons why the claimant believes the claim should not have been denied. The claimant should also include with the written request for an appeal any and all documents, materials, or other evidence which he or she believes supports the claim for benefits. The request should be addressed to the Plan Administrator at the address of the Plan Administrator.

Generally, the Plan Administrator will give the claimant written notice of its decision within 60 days of the date the claimant’s request for review was received by the Plan Administrator. However, if the Plan Administrator finds that special circumstances exist, its decision may be given to the claimant more than 60 days after the date the claimant’s request was received, but not later than 120 days after such date. The Plan Administrator’s notice of its decision will include specific reasons for its decision and specific references to the provisions of the Plan on which its decision is based. The decision of the Plan Administrator shall be final, conclusive and binding on all Persons (including Employees, Participants and beneficiaries).

Prior to authorizing and awarding any Separation Benefits hereunder, the Plan Administrator may require the claimant to provide additional information, and to complete any required or requested releases, forms or other documents hereunder, including filing of all claims and requests for payment from any other source.

SECTION 8.03. Legal Proceedings. Any claims and disputes between or among any Persons arising out of or in any way connected with this Plan shall be solely and finally settled by Plan Administrator, acting in good faith, the determination of which shall be final. Unless prohibited by applicable law, no legal action may be commenced prior to the completion of the benefits claims procedure described in the Plan. In addition, no legal action may be commenced after the later of 180 days after receiving a written response of the Plan Administrator to an appeal or 365 days after the date the claimant was terminated. If any such judicial proceeding is undertaken, the evidence presented shall be strictly limited to the evidence timely presented to the Plan Administrator.

EXHIBIT 10.3

WESTERN MIDSTREAM PARTNERS, LP
EXECUTIVE CHANGE IN CONTROL SEVERANCE PLAN

Establishment of Plan

From time to time, the Company may explore potential transactions that could result in a Change in Control. The Company believes that, when a Change in Control occurs or is perceived as imminent, the Company should be able to rely on its executives to serve the best interests of the Company and its equityholders, without concern that its executives might be distracted by the personal uncertainties and risks that may be created by a Change in Control or the perception of an imminent Change in Control.

The Company also believes that it is consistent with its employment desires and in the best interests of the Company and its equityholders to provide severance compensation for its eligible executives in the event of a qualifying termination of employment following a Change in Control.

Accordingly, to assure the Company of its executives’ continued attention and dedication and to seek to ensure the availability of their continued service, notwithstanding the possibility or occurrence of a Change in Control, the Plan was adopted effective as of the Effective Date.

ARTICLE I

Definitions and Interpretations

SECTION 1.01. Definitions. As used herein, the following words and phrases shall have the following respective meanings.

a. Accountant. The meaning set forth in Section 4.03(c).

b. Affiliate. Any corporation, partnership, limited liability company, limited liability partnership, association, trust or other organization that, directly or indirectly, controls, is controlled by, or is under common control with, the Company. For purposes of the preceding sentence, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any entity or organization, shall mean the possession, directly or indirectly, of the power (i) to vote more than 50% of the securities having ordinary voting power for the election of directors (or the equivalent) of the controlled entity or organization; or (ii) to direct or cause the direction of the management and policies of the controlled entity or organization, whether through the ownership of voting securities or by contract or otherwise. For the avoidance of doubt, each Subsidiary shall also be an Affiliate.

c. Annual Incentive Plan. The Western Midstream Partners, LP US Incentive Compensation Program (or any successor plan or program thereto) or any other annual incentive program maintained for the benefit of the Participants.

d. Base Salary. With respect to any Participant, the annual rate of base salary paid by the Company or any Subsidiary or Affiliate, to such Participant (including amounts that such Participant could have received in cash had he or she not elected to contribute to an employee benefit plan or a deferred compensation program maintained by the Company or any Subsidiary or Affiliate), excluding overtime pay, bonuses, employee benefits, all forms of incentive compensation and all other types of compensation and special payments. For purposes of Section 3.02, Base Salary shall mean such Participant’s highest Base Salary in effect at any time during the three-year period preceding the Change in Control or at any time on or after the Change in Control (without regard to any material diminution in such Base Salary giving rise to Good Reason).

e. Board. The Board of Directors of the Company (which is the board of directors of the General Partner).

f. Business Combination. A merger, consolidation or other reorganization of the Company (or any Subsidiary or Affiliate that was established or employed for purposes of effecting such merger, consolidation or other reorganization) with or into, or the sale of all or substantially all of the Company’s business and/or assets as an entirety to, one or more entities that are not Subsidiaries of the Company.

