Form 8-K/A Western Gas Equity Partn For: Nov 25

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December 17, 2014 4:05 PM EST

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): December 17, 2014 (November 25, 2014)

�

WESTERN GAS EQUITY PARTNERS, LP

(Exact name of registrant as specified in its charter)

�



Delaware	001-35753	46-0967367
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

1201 Lake Robbins Drive

The Woodlands, Texas 77380-1046

(Address of principal executive offices) (Zip Code)

(832) 636-6000

(Registrants telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

��Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

��Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

��Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

��Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

EXPLANATORY NOTE

On November 25, 2014, Western Gas Equity Partners, LP (the WGP) filed a Current Report on Form 8-K (the Initial Report) to report, among other things, the closing of the acquisition (the Acquisition) of Nuevo Midstream, LLC (Nuevo) by Western Gas Partners, LP (WES) pursuant to an Agreement and Plan of Merger (Merger Agreement) by and among WES, Maguire Midstream, LLC, an indirect wholly owned subsidiary of WES, Nuevo and the other parties thereto.

The consideration paid by WES for the Acquisition consisted of $1.5 billion in cash, as adjusted pursuant to the terms of the Merger Agreement. WES funded the Acquisition through approximately (i) $275.0 million of cash on hand, including the net proceeds from the WESs November 2014 equity offering, (ii) $475.0 million in borrowings under the WES revolving credit facility and (iii) the issuance of $750.0 million of WES Class C units to a subsidiary of Anadarko Petroleum Corporation (Anadarko).

This Current Report on Form 8-K/A (the Amendment) amends and supplements the Initial Report to include the financial statements of Nuevo and the unaudited pro forma financial statements of WGP required by Items 9.01(a) and 9.01(b) of Form 8-K, and to include exhibits under Item 9.01(d) of Form 8-K. No other modifications to the Initial Report are being made by this Amendment.

Item 9.01 Financial Statements and Exhibits.



(a)	�	Financial Statements of Businesses Acquired
�	�	�	�
�	�	Financial Statements of Nuevo as of and for the year ended December 31, 2013, a copy of which is included as Exhibit 99.1 to this Current Report on Form 8-K/A, incorporated herein by reference.
�	�	�	�
�	�	Unaudited Financial Statements of Nuevo as of and for the nine months ended September 30, 2014, a copy of which is included as Exhibit 99.2 to this Current Report on Form 8-K/A, incorporated herein by reference.
�	�	�	�
(b)	�	Pro Forma Financial Information
�	�	�	�
�	�	Unaudited Pro Forma Condensed Consolidated Financial Statements of WGP as of and for the nine months ended September 30, 2014, and for the twelve months ended December 31, 2013, copies of which are included as Exhibit 99.3 to this Current Report on Form 8-K/A, incorporated herein by reference.
�	�	�	�
(d)	�	Exhibits	�
�	�	�	�
�	�	23.1	Consent of UHY LLP.
�	�	�	�
�	�	99.1	Audited Financial Statements of Nuevo as of and for the year ended December 31, 2013.
�	�	�	�
�	�	99.2	Unaudited Financial Statements of Nuevo as of and for the nine months ended September 30, 2014.
�	�	�	�
�	�	99.3	Unaudited Pro Forma Condensed Consolidated Financial Statements of WGP as of and for the nine months ended September 30, 2014, and for the twelve months ended December 31, 2013.

SIGNATURE

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 thereunto duly authorized.



�	�	WESTERN GAS EQUITY PARTNERS, LP
�	�	�
�	�	By:	Western Gas Equity Holdings, LLC, its general partner
�	�	�
�	�	�
Dated:	December 17, 2014	By:	/s/ Benjamin M. Fink
�	�	�	Benjamin M. Fink Senior Vice President, Chief Financial Officer and Treasurer

EXHIBIT INDEX



Exhibit Number	�	Exhibit Title
�	�	�
23.1	�	Consent of UHY LLP.
�	�	�
99.1	�	Audited Financial Statements of Nuevo as of and for the year ended December 31, 2013.
�	�	�
99.2	�	Unaudited Financial Statements of Nuevo as of and for the nine months ended September 30, 2014.
�	�	�
99.3	�	Unaudited Pro Forma Condensed Consolidated Financial Statements of WGP as of and for the nine months ended September 30, 2014, and for the twelve months ended December 31, 2013.

EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITOR

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-193163) and Form S-8 (No. 333-186306) of Western Gas Equity Partners, LP of our report dated February 28, 2014, relating to our audit of the financial statements of Nuevo Midstream, LLC as of and for the year ended December 31, 2013, included in this Form 8-K.

/s/ UHY LLP

Farmington Hills, Michigan

December 17, 2014

EXHIBIT 99.1

NUEVO MIDSTREAM, LLC

FINANCIAL STATEMENTS

DECEMBER 31, 2013

C O N T E N T S



�	Page
�	�
Independent Auditors Report	2
�	�
Balance Sheet	3
�	�
Statement of Operations	4
�	�
Statement of Changes in Members Equity	5
�	�
Statement of Cash Flows	6
�	�
Notes to Financial Statements	7

Independent Auditors Report

To the Members of

Nuevo Midstream, LLC

Houston, Texas

We have audited the accompanying financial statements of Nuevo Midstream, LLC (the "Company"), which comprise the balance sheet as of December 31, 2013, and the related statements of operations, changes in members' equity, and cash flows for the year then ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant�accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Nuevo Midstream, LLC as of December 31, 2013, and the results of its operations and its cash flows for the year then ended, in accordance with accounting principles generally accepted in the United States of America.

/s/ UHY LLP

Houston, Texas

February 28, 2014

-2-

NUEVO MIDSTREAM, LLC

BALANCE SHEET



�	�	December 31, 2013
Assets	�	�
�	�	�
Current assets	�	�
Cash and cash equivalents	�	$	6,833,495
Accounts receivable	�	15,254,735
Due from affiliates	�
Other current assets	�	2,131,041
Total current assets	�	24,219,271
�	�
Property and equipment, at cost	�	�
Gas pipelines and processing and treating equipment	�	182,837,018
Fixed assets	�	362,311
�	�	183,199,329
Accumulated depreciation	�	(13,214,041		)
�	�	169,985,288
Construction in progress	�	46,605,282
Total property and equipment	�	216,590,570
�	�	�
Deferred finance costs and other	�	696,474
�	�	�
Total Assets	�	$	241,506,315
�	�	�
�	�	�
Liabilities and Members Equity	�	�
�	�	�
Current liabilities	�	�
Accounts payable and accrued liabilities	�	$	20,531,464
Due to affiliates	�
Current maturities of notes payable	�	3,263,540
Total current liabilities	�	23,795,004
�	�	�
Notes payable, net of current maturities	�	27,837,581
�	�	�
Commitments and contingencies	�
�	�	�
Members equity:	�	�
Capital contributions	�	200,068,850
Accumulated deficit	�	(8,287,461		)
Total members equity	�	191,781,389
Note receivable from management	�	(1,907,659		)
Net members equity	�	189,873,730
�	�	�
Total Liabilities and Members Equity	�	$	241,506,315

See notes to financial statements.

�

-3-

NUEVO MIDSTREAM, LLC

STATEMENT OF OPERATIONS



�	�	Year Ended
�	�	December 31, 2013
Income	�	�
Natural gas and natural gas liquids revenue	�	$	62,720,467
Treating	�	6,261,043
Reimbursables	�
Compression	�	2,927,720
Transportation	�	3,493,796
Processing	�	1,755,959
Fixed recovery gain (loss)	�	(146,488		)
Gain on sale of assets	�
Other	�	108,013
Total Income	�	77,120,510
�	�	�
Costs and Expenses	�	�
Cost of natural gas and natural gas liquids	�	54,696,182
Operating	�	12,193,144
General and administrative	�	3,045,134
Depreciation	�	10,105,771
Interest expense	�	597,902
Total Costs and Expenses	�	80,638,133
�	�	�
Net Loss	�	$	(3,517,623	)

See notes to financial statements.

