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, which are included under Part I, Item 1 of this quarterly report, as well as our historical consolidated financial statements, and the notes thereto (which have been recast to reflect the results of the acquisition of Mountain Gas Resources, LLC in our Current Report on Form 8-K, as filed with the Securities and Exchange Commission, or "SEC," on May 22, 2012), and other public filings and press releases by Western Gas Partners, LP. Unless the context otherwise requires, references to "we," "us," "our," the "Partnership" or "Western Gas Partners" refers to Western Gas Partners, LP and its subsidiaries, including the financial results of the Partnership assets (described below) from their respective date acquired by entities under common control, for all periods presented. For ease of reference, we also refer to the historical financial results of the Partnership assets prior to our acquisitions as being "our" historical financial results. "Anadarko" refers to Anadarko Petroleum Corporation and its consolidated subsidiaries, excluding the Partnership and our general partner. Our "general partner" refers to Western Gas Holdings, LLC, a wholly owned subsidiary of Anadarko and the general partner of the Partnership. "Affiliates" refers to Anadarko and its wholly owned and partially owned subsidiaries, excluding the Partnership, and also refers to Fort Union Gas Gathering, LLC, or "Fort Union," White Cliffs Pipeline, LLC, or "White Cliffs," and Rendezvous Gas Services, LLC, or "Rendezvous." References to the "Partnership assets" refer collectively to the assets owned by the Partnership as of September 30, 2012.

We have made in this report, and may from time to time otherwise make in other public filings, press releases and discussions by Partnership management, forward-looking statements concerning our operations, economic performance and financial condition. These statements can be identified by the use of forward-looking terminology including "may," "will," "believe," "expect," "anticipate," "estimate," "continue," or other similar words. These statements discuss future expectations, contain projections of results of operations or financial condition or include other "forward-looking" information. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct.

These forward-looking statements involve risks and uncertainties. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, the following risks and uncertainties:

• our assumptions about the energy market;

• future throughput, including Anadarko's production, which is gathered or processed by or transported through our assets;

• operating results;

• competitive conditions;

• technology;

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

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

• the weather;

• inflation;

• the availability of goods and services, including downstream transportation and fractionation capacity;

• changes in environmental and safety regulations; environmental risks; regulations by the Federal Energy Regulatory Commission ("FERC"); and liability under federal and state laws and regulations;

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

• changes in the financial or operational condition of our sponsor, Anadarko, including changes as a result of remaining claims related to the Deepwater Horizon events for which Anadarko is not indemnified;

• changes in Anadarko's capital program, strategy or desired areas of focus;

• our commitments to capital projects and the ability to complete such projects on time and within budget expectations;

• the ability to utilize our revolving credit facility ("RCF");

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

• our ability to repay debt;

• 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;

• non-payment or non-performance of Anadarko or other significant customers, including under our gathering, processing and transportation agreements and our $260.0 million note receivable from Anadarko;

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

• other factors discussed below, in "Risk Factors" included in our 2011 Form 10-K, in "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates" included in our Current Report on Form 8-K filed May 22, 2012, in our quarterly reports on Form 10-Q and elsewhere in our other public filings and press releases.

The risk factors and other factors noted throughout or incorporated by reference in this report could cause our actual results to differ materially from those contained in any forward-looking statement. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

We are a growth-oriented Delaware master limited partnership ("MLP") organized by Anadarko to own, operate, acquire and develop midstream energy assets. We currently own assets located in East, West and South Texas, the Rocky Mountains (Colorado, Utah and Wyoming), and the Mid-Continent (Kansas and Oklahoma) and are engaged in the business of gathering, processing, compressing, treating and transporting natural gas, condensate, NGLs and crude oil for Anadarko and its consolidated subsidiaries, as well as for third-party producers and customers. As of September 30, 2012, our assets consisted of thirteen gathering systems, seven natural gas treating facilities, ten natural gas processing facilities, two NGL pipelines, one interstate gas pipeline, one intrastate gas pipeline and interests accounted for under the equity method in two gas gathering systems and a crude oil pipeline.

Significant financial highlights during the first nine months of 2012 include the following:

• We issued $520.0 million aggregate principal amount of 4.000% Senior Notes due 2022 (the "2022 Notes"). Net proceeds from this issuance were used to repay all amounts then outstanding under our revolving credit facility and the note payable to Anadarko, with the remaining net proceeds used for general partnership purposes. See Liquidity and Capital Resources below.

• We issued 5,000,000 common units to the public, generating net proceeds of $216.6 million, including the general partner's proportionate capital contribution to maintain its 2.0% general partner interest. Net proceeds are being used for general partnership purposes, including the funding of capital expenditures. See Equity Offerings below.

• We completed the acquisition of Anadarko's MGR assets located in southwestern Wyoming in January and the acquisition of Anadarko's remaining 24% interest in Chipeta in August. See Acquisitions below.

• We announced two growth projects: (i) the expansion of our processing capacity by 300 MMcf/d at our Wattenberg system with the construction of the Lancaster plant, and (ii) the construction of a new 200 MMcf/d cryogenic processing plant in the Maverick Basin, referred to as the Brasada plant. Startup is anticipated in the first quarter of 2014 for the Lancaster plant and the second quarter of 2013 for the Brasada plant. See Liquidity and Capital Resources below.

• We raised our distribution to $0.50 per unit for the third quarter of 2012, representing a 4% increase over the distribution for the second quarter of 2012, a 19% increase over the distribution for the third quarter of 2011, and our fourteenth consecutive quarterly increase.

Significant operational highlights during the first nine months of 2012 include the following:

• Throughput attributable to Western Gas Partners, LP totaled 2,461 MMcf/d and 2,419 MMcf/d for the three and nine months ended September 30, 2012, respectively, representing a 10% and 9% increase, respectively, compared to the same periods in 2011.

• Gross margin (total revenues less cost of product) attributable to Western Gas Partners, LP averaged $0.55 per Mcf for both the three and nine months ended September 30, 2012, representing a 7% and 5% decrease, respectively, compared to the same periods in 2011.

                                  ACQUISITIONS

Acquisitions. The following table presents our acquisitions completed during
2012 and 2011, and identifies the funding sources for such acquisitions:



thousands except unit and     Acquisition         Percentage                             Cash              Common             GP Units
  percent amounts                Date              Acquired          Borrowings         On Hand         Units  Issued          Issued
Platte Valley (1)                  02/28/11               100%     $     303,000      $      602                     -                -
Bison (2)                          07/08/11               100%                 -          25,000             2,950,284           60,210
MGR (3)                            01/13/12               100%           299,000         159,587               632,783           12,914
Chipeta (4)                        08/01/12                24%                 -         128,250               151,235            3,086

(1) The assets acquired from a third party include (i) a processing plant with initial cryogenic capacity of 84 MMcf/d, (ii) two fractionation trains,
(iii) an initial 1,098-mile natural gas gathering system that delivers gas to the Platte Valley plant either directly or through our Wattenberg gathering system, and (iv) related equipment. These assets, located in the Denver-Julesburg Basin, are referred to collectively as the "Platte Valley assets" or "Platte Valley system" and the acquisition as the "Platte Valley acquisition." An adjustment to intangible assets of $1.6 million was recorded in August 2011, representing the final allocation of the purchase price. In connection with the acquisition, we entered into long-term fee-based agreements with the seller to gather and process its existing gas production, as well as to expand the existing gathering systems and processing capacity. We financed the Platte Valley acquisition with borrowings under our RCF. See Note 2-Acquisitions in the Notes to Consolidated Financial Statements under Item 1 of this Form 10-Q.

(2) The Bison gas treating facility that we acquired from Anadarko is located in the Powder River Basin in northeastern Wyoming, and includes (i) three amine treating units with a combined CO2treating capacity of 450 MMcf/d,
(ii) three compressor units with combined compression of 5,230 horsepower, and (iii) five generators with combined power output of 6.5 megawatts. These assets are referred to collectively as the "Bison assets" and the acquisition as the "Bison acquisition." The Bison assets are the only treating and delivery point into the third-party-owned Bison pipeline. Anadarko began construction of the Bison assets in 2009 and placed them in service in June 2010.

(3) Mountain Gas Resources LLC ("MGR"), acquired from Anadarko, owns (i) the Red Desert Complex, located in the greater Green River Basin in southwestern Wyoming, including the Patrick Draw processing plant with a capacity of 125 MMcf/d, the Red Desert processing plant with a capacity of 48 MMcf/d, 1,295 miles of gathering lines, and related facilities, (ii) a 22% interest in Rendezvous, which owns a 338-mile mainline gathering system serving the Jonah and Pinedale Anticline fields in southwestern Wyoming, and
(iii) certain additional midstream assets and equipment. These assets are collectively referred to as the "MGR assets" and the acquisition as the "MGR acquisition." In connection with the MGR acquisition, we entered into 10-year, fee-based gathering and processing agreements with Anadarko effective December 1, 2011, for all affiliate throughput on the MGR assets.

(4) On August 1, 2012, we acquired Anadarko's remaining 24% membership interest in Chipeta (as described in Note 1-Description of Business and Basis of Presentation under Item 1 of this Form 10-Q), with the Partnership receiving distributions related to the additional interest beginning July 1, 2012, bringing our total membership interest in Chipeta to 75%. The 25% held by a third-party member is reflected as noncontrolling interests in our consolidated financial statements for all periods presented.

Presentation of Partnership assets. References to the "Partnership assets" refer collectively to the assets owned by us as of September 30, 2012. Because Anadarko controls us through its ownership and control of our general partner, our acquisition of assets from Anadarko was considered a transfer of net assets between entities under common control. As such, the Partnership assets we acquired from Anadarko were initially recorded at Anadarko's historic carrying value, which does not correlate to the total acquisition price paid by us (see Note 2-Acquisitions in the Notes to Consolidated Financial Statements under Item 1 of this Form 10-Q). Further, we may be required to recast our financial statements to include the activities of the newly acquired commonly controlled assets as of the date of common control.

The historical financial statements previously filed with the SEC have been recast in this Form 10-Q to include the results attributable to the MGR assets as if we owned such assets for all periods presented. The consolidated financial statements for periods prior to our acquisition of the Partnership assets from Anadarko have been prepared from Anadarko's historical cost-basis accounts and may not necessarily be indicative of the actual results of operations that would have occurred if we had owned the assets during the periods reported.

                                EQUITY OFFERINGS

Equity offerings. We completed the following public offerings of our common
units during 2011 and 2012:



                                                                                                                    Underwriting
                                                                                                                    Discount and
thousands except unit                                         Common             GP Units         Price Per        Other Offering           Net
  and per-unit amounts                                   Units Issued (1)       Issued (2)          Unit              Expenses           Proceeds
March 2011 equity offering                                       3,852,813          78,629      $      35.15      $          5,621      $  132,569
September 2011 equity offering                                   5,750,000         117,347             35.86                 7,655         202,748
June 2012 equity offering                                        5,000,000         102,041             43.88                 7,435         216,442

(1) Includes the issuance of 302,813 common units and 750,000 common units pursuant to the exercise, in full or in part, of the underwriters' over-allotment options granted in connection with the March 2011 and September 2011 equity offerings, respectively.

(2) Represents general partner units issued to the general partner in exchange for the general partner's proportionate capital contribution to maintain its 2.0% general partner interest.

In August 2012, we filed a registration statement with the SEC authorizing the issuance of up to $125.0 million of our common units in amounts, at prices and on terms to be determined by market conditions and other factors at the time of our offerings. As of September 30, 2012, we had not issued any common units under this registration statement.

                             RESULTS OF OPERATIONS

                               OPERATING RESULTS

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



                                                      Three Months Ended               Nine Months Ended
                                                         September 30,                   September 30,
thousands                                            2012            2011            2012            2011
Gathering, processing and transportation of
natural gas and natural gas liquids               $   78,219      $   75,686      $  235,849      $  222,432
Natural gas, natural gas liquids and condensate
sales                                                136,106         137,860         386,818         371,800
Equity income and other, net                           4,695           4,000          13,936          13,836

Total revenues (1)                                   219,020         217,546         636,603         608,068
Total operating expenses (1)                         169,778         163,600         482,261         444,969

Operating income                                      49,242          53,946         154,342         163,099
Interest income, net - affiliates                      4,225           8,573          12,675          18,992
Interest expense                                     (10,977)         (8,930)        (30,118)        (21,738)
Other income (expense), net                              522             258            (287)           (895)

Income before income taxes                            43,012          53,847         136,612         159,458
Income tax expense                                        72           4,668             699          15,564

Net income                                            42,940          49,179         135,913         143,894
Net income attributable to noncontrolling
interests                                              3,423           3,873          11,956           9,665

Net income attributable to Western Gas
Partners, LP                                      $   39,517      $   45,306      $  123,957      $  134,229

Key Performance Metrics (2)
Gross margin                                      $  129,913      $  127,880      $  381,884      $  367,303
Adjusted EBITDA attributable to Western Gas
Partners, LP                                      $   84,497      $   82,256      $  244,349      $  241,284
Distributable cash flow                           $   64,360      $   66,934      $  197,285      $  211,313

(1) Revenues include amounts earned from services provided to our affiliates, as well as from the sale of residue, condensate and NGLs to our affiliates. Operating expenses include amounts charged by our affiliates for services as well as reimbursement of amounts paid by affiliates to third parties on our behalf. See Note 5-Transactions with Affiliates in the Notes to Consolidated Financial Statements under Item 1 of this Form 10-Q.

(2) Gross margin, Adjusted EBITDA attributable to Western Gas Partners, LP ("Adjusted EBITDA") and Distributable cash flow are defined under the caption Key Performance Metrics within this Item 2. Such caption also includes reconciliations of Adjusted EBITDA and Distributable cash flow to their most directly comparable measures calculated and presented in accordance with generally accepted accounting principles in the United States ("GAAP").

For purposes of the following discussion, any increases or decreases "for the three months ended September 30, 2012" refer to the comparison of the three months ended September 30, 2012, to the three months ended September 30, 2011; any increases or decreases "for the nine months ended September 30, 2012" refer to the comparison of the nine months ended September 30, 2012, to the nine months ended September 30, 2011; and any increases or decreases "for the three and nine months ended September 30, 2012" refer to both the comparison for the three months ended September 30, 2012, and to the comparison for the nine months ended September 30, 2012.

Operating Statistics



                                                        Three Months Ended                      Nine Months Ended
                                                           September 30,                          September 30,
throughput in MMcf/d                              2012          2011           D          2012          2011          D
Gathering, treating and transportation (1)         1,201         1,274         (6)%        1,255         1,327        (5)%
Processing (2)                                     1,228         1,012          21%        1,182           940         26%
Equity investment (3)                                236           212          11%          236           191         24%

Total throughput (4)                               2,665         2,498           7%        2,673         2,458          9%
Throughput attributable to noncontrolling
interests                                            204           258        (21)%          254           237          7%

Total throughput attributable to Western Gas
Partners, LP                                       2,461         2,240          10%        2,419         2,221          9%

(1) Excludes average NGL pipeline volumes from the Chipeta assets of 22 MBbls/d and 25 MBbls/d for the three months ended September 30, 2012 and 2011, respectively, and 25 MBbls/d and 23 MBbls/d for the nine months ended September 30, 2012 and 2011, respectively.

(2) Consists of 100% of Chipeta, Granger, Hilight and Red Desert complex volumes and 50% of Newcastle system volumes for all periods presented, as well as throughput beginning March 2011 attributable to the Platte Valley system.

(3) Represents our 14.81% share of Fort Union and 22% share of Rendezvous gross volumes, and excludes our 10% share of average White Cliffs pipeline volumes consisting of 6 MBbls/d and 4 MBbls/d for the three months ended September 30, 2012 and 2011, respectively, and 6 MBbls/d and 3 MBbls/d for the nine months ended September 30, 2012 and 2011, respectively.

(4) Includes affiliate, third-party and equity-investment volumes.

Gathering, treating and transportation throughput decreased by 73 MMcf/d and 72 MMcf/d for the three and nine months ended September 30, 2012, respectively, resulting from: throughput decreases at the Haley, Pinnacle, Hugoton and Dew systems resulting from natural production declines and reduced drilling activity in those areas; throughput decreases at MIGC due to the September 2012 expiration of a firm transportation agreement; and throughput decreases at the Bison facility resulting from reduced drilling activity in the area driven by unfavorable producer economics. These decreases were partially offset by a throughput increase at Wattenberg due to increased drilling behind the system.

Processing throughput increased by 216 MMcf/d and 242 MMcf/d for the three and nine months ended September 30, 2012, respectively, primarily due to: volumes processed at a plant included in the MGR acquisition under a new contract effective January 2012, with no volumes in the comparable period; throughput increases at the Chipeta system resulting from increased drilling activity; and for the nine months ended September 30, 2012, additional throughput from the Platte Valley system beginning in March 2011.

Equity investment volumes increased by 24 MMcf/d and 45 MMcf/d for the three and nine months ended September 30, 2012, respectively, resulting from higher throughput at the Fort Union system due to producers choosing to route additional gas to reach desired end markets and at the Rendezvous system due to increased third-party drilling activity.

Natural Gas Gathering, Processing and Transportation Revenues



                                                          Three Months Ended                       Nine Months Ended
                                                             September 30,                           September 30,
thousands except percentages                        2012          2011           D          2012          2011           D
Gathering, processing and transportation of

Gathering, processing and transportation of natural gas and natural gas liquids revenues increased by $2.5 million for the three months ended September 30, 2012, primarily due to increases of $3.6 million and $2.1 million due to increased drilling activity in the areas around the Wattenberg and Chipeta systems, respectively, and increased rates at the Haley system for an increase of $0.8 million. These increases were partially offset by decreased revenue of $1.0 million at the Helper system due to a downward rate revision effective April 1, 2012, decreased revenue of $0.5 million at the Platte Valley system due to decreased wellhead volumes and a rate adjustment, decreased revenue of $0.5 million at the Red Desert complex due to changes in contracts and lower volumes due to shut-ins, decreased revenue of $0.4 million at MIGC due to the expiration of firm transportation agreements and due to a decrease in interruptible volumes, decreased revenue of $0.3 million at a plant included in the MGR acquisition due to the expiration of processing agreements, and decreased revenue of $0.9 million due to decreased throughput at the Dew, Pinnacle and Clawson systems as a result of natural production declines in the area.

Gathering, processing and transportation of natural gas and natural gas liquids revenues increased by $13.4 million for the nine months ended September 30, 2012, primarily due to increases of $8.8 million and $7.4 million due to increased drilling activity in the areas around the Wattenberg and Chipeta systems, respectively, an increase of $5.5 million due to the acquisition of the . . .