g. Cause. A Participant’s (i) conviction of any felony or of a misdemeanor involving moral turpitude, (ii) willful failure to perform the Participant’s duties or responsibilities, (iii) engaging in conduct which is injurious (monetarily or otherwise) to the Company or any of its Subsidiaries (including misuse of funds or other property), (iv) engaging in business activities which are in conflict with the business interests of the Company and its Subsidiaries, (v) insubordination, (vi) engaging in conduct which is in violation of any applicable policy or work rule of the Company or its Subsidiaries, (vii) engaging in conduct which is in violation of the Company’s (or its Subsidiaries’) applicable safety rules or standards or which otherwise causes or may cause injury to another employee or any other person, or (viii) engaging in conduct which is in violation of any applicable Code of Business Conduct and Ethics or which is otherwise inappropriate in the office or work environment. For purposes of clause (ii) above, no act or failure to act, on the Participant’s part, shall be considered “willful” unless it is done, or omitted to be done, by the Participant in bad faith or without reasonable belief that the Participant’s action or omission was in the best interests of the Company and its Subsidiaries. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of legal counsel for the Company or its Subsidiaries shall be conclusively presumed to be done, or omitted to be done, by the Participant in good faith and in the best interests of the Company and its Subsidiaries.

h. Change in Control. For purposes of the Plan, a “Change in Control” shall mean the occurrence of any of the following events:

i. any transaction, including, but not limited to, any merger, consolidation, recapitalization, reorganization, acquisition or tender offer in which a Person, other than an Excluded Person, shall become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of more than 50% of the Voting Securities in the Company or the General Partner (including, in either case, its successor or survivor by way of merger, consolidation or other transaction);

ii. the limited partners of the Company approve, in one or a series of transactions, a plan of complete liquidation of the Company;

iii. the sale, transfer or other disposition by the Company of all or substantially all of its assets in one or more transactions;

iv. (a) any Person, other than an Excluded Person, acquires the right (by contract or otherwise) to appoint a majority of the Board, (b) during any eighteen-month period, three or more of the five Non-Oxy Directors serving on the Board as of the Effective Date shall cease for any reason to serve on the Board or two of the three Special Committee Directors serving on the Special Committee as of the Effective Date shall cease for any reason to serve on the Special Committee, or (c) the Non-Oxy Directors cease to constitute at least 50% of the Board or the Special Committee Directors cease to constitute at least 50% of the Special Committee;

v. consummation of a Business Combination, unless (x) as a result of the Business Combination, more than 50% of the outstanding voting power of the outstanding Voting Securities of the Ultimate Parent (or, if no Ultimate Parent exists, then

the Surviving Entity) is, or will be, owned, directly or indirectly, by Excluded Persons; and (y) no Person, excluding the Ultimate Parent or an Excluded Person, beneficially owns (within the meaning of Rule 13d-3 under the Exchange Act) more than 30% of the outstanding Voting Securities of the Ultimate Parent (or, if no Ultimate Parent exists, then the Surviving Entity), after giving effect to the Business Combination;

vi. the General Partner is removed by the limited partners of the Company pursuant to the Company’s partnership agreement or the General Partner or an Affiliate of the General Partner ceases to be the sole general partner of the Company; or

vii. a Covered Transaction.

For the avoidance of doubt, the following shall not, in and of itself, be deemed a Change in Control: (i) except in the case of clause (ii) above, the announcement, commencement, stockholder approval or other potential occurrence of any event or transaction that, if completed, would result in a change in control of the Company (rather than the consummation or effectiveness of such event or transaction), (ii) any acquisition, regardless of amount, of equity interests in the Company by Oxy or its Affiliates (other than a Covered Transaction), or (iii) the conversion of the Company to a corporation, limited liability company or other form of entity, such that all of the partnership interests in the Company are converted into common stock (or the equivalent thereof) of such entity; provided that (a) the respective equity holders of the converted entity hold equity interests in the converted entity with a value commensurate with the value of the partnership interests that they held in the Company immediately prior to the conversion, (b) the equity holders of the converted entity have the power to elect the directors of such entity on a pro-rata basis, (c) the common stock (or equivalent security) of the converted entity is listed on a national securities exchange and (d) such conversion (or any concurrent or related transaction) would not otherwise constitute a Change in Control under clauses (i), (ii), (iii) and (v) above and under the portion of clause (iv) above regarding changes in the Non-Oxy Directors. Furthermore, for the avoidance of doubt, the failure of any director to serve on the Special Committee following the conversion of the Company to a corporation, limited liability company or other form of entity that does not have a Special Committee shall not constitute a Change in Control under the portion of clause (iv) above regarding changes in the Special Committee Directors.