�

-4-

NUEVO MIDSTREAM, LLC

STATEMENT OF CHANGES IN MEMBERS EQUITY



�	�	Total
Balance at December 31, 2012	�	$	135,299,012
Cash contributions	�	60,000,000
Net loss	�	(3,517,623		)
Assignment of interests	�
Note receivable from management	�	(1,907,659		)
Balance at December 31, 2013	�	$	189,873,730

See notes to financial statements.

�

-5-

NUEVO MIDSTREAM, LLC

STATEMENT OF CASH FLOWS



�	�	Year Ended
�	�	December 31, 2013
Cash Flows from Operating Activities	�	�
Net loss	�	$	(3,517,623	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:	�	�
Depreciation	�	10,105,771
Amortization of deferred finance costs	�	44,004
Accrued interest on notes receivable from management	�	(107,659		)
Gain on sale of assets	�
Changes in operating assets and liabilities:	�	�
Accounts receivable	�	(8,984,845		)
Due to affiliates	�	2,074,565
Other assets	�	(1,855,276		)
Accounts payable and accrued liabilities	�	12,319,182
Net Cash Provided by (Used In) Operating Activities	�	10,078,119
�	�	�
Cash Flows from Investing Activities	�	�
Proceeds from sale of assets	�
Investment in gas pipelines and processing equipment	�	(107,600,408		)
Investment in fixed assets	�	(261,730		)
Net Cash Used in Investing Activities	�	(107,862,138		)
�	�	�
Cash Flows from Financing Activities	�
Proceeds from notes payable	�	33,054,161
Repayment of notes payable	�	(1,953,040		)
Capital contributions	�	60,000,000
Loans to management	�	(1,800,000		)
Financing costs	�	(704,063		)
Net Cash Provided by Financing Activities	�	88,597,058
�	�	�
Net decrease in cash and cash equivalents	�	(9,186,961		)
�	�	�
Cash and cash equivalents, beginning of the year	�	16,020,456
�	�	�
Cash and cash equivalents, end of the year	�	$	6,833,495
�	�	�
Supplemental disclosure of cash flow information	�	�
�	�	�
Cash paid during the year for interest	�	$	507,136

See notes to financial statements.

�

-6-

NUEVO MIDSTREAM, LLC

NOTES TO FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2013

NOTE A - ORGANIZATION AND NATURE OF BUSINESS

Nuevo Midstream, LLC (the Company), a Delaware limited liability company, was formed on April 6, 2011 for the purpose of acquiring, developing and operating natural gas midstream assets. The Company is managed by a board of managers. The members of the Company include EFM A Holdco, LP; Cenizo Midstream, LLC; PFC Gas Liquids, LLC; EnCap Energy Infrastructure Fund, L.P.; TT-EEIF Co- Investments, LLC; UT EETF Side Car, LLC; LIC-EETF Side Car, LLC; SBC-EnCap Co-Investment, LLC; Nuevo Midstream Management, LLC; and Ramsey Gas System Operations, LLC (Ramsey). On December 31, 2012, EnCap Energy Infrastructure Fund, L.P.; TI-EEIF Co-Investments, LLC; UT EEIF Side Car, LLC; LIC-EEIF Side Car, LLC; and SBC-EnCap Co-Investment, LLC assigned their respective Class A membership interests in the Company to EFM A Holdco, LP and retained their respective Class B membership interests in the Company.��On April 8, 2013, members of Ramsey assigned a portion of Ramseys membership interests in the Company to EFM A Holdco, LP and certain members of Company management, who subsequently contributed those interests to Nuevo�Midstream�Management,�LLC. Under the terms of the Amended�and�Restated�Limited�Liability�Company Agreement (LLC Agreement), profits and losses are allocated to the members based upon their year-end capital contribution�percentages until certain payout phases, as defined, are reached.

The Company generates the majority of its revenue from the sale of natural gas and natural gas liquids, and from fees related to the compression, transportation, treating and processing of natural gas.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents:��Cash in excess of the Companys daily requirements is generally invested in short-term, highly liquid investments with original maturities of three months or less. Such investments are carried at cost, which approximates fair value and, for the purposes of reporting cash flows, and are considered to be cash equivalents. The Company maintains its cash in bank deposits with various major financial institutions. These accounts, at times, exceed federally insured limits. The Company monitors the financial condition of the financial institutions and has not experienced any losses on such accounts.

Accounts Receivable:��Accounts receivable consists primarily of accrued revenues for natural gas and natural gas liquids sales and related fees. Management establishes a credit allowance, if necessary, for those accounts receivable that will eventually be deemed uncollectible. The allowance for doubtful accounts was $0 as of December 31, 2013.

Gas Pipelines and Processing and Treating Equipment:��Gas pipelines and processing and treating equipment are depreciated on a straight-line basis over their estimated useful lives of 15 years. These assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If necessary, an impairment loss would be recorded in the period�in which it is determined that the carrying amount is not recoverable. The determination of recoverability is made based upon the estimated undiscounted future net cash flows, excluding interest expense, compared with the carrying value of the related assets. Impairment would be measured as the difference between the assets fair value and its carrying value. The Company has not recorded an impairment�expense on its pipeline, processing and treating assets.

-7-

NUEVO MIDSTREAM, LLC

NOTES TO FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2013

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

�

Revenue Recognition:��The Company recognizes revenues associated with the sale of natural gas and natural gas liquids and other related items when title passes to the customer, which is when the risk of ownership passes to the purchaser and physical delivery of goods occurs, either immediately or within a fixed delivery schedule that is reasonable and customary in the industry. Compression, transportation, treating and processing revenues are recognized as the service is provided.

�

Income Taxes: The Company is treated as a partnership for federal tax and most state income tax purposes and is, therefore, not a tax paying entity. Accordingly, its pro�rata share of income, losses, and tax credits are reported by its members, as provided in the LLC Agreement, on their individual income tax returns. Therefore, no provision for federal or state income taxes is made in the accompanying financial statements.

�

The Company follows the guidance issued by the Financial Accounting Standards Board (FASB) regarding accounting for uncertainty in income taxes. This guidance clarifies the accounting for income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the financial statements and applies to all income tax positions. Each income tax position is assessed using a two step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement.

�

The income tax position taken by the Company for any years open under the various statutes of limitations is that the Company is not subject to income taxes by virtue of its pass-through entity status. Management believes this tax position meets the more-likely-than-not threshold and, accordingly, the tax benefit of this income tax position (no income tax expense or liability) has been recognized for the year ended December 31, 2013.

�

The Company believes that there are no tax positions taken or expected to be taken that would significantly increase or decrease unrecognized tax benefits within 12 months of the reporting date. None of the Company's federal or state income tax returns is currently under examination by the Internal Revenue�Service (IRS) or state authorities. However, the calendar years 2013 and 2012 and the fiscal year 2011 returns remain subject to examination by the IRS and respective state tax authorities.

�

The Company is subject to the Texas margin tax. As of December 31, 2013, the Company did not owe any margin tax and, therefore, a provision was not recorded.

�

Use of Estimates: Management of the Company has made a number of estimates and assumptions relating�to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates.

-8-

NUEVO MIDSTREAM, LLC

NOTES TO FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2013

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Asset Retirement Obligations: The Company follows ASC 410, Asset Retirement and Environmental Obligations. ASC 410 requires that an asset retirement obligation (ARO) associated with the retirement of a tangible long-lived asset be recognized as a liability in the period in which a legal obligation is incurred and becomes determinable, with an offsetting increase in the carrying amount of the associated asset. The Company has certain legal obligations associated with its gas pipelines and processing and treating equipment; however it has not recorded an asset retirement obligation because these assets have indeterminate lives.

Subsequent Events: The Company has evaluated subsequent events through February 28, 2014, the date the financial statements were available to be issued.

NOTE C - RELATED PARTY TRANSACTIONS

Through February 28, 2014, the Company received support services from Torch Energy Advisors Incorporated and its subsidiaries (TEAI), which include office administration, risk management, corporate and legal services, graphic services, financial planning and analysis, information management, financial reporting and accounting services, engineering and technical services, and field operations and supervision as defined in an administrative services agreement (the Agreement). TEAI charged the Company $349,735 for the year ended December 31, 2013 which is included in gas pipelines and processing equipment, operating expenses and general and administrative expenses.

