[source: BC]

Western Gas Partners LP (WES - US$ 14.73) 1-Overweight

Change of Price Target

Guidance Reduced, LT Growth Story Intact


Investment Conclusion

Based on minimal direct commodity price exposure, modest debt balance, combined with strong GP (APC) who has large inventory of assets to drop down, we believe WES is well positioned to weather the current challenging

commodity and capital market environment. While we reduce 2009 growth assumption given volume headwind from reduced drilling activity, combined with light Q1, we believe the Partnership's LT growth story is intact. Our view is that WES can grow distribution at 5-10%/yr range in the next few years, driven by asset drop-downs from APC.

Also, given the Partnership's focus on maintaining little commodity price exposure, we believe WES will trade at a premium to commodity exposed G&P peer group. Given cost of capital advantage and low leverage, we believe WES is well positioned to close accretive acquisitions (including drop-down or third-party acquisitions) in the current environment. WES has 1.7x leverage and over $150 mm of liquidity vs less than $10 mm growth spending.

Summary

We raise our PT to $17 based on 12 months distribution run rate of $1.26 and 7.5% target yield. Old $16 PT based on $1.26 and 8% target yield.