i. COBRA. The Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

j. Code. The Internal Revenue Code of 1986.

k. Company. Western Midstream Partners, LP, a Delaware master limited partnership.

l. Continued Benefits. The meaning set forth in Section 3.02(a)(iii).

m. Covered Transaction. Any transaction, including, but not limited to, any merger, consolidation, recapitalization, reorganization, acquisition or tender offer in which Oxy by itself or together with third-party purchasers, in each case individually or collectively, become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of all of the common equity securities in the Company (including, in either case, its successor or survivor by way of merger, consolidation or other transaction), and, as a result of which, the Company’s (or its successor’s) common equity securities cease to be listed on a national securities exchange.

n. Date of Termination. With respect to any Participant, the date on which such Participant’s employment with the Company and its Affiliates is terminated, without the concurrent or immediate re-employment of such Participant by the Company or one of its Affiliates (or any successor thereto).

o. Effective Date. August 5, 2021.

p. Employee. Provided he or she is employed by the Company or an Affiliate on the date of a Change in Control, any individual who is designated on the U.S. dollar payroll of the Company or any Affiliate as a regular full-time employee of the Company or any Subsidiary. Notwithstanding the foregoing, “Employee” excludes:

i. any individual who is not on the U.S. dollar payroll of the Company or its Subsidiaries for whatever reason, including a worker that the Company or its Subsidiaries considers to be an independent contractor, a leased employee, a contractor or an agency or staffing worker;

ii. any individual not designated in the payroll records of the Company, or its Subsidiaries, or otherwise not considered by Company or its Subsidiaries, to be a regular full-time employee;

iii. any interim officer, or temporary or seasonal employee;

iv. any individual who is a participant in another change in control severance plan or program sponsored by the Company or any Subsidiary, solely to the extent such benefits exceed the benefits provided for under the Plan (it being understood that the severance and benefits under such other plan or program, to the extent applicable and payable to the Participant, shall be in lieu of the severance and benefits under the Plan if greater, in the aggregate, than the severance and benefits provided under this Plan);

v. any individual who is party to an individual written agreement with the Company or any Subsidiary providing for severance benefits (as defined in that agreement), solely to the extent such benefits exceed the benefits provided for under the Plan; and

vi. any employee whose employment terms and conditions are governed by a collective bargaining agreement or other agreement with any labor union, works council or other employee representative organization, unless such agreement expressly provides for coverage under the Plan.

q. ERISA. The Employee Retirement Income Security Act of 1974.

r. Exchange Act. The Securities Exchange Act of 1934.

s. Excluded Person. The Company or Oxy, a Delaware corporation, or any respective Affiliate of the Company or Oxy, a Delaware corporation.

t. General Partner. Western Midstream Holdings, LLC, the general partner of the Company, and its successors and permitted assigns as the general partner of the Company.

u. Good Reason. Good Reason means the occurrence of any of the following conditions, without the Participant’s consent, (i) the Participant’s duties and responsibilities as an employee and officer of the Company are materially and adversely diminished in comparison to the duties and responsibilities enjoyed immediately prior to the commencement of the Protection Period; provided, however, that in a Covered Transaction and with respect to Participants other than the Chief Executive Officer, Chief Financial Officer and General Counsel (or the equivalent positions), the mere cessation of the Company’s listing on a national securities exchange, or reporting obligations under the Exchange Act, shall not be understood to materially diminish a

Participant’s duties or responsibilities, (ii) the Participant’s base salary is materially reduced in comparison to the base salary enjoyed immediately prior to the commencement of the Protection Period, (iii) the aggregate value of the Participant’s base salary plus target annual bonus is materially reduced in comparison to the aggregate value of the Participant’s base salary plus target annual bonus immediately prior to the commencement of the Protection Period, (iv) the Participant is required to be based at a location more than 50 miles from the primary location where the Participant was based and performed services immediately prior to the commencement of the Protection Period, or (v) in connection with a Change in Control, the failure by the Surviving Entity or the Ultimate Parent to assume the Plan; provided, however, that a termination of employment for Good Reason shall not be effective unless the Participant provides notice to the Plan Administrator at the address set forth in Section 8.02 of the existence of one or more of the foregoing conditions within 80 days following the initial existence of the condition(s), such condition(s) remains uncorrected for 30 days after receipt of such notice by the Plan Administrator and the date of the Participant’s termination of employment occurs within 120 days after the initial existence of such condition(s).

v. Non-Oxy Directors. (i) The directors serving on the Board as of the Effective Date who are not officers or employees of Oxy and (ii) directors serving on the Board who are Qualified Directors and who commence service on the Board after the Effective Date.