Prior to April 8, 2013, TEAI had the right to request an advance for one months estimated cash outlays for the succeeding months services. At December 31, 2013 the Company had not advanced TEAI any funds for services.

On December 31, 2012, the Company loaned $2,180,000 to Flatrock Fund II, a partner in EFM A Holdco, LP to facilitate Flatrock Fund IIs purchase of certain beneficial interests in the Company. The loan from Flatrock Fund II did not bear interest. Flatrock Fund II repaid the loan in full on January 18, 2013.

On April 8, 2013, the Company loaned five members of Company management a total of $1,800,000 to facilitate the employees purchase of units in the Company from member of Ramsey (the Employee Loans). The Employee Loans mature on April 8, 2018 and bear interest at an annual interest rate of 8%, compounded monthly. The interest on the Employee Loans is payable at maturity. For the year ended December 31, 2013, the Company accrued $107,659 of interest on the Employee Loans, which was all included as part of the loan. At December 31, 2013, the balance of the Employee Loans was $1,907,659, which was recorded as a reduction to members equity.

NOTE D - NOTES PAYABLE AND LETTERS OF CREDIT

The Company entered into five financing arrangements with Zions Bank during 2013 related to capital equipment (the Zions Financings). All of the Zions Financings have a set monthly principal payment based on the actual cost of the equipment and a variable interest rate based on the 30-day LIBOR rate. At December 31, 2013, the interest rate on the Zions Financings was 3.42%.

-9-

NUEVO MIDSTREAM, LLC

NOTES TO FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2013

NOTE D - NOTES PAYABLE AND LETTERS OF CREDIT (Continued)

Citibank Facility is $60 million which can be increased in a minimum of $10 million increments up to a total of $125 million. The interest rate on each borrowing made under the Citibank Facility is a function of the type of borrowing chosen (Libor or an alternative base rate) and the Company's leverage ratio at the time of each borrowing. The interest rate for LIBOR borrowings are equal to the Libor rate for the borrowing period chosen, plus a spread of 2.0% to 3.25%. The interest rate on alternate base rate borrowings�are equal to the alternate base rate (the greater of the Citibank prime rate or the federal funds rate plus .05%), plus a spread of 1.0% to 2.25%. Recourse for the Citibank Facility is limited to the Company as borrower and the note is secured by all of the Company's gas plants and pipelines. At December�31,�2013, the interest rate in place was 3.17%. For any unused commitment under the Citibank Facility, a commitment fee of .375% to .5% is payable depending on the Company's leverage ratio. The Citibank�Facility contains, among other terms, provisions for the maintenance of certain financial ratios and restrictions on additional debt. As of December 31, 2013, the Company was in compliance with all of the covenants under the Citibank Facility.

Scheduled maturities of the Zions Financings and Citibank Facility as of December 31, 2013 are as follows:



Year Ending December 31,	�	�
�	�	�
2014	�	$	3,263,540
2015	�	3,263,540
2016	�	3,263,540
2017	�	21,310,501
�	�	$	31,101,121

During the year ended December 31, 2013, the Company had four standby letters of credit outstanding related to potential obligations to two counterparties. At December 31, 2013, the Company had two outstanding standby letters of credit totaling $4,866,500, both of which were issued by Citibank. The rate charged by Citibank for the letters of credit is a function of the LIBOR rate and the Companys leverage ratio.

NOTE E - MAJOR CUSTOMERS

Four customers accounted for 29%, 23%, 20% and 10% of total natural gas and natural gas liquids revenue for the year ended December 31, 2013. Three customers accounted for 57%, 21% and 13% of gross accounts receivable at December 31, 2013. The Company does not believe that it is dependent upon any particular customer for these revenues.

NOTE F - CONTINGENCIES

The Company, from time to time, may be involved in certain contingent matters arising out of the normal course of business, none currently outstanding of which, in the opinion of management, will have any material adverse effect on the financial position or results of operations of the Company as a whole.

-10-

NUEVO MIDSTREAM, LLC

NOTES TO FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2013

NOTE G - MEMBERS EQUITY

The Company is authorized to issue 2,944,300 Class A units, 141,959 Class B units and 1,000 Profits units. The Class A and Class B units have a stated value of $100 per unit. Items of profit and loss are allocated to the members based upon the sharing ratios of the various classes of member units once payout�phases are reached as set forth in the LLC Agreement. For the year ended December 31, 2013, the Company issued 600,000 Class A units and zero Class B units for total cash proceeds of $60,000,000. As of December 31, 2013, 1,877,634 Class A and 141,959 Class B units were issued and outstanding.

-11-

EXHIBIT 99.2

NUEVO MIDSTREAM, LLC

FINANCIAL STATEMENTS

NINE MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

C O N T E N T S



�	Page
�	�
Balance Sheets	2
�	�
Statements of Operations	3
�	�
Statements of Cash Flows	4
�	�
Notes to Financial Statements	5

NUEVO MIDSTREAM, LLC

BALANCE SHEETS



�	�	September 30, 2014			�	December 31, 2013
ASSETS	�	(Unaudited)			�	�
�	�	�			�	�
CURRENT ASSETS	�	�			�	�
Cash and cash equivalents	�	$	9,021,312		�	$	6,833,495
Accounts receivable	�	18,960,111			�	15,254,735
Other current assets	�	4,250,549			�	2,131,041
TOTAL CURRENT ASSETS	�	32,231,972			�	24,219,271
�	�	�			�	�
PROPERTY AND EQUIPMENT, at cost	�	�			�	�
Gas pipelines and processing and treating equipment	�	277,944,223			�	182,837,018
Fixed assets	�	877,719			�	362,311
�	�	278,821,942			�	183,199,329
Accumulated depreciation	�	(25,634,012		)	�	(13,214,041		)
�	�	253,187,930			�	169,985,288
Construction in progress	�	20,872,193			�	46,605,282
TOTAL PROPERTY AND EQUIPMENT, net	�	274,060,123			�	216,590,570
�	�	�			�	�
DEFERRED FINANCE COSTS AND OTHER	�	944,332			�	696,474
�	�	�			�	�
TOTAL ASSETS	�	$	307,236,427		�	$	241,506,315
�	�	�			�	�
�	�	�			�	�
LIABILITIES AND MEMBERS EQUITY	�	�			�	�
�	�	�			�	�
CURRENT LIABILITIES	�	�			�	�
Accounts payable and accrued liabilities	�	$	21,073,323		�	$	20,531,464
Current maturities of notes payable	�	3,804,616			�	3,263,540
Current maturities of lease obligations	�	133,588			�
TOTAL CURRENT LIABILITIES	�	25,011,527			�	23,795,004
�	�	�			�	�
NOTES PAYABLE, net of current maturities	�	71,389,926			�	27,837,581
�	�	�			�	�
LEASE OBLIGATIONS, net of current maturities	�	142,690			�
�	�	�			�	�
TOTAL LIABILITIES	�	96,544,143			�	51,632,585
�	�	�			�	�
COMMITMENTS AND CONTINGENCIES	�	�			�	�
�	�	�			�	�
MEMBERS EQUITY	�	�			�	�
Capital contributions	�	220,068,850			�	200,068,850
Accumulated deficit	�	(7,351,462		)	�	(8,287,461		)
Total members equity	�	212,717,388			�	191,781,389
Note receivable from management	�	(2,025,104		)	�	(1,907,659		)
NET MEMBERS EQUITY	�	210,692,284			�	189,873,730
�	�	�			�	�
TOTAL LIABILITIES AND MEMBERS EQUITY	�	$	307,236,427		�	$	241,506,315

See notes to financial statements.

