NGL NGL Energy Partners LP

NGL Energy Partners LP (NYSE:NGL) (“NGL,” “we,” “us,” “our,” or the “Partnership”) today reported its second quarter Fiscal 2025 financial results. Highlights include:

• Net income for the second quarter of Fiscal 2025 of $3.4 million, compared to net income of $28.3 million for the second quarter of Fiscal 2024
• Adjusted EBITDA(1) for the second quarter of Fiscal 2025 of $147.3 million, compared to $176.2 million for the second quarter of Fiscal 2024
• On August 5, 2024, we amended the Term Loan B agreement to reduce the SOFR margin from 4.50% to 3.75%.

Highlights for the period subsequent to September 30, 2024:

• On November 1, 2024, we commenced operations on our expanded Lea County Express Pipeline system (LEX II).
• On November 11, 2024, we entered into an agreement to purchase 23,375,000 of our outstanding warrants for approximately $6.9 million. This transaction is expected to close on November 22, 2024.

“We continue to grow our disposed water volumes with the current quarter volumes increasing by approximately 9% over the preceding quarter. As indicated previously, our capital expenditures for the year were front loaded with LEX II so the back half of the fiscal year will generate a majority of our free cash flow. We are on track for the first six months of the fiscal year but are lowering our full year consolidated Adjusted EBITDA(2) guidance to a range of $640 to $650 million, as a result of projected warmer weather, lower crude oil prices and other Liquids Logistics results,” stated Mike Krimbill. “We are seeing continued demand for new water disposal capacity, and our conversations with producers to contract additional volumes on Grand Mesa are going well. We continue to work on additional non-core asset sales,” he added.

Quarterly Results of Operations

The following table summarizes the unaudited operating income (loss) and Adjusted EBITDA(1) by reportable segment for the periods indicated:

 

 

Quarter Ended

 

 

September 30, 2024

 

September 30, 2023

 

 

Operating Income (Loss)

 

Adjusted EBITDA(1)

 

Operating Income (Loss)

 

Adjusted EBITDA(1)

 

 

(in thousands)

Water Solutions

 

$

72,829

 

 

$

128,862

 

 

$

59,118

 

 

$

140,389

 

Crude Oil Logistics

 

 

14,840

 

 

 

17,263

 

 

 

14,778

 

 

 

30,713

 

Liquids Logistics

 

 

(1,133

)

 

 

9,235

 

 

 

23,577

 

 

 

17,086

 

Corporate and Other

 

 

(8,807

)

 

 

(8,090

)

 

 

(11,443

)

 

 

(11,974

)

Total

 

$

77,729

 

 

$

147,270

 

 

$

86,030

 

 

$

176,214

 

________________

(1) See the “Non-GAAP Financial Measures” section of this release for the definition of Adjusted EBITDA (as used herein) and a discussion of this non-GAAP financial measure.

(2) Certain of the forward-looking financial measures are provided on a non-GAAP basis. A reconciliation of forward-looking financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP is potentially misleading and not practical given the difficulty of projecting event driven transactional and other non-core operating items in any future period. The magnitude of these items, however, may be significant.

Water Solutions

Operating income for the Water Solutions segment increased by $13.7 million for the quarter ended September 30, 2024, compared to the quarter ended September 30, 2023. The increase was due primarily to lower losses on the disposal or impairment of assets of $2.0 million in the current period compared to $23.6 million in the prior year period. Also contributing to the increase was an increase in net gains from derivatives. These increases were partially offset by lower disposal revenues due to the timing and recognition of payments made by certain producers for committed volumes not delivered and the prior year period including the acceleration of revenue from the termination of a water disposal contract with a minimum volume commitment. Excluding these items, disposal revenues increased due to an increase in produced water volumes processed on our system. The Partnership processed approximately 2.68 million barrels of produced water per day during the quarter ended September 30, 2024, a 9.8% increase when compared to approximately 2.44 million barrels of water per day processed during the quarter ended September 30, 2023.

Revenues from recovered skim oil, including the impact from realized skim oil hedges, totaled $27.4 million for the quarter ended September 30, 2024, a decrease of $3.7 million from the prior year period. The decrease was due primarily to a decrease in skim oil barrels sold as a result of lower skim oil recovered as certain producers recycled their water for use in their operations, lower realized crude oil prices received from the sale of skim oil barrels and the sale during the prior year quarter of approximately 53,000 barrels of skim oil that were stored at June 30, 2023 due to tighter pipeline specifications.