w. Other Source. The meaning set forth in Section 3.03(c).

x. Oxy. Occidental Petroleum Corporation and its Affiliates, excluding the Company and its Subsidiaries.

y. Participant. A Tier I Employee, Tier II Employee, or Tier III Employee, as applicable, unless otherwise designated by the Plan Administrator pursuant to Section 2.02.

z. Payments. The meaning set forth in Section 4.03(a).

aa. Person. Any person, entity or “group” within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act.

bb. Plan. This Western Midstream Partners, LP Executive Change in Control Severance Plan, as it may be amended or modified from time to time.

cc. Plan Administrator. The Board or any committee thereof that the Board shall appoint.

dd. Protection Period. The period commencing on the date 180 days prior to the consummation of a Change in Control and ending on the second anniversary of the date of a Change in Control; provided, however, that for the purposes of any Change in Control arising from an occurrence described in clause (iv)(b) or (iv)(c) of the definition of Change in Control, the “Protection Period” shall be the period commencing upon the occurrence of such event.

ee. Qualified Director. A person (i) who is eligible to serve on the Special Committee, (ii) who does not own any outstanding common stock in Oxy or securities convertible into common stock in Oxy, (iii) who is not an officer, director or an employee of a Person who owns 5% or more of the outstanding common stock of Oxy or securities convertible into the common stock of Oxy and (iv) whose appointment or election is approved or recommended by the vote of at least two-third (2/3) of the directors in office at the time of such approval or recommendation who are not officers, directors or employees of Oxy; provided, however, that upon any conversion of the Company to a corporation, limited liability company or other form of entity that does not have a Special Committee, clause (i) in this definition of “Qualified Director” shall be replaced with the following “(i) who meets the independence standards required of directors who serve on an audit committee of a board of directors established by the Exchange Act and the rules and regulations of the United States Securities and Exchange Commission thereunder and by the national securities exchange on which the common stock (or equivalent security) of the converted entity is listed or admitted to trading”.

ff. Release Agreement. The meaning set forth in Section 3.02(c).

gg. Release Condition. The meaning set forth in Section 3.02(c).

hh. Restricted Business. Means the business of: (i) gathering, compressing, treating, processing and transporting natural gas; (ii) gathering, stabilizing, and transporting condensate, natural gas liquids or crude oil; (iii) gathering and disposing of produced water; or (iv) any other business in which the Company or its Subsidiaries was engaged, in any Restricted Territory, at the Date of Termination, or at any time within the 24-month period prior to, the Date of Termination. Notwithstanding the forgoing, “Restricted Business” shall not include any business that the Company (x) is not engaged in, or (y) has not taken definitive steps toward initiating, as of the Date of Termination.

ii. Restricted Territory. Means each county or similar geographic subdivision in which the Company (i) conducts business, or (ii) has taken definitive steps toward conducting business (including by having executed an agreement or letter of intent to acquire a business or assets, or through Board approval of capital expenditures), in each case as of the Date of Termination.

jj. Separation Benefits. The payments and benefits due pursuant to Section 3.02(a).

kk. Special Committee. Has the meaning ascribed to such term in the Company’s partnership agreement.

ll. Special Committee Directors. (i) The directors serving on the Special Committee as of the Effective Date and (ii) directors serving on the Special Committee who are Qualified Directors and who commence service on the Special Committee after the Effective Date.

mm. Specified Employee. A “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, as determined under the Company’s established methodology for determining specified employees.

nn. Subsidiary. Any entity in which the Company, directly or indirectly, holds a majority of the voting power of such entity’s outstanding shares of capital stock or other voting interests, as applicable.

oo. Surviving Entity. The surviving or resulting entity of the Company immediately after a Business Combination.

pp. Target Bonus. The Participant’s annual target bonus opportunity under the applicable Annual Incentive Plan for the year in which the Date of Termination occurs, without regard to any material diminution in such bonus opportunity giving rise to Good Reason; provided, however, if the annual target bonus opportunity has not been established for the Participant for the year in which the Date of Termination occurs, the Target Bonus shall be based on the annual target bonus opportunity under the applicable Annual Incentive Plan for the year prior to the year in which the Date of Termination occurs, without regard to any material diminution in such bonus opportunity giving rise to Good Reason.

qq. Tier I Employee. An Employee who is, immediately prior to a Change in Control, the Chief Executive Officer of the Company.

rr. Tier II Employee. An Employee who is, immediately prior to a Change in Control, in the position of Senior Vice President or above (excluding the Tier I Employee).

ss. Tier III Employee. An Employee who is, immediately prior to a Change in Control, in the position of Vice President or above (excluding the Tier I Employee and any Tier II Employee).

tt. Ultimate Parent. The ultimate parent of the Surviving Entity immediately after a Business Combination.

uu. Voting Securities. Any securities or interest which at present or upon conversion entitle the owner or holder thereof to vote for the election of directors, or equivalent legal body, of a company.

vv. WARN Act. As applicable, the Worker Adjustment and Retraining Notification Act and any other similar U.S. Federal, state or other applicable law mandating the provision of notice to employees prior to termination of employment.