�

-2-

NUEVO MIDSTREAM, LLC

STATEMENTS OF OPERATIONS

(Unaudited)



�	�	Nine Months Ended September 30,
�	�	2014			�	2013
INCOME (LOSS)	�	�			�	�
Natural gas and natural gas liquids revenue	�	$	80,079,980		�	$	38,558,351
Treating	�	5,470,708			�	4,140,471
Compression	�	2,882,151			�	2,039,482
Transportation	�	4,813,012			�	2,346,594
Processing	�	6,270,422			�	1,027,690
Fixed recovery loss	�	(290,219		)	�
Other	�	117,444			�	70,256
TOTAL INCOME	�	99,343,498				48,182,844
�	�	�			�	�
COSTS AND EXPENSES	�	�			�	�
Cost of natural gas and natural gas liquids	�	68,503,316			�	33,490,427
Operating	�	13,405,024			�	8,832,886
General and administrative	�	2,551,042			�	1,868,952
Depreciation and amortization	�	12,504,500			�	7,057,006
Interest expense	�	1,443,617			�	285,178
TOTAL COSTS AND EXPENSES	�	98,407,499				51,534,449
�	�	�			�	�
NET INCOME (LOSS)	�	$	935,999			$	(3,351,605	)

See notes to financial statements.

�

-3-

NUEVO MIDSTREAM, LLC

STATEMENTS OF CASH FLOWS

(Unaudited)



�	�	Nine Months Ended September 30,
�	�	2014			�	2013
CASH FLOWS FROM OPERATING ACTIVITIES	�	�			�	�
Net income (loss)	�	$	935,999		�	$	(3,351,605	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:	�	�			�	�
Depreciation	�	12,504,500			�	7,057,006
Amortization of deferred finance costs	�	153,342			�
Accrued interest on notes receivable from management	�	(117,445		)	�	(69,903		)
Loss on disposal of assets	�	155,940			�
Changes in operating assets and liabilities:	�	�			�	�
Accounts receivable	�	(3,705,376		)	�	(9,392,480		)
Due to/from affiliates	�				�	2,074,565
Other assets	�	(1,459,808		)	�	(2,076,679		)
Accounts payable and accrued liabilities	�	541,859			�	18,126,354
NET CASH PROVIDED BY OPERATING ACTIVITIES	�	9,009,011			�	12,367,258
�	�	�			�	�
CASH FLOWS FROM INVESTING ACTIVITIES	�	�			�	�
Proceeds from sale of assets	�	654,543			�
Investment in gas pipelines and processing equipment	�	(70,269,128		)	�	(84,290,966		)
Investment in fixed assets	�	(144,721		)	�	(48,786		)
NET CASH USED IN INVESTING ACTIVITIES	�	(69,759,306		)	�	(84,339,752		)
�	�	�			�	�
CASH FLOWS FROM FINANCING ACTIVITIES	�	�			�	�
Proceeds from notes payable	�	46,000,000			�	13,054,161
Repayment of notes payable	�	(2,566,279		)	�	(1,236,394		)
Payment of capital lease obligations	�	(94,409		)	�
Capital contributions	�	20,000,000			�	60,000,000
Loans to management	�				�	(1,800,000		)
Financing costs	�	(401,200		)	�	(487,956		)
NET CASH PROVIDED BY FINANCING ACTIVITIES	�	62,938,112			�	69,529,811
�	�	�			�	�
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	�	2,187,817			�	(2,442,683		)
�	�	�			�	�
CASH AND CASH EQUIVALENTS, beginning of period	�	6,833,495			�	16,020,456
�	�	�			�	�
CASH AND CASH EQUIVALENTS, end of period	�	$	9,021,312		�	$	13,577,773
�	�	�			�	�
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION	�	�			�	�
Cash paid during the year for interest	�	$	1,231,151		�	$	223,681
�	�	�			�	�
NON-CASH INVESTING AND FINANCING ACTIVITIES	�	�			�	�
Prepaid insurance financed by notes payable	�	$	659,700		�	$
�	�	�			�	�
Property and equipment financed through capital leases	�	$	370,687		�	$

See notes to financial statements.

�

-4-

NUEVO MIDSTREAM, LLC

NOTES TO FINANCIAL STATEMENTS

NINE MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE A - ORGANIZATION AND NATURE OF BUSINESS

Nuevo Midstream, LLC (the Company), a Delaware limited liability company, was formed on April�6,�2011 for the purpose of acquiring, developing and operating natural gas midstream assets. The Company is managed by a board of managers. The members of the Company include EFM A Holdco, LP; Cenizo Midstream, LLC; PFC Gas Liquids, LLC; EnCap Energy Infrastructure Fund, L.P.; TT-EEIF Co- Investments, LLC; UT EEIF Side Car, LLC; LIC-EEIF Side Car, LLC; SBC-EnCap Co-Investment, LLC; Nuevo Midstream Management, LLC; and Ramsey Gas System Operations, LLC (Ramsey). Under the terms of the Amended and Restated Limited Liability Company Agreement (LLC Agreement), profits and losses are allocated to the members based upon their year-end capital contribution percentages until certain payout phases, as defined, are reached.

The accompanying unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments of a normal and recurring nature considered necessary for a fair presentation of our interim results have been included in the accompanying financial statements. The results of operations for the interim period are not necessarily indicative of the results that will be realized for the entire fiscal year. For further information, refer to the financial statements and notes thereto for the year ended December�31,�2013.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents: Cash in excess of the Companys daily requirements is generally invested in short-term, highly liquid investments with original maturities of three months or less. Such investments are carried at cost, which approximates fair value and, for the purposes of reporting cash flows, are considered to be cash equivalents. The Company maintains its cash in bank deposits with various major financial institutions. These accounts, at times, exceed federally insured limits. The Company monitors the financial condition of the financial institutions and has not experienced any losses on such accounts.

Accounts Receivable: Accounts receivable consists primarily of accrued revenues for natural gas and natural gas liquids sales and related fees. Management establishes an allowance for doubtful accounts, if necessary, for those accounts receivable that will eventually be deemed uncollectible. The allowance for doubtful accounts was $0 as of September�30,�2014 and December�31,�2013.

Other Current Assets: Other current assets are primarily comprised of natural gas liquids linefill inventory recorded at cost. Transportation costs are included in the cost of the Companys natural gas liquids linefill inventory.

Gas Pipelines and Processing and Treating Equipment: Gas pipelines and processing and treating equipment are depreciated on a straight-line basis over 15 years. These assets are evaluated for impairment�whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If necessary, an impairment loss would be recorded in the period in which it is determined that the carrying amount is not recoverable. The determination of recoverability is made based upon the estimated undiscounted future net cash flows, excluding interest expense, compared with the carrying value of the related assets. Impairment would be measured as the difference between the assets fair value and its carrying value. The Company has not recorded an impairment expense on its pipeline, processing and�treating assets.

-5-

NUEVO MIDSTREAM, LLC

NOTES TO FINANCIAL STATEMENTS

NINE MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue Recognition: The Company recognizes revenues associated with the sale of natural gas and natural gas liquids and other related items when title passes to the customer, which is when the risk of ownership passes to the purchaser and physical delivery of goods occurs, either immediately or within a fixed delivery schedule that is reasonable and customary in the industry. Compression, transportation, treating and processing revenues are recognized as the service is provided.

Income Taxes: The Company is treated as a partnership for federal tax and most state income tax purposes and is, therefore, not a tax paying entity. Accordingly, its pro rata share of income, losses, and tax credits are reported by its members, as provided in the LLC Agreement, on their individual income tax returns. Therefore, no provision for federal or state income taxes is made in the accompanying financial statements.

The Company follows the guidance issued by the FASB regarding accounting for uncertainty in income taxes. This guidance clarifies the accounting for income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the financial statements and applies to all income tax positions. Each income tax position is assessed using a two step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the financial statements�equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement.

The income tax position taken by the Company for any years open under the various statutes of limitations�is�that the Company is not subject to income taxes by virtue of its pass-through entity status. Management believes this tax position meets the more-likely-than-not threshold and, accordingly, the tax benefit of this income tax position (no income tax expense or liability) has been recognized for the nine months ended September�30,�2014 and 2013.

