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Did Western Gas Partners Cover Its Distribution in 1Q18?

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May. 4 2018, Published 10:57 a.m. ET

Distribution coverage

Western Gas Partners (WES) covered its distribution in 1Q18 with a distribution coverage of ~1.1x. A distribution coverage above 1.0 indicates that a partnership is able to generate enough distributable cash flow to cover its distributions. 

However, Western Gas Partners’ distribution coverage is still below its historical levels. This is due to its low distributable cash flow growth in the last few quarters. WES expects to end 2018 with a distribution coverage of 1.2x.

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Distribution per unit

Western Gas Partners (WES) declared a distribution of $0.935 per unit for 1Q18, which represented a 7.0% YoY (year-over-year) increase compared to 1Q17 and a 2.0% increase compared to 4Q17. 

Western Gas Partners’ GP (general partner), Western Gas Equity Partners (WGP), declared a distribution of $0.56875 per unit in 1Q18, representing a 4.0% quarter-over-quarter and 16.0% YoY increase.

Distribution yield

Based on the current distribution, the publicly traded partnership is trading at a distribution yield of 7.9%. This is above the one-year and three-year averages of 7.2% and 6.6%, respectively. 

Western Gas Partners’ current distribution yield looks attractive considering its distribution growth plans for 2018. The limited partnership expects to grow its distribution at a fixed rate of 1.5 cents per quarter for the remainder of 2018.

In the next article, we’ll look into Western Gas Partners’ updated capital guidance for 2018.

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