ARTICLE II

Eligibility

SECTION 2.01. Participation. Each Tier I Employee, Tier II Employee, and Tier III Employee shall be a Participant.

SECTION 2.02. Duration of Participation. A Participant shall cease to be a Participant upon the earliest to occur of the following: he or she (i) is no longer an Employee as defined herein or (ii) ceases to hold a position that qualifies him or her as a Tier I Employee, Tier II Employee, or Tier III Employee; provided, however, that in no event shall a cessation of participation under this Section 2.02 be effective earlier than 90 days following the individual’s change in position. Notwithstanding the foregoing, a Participant who is entitled, as a result of ceasing to be an Employee, to payment of Separation Benefits or any other amounts due under the Plan shall remain a Participant until all such Separation Benefits have been paid to the Participant

ARTICLE III

Separation Benefits

SECTION 3.01. Termination of Employment.

a. Terminations That Give Rise to Separation Benefits Under This Plan. If, during the Protection Period, a Participant’s employment with the Company or any Subsidiary is terminated for either of the following reasons, the Participant shall be eligible to receive Separation Benefits under the Plan:

i. a termination by the Company or any Subsidiary without Cause; or

ii. a termination by the Participant for Good Reason .

b. Terminations That Do Not Give Rise to Separation Benefits Under This Plan. If a Participant’s employment with the Company or any Affiliate is terminated for any of the following reasons, the Participant shall not be entitled to Separation Benefits under the Plan, regardless of the occurrence of a Change in Control:

i. a termination by the Company or any Subsidiary for Cause;

ii. a termination from the Company or any Subsidiary as a result of the Participant’s inability to perform the essential functions of his or her position with or without a reasonable accommodation that is required by law;

iii. the death of the Participant;

iv. a termination by the Participant due to retirement; provided that a termination that otherwise meets the requirements of clause (i) or (ii) of Section 3.01(a) shall not be deemed to be a retirement for purposes of this Section 3.01(b);

v. the voluntary termination by the Participant without Good Reason; or

vi. any termination that does not occur during the Protection Period.

SECTION 3.02. Separation Benefits.

a. Post-Change in Control Separation Benefits. If a Participant incurs a termination of employment described in Section 3.01(a) on or after a Change in Control and satisfies the Release Condition, then the Company shall pay or provide, or cause to be paid or provided, the following:

i. Cash Severance:

A. Tier I Employee: An amount equal to 2.99 times the sum of (A) Base Salary and (B) Target Bonus;

B. Tier II Employee: An amount equal to two times the sum of (A) Base Salary and (B) Target Bonus; or

C. Tier III Employee: An amount equal to 1.5 times the sum of (A) Base Salary and (B) Target Bonus;

in each case, payable as a lump sum within 60 days following the Date of Termination;

ii. Pro Rata Bonus: A pro rata portion of the Participant’s annual bonus under the Annual Incentive Plan in respect of the year in which the Date of Termination occurs (determined by multiplying (A) the greater of (I) Target Bonus and (II) the amount of such bonus that would have been due for the full year based on actual results for such year, had the Participant remained employed through the payment date (provided that, if such termination occurs in the year of the Change in Control, the amount applied in this clause (II) shall, if greater, equal the amount of such bonus calculated by the Plan Administrator (composed of such members serving as of a date prior to the Change in Control) prior to the Change in Control on the basis of projected performance as of the last day of the quarter preceding the date of the Change in Control) by (B) a fraction, the numerator of which is the number of days between (and inclusive of) the first day of the applicable Annual Incentive Plan year and the Date of Termination, and the

denominator of which is the total number of days in the applicable Annual Incentive Plan year), such prorated bonus to be payable at the same time bonuses under the Annual Incentive Plan are paid to other senior executives of the Company (and in all events no later than March 15 of the calendar year following the calendar year in which the Date of Termination occurs);

iii. Welfare Benefits: Until the second anniversary of the Date of Termination, the Company shall maintain in full force and effect the basic life, medical and dental plans in which the Participant (and, as applicable, the Participant’s eligible dependents) were participating immediately prior to the Date of Termination, and shall permit the Participant (and, as applicable, the Participant’s eligible dependents) to continue participation in such plans through such two-year period, at the same rates and levels in accordance with the terms of such plans (the “Continued Benefits”), subject to the following:

A. The Participant’s continued participation must be possible under the general terms and provisions of such plans;

B. If the Participant’s continued participation in any such plan is barred due to the eligibility and participation requirements of such plan as then in effect or applicable tax regulations, the Company shall arrange to provide benefits substantially similar to those to which the Participant was entitled to receive under such plan prior to the Date of Termination, and in such event, appropriate adjustments shall be made so that the after-tax value thereof to the Participant is similar to the after-tax value of the benefit plan in which participation is barred;

C. The Continued Benefits shall be subject to the application of any Medicare or other coordination of benefits provisions under the applicable medical or welfare benefit plan; and

D. The Continued Benefits are contractual only and are not to be considered a continuation of coverage as provided under COBRA.

iv. Long-Term Incentive Awards: If upon the Date of Termination, Participant holds any awards granted under any equity plan maintained by the Company or its Affiliates that were granted after the Effective Date, including stock options, restricted stock units, performance units, and any other unit-based award, all such awards shall become fully vested, exercisable, and payable upon such Date of Termination, with such awards to be payable within 60 days following such Date of Termination (or, if later, within 60 days following the lapse of the substantial risk of forfeiture with respect to such award) or exercisable in the case of stock options for the post-termination exercise period set forth in such stock option agreement (which shall not be less than 90 days following the Date of Termination, or the remaining exercise period stated in the option award agreement, whichever is shorter) and the achievement of any performance conditions determined as follows:

A. With respect to any performance-based awards granted to the Participant prior to the date of the Change in Control, the performance-vesting condition of such award shall be deemed earned at the greater of (1) target performance and (2) actual performance (with any total shareholder return condition measured as of the effective date of the Change in Control and any other performance condition measured as of the last day of the quarter

preceding the date of the Change in Control), as certified by the Plan Administrator, composed of such members serving as of a date prior to the Change in Control; and

B. With respect to any performance-based awards granted to the Participant on or after the date of the Change in Control, the performance-vesting condition of such award shall be deemed earned at the greater of (1) target performance; and (2) actual performance as of the Date of Termination, as certified by the compensation committee of the board of directors (or other governing body) of the Ultimate Parent (or, if no Ultimate Parent exists, then the Surviving Entity);

provided that any individual performance goals that are not based on objective financial performance criteria shall be deemed earned at target; provided, further, that if the individual award agreement between the Company and the Participant or other contract applicable to any long-term incentive award held by the Participant provides for more favorable vesting treatment than provided in the Plan, then the more favorable treatment shall apply to such award;

v. Outplacement: Outplacement services, at the Company’s sole cost, for up to nine months following the Date of Termination; and

vi. Accrued Vacation: Within 60 days following the Date of Termination, a cash payment equal to any banked vacation and vacation earned but not taken as of the Date of Termination.

b. Pre-Change in Control Separation Benefits. If a Participant incurs a termination of employment described in Section 3.01(a) prior to the occurrence of a Change in Control and the Participant satisfies the Release Condition, then the Company shall pay or provide, or cause to be paid or provided, to the Participant (i) in connection with such termination, the same benefits and payments, on the same terms and conditions, as provided for in the event of a termination by the Company or a Subsidiary without Cause under Section 3.02 of the Western Midstream Partners, LP Executive Severance Plan and (ii) upon the consummation of the Change in Control, the Separation Benefits provided for in Section 3.02(a) less the value of all severance benefits and payments to which the Participant is entitled to receive under the Western Midstream Partners, LP Executive Severance Plan pursuant to clause (i) of this sentence, with such additional payments and benefits to be paid within 60 days following the date of the Change in Control or such later time as set forth in Section 3.01(a) and permitted by Section 409A of the Code.