The Company believes that there are no tax positions taken or expected to be taken that would significantly increase or decrease unrecognized tax benefits within 12 months of the reporting date. None of the Companys federal or state income tax returns are currently under examination by the Internal Revenue Service (IRS) or state authorities. However, the calendar years 2013, 2012 and 2011 returns remain subject to examination by the IRS and respective state tax authorities.

The Company is subject to the Texas margin tax. As of September�30,�2014 and December�31,�2013, the Company did not owe any margin tax and, therefore, a provision was not recorded.

Deferred Finance Costs: The Company capitalizes all costs directly related to obtaining financing and such costs are amortized to interest expense over the life of the related facility. During the nine months ended September�30,�2014, the Company incurred and capitalized finance costs of $401,200. During the year ended December�31,�2013, the Company incurred and capitalized finance costs of $704,063. As of September�30,�2014 and December�31,�2013, the deferred finance costs balance is presented net of accumulated amortization of $197,346 and 44,004, respectively.

Use of Estimates: Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates.

-6-

NUEVO MIDSTREAM, LLC

NOTES TO FINANCIAL STATEMENTS

NINE MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Asset Retirement Obligations: The Company follows ASC 410, Asset Retirement and Environmental Obligations. ASC 410 requires that an asset retirement obligation (ARO) associated with the retirement of a tangible long-lived asset be recognized as a liability in the period in which a legal obligation is incurred�and becomes determinable, with an offsetting increase in the carrying amount of the associated asset. The Company has certain legal obligations associated with its gas pipelines and processing and treating equipment; however it has not recorded an ARO because these assets have indeterminate lives.

Subsequent Events: The Company has evaluated subsequent events through November 24, 2014, the date the financial statements were available to be issued. See Note J.

NOTE C - NEW ACCOUNTING PRONOUNCEMENTS

In September 2014, the FASB issued 2014-09, Revenue from Contracts with Customers, which superseded and replaced Accounting Standards Codification (ASC) 605-25, Revenue Recognition: Multiple-Element Arrangements, and most of ASC 985-605, Software: Revenue Recognition, which applies to all software and SaaS arrangements. The Company is currently evaluating the provisions of this guidance and assessing the impact, if any, it may have on the Companys financial statements.

NOTE D - RELATED PARTY TRANSACTIONS

Through February 28, 2014, the Company received support services from Torch Energy Advisors Incorporated and its subsidiaries (TEAI), which included office administration, risk management, corporate and legal services, graphic services, financial planning and analysis, information management, financial reporting and accounting services, engineering and technical services, and field operations and supervision as defined in an administrative services agreement (the Agreement). TEAI charged the Company $4,025 and $336,735 for the nine month periods ended September 30, 2014 and 2013, respectively, which is included in gas pipelines and processing equipment, operating expenses and general and administrative expenses.

Prior to April 8, 2013, TEAI had the right to request an advance for one months estimated cash outlays for the succeeding months services. As of September 30, 2014 and December�31,�2013, the Company had not advanced TEAI any funds for services.

On April 8, 2013, the Company loaned five members of Company management a total of $1,800,000 to facilitate the employees purchase of units in the Company from member of Ramsey (the Employee Loans). The Employee Loans mature on April 8, 2018 and bear interest at an annual interest rate of 8%, compounded monthly. The interest on the Employee Loans is payable at maturity. For the nine month periods ended September�30,�2014 and 2013, the Company accrued $117,445 and $69,903, respectively, of interest on the Employee Loans, which was all included as part of the loan. As of September�30,�2014 and December 31, 2013, the balance of the Employee Loans was $2,025,104 and $1,907,659, respectively, which was recorded as a reduction to members equity.

-7-

NUEVO MIDSTREAM, LLC

NOTES TO FINANCIAL STATEMENTS

NINE MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE E - NOTES PAYABLE AND LETTERS OF CREDIT

The Company entered into five financing arrangements with Zions Bank during 2013 related to capital equipment (the Zions Financings). All of the Zions Financings have a set monthly principal payment based on the actual cost of the equipment and a variable interest rate based on the 30-day LIBOR rate. As of September�30,�2014 and December�31,�2013, the interest rate on the Zions Financings was 3.41% and 3.42%, respectively.

The Citibank Facility was originally $60 million and may be increased in a minimum of $10 million increments up to a total of $125 million. During the nine months ended September�30,�2014, the facility was increased by $65 million to $125 million. The interest rate on each borrowing made under the Citibank�Facility is a function of the type of borrowing chosen (LIBOR or an alternative base rate) and the Companys leverage ratio at the time of each borrowing. The interest rate for LIBOR borrowings are equal to the LIBOR rate for the borrowing period chosen, plus a spread of 2.0% to 3.25%. The interest rate on alternate base rate borrowings are equal to the alternate base rate (the greater of the Citibank prime rate or the federal funds rate plus .05%), plus a spread of 1.0% to 2.25%. Recourse for the Citibank Facility is limited to the Company as borrower and the note is secured by all of the Companys gas plants and pipelines. As of September 30, 2014 and December 31, 2014, the interest rate in place was 2.52% and 3.17%, respectively. For any unused commitment under the Citibank Facility, a commitment fee of .375% to .5% is payable depending on the Companys leverage ratio. The Citibank Facility contains, among other terms, provisions for the maintenance of certain financial ratios and restrictions on additional debt. As of September�30,�2014, the Company was in compliance with all of the covenants under the Citibank Facility.

Scheduled maturities of the Zions Financings and Citibank Facility as of September�30,�2014 are as follows:



Twelve Months Ending September 30,	�	�
�	�	�
2015	�	$	3,804,616
2016	�	3,263,540
2017	�	68,126,386
�	�	$	75,194,542

As of September�30,�2014, the Company had three standby letters of credit outstanding related to potential�obligations to three counterparties. As of December�31,�2013, the Company had four standby letters of credit outstanding related to potential obligations to two counterparties. As of September�30,�2014, the Company had two outstanding standby letters of credit totaling $7,785,660, both of which were issued by Citibank. As of December�31,�2013, the Company had two outstanding standby letters of credit totaling $4,866,500, both of which were issued by Citibank. The rate charged by Citibank for the letters of credit is a function of the LIBOR rate and the Companys leverage ratio.

-8-

NUEVO MIDSTREAM, LLC

NOTES TO FINANCIAL STATEMENTS

NINE MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE F - CAPITAL LEASES

The Company is the lessee of vehicle capital leases expiring in 2017 and 2018. The assets and liabilities under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the asset. The assets are amortized over their estimated productive lives. Amortization of assets under capital leases is included in depreciation expense.

Following is a summary of property held under capital leases:



Vehicles	�	$	370,687
Accumulated amortization	�	(97,305		)
�	�	$	273,382

Minimum future lease payments under capital leases as of September�30,�2014 are as follows:



Twelve Months Ending September 30,	�	�
�	�	�
2015	�	$	133,588
2016	�	82,062
2017	�	46,998
2018	�	13,630
Net minimum lease payments	�	276,278
Amount representing interest	�	(12,210		)
Present value of net minimum lease payments	�	$	264,068

Interest rates on capitalized leases vary from 3.41% to 3.53% and are imputed based on the lower of the Companys incremental borrowing rate at the inception of each lease or the lessors implicit rate of return.

NOTE G - MAJOR CUSTOMERS

Three customers accounted for 52%, 26%, and 11% of total natural gas and natural gas liquids revenue for the nine month period ended September�30,�2014. Three customers accounted for 63%, 21% and 13% of gross accounts receivable as of September�30,�2014. Three customers accounted for 32%, 26%, and 16% of total natural gas and natural gas liquids revenue for the nine month period ended September�30,�2013. Three customers accounted for 57%, 21% and 13% of gross accounts receivable as of December�31,�2013. The Company does not believe that it is dependent upon any particular customer for these revenues.

