Western Midstream Partners (WES) risk factors, FY2024 10-K

Other

1. 01CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
2. 02RISKS INHERENT IN OUR BUSINESS
3. 03Occidental’s ownership of our general partner may result in conflicts of interest
4. 04Any future credit-rating downgrade could negatively impact our cost of and ability to access capital
5. 05Sustained low natural-gas, NGLs, or oil prices and volatility of such prices could adversely affect our business
6. 06Our profitability may be negatively impacted by inflation in the cost of labor, materials, and services
7. 07Certain of our natural-gas processing agreements provide our producer customers with contractually specified NGL recoveries that, under expected operating conditions, may generate commodity price exposure and could, under certain circumstances, generate financial or physical-delivery obligations for us
8. 08We are exposed to the credit risk of third-party customers, and any material non-payment or non-performance by these parties, including with respect to our gathering, processing, transportation, and disposal agreements, could reduce our ability to make distributions to our unitholders
9. 09Changes in laws or regulations regarding hydraulic fracturing could result in increased costs, operating restrictions, or delays in the completion of oil and natural-gas wells, which could decrease the need for our gathering and processing services
10. 10Physical injection constraints and the adoption of new or more stringent legal standards relating to induced seismic activity could affect our produced-water disposal operations
11. 11Adverse developments in our geographic areas of operation could disproportionately impact our business, results of operations, financial condition, and ability to make cash distributions to our unitholders
12. 12Our indebtedness may limit our ability to capitalize on acquisitions and other business opportunities or our flexibility to obtain financing
13. 13Furthermore, our indebtedness and related debt-service costs could impair our ability to obtain additional financing, reduce funds available for operations and business opportunities, make us more vulnerable to competitive pressures or market downturns, and limit our financial and operational flexibility
14. 14We may not be able to obtain funding on acceptable terms or at all. This may hinder or prevent us from meeting our future capital needs
15. 15Our failure to maintain an adequate system of internal control over financial reporting could adversely affect our ability to accurately report our results
16. 16Our business could be negatively affected by security threats, including cyber-threats, and other disruptions
17. 17natural gas into or receiving natural gas and other products from our facilities. Disruption of those communications, whether caused by cyber-attacks or otherwise, may disrupt our ability to deliver natural gas and control these assets
18. 18We typically do not obtain independent evaluations of hydrocarbon reserves connected to our systems. Therefore, in the future, throughput on our systems could be less than we anticipate
19. 19Our results of operations could be adversely affected by asset impairments
20. 20A change in the jurisdictional characterization of some of our assets by federal, state, or local regulatory agencies or a change in policy by those agencies could result in increased regulation of our assets, which could cause our revenues to decline and operating expenses to increase
21. 21could cause our revenues to decline and operating expenses to increase. For additional information, read Regulation of Operations–Natural-Gas Gathering Pipeline Regulation under Items 1 and 2 of this Form 10-K
22. 22We are subject to stringent and comprehensive environmental laws and regulations that may expose us to significant costs and liabilities
23. 23Our construction of new assets is subject to regulatory, environmental, political, legal, and economic risks, which could adversely affect our results of operations and financial condition
24. 24We are subject to increased scrutiny from institutional investors with respect to our governance structure and the social cost of our industry, which may adversely impact our ability to raise capital from such investors
25. 25We do not own all of the land on which our pipelines and facilities are located, which could result in disruptions to our operations
26. 26Our business involves many hazards and operational risks, some of which may not be fully covered by insurance. If a significant accident or event occurs for which we are not fully insured, our operations and financial results could be adversely affected
27. 27Our general partner’s liability regarding our obligations is limited
28. 28Our partnership agreement limits our general partner’s fiduciary duties to holders of our common units and restricts the remedies available to holders of our common units for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty
29. 29The general partner interest in us may be transferred to a third party without unitholder consent
30. 30We may issue additional units without unitholder approval, which would dilute existing ownership interests
31. 31The market price of our common units could be affected adversely by sales of substantial amounts of our common units in the public or private markets, including sales by Occidental or other large holders
32. 32Unitholders may have liability to repay distributions that were wrongfully distributed to them
33. 33Unitholders’ liability may not be limited if a court finds that unitholder action constitutes control of our business
34. 34TAX RISKS TO COMMON UNITHOLDERS
35. 35The 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
36. 36If the IRS were to contest the federal income tax positions we take, it may impact the market for our common units adversely, and the costs of any such contest would reduce the cash available for distribution to our unitholders
37. 37may materially and adversely impact the market for our common units and the price at which they trade. Moreover, the costs of any contest with the IRS will result in a reduction in cash available for distribution to our unitholders and thus will be borne indirectly by our unitholders
38. 38Our unitholders are required to pay taxes on their share of our income even if they do not receive any cash distributions from us
39. 39Tax gain or loss on the disposition of our common units could be more or less than expected
40. 40Tax-exempt entities face unique tax issues from owning our common units that may result in adverse tax consequences to them
41. 41We have adopted certain valuation methodologies in determining a unitholder’s allocations of income, gain, loss, and deduction. The IRS may challenge these methodologies or the resulting allocations, which could affect the value of our common units adversely
42. 42Our unitholders are subject to state and local taxes and return-filing requirements in jurisdictions where they do not live as a result of investing in our common units