c. Release Condition. In order to receive any of the payments and benefits outlined in this Section 3.02, the Participant must execute, deliver, and not revoke a separation agreement containing an effective waiver and release of all claims against the Company, its Affiliates and their respective representatives, and certain other persons and entities, and containing other provisions in the form required by the Plan Administrator (the “Release Agreement”) that becomes irrevocable in accordance with its terms within 55 days following the Date of Termination (or, if applicable in the case of Section 3.02(b), following the consummation of the Change in Control) (the “Release Condition”). The Plan Administrator, composed of such members serving as of a date prior to the Change in Control, may, in its discretion, require that the Release Agreement a Participant must execute and not revoke in satisfaction of the Release Condition include restrictive covenants in favor of the Company and its Affiliates (which may include a perpetual non-disclosure of confidential information provision, a non-disparagement provision, non-competition and employee, customer, prospective customer, supplier and vendor non-solicitation provisions, in each case that are effective from the date of Participant’s termination of employment and for no greater than 18 months thereafter and, with respect to the non-competition provision, that restrict the Participant from engaging in any Restricted Business during such period) in substantially the form attached hereto

as Exhibit A; provided, however, the Plan Administrator may update the form of Release Agreement attached hereto, in its sole discretion, provided that such update is determined and communicated to the affected Participant at least 10 business days prior to the date of such Change in Control. If a Participant does not satisfy the Release Condition, the only payment under the Plan to which the Participant would be entitled is the payment for accrued vacation set forth in Section 3.02(a)(vi).

SECTION 3.03. Other Benefits Payable and Offset.

a. Accrued Benefits. The Separation Benefits shall be payable in addition to, and not in lieu of, other accrued or vested or earned but deferred compensation, rights, options or other benefits that are owed to a Participant upon or following his or her termination of employment, including accrued amounts or benefits previously earned and payable under any bonus or other compensation plans, stock option plan, equity ownership plan, equity purchase plan, life insurance plan, health plan, disability plan or similar or successor plan, and any business expenses required to be reimbursed under the applicable policies of the Company or any Subsidiary or any Affiliate.

b. Offsets. Notwithstanding the foregoing, any Separation Benefits paid under the Plan will be reduced, on a dollar-for-dollar basis, by the following, and such reduction shall be made without any change to the timing of payment in a manner that would violate Section 409A of the Code:

i. any payments made or to be made to the Participant to comply with, or satisfy liability under, the WARN Act requiring payments in connection with an involuntary termination of employment, plant shutdown or workforce reduction, including amounts paid in connection with paid leaves of absence, back pay, benefits and other payments intended to satisfy such liability or alleged liability; and

ii. any payment provided to Participant after the Date of Termination that Participant was not legally entitled to receive (e.g., salary continuation for a short period of time following the Date of Termination).

c. No Duplicative Benefits. In the event that monetary or nonmonetary severance and benefits are due from other severance plan, program or agreement (“Other Source”), then the Plan Administrator will compare such severance and benefits to the severance and benefits due under the Plan and, where the severance and benefits are of the same nature or class, the Participant will be provided with the severance and benefits from the Other Source if such severance and benefits are, in the aggregate, greater than the severance and benefits provided under this Plan; provided, however, under no circumstances shall the Participant receive duplicate severance and benefits as determined by the Plan Administrator, with the result being that the Participant receives, in the aggregate, no less favorable severance and benefits than those due under the Plan. If the Participant is eligible to receive severance and benefits from any Other Source, the form and timing of payments under such Other Source will be determined as set forth by such Other Source, and the form and timing of any remaining severance and benefits payable under the Plan will be as described herein without any change in the timing of payment that would violate Section 409A of the Code. Further, except to the extent explicitly contemplated in Section 3.02(b), benefits under the Plan due as a result of a termination of employment by the Company without Cause or by the Participant with Good Reason within the Protection Period shall be in lieu of benefits under the Western Midstream Partners, LP Executive Severance Plan.

SECTION 3.04. Payment Obligations Absolute. In no event shall a Participant be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to a Participant under any of the provisions of the Plan, nor shall the amount of any payment hereunder be reduced by any compensation earned by a Participant as a result of employment by another employer. Upon a Change in Control, the obligations of the Company and the Subsidiaries and Affiliates to pay the Separation Benefits as required by the Plan shall be absolute and unconditional and shall not be affected by any circumstances, including any set-off, counterclaim,

recoupment, defense or other right that the Company or any Subsidiary or Affiliate may have against any Participant.

ARTICLE IV

Certain Tax Rules

SECTION 4.03. Cutback of Parachute Payments.

a. Notwithstanding any other provision to the contrary, if a Participant is a “disqualified individual” (as defined in Section 280G of the Code) and any portion of the Separation Benefits or other payments and benefits the Participant is entitled to receive, has received or would receive in connection with a “change in ownership or control” as defined in Section 280G of the Code (a “Section 280G Transaction”) (such payments and benefits, collectively, the “Payments”) would constitute a “parachute payment” (as defined in Section 280G of the Code), then the Payments shall be either (i) reduced (but not below zero) so that the aggregate present value of the Payments will be one dollar ($1.00) less than three times such Participant’s “base amount” (as defined in Section 280G of the Code), such that no portion of the Payments shall be subject to the excise tax imposed by Section 4999 of the Code; or (ii) paid in full, whichever produces the better net after-tax result for such Participant (taking into account any applicable excise tax under Section 4999 of the Code and any other applicable tax).