-9-

NUEVO MIDSTREAM, LLC

NOTES TO FINANCIAL STATEMENTS

NINE MONTH PERIODS ENDED SEPTEMBER 30, 2014 AND 2013

NOTE H - CONTINGENCIES

NOTE I - MEMBERS EQUITY

The Company is authorized to issue 2,944,300 Class A units, 141,959 Class B units and 1,000 Profits units. The Class A and Class B units have a stated value of $100 per unit. Items of profit and loss are allocated to the members based upon the sharing ratios of the various classes of member units once payout�phases are reached as set forth in the LLC Agreement. For the nine month periods ended September�30,�2014 and 2013, the Company issued 200,000 and 600,000 Class A units for total cash proceeds of $20,000,000 and $60,000,000, respectively. As of September�30,�2014 and December�31,�2013, 2,077,634 and 1,877,634 Class A and 141,959 and 141,959 Class B units were issued and outstanding, respectively.

NOTE J - SUBSEQUENT EVENTS

On October 28, 2014, the Company signed an Agreement and Plan of Merger with Western Gas Partners, LP (Western) whereby Western will acquire the Company for $1.5 billion in cash. The transaction is subject to certain regulatory approval and customary closing conditions and is expected to close prior to December 31, 2014.

-10-

EXHIBIT 99.3

WESTERN GAS EQUITY PARTNERS, LP

INDEX TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



�	Page
�	�
Introduction	2
�	�
Unaudited Pro Forma Condensed Consolidated Statement of Income for the year ended December 31, 2013	4
�	�
Unaudited Pro Forma Condensed Consolidated Statement of Income for the nine months ended September�30,�2014	5
�	�
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2014	6
�	�
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements	7

INTRODUCTION

These unaudited pro forma condensed consolidated financial statements present the impact to the results of operations and financial position of Western Gas Equity Partners, LP attributable to the acquisition on November 25, 2014, of Nuevo Midstream, LLC (Nuevo) by Western Gas Partners, LP (WES). The assets acquired are referred to as the Nuevo assets and the acquisition as the Nuevo acquisition.

WGP refers to Western Gas Equity Partners, LP in its individual capacity or to Western Gas Equity Partners, LP and its subsidiaries, including Western Gas Holdings, LLC and WES, as the context requires. WES GP refers to Western Gas Holdings, LLC, individually as the general partner of WES, and excludes WES. WGPs general partner, Western Gas Equity Holdings, LLC (WGP GP), is a wholly owned subsidiary of Anadarko Petroleum Corporation. Anadarko refers to Anadarko Petroleum Corporation and its subsidiaries, excluding WGP and WGP GP, and affiliates refers to subsidiaries of Anadarko, excluding WGP and its subsidiaries, and includes equity interests in Fort Union Gas Gathering, LLC, White Cliffs Pipeline, LLC, Rendezvous Gas Services, LLC, Enterprise EF78, LLC, Texas Express Pipeline LLC, Texas Express Gathering LLC and Front Range Pipeline LLC.

WGP has no independent operations or material assets other than its partnership interests in WES; the consolidated financial results of WES are included in WGPs consolidated financial statements due to WGPs 100% ownership interest in and control of WES GP.

The unaudited pro forma condensed consolidated statement of income for the year ended December 31, 2013, is based upon the historical consolidated financial statements of WGP, as presented in Exhibit 99.3 to WGPs Current Report on Form 8-K for the year ended December 31, 2013, as filed with the U.S. Securities and Exchange Commission (SEC) on August 27, 2014, and the historical financial statements of Nuevo, as presented in Exhibit 99.1 of this Current Report on Form 8-K/A. The unaudited pro forma condensed consolidated statement of income for the year ended December 31, 2013, has been prepared as if the Nuevo acquisition occurred on January 1, 2013.

The unaudited pro forma condensed consolidated statement of income for the nine months ended September 30, 2014, and the unaudited pro forma condensed consolidated balance sheet as of September 30, 2014, are based upon the historical consolidated financial statements of WGP, as presented in WGPs Form 10-Q for the quarterly period ended September 30, 2014, and the historical financial statements of Nuevo, as presented in Exhibit 99.2 of this Current Report on Form 8-K/A. The unaudited pro forma condensed consolidated statement of income for the nine months ended September 30, 2014, has been prepared as if the Nuevo acquisition occurred on January 1, 2013. The unaudited pro forma condensed consolidated balance sheet has been prepared as if the Nuevo acquisition occurred on September 30, 2014.

The unaudited pro forma condensed consolidated financial statements have been prepared based on the assumption that WGP will continue to be treated as a partnership for U.S. federal and state income tax purposes and therefore will not be subject to U.S. federal income taxes and state income taxes, except for the Texas margin tax. The unaudited pro forma condensed consolidated financial statements have also been prepared based on certain pro forma adjustments as described in Note 2Pro Forma Adjustments.

The audited historical financial information of Nuevo and WGP included in these unaudited pro forma condensed consolidated financial statements (and the notes thereto) is qualified in its entirety by reference to the audited historical financial statements of Nuevo as set forth in Exhibit 99.1 of this Current Report on Form 8-K/A and WGPs audited historical consolidated financial statements as set forth in Exhibit 99.3 to its Current Report on Form 8-K as filed with the SEC on August 27, 2014, respectively, in each case including the related notes thereto. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with those historical financial statements and the related notes thereto.

The unaudited historical financial information of Nuevo and WGP included in these unaudited pro forma condensed consolidated financial statements (and the notes thereto) is qualified in its entirety by reference to the unaudited historical financial statements of Nuevo as set forth in Exhibit 99.2 of this Current Report on Form 8-K/A and WGPs unaudited historical consolidated financial statements as set forth in its Form 10-Q as filed with the SEC on October 29, 2014, respectively, in each case including the related notes thereto. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with those historical financial statements and the related notes thereto.

INTRODUCTION (CONTINUED)

The pro forma adjustments reflected in the unaudited pro forma condensed consolidated financial statements are based upon currently available information and certain assumptions and estimates. The actual effects of these transactions will differ from the pro forma adjustments. The estimated fair values of assets acquired and liabilities assumed are based on preliminary management estimates and are subject to final valuation adjustments which may cause the amounts ultimately recorded to be different from those shown. However, WGPs management believes that the applied estimates and assumptions provide a reasonable basis for the presentation of the significant effects of certain transactions that are expected to have a continuing impact on WGP. In addition, WESs management believes that the pro forma adjustments are factually supportable and appropriately represent the expected impact of items that are directly attributable to the acquisition of Nuevo by WES.

The pro forma adjustments included in the unaudited pro forma condensed consolidated financial statements reflect the acquisition of Nuevo on November 25, 2014, including the following significant transactions:


"	WESs use of $275.0 million of cash on hand, including the net proceeds from WESs November 2014 equity offering, to fund a portion of the cash consideration paid for the acquisition of Nuevo;


"	WESs borrowing of $475.0 million under the WES revolving credit facility to fund a portion of the cash consideration paid for the acquisition of Nuevo; and


"	WESs issuance of 10,913,853 Class C units to APC Midstream Holdings LLC (AMH), an indirect wholly owned subsidiary of Anadarko, at a price of $68.72 per unit, pursuant to a Unit Purchase Agreement (UPA) with Anadarko and AMH, for a total of $750.0 million.

From and after the closing of the Nuevo acquisition and related transactions, WES will be subject to the terms and conditions of various agreements, including the following:


"	the UPA with Anadarko and AMH, pursuant to which WES issued 10,913,853 Class C units to AMH;


"	the Agreement and Plan of Merger by and among WES, Maguire Midstream, LLC, an indirect wholly owned subsidiary of WES, Nuevo and the other parties thereto; and


"	Amendment No. 12 to the First Amended and Restated Agreement of Limited Partnership of Western Gas Partners, LP establishing the terms of the WES Class C units.

The unaudited pro forma condensed consolidated financial statements are not necessarily indicative of the results that would have occurred if WES had acquired Nuevo on the dates indicated nor are they indicative of the future operating results of WES.