Operating expenses in the Water Solutions segment decreased $0.3 million for the quarter ended September 30, 2024, compared to the quarter ended September 30, 2023 due primarily to lower chemical expense due to purchasing fewer chemicals and using chemicals more efficiently, as well as lower repairs and maintenance expense due to the timing of repairs and tank cleaning. These decreases were partially offset by higher business insurance expense for remediation costs incurred, higher utilities expense due to increased produced water volumes processed and lower severance taxes in the prior year quarter as a result of a severance tax refund received in September 2023 that related to prior periods. Operating expense per produced barrel processed was $0.22 for the quarter ended September 30, 2024, compared to $0.24 in the comparative quarter last year.

Crude Oil Logistics

Operating income for the Crude Oil Logistics segment increased by $0.1 million for the quarter ended September 30, 2024, compared to the quarter ended September 30, 2023. The increase was due to net gains on derivative contracts of $4.4 million in the current period compared to net losses of $15.4 million in the prior year period. This was offset by lower margins due to reduced sales volumes as a result of lower production on acreage dedicated to us in the DJ Basin. In addition, margin per barrel decreased due to the selling higher priced inventory into a market in which prices were declining. During the quarter ended September 30, 2024, physical volumes on the Grand Mesa Pipeline averaged approximately 63,000 barrels per day, compared to approximately 70,000 barrels per day for the quarter ended September 30, 2023.

Liquids Logistics

Operating income for the Liquids Logistics segment decreased by $24.7 million for the quarter ended September 30, 2024, compared to the quarter ended September 30, 2023, primarily due to lower margins. Butane margins declined primarily due to an increase in derivative losses and the prior year period benefiting from a lower of cost or realizable value adjustment. Margins for propane declined due to lower contracted volumes due to reduced retail customer demand as a result of warmer weather, which was offset by an increase in derivative gains. Margins for refined products declined due to lower customer demand and aggressive pricing by some competitors in certain markets. Margins for other products declined primarily due to selling higher priced biodiesel inventory into a market in which prices were declining and lower derivative gains. In addition, a net gain of $6.9 million related to the sale of two propane terminals was realized in the prior year period.

Corporate and Other

The operating loss for Corporate and Other was lower by $2.6 million for the quarter ended September 30, 2024, compared to the quarter ended September 30, 2023. General and administrative expenses decreased due to lower legal expenses as several large cases ended and the reimbursement of legal expenses relating to a dispute associated with commercial activities in prior periods and a decrease in business insurance. The results for the prior period included gains from derivatives of $3.4 million as we had entered into economic hedges to protect our liquidity positions and leverage from a significant increase in commodity prices.

Capitalization and Liquidity

Total liquidity (cash plus available capacity on our asset-based revolving credit facility (“ABL Facility”)) was approximately $251.1 million as of September 30, 2024. Borrowings on the Partnership’s ABL Facility totaled approximately $274.0 million as of September 30, 2024, as we funded certain capital projects and began to build inventory for the blending and heating seasons.

The Partnership is in compliance with all of its debt covenants and has no upcoming debt maturities.

Second Quarter Conference Call Information

A conference call to discuss NGL’s results of operations is scheduled for 4:00 pm Central Time on Tuesday, November 12, 2024. Analysts, investors, and other interested parties may join the webcast via the event link: https://www.webcaster4.com/Webcast/Page/2808/51470 or by dialing (877) 545-0523 and providing conference code: 395492. An archived audio replay of the call will be available for 14 days, which can be accessed by dialing (877) 481-4010 and providing replay passcode 51470.

Non-GAAP Financial Measures

We define EBITDA as net income (loss) attributable to NGL Energy Partners LP, plus interest expense, income tax expense (benefit), and depreciation and amortization expense. We define Adjusted EBITDA as EBITDA excluding net unrealized gains and losses on derivatives, lower of cost or net realizable value adjustments, gains and losses on disposal or impairment of assets, gains and losses on early extinguishment of liabilities, equity-based compensation expense, revaluation of liabilities and other. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income, income before income taxes, cash flows from operating activities, or any other measure of financial performance calculated in accordance with GAAP, as those items are used to measure operating performance, liquidity or the ability to service debt obligations. We believe that EBITDA provides additional information to investors for evaluating our ability to make quarterly distributions to our unitholders and is presented solely as a supplemental measure. We believe that Adjusted EBITDA provides additional information to investors for evaluating our financial performance without regard to our financing methods, capital structure and historical cost basis. Further, EBITDA and Adjusted EBITDA, as we define them, may not be comparable to EBITDA, Adjusted EBITDA, or similarly titled measures used by other entities.