b. The reduction of the Payments, if any, shall be made by reducing the Payments in the reverse order in which the Payments would be paid or provided (beginning with such payment or benefit that would be made last in time and continuing, to the extent necessary, through to such payment or benefit that would be made first in time), with any benefits exempt from Section 409A of the Code reduced first.

c. All determinations as to the Payments to be reduced and the amount of reduction shall be made by a nationally recognized certified public accounting firm selected by the Company (the “Accountant”), whose determination shall be conclusive and binding. It is expressly understood that in determining the amount of any reduction to the Payments, the Accountant shall conduct a “reasonable compensation” analysis under Section 280G of the Code, including a valuation of any applicable noncompetition or other covenant, and the Company and the Participant shall cooperate in good faith in connection with such valuation. All such determinations by the Accountant shall be at the Company’s expense.

authority, determines that a Payment has been reduced pursuant to this Section 4.03 that could have been fully paid or distributed, the Company (or applicable payor) shall promptly pay such amount to the Participant, together with interest at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code.

ARTICLE V

Successor to Company

and its affiliates as continuous employment service with the Company and its Affiliates for all purposes of calculating Separation Benefits.

ARTICLE VI

Amendment and Termination

SECTION 6.01. Amendment and Termination. The Company expects the Plan to be permanent, but since future conditions affecting the Company or its Subsidiaries and its Affiliates cannot be anticipated or foreseen, the Board must necessarily and does hereby reserve the right to amend, modify or terminate the Plan at any time by action of the Plan Administrator; provided, however, that in connection with, in anticipation of or at any time following a Change in Control, the Plan may not be amended, modified or terminated in any manner that would adversely affect the rights or potential rights of any Participant, without the Participant’s written consent.

SECTION 6.02. Board Approval. Any amendment, suspension, discontinuation or termination of the Plan shall be approved by the Board.

ARTICLE VII

Miscellaneous

ARTICLE VIII

Administration and Claims Procedures

Attention: Plan Administrator, Western Midstream Partners, LP Executive Severance Plan

Senior Human Resources Officer

9950 Woodloch Forest

Suite 9800

The Woodlands, TX 77380

Within 60 days following receipt of the claim, the Plan Administrator will:

•request any additional information needed to make a decision regarding the claim;

•pay benefits provided by the Plan; or

•send notification to the Claimant of a decision to deny the claim in whole or in part.

•the specific reasons for the denial of the claim (including the facts upon which the denial is based) and reference to any pertinent Plan provisions on which the denial is based;

•if applicable, a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material is necessary; and

•an explanation of the claims review appeal procedure including the name and address of the Person or committee to whom an appeal should be directed.

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND

CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)

OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Michael P. Ure, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Western Midstream Partners, LP (the “registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusion about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2021


			/s/ Michael P. Ure
			Michael P. Ure President, Chief Executive Officer and Chief Financial Officer Western Midstream Holdings, LLC (as general partner of Western Midstream Partners, LP)

EXHIBIT 31.2

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND

CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)

OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Michael P. Ure, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Western Midstream Operating, LP (the “registrant”);

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2021


			/s/ Michael P. Ure
			Michael P. Ure President, Chief Executive Officer and Chief Financial Officer Western Midstream Operating GP, LLC (as general partner of Western Midstream Operating, LP)

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, I, Michael P. Ure, President, Chief Executive Officer and Chief Financial Officer of Western Midstream Holdings, LLC, the general partner of Western Midstream Partners, LP (the “Partnership”), certify to the best of my knowledge that:

(1)the Quarterly Report on Form 10-Q of the Partnership for the period ending June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.


August 9, 2021

						/s/ Michael P. Ure
						Michael P. Ure President, Chief Executive Officer and Chief Financial Officer Western Midstream Holdings, LLC (as general partner of Western Midstream Partners, LP)

The foregoing certification is being furnished as an exhibit to the Report pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and, accordingly, is not being filed as part of the Report for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Partnership, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, I, Michael P. Ure, President, Chief Executive Officer and Chief Financial Officer of Western Midstream Operating GP, LLC, the general partner of Western Midstream Operating, LP (the “Partnership”), certify to the best of my knowledge that:

(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.


August 9, 2021

						/s/ Michael P. Ure
						Michael P. Ure President, Chief Executive Officer and Chief Financial Officer Western Midstream Operating GP, LLC (as general partner of Western Midstream Operating, LP)