WESTERN GAS EQUITY PARTNERS, LP

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

YEAR ENDED DECEMBER 31, 2013

(UNAUDITED)

thousands except per-unit amounts

�

WGP Historical

�

Nuevo Midstream Historical

�

Pro Forma Adjustments

�

WGP Pro�Forma

Revenues affiliates

�

Gathering, processing and transportation of natural gas and natural gas liquids

�

306,810

�

306,810

Natural gas, natural gas liquids and condensate sales

�

496,848

�

496,848

Other, net

�

1,868

�

1,868

Total revenues affiliates

�

805,526

�

805,526

Revenues third parties

�

Gathering, processing and transportation of natural gas and natural gas liquids

�

175,732

�

14,439

�

190,171

Natural gas, natural gas liquids and condensate sales

�

44,396

�

62,720

�

107,116

Other, net

�

4,109

�

108

�

4,217

Total revenues third parties

�

224,237

�

77,267

�

301,504

Total revenues

�

1,029,763

�

77,267

�

1,107,030

Equity income, net ⁽¹⁾

�

22,948

�

22,948

Operating expenses

�

Cost of product ⁽²⁾

�

364,285

�

54,843

�

419,128

Operation and maintenance ⁽²⁾

�

168,657

�

12,022

�

180,679

General and administrative ⁽²⁾

�

33,464

�

3,045

�

36,509

Property and other taxes

�

23,244

�

171

�

23,415

Depreciation, amortization and impairments

�

145,916

�

10,106

�

29,314

(f)

185,336

Total operating expenses

�

735,566

�

80,187

�

29,314

�

845,067

Operating income (loss)

�

317,145

�

(2,920

)

�

(29,314

)

�

284,911

Interest income, net affiliates

�

16,900

�

16,900

Interest expense

�

(51,797

)

�

(598

)

�

(6,935

)

(a)

(58,732

)

�

598

(g)

�

Other income (expense), net

�

1,935

�

1,935

Income (loss) before income taxes

�

284,183

�

(3,518

)

�

(35,651

)

�

245,014

Income tax expense

�

2,305

�

370

(b)

2,675

Net income (loss)

�

281,878

�

(3,518

)

�

(36,021

)

�

242,339

Net income (loss) attributable to noncontrolling interests

�

122,173

�

(16,339

)

(h)

105,834

Net income (loss) attributable to Western Gas Equity Partners, LP

�

159,705

�

(3,518

)

�

(19,682

)

�

136,505

Limited partners interest in net income (loss):

�

Net income (loss) attributable to Western Gas Equity Partners, LP

�

159,705

�

(3,518

)

�

(19,682

)

�

136,505

Results attributable to the pre-IPO period

�

(49

)

�

(49

)

Pre-acquisition net (income) loss allocated to Anadarko

�

(4,128

)

�

(4,128

)

Limited partners interest in net income ⁽³⁾

�

155,528

�

132,328

Net income per common unit basic and diluted

�

0.71

�

0.60

Weighted average common units outstanding basic and diluted

�

218,896

�

218,896

��


⁽¹⁾�	Income earned from equity investments is classified as affiliate.


⁽²⁾�	As it relates to the WGP Historical column, cost of product includes product purchases from Anadarko (as defined in the Introduction) of $129.0 million, operation and maintenance includes charges from Anadarko of $56.4 million, general and administrative includes charges from Anadarko of $24.2 million.


⁽³⁾�	Represents net income earned on and subsequent to the date of acquisition of the WES assets (as defined in Note 3).

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

WESTERN GAS EQUITY PARTNERS, LP

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

NINE MONTHS ENDED SEPTEMBER 30, 2014

(UNAUDITED)

thousands except per-unit amounts

�

WGP Historical

�

Nuevo Midstream Historical

�

Pro Forma Adjustments

�

WGP Pro�Forma

Revenues affiliates

�

Gathering, processing and transportation of natural gas and natural gas liquids

�

288,392

�

288,392

Natural gas, natural gas liquids and condensate sales

�

415,715

�

415,715

Other, net

�

4,349

�

4,349

Total revenues affiliates

�

708,456

�

708,456

Revenues third parties

�

Gathering, processing and transportation of natural gas and natural gas liquids

�

182,663

�

19,437

�

202,100

Natural gas, natural gas liquids and condensate sales

�

37,471

�

80,080

�

117,551

Other, net

�

7,276

�

117

�

7,393

Total revenues third parties

�

227,410

�

99,634

�

327,044

Total revenues

�

935,866

�

99,634

�

1,035,500

Equity income, net ⁽¹⁾

�

41,322

�

41,322

Operating expenses

�

Cost of product ⁽²⁾

�

318,428

�

68,794

�

387,222

Operation and maintenance ⁽²⁾

�

145,064

�

11,315

�

156,379

General and administrative ⁽²⁾

�

26,809

�

2,551

�

29,360

Property and other taxes

�

20,718

�

2,090

�

22,808

Depreciation, amortization and impairments

�

130,009

�

12,504

�

17,089

(f)

159,602

Total operating expenses

�

641,028

�

97,254

�

17,089

�

755,371

Operating income (loss)

�

336,160

�

2,380

�

(17,089

)

�

321,451

Interest income, net affiliates

�

12,675

�

12,675

Interest expense

�

(55,703

)

�

(1,444

)

�

(5,201

)

(a)

(60,904

)

�

1,444

(g)

�

Other income (expense), net

�

849

�

849

Income (loss) before income taxes

�

293,981

�

936

�

(20,846

)

�

274,071

Income tax (benefit) expense

�

276

�

280

(b)

556

Net income (loss)

�

293,705

�

936

�

(21,126

)

�

273,515

Net income (loss) attributable to noncontrolling interest

�

128,958

�

(8,712

)

(h)

120,246

Net income (loss) attributable to Western Gas Equity Partners, LP

�

164,747

�

936

�

(12,414

)

�

153,269

Limited partners interest in net income (loss):

�

Net income (loss) attributable to Western Gas Equity Partners, LP

�

164,747

�

936

�

(12,414

)

�

153,269

Pre-acquisition net (income) loss allocated to Anadarko

�

956

�

956

Limited partners interest in net income ⁽³⁾

�

165,703

�

154,225

Net income per common unit basic and diluted

�

0.76

�

0.70

Weighted average common units outstanding basic and diluted

�

218,903

�

218,903

�

��


⁽¹⁾�	Income earned from equity investments is classified as affiliate.


⁽²⁾�	As it relates to the WGP Historical column, cost of product includes product purchases from Anadarko (as defined in the Introduction) of $74.6 million, operation and maintenance includes charges from Anadarko of $42.5 million, and general and administrative includes charges from Anadarko of $20.4 million.


⁽³⁾�	Represents net income earned on and subsequent to the date of acquisition of the WES assets (as defined in Note 3).

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

WESTERN GAS EQUITY PARTNERS, LP

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

AS OF SEPTEMBER 30, 2014

(UNAUDITED)

thousands

�

WGP Historical

�

Nuevo Midstream Historical

�

Pro Forma Adjustments

�

WGP Pro�Forma

ASSETS

�

Current assets

�

Cash and cash equivalents

�

78,219

�

9,021

�

475,000

(c)

382,813

�

1,352,921

(d)

�

(1,553,959

)

(e)

�

21,611

(e)

�

Accounts receivable, net ⁽¹⁾

�

126,250

�

18,960

�

(8,468

)

(e)

136,742

Other current assets ⁽²⁾

�

6,915

�

4,251

�

683

(e)

11,849

Total current assets

�

211,384

�

32,232

�

287,788

�

531,404

Note receivable Anadarko

�

260,000

�

260,000

Property, plant and equipment

�

Cost

�

4,754,279

�

299,694

�

104,764

(e)

5,158,737

Less accumulated depreciation

�

986,692

�

25,634

�

(25,634

)

(e)

986,692

Net property, plant and equipment

�

3,767,587

�

274,060

�

130,398

�

4,172,045

Goodwill

�

105,336

�

460,557

(b), (e)

565,893

Other intangible assets

�

52,561

�

700,000

(e)

752,561

Equity investments

�

639,191

�

639,191

Other assets

�

28,910

�

944

�

(944

)

(e)

28,910

Total assets

�

5,064,969

�

307,236

�

1,577,799

�

6,950,004

LIABILITIES, EQUITY AND PARTNERS CAPITAL

�

Current liabilities

�

Accounts and natural gas imbalance payables ⁽³⁾

�

27,011

�

3,610

�

9,454

(e)