For purposes of our Adjusted EBITDA calculation, we make a distinction between realized and unrealized gains and losses on derivatives. During the period when a derivative contract is open, we record changes in the fair value of the derivative as an unrealized gain or loss. When a derivative contract matures or is settled, we reverse the previously recorded unrealized gain or loss and record a realized gain or loss. In our Crude Oil Logistics segment, we purchase certain crude oil barrels using the West Texas Intermediate (“WTI”) calendar month average (“CMA”) price and sell the crude oil barrels using the WTI CMA price plus the Argus CMA Differential Roll Component (“CMA Differential Roll”) per our contracts. To eliminate the volatility of the CMA Differential Roll, we entered into derivative instrument positions in January 2021 to secure a margin of approximately $0.20 per barrel on 1.5 million barrels per month from May 2021 through December 2023. Due to the nature of these positions, the cash flow and earnings recognized on a GAAP basis differed from period to period depending on the current crude oil price and future estimated crude oil price which were valued utilizing third-party market quoted prices. We recognized in Adjusted EBITDA the gains and losses from the derivative instrument positions entered into in January 2021 to properly align with the physical margin we hedged each month through the term of this transaction. This representation aligns with management’s evaluation of the transaction. The derivative instrument positions we entered into related to the CMA Differential Roll expired as of December 31, 2023, and we have not entered into any new derivative instrument positions related to the CMA Differential Roll.

As previously reported, for purposes of our Adjusted EBITDA calculation, we did not draw a distinction between realized and unrealized gains and losses on derivatives of certain businesses within our Liquids Logistics segment. The primary hedging strategy of these businesses is to hedge against the risk of declines in the value of inventory over the course of the contract cycle, and many of the hedges cover extended periods of time. The “inventory valuation adjustment” row in the reconciliation table reflects the difference between the market value of the inventory of these businesses at the balance sheet date and its cost. We include this in Adjusted EBITDA because the unrealized gains and losses for derivative contracts associated with the inventory of this segment, which are intended primarily to hedge inventory holding risk and are included in net income, also affect Adjusted EBITDA. Beginning April 1, 2024, and going forward, we will now be drawing a distinction between realized and unrealized gains and losses on derivatives and will no longer include the activity on the “inventory valuation adjustment” row in the reconciliation table for these certain businesses within our Liquids Logistics segment. This change aligns with how management now views and evaluates the transactions within these businesses and is also consistent with the calculation of Adjusted EBITDA used in our other businesses. If this change was made as of April 1, 2023, Adjusted EBITDA for the three months and six months ended September 30, 2023 would have been $175.8 million and $311.8 million, respectively.

Distributable Cash Flow is defined as Adjusted EBITDA minus maintenance capital expenditures, income tax expense, cash interest expense, preferred unit distributions paid and other. Maintenance capital expenditures represent capital expenditures necessary to maintain the Partnership’s operating capacity. For the CMA Differential Roll transaction, as discussed above, we have included an adjustment to Distributable Cash Flow to reflect, in the period for which they relate, the actual cash flows for the positions that settled that are not being recognized in Adjusted EBITDA. Distributable Cash Flow is a performance metric used by senior management to compare cash flows generated by the Partnership (excluding growth capital expenditures and prior to the establishment of any retained cash reserves by the board of directors of our general partner) to the cash distributions expected to be paid to unitholders. Using this metric, management can quickly compute the coverage ratio of estimated cash flows to planned cash distributions. This financial measure also is important to investors as an indicator of whether the Partnership is generating cash flow at a level that can sustain, or support an increase in, quarterly distribution rates. Actual distribution amounts are set by the board of directors of our general partner.

We do not provide a reconciliation for non-GAAP estimates on a forward-looking basis where we are unable to provide a meaningful calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing or amount of various items that would impact the most directly comparable forward-looking U.S. GAAP financial measure that have not yet occurred, are out of the Partnership’s control and/or cannot be reasonably predicted. Forward-looking non-GAAP financial measures provided without the most directly comparable U.S. GAAP financial measures may vary materially from the corresponding U.S. GAAP financial measures.

Forward-Looking Statements

This press release includes “forward-looking statements.” All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Actual results could vary significantly from those expressed or implied in such statements and are subject to a number of risks and uncertainties. While NGL believes such forward-looking statements are reasonable, NGL cannot assure they will prove to be correct. The forward-looking statements involve risks and uncertainties that affect operations, financial performance, and other factors as discussed in filings with the Securities and Exchange Commission. Other factors that could impact any forward-looking statements are those risks described in NGL’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other public filings. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, specifically those under the heading “Risk Factors.” NGL undertakes no obligation to publicly update or revise any forward-looking statements except as required by law.

NGL provides Adjusted EBITDA guidance that does not include certain charges and costs, which in future periods are generally expected to be similar to the kinds of charges and costs excluded from Adjusted EBITDA in prior periods, such as income taxes, interest and other non-operating items, depreciation and amortization, net unrealized gains and losses on derivatives, lower of cost or net realizable value adjustments, gains and losses on disposal or impairment of assets, gains and losses on early extinguishment of liabilities, equity-based compensation expense, acquisition expense, revaluation of liabilities and items that are unusual in nature or infrequently occurring. The exclusion of these charges and costs in future periods will have a significant impact on the Partnership’s Adjusted EBITDA, and the Partnership is not able to provide a reconciliation of its Adjusted EBITDA guidance to net income (loss) without unreasonable efforts due to the uncertainty and variability of the nature and amount of these future charges and costs and the Partnership believes that such reconciliation, if possible, would imply a degree of precision that would be potentially confusing or misleading to investors.

About NGL Energy Partners LP

NGL Energy Partners LP, a Delaware master limited partnership, is a diversified midstream energy partnership that transports, treats, recycles and disposes of produced and flowback water generated as part of the energy production process as well as transports, stores, markets and provides other logistics services for crude oil and liquid hydrocarbons.

For further information, visit the Partnership’s website at www.nglenergypartners.com.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

(in Thousands, except unit amounts)

 

 

September 30, 2024

 

March 31, 2024

ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

4,495

 

 

$

38,909

 

Accounts receivable-trade, net of allowance for expected credit losses of $2,932 and $1,671, respectively

 

727,520

 

 

 

814,087

 

Accounts receivable-affiliates

 

1,569

 

 

 

1,501

 

Inventories

 

193,886

 

 

 

130,907

 

Prepaid expenses and other current assets

 

75,990

 

 

 

126,933

 

Assets held for sale

 

—

 

 

 

66,597

 

Total current assets

 

1,003,460

 

 

 

1,178,934

 

PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $1,098,141 and $1,011,274, respectively

 

2,165,779

 

 

 

2,096,702

 

GOODWILL

 

634,282

 

 

 

634,282

 

INTANGIBLE ASSETS, net of accumulated amortization of $343,925 and $332,560, respectively

 

915,869

 

 

 

939,978

 

INVESTMENTS IN UNCONSOLIDATED ENTITIES

 

20,137

 

 

 

20,305

 

OPERATING LEASE RIGHT-OF-USE ASSETS

 

97,756

 

 

 

97,155

 

OTHER NONCURRENT ASSETS

 

52,896

 

 

 

52,738

 

Total assets

$

4,890,179

 

 

$

5,020,094

 

LIABILITIES AND EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Accounts payable-trade

$

594,547

 

 

$

707,536

 

Accounts payable-affiliates

 

72

 

 

 

37

 

Accrued expenses and other payables

 

173,683

 

 

 

213,757

 

Advance payments received from customers

 

25,158

 

 

 

17,313

 

Current maturities of long-term debt

 

7,865

 

 

 

7,000

 

Operating lease obligations

 

27,660

 

 

 

31,090

 

Liabilities held for sale

 

—

 

 

 

614

 

Total current liabilities

 

828,985

 

 

 

977,347

 

LONG-TERM DEBT, net of debt issuance costs of $46,997 and $49,178, respectively, and current maturities

 

3,121,794

 

 

 

2,843,822

 

OPERATING LEASE OBLIGATIONS

 

74,118

 

 

 

70,573

 

OTHER NONCURRENT LIABILITIES

 

128,671

 

 

 

129,185

 

 

 

 

 

CLASS D 9.00% PREFERRED UNITS, 600,000 and 600,000 preferred units issued and outstanding, respectively

 

551,097

 

 

 

551,097

 

REDEEMABLE NONCONTROLLING INTEREST

 

179

 

 

 

—

 

 

 

 

 

EQUITY:

 

 

 

General partner, representing a 0.1% interest, 132,145 and 132,645 notional units, respectively

 

(52,881

)

 

 

(52,834

)

Limited partners, representing a 99.9% interest, 132,012,766 and 132,512,766 common units issued and outstanding, respectively

 

(131,712

)

 

 

134,807

 

Class B preferred limited partners, 12,585,642 and 12,585,642 preferred units issued and outstanding, respectively

 

305,468

 

 

 

305,468

 

Class C preferred limited partners, 1,800,000 and 1,800,000 preferred units issued and outstanding, respectively

 

42,891

 

 

 

42,891

 

Accumulated other comprehensive loss

 

(99

)

 

 

(499

)

Noncontrolling interests

 

21,668

 

 

 

18,237

 

Total equity

 

185,335

 

 

 

448,070

 

Total liabilities and equity

$

4,890,179

 

 

$

5,020,094

 

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

(in Thousands, except unit and per unit amounts)

 

 

 

Three Months Ended September 30,

 

Six Months Ended September 30,

 

 

2024

 

2023

 

2024

 

2023

REVENUES:

 

 

 

 

 

 

 

 

Water Solutions

 

$

181,867

 

 

$

197,244

 

 

$

363,277

 

 

$

378,546

 

Crude Oil Logistics

 

 

243,757

 

 

 

489,713

 

 

 

523,860

 

 

 

954,103

 

Liquids Logistics

 

 

926,977

 

 

 

1,154,139

 

 

 

1,852,723

 

 

 

2,124,551

 

Corporate and Other

 

 

74

 

 

 

—

 

 

 

74

 

 

 

—

 

Total Revenues

 

 

1,352,675

 

 

 

1,841,096

 

 

 

2,739,934

 

 

 

3,457,200

 

COST OF SALES:

 

 

 

 

 

 

 

 

Water Solutions

 

 

(567

)

 

 

7,424

 

 

 

433

 

 

 

9,993

 

Crude Oil Logistics

 

 

212,148

 

 

 

454,927

 

 

 

461,645

 

 

 

880,226

 

Liquids Logistics

 

 

909,614

 

 

 

1,119,478

 

 

 

1,832,325

 

 

 

2,066,725

 

Corporate and Other

 

 

—

 

 

 

(3,381

)

 

 

—

 

 

 

833

 

Total Cost of Sales

 

 

1,121,195

 

 

 

1,578,448

 

 

 

2,294,403

 

 

 

2,957,777

 

OPERATING COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

Operating

 

 

78,132

 

 

 

77,389

 

 

 

150,665

 

 

 

154,070

 

General and administrative

 

 

12,179

 

 

 

17,496

 

 

 

27,193

 

 

 

37,787

 

Depreciation and amortization

 

 

61,931

 

 

 

65,526

 

 

 

124,150

 

 

 

134,505

 

Loss (gain) on disposal or impairment of assets, net

 

 

1,509

 

 

 

16,207

 

 

 

(9,157

)

 

 

15,011

 

Operating Income

 

 

77,729

 

 

 

86,030

 

 

 

152,680

 

 

 

158,050

 

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated entities

 

 

1,522

 

 

 

851

 

 

 

1,822

 

 

 

942

 

Interest expense

 

 

(77,404

)

 

 

(58,627

)

 

 

(147,143

)

 

 

(118,149

)

Gain on early extinguishment of liabilities, net

 

 

—

 

 

 

63

 

 

 

—

 

 

 

6,871

 

Other income, net

 

 

1,822

 

 

 

310

 

 

 

1,989

 

 

 

616

 

Income Before Income Taxes

 

 

3,669

 

 

 

28,627

 

 

 

9,348

 

 

 

48,330

 

INCOME TAX (EXPENSE) BENEFIT

 

 

(278

)

 

 

(342

)

 

 

4,518

 

 

 

(482

)

Net Income

 

 

3,391

 

 

 

28,285

 

 

 

13,866

 

 

 

47,848

 

LESS: NET INCOME ATTRIBUTABLE TO NONREDEEMABLE NONCONTROLLING INTERESTS

 

 

(932

)

 

 

(257

)

 

 

(1,724

)

 

 

(519

)

LESS: NET INCOME ATTRIBUTABLE TO REDEEMABLE NONCONTROLLING INTERESTS

 

 

(5

)

 

 

—

 

 

 

(5

)

 

 

—

 

NET INCOME ATTRIBUTABLE TO NGL ENERGY PARTNERS LP

 

$

2,454

 

 

$

28,028

 

 

$

12,137

 

 

$

47,329

 

NET LOSS ALLOCATED TO COMMON UNITHOLDERS

 

$

(28,270

)

 

$

(6,709

)

 

$

(47,382

)

 

$

(21,191

)

BASIC AND DILUTED LOSS PER COMMON UNIT

 

$

(0.21

)

 

$

(0.05

)

 

$

(0.36

)

 

$

(0.16

)

BASIC AND DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING

 

 

132,274,669

 

 

 

131,927,343

 

 

 

132,393,067

 

 

 

131,927,343

 

EBITDA, ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW RECONCILIATION

(Unaudited)

 

The following table reconciles NGL’s net income to NGL’s EBITDA, Adjusted EBITDA and Distributable Cash Flow for the periods indicated:

 

 

 

Three Months Ended September 30,

 

Six Months Ended September 30,

 

 

2024

 

2023

 

2024

 

2023

 

 

(in thousands)

Net income

 

$

3,391

 

 

$

28,285

 

 

$

13,866

 

 

$

47,848

 

Less: Net income attributable to nonredeemable noncontrolling interests

 

 

(932

)

 

 

(257

)

 

 

(1,724

)

 

 

(519

)

Less: Net income attributable to redeemable noncontrolling interests

 

 

(5

)

 

 

—

 

 

 

(5

)

 

 

—

 

Net income attributable to NGL Energy Partners LP

 

 

2,454

 

 

 

28,028

 

 

 

12,137

 

 

 

47,329

 

Interest expense

 

 

77,391

 

 

 

58,642

 

 

 

147,129

 

 

 

118,178

 

Income tax expense (benefit)

 

 

278

 

 

 

342

 

 

 

(4,518

)

 

 

482

 

Depreciation and amortization

 

 

61,546

 

 

 

65,502

 

 

 

123,395

 

 

 

134,423

 

EBITDA

 

 

141,669

 

 

 

152,514

 

 

 

278,143

 

 

 

300,412

 

Net unrealized losses on derivatives

 

 

5,632

 

 

 

9,691

 

 

 

23,588

 

 

 

9,059

 

Lower of cost or net realizable value adjustments

 

 

(901

)

 

 

1,080

 

 

 

(1,231

)

 

 

3,844

 

Loss (gain) on disposal or impairment of assets, net

 

 

1,515

 

 

 

16,207

 

 

 

(9,151

)

 

 

15,011

 

CMA Differential Roll net losses (gains) (1)

 

 

—

 

 

 

2,233

 

 

 

—

 

 

 

(6,904

)

Inventory valuation adjustment (2)

 

 

—

 

 

 

(6,436

)

 

 

—

 

 

 

(6,100

)

Gain on early extinguishment of liabilities, net

 

 

—

 

 

 

(63

)

 

 

—

 

 

 

(6,871

)

Equity-based compensation expense

 

 

—

 

 

 

410

 

 

 

—

 

 

 

884

 

Other (3)

 

 

(645

)

 

 

578

 

 

 

263

 

 

 

1,534

 

Adjusted EBITDA

 

$

147,270

 

 

$

176,214

 

 

$

291,612

 

 

$

310,869

 

Less: Cash interest expense (4)

 

 

68,491

 

 

 

54,483

 

 

 

135,709

 

 

 

109,894

 

Less: Income tax expense (benefit)

 

 

278

 

 

 

342

 

 

 

(4,518

)

 

 

482

 

Less: Maintenance capital expenditures

 

 

16,572

 

 

 

16,358

 

 

 

39,376

 

 

 

32,885

 

Less: CMA Differential Roll (5)

 

 

—

 

 

 

(7,352

)

 

 

—

 

 

 

(18,047

)

Less: Preferred unit distributions paid

 

 

27,513

 

 

 

—

 

 

 

245,604

 

 

 

—

 

Less: Other (6)

 

 

—

 

 

 

4

 

 

 

65

 

 

 

222

 

Distributable Cash Flow

 

$

34,416

 

 

$

112,379

 

 

$

(124,624

)

 

$

185,433

 

_______________

(1)

Adjustment to align, within Adjusted EBITDA, the net gains and losses of the Partnership’s CMA Differential Roll derivative instruments positions with the physical margin being hedged. See “