13. DEBT AND INTEREST EXPENSE

At December 31, 2014, WES’s debt consisted of 5.375% Senior Notes due 2021 (the “2021 Notes”), 4.000% Senior Notes due 2022 (the “2022 Notes”), 2.600% Senior Notes due 2018 (the “2018 Notes”), 5.450% Senior Notes due 2044 (the “2044 Notes”), and borrowings on the WES RCF. The two tranches of the 2022 Notes, issued in June and October 2012, were issued under the same indenture and are considered a single class of securities. The two tranches of the 2018 Notes, issued in August 2013 and March 2014, were issued under the same indenture and are considered a single class of securities.

The following table presents WES and WGP’s outstanding debt as of December 31, 2014 and 2013:



	December 31, 2014						December 31, 2013
thousands	Principal		Carrying Value		Fair Value ⁽¹⁾		Principal		Carrying Value		Fair Value ⁽¹⁾
Current portion of long-term debt - Anadarko
WGP working capital facility	$	1,150	$	1,150	$	1,150	$	—	$	—	$	—

Long-term debt
WES 5.375% Senior Notes due 2021	$	500,000	$	495,714	$	549,530	$	500,000	$	495,173	$	533,615
WES 4.000% Senior Notes due 2022	670,000		672,930		681,942		670,000		673,278		641,237
WES revolving credit facility	510,000		510,000		510,000		—		—		—
WES 2.600% Senior Notes due 2018	350,000		350,474		352,162		250,000		249,718		247,988
WES 5.450% Senior Notes due 2044	400,000		393,836		417,619		—		—		—
Total long-term debt	$	2,430,000	$	2,422,954	$	2,511,253	$	1,420,000	$	1,418,169	$	1,422,840


⁽¹⁾	Fair value is measured using Level 2 inputs.

Debt activity. The following table presents WES and WGP’s debt activity for the years ended December 31, 2014 and 2013:



thousands	Carrying Value
Balance at December 31, 2012	$	1,168,278
WES revolving credit facility borrowings	710,000
Repayments of WES revolving credit facility	(710,000		)
Issuance of WES 2.600% Senior Notes due 2018	250,000
Other	(109		)
Balance at December 31, 2013	$	1,418,169
WES revolving credit facility borrowings	1,160,000
Issuance of WES 5.450% Senior Notes due 2044	400,000
Issuance of WES 2.600% Senior Notes due 2018	100,000
Repayments of WES revolving credit facility	(650,000		)
WGP working capital facility borrowings	1,150
Other	(5,215		)
Balance at December 31, 2014	$	2,424,104

13. DEBT AND INTEREST EXPENSE (CONTINUED)

WES Senior Notes. The 2044 Notes issued in March 2014 were offered at a price to the public of 98.443% of the face amount. Including the effects of the issuance and underwriting discounts, the effective interest rate of the 2044 Notes is 5.633%. Interest is paid semi-annually on April 1 and October 1 of each year. Proceeds (net of underwriting discount of $3.5 million, original issue discount and debt issuance costs) were used to repay amounts then outstanding under the WES RCF and for general partnership purposes.

The 2018 Notes issued in March 2014 were offered at a price to the public of 100.857% of the face amount. Including the effects of the issuance premium for the March 2014 offering, the issuance discount for the August 2013 offering of 2018 Notes and underwriting discounts, the effective interest rate of the 2018 Notes is 2.743%. Interest is paid semi-annually on February 15 and August 15 of each year. Proceeds (net of underwriting discount of $0.6 million, original issue premium and debt issuance costs) were used to repay amounts then outstanding under the WES RCF and for general partnership purposes.

At December 31, 2014, WES was in compliance with all covenants under the indentures governing the 2021 Notes, 2022 Notes, 2018 Notes and 2044 Notes.

Interest rate agreements. In May 2012, WES entered into U.S. Treasury Rate lock agreements to mitigate the risk of rising interest rates prior to the issuance of the 2022 Notes. WES settled the rate lock agreements simultaneously with the June 2012 offering of the 2022 Notes, realizing a loss of $1.7 million, which is included in other income (expense), net in the consolidated statements of income.

WES note payable to Anadarko. In 2008, WES entered into a five-year $175.0 million term loan agreement with Anadarko. The interest rate was fixed at 2.82% prior to June 2012 when the WES note payable to Anadarko was repaid in full with proceeds from the June 2012 offering of the 2022 Notes.

WES revolving credit facility. In February 2014, WES entered into its amended and restated $1.2 billion senior unsecured WES RCF, which is expandable to a maximum of $1.5 billion, replacing WES’s $800.0 million credit facility, which was originally entered into in March 2011. Subsequent to February 2014, WES borrowed $350.0 million under the WES RCF to fund the acquisition of the TEFR Interests (see Note 2). The WES RCF matures in February 2019 and bears interest at London Interbank Offered Rate (“LIBOR”), plus applicable margins ranging from 0.975% to 1.45%, or an alternate base

rate equal to the greatest of (a) the Prime Rate, (b) the Federal Funds Effective Rate plus 0.5%, or (c) LIBOR plus 1%, in each case plus applicable margins currently ranging from zero to 0.45%, based upon WES’s senior unsecured debt rating. The interest rate on the WES RCF was 1.47% at December 31, 2014. At December 31, 2013, the interest rate on the previous credit facility was 1.67%. WES is required to pay a quarterly facility fee currently ranging from 0.15% to 0.30% of the commitment amount (whether used or unused), based upon its senior unsecured debt rating. The facility fee rate was 0.20% and 0.25% at December 31, 2014 and 2013, respectively.

As of December 31, 2014, WES had $510.0 million of outstanding borrowings, $12.8 million in outstanding letters of credit and $677.2 million available for borrowing under the WES RCF. At December 31, 2014, WES was in compliance with all covenants under the WES RCF.

The 2021 Notes, 2022 Notes, 2018 Notes, 2044 Notes and obligations under the WES RCF are recourse to WES GP. WES GP is indemnified by a wholly owned subsidiary of Anadarko, WGRI, against any claims made against WES GP under the 2022 Notes, 2021 Notes, and/or the WES RCF.

In connection with the acquisitions of the Non-Operated Marcellus Interest, the Anadarko-Operated Marcellus Interest and the TEFR Interests, WES GP and other wholly owned subsidiaries of Anadarko entered into indemnification agreements, whereby such subsidiaries agreed to indemnify WES GP for any recourse liability it may have for WES RCF borrowings, or other debt financing, attributable to the acquisitions of the Non-Operated Marcellus Interest, the Anadarko-Operated Marcellus Interest and the TEFR Interests. These indemnification agreements apply to the 2044 Notes, 2018 Notes and/or WES RCF borrowings outstanding related to the aforementioned acquisitions.

13. DEBT AND INTEREST EXPENSE (CONTINUED)

WES GP, the other indemnifying subsidiaries of Anadarko and WGRI also amended and restated the indemnity agreements between them to (i) conform language among all the indemnification agreements and (ii) reduce the amount for which WGRI would indemnify WES GP by an amount equal to any amounts payable to WES GP under the indemnification agreements related to the acquisitions of the Non-Operated Marcellus Interest, the Anadarko-Operated Marcellus Interest and the TEFR Interests.

WGP working capital facility. On November 1, 2012, WGP entered into a $30.0 million working capital facility (the “WGP WCF”) with Anadarko as the lender. The facility is available exclusively to fund WGP’s working capital borrowings. Borrowings under the facility will mature on November 1, 2017, and bear interest at LIBOR plus 1.50%. The interest rate was 1.67% for each of the years ended December 31, 2014 and 2013.

WGP is required to reduce all borrowings under the WGP WCF to zero for a period of at least 15 consecutive days during the twelve month period commencing on November 1 of each year. As of December 31, 2014, WGP had $1.2 million in outstanding borrowings under the WGP WCF and $28.9 million available for borrowing. At December 31, 2014, WGP was in compliance with all covenants under the WGP WCF.

Interest expense. The following table summarizes the amounts included in interest expense:



	Year Ended December 31,
thousands	2014			2013			2012
Third parties
Interest expense on long-term debt	$	81,495		$	59,293		$	41,171
Amortization of debt issuance costs and commitment fees	5,103			4,449			4,319
Capitalized interest	(9,832		)	(11,945		)	(6,196		)
Total interest expense – third parties	76,766			51,797			39,294
Affiliates
Interest expense on WES note payable to Anadarko ⁽¹⁾	—			—			2,440
Interest expense on affiliate balances ⁽²⁾	—			—			326
Interest expense on WGP working capital facility	3			—			—
Total interest expense – affiliates	3			—			2,766
Interest expense	$	76,769		$	51,797		$	42,060


⁽¹⁾	In June 2012, the note payable to Anadarko was repaid in full. See Note payable to Anadarko within this Note 13.


⁽²⁾	Imputed interest expense on the reimbursement payable to Anadarko for certain expenditures Anadarko incurred in 2011 related to the construction of the Brasada complex and Lancaster plant. In the fourth quarter of 2012, WES repaid the reimbursement payable to Anadarko associated with the construction of the Brasada complex and Lancaster plant.