40,075

Accrued ad valorem taxes

�

21,083

�

21,083

Income taxes payable

�

258

�

258

Accrued liabilities

�

153,061

�

17,463

�

7,361

(e)

177,885

Current maturities of long-term debt

�

3,938

�

(3,938

)

(e)

Total current liabilities

�

201,413

�

25,011

�

12,877

�

239,301

Long-term debt

�

2,082,914

�

71,533

�

475,000

(c)

2,558,179

�

(71,533

)

(e)

�

265

(e)

�

Deferred income taxes

�

780

�

1,321

(b)

2,101

Asset retirement obligations and other

�

85,903

�

17,640

(e)

103,543

Total long-term liabilities

�

2,169,597

�

71,533

�

422,693

�

2,663,823

Total liabilities

�

2,371,010

�

96,544

�

435,570

�

2,903,124

Equity and partners capital

�

Common units

�

938,225

�

938,225

Class A & B Members

�

210,692

�

(210,692

)

(e)

Total partners capital

�

938,225

�

210,692

�

(210,692

)

�

938,225

Noncontrolling interests

�

1,755,734

�

1,352,921

(d)

3,108,655

Total equity and partners capital

�

2,693,959

�

210,692

�

1,142,229

�

4,046,880

Total liabilities, equity and partners capital

�

5,064,969

�

307,236

�

1,577,799

�

6,950,004

��


⁽¹⁾�	As it relates to the WGP Historical column, accounts receivable, net includes amounts receivable from affiliates (as defined in the Introduction) of $87.2 million.


⁽²⁾�	As it relates to the WGP Historical column, other current assets includes natural gas imbalance receivables from affiliates of $0.1 million.


⁽³⁾�	As it relates to the WGP Historical column, accounts and natural gas imbalance payables includes amounts payable to affiliates of $0.1 million.

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

WESTERN GAS EQUITY PARTNERS, LP

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

1.��BASIS OF PRESENTATION

The unaudited pro forma condensed consolidated statement of income for the year ended December 31, 2013, is based upon the audited historical consolidated financial statements of WGP and the audited historical financial statements of Nuevo as of December 31, 2013. The unaudited pro forma condensed consolidated statement of income for the nine months ended September 20, 2014, and balance sheet as of September 30, 2014, are based upon the unaudited historical consolidated financial statements of WGP and the unaudited historical financial statements of Nuevo as of and for the nine months ended September 30, 2014. As described in the Introduction, these unaudited pro forma condensed consolidated financial statements present the impact of the Nuevo acquisition on WGPs results of operations and financial position.

2.��PRO FORMA ADJUSTMENTS

The following adjustments for WGP have been prepared as if the acquisition of Nuevo (i) occurred on January 1, 2013, in the case of the unaudited pro forma condensed consolidated statements of income for the year ended December 31, 2013, and for the nine months ended September 30, 2014, and (ii) on September 30, 2014, in the case of the unaudited pro forma condensed consolidated balance sheet as of September 30, 2014:

(a)

The inclusion of interest expense on WESs $475.0 million of borrowings under WESs revolving credit facility (the WES RCF) to partially finance the acquisition of Nuevo. The interest rate on the WES RCF at September 30, 2014, and used for purposes of calculating interest expense in these unaudited pro forma condensed consolidated statements of income, was 1.46%. A 1/8% variance in this rate would result in an adjustment to income (loss) before income taxes of $594,000 for the twelve months ended December 31, 2013, and $445,000 for the nine months ended September 30, 2014;


(b)	The adjustment of historical current and deferred income taxes as if WES, an entity which is generally not subject to federal and state income taxes, owned and operated Nuevo, and purchase accounting adjustments;


(c)	The receipt of $475.0 million of borrowings under WESs revolving credit facility;


(d)	The acquisition of Nuevo by WES for $1.6 billion, consisting of (i) $201.0 million of cash on hand, (ii) the issuance of 8,620,153 WES public common units, (iii) the issuance of 153,061 WES general partner units to Anadarko and (iv) the issuance of 10,913,853 WES Class C units to AMH for $750.0 million;

WESTERN GAS EQUITY PARTNERS, LP

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

2.��PRO FORMA ADJUSTMENTS (CONTINUED)

(e)

The acquisition of Nuevo was accounted for using the acquisition method of accounting, under which tangible and identifiable intangible assets acquired and liabilities assumed are recorded at their estimated fair values as of the acquisition date. The excess of the consideration transferred over the preliminary estimated fair value of net assets acquired is reflected as goodwill on the accompanying unaudited pro forma condensed combined balance sheet. The estimated fair values of assets acquired and liabilities assumed are based on preliminary management estimates and are subject to final valuation adjustments which may cause the amounts ultimately recorded to be different from those shown on the unaudited pro forma condensed combined balance sheet. The pro forma adjustments reflect the increase in depreciation and amortization expense due to the amortization of identifiable intangibles (customer contracts assumed in connection with the acquisition of Nuevo) with a definite life using the straight-line method over a weighted average life of 30 years, and the increase in depreciation resulting from step up of property, plant and equipment, depreciated on a straight-line basis over periods of 3 to 30 years. The pro forma adjustments also reflect the consolidation of Nuevo. The following table presents a preliminary allocation of the major classes of the assets acquired and liabilities assumed at November 25, 2014, including additional specific adjustments as further described above.



thousands	�	Nuevo Historical Net Book Value			�	Adjustment		�	Preliminary Fair Value
Current assets	�	$	32,232		�	13,826		�	$	46,058
Property, plant and equipment, net	�	274,060			�	130,398		�	404,458
Goodwill	�				�	460,557		�	460,557
Other intangible assets	�				�	700,000		�	700,000
Other assets	�	944			�	(944	)	�
Accounts payable and accrued liabilities	�	(21,073		)	�	(16,815	)	�	(37,888		)
Current maturities of long-term debt	�	(3,938		)	�	3,938		�
Asset retirement obligations	�				�	(17,640	)	�	(17,640		)
Long-term notes payable	�	(71,533		)	�	71,533		�
Capital lease obligations	�				�	(265	)	�	(265		)
Deferred income taxes	�				�	(1,321	)	�	(1,321		)
Members equity	�	(210,692		)	�	210,692		�
Total purchase price	�				�			�	$	1,553,959


(f)	The allocation of the purchase price to property, plant and equipment, with related changes in depreciation, amortization and accretion expense;


(g)	The impact of the reversal of the interest expense incurred by Nuevo since January 1, 2013; and


(h)	The allocation to WGPs noncontrolling interests of the Nuevo net income and pro forma adjustments.

WESTERN GAS EQUITY PARTNERS, LP

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

3.��PRO FORMA NET INCOME PER UNIT

References to the WES assets refer collectively to the assets owned by WES as of December 31, 2013, or September 30, 2014, as the case may be. Because WGP owns and controls WES GP, and WGP GP is owned and controlled by Anadarko, each of WESs acquisitions of WES assets from Anadarko has been considered a transfer of net assets between entities under common control. Net income attributable to the WES assets acquired from Anadarko for periods prior to WESs acquisition of the WES assets is not allocated to the limited partners for purposes of calculating net income per common unit. WGPs net income earned on and subsequent to the date of the acquisition of the WES assets is allocated in accordance with ownership percentages.

For WGP, earnings per unit is calculated based on the assumption that WGP distributes to its unitholders an amount of cash equal to net income attributable to WGP, notwithstanding the general partners ultimate discretion over the amount of cash to be distributed for the period, the existence of other legal or contractual limitations that would prevent distributions of all of the net income for the period or any other economic or practical limitation on the ability to make a full distribution of all of the net income for the period. Net income equal to the amount of available cash (as defined by WGPs partnership agreement) is allocated to WGP common unitholders consistent with actual cash distributions for the period.

For purposes of calculating pro forma net income per unit, management assumed that annual pro forma cash distributions were equal to annual pro forma earnings. Pro forma basic and diluted net income per unit is calculated by dividing the limited partners interest in net income by the pro forma weighted average number of units outstanding as of December 31, 2013, or September 30, 2014, as the case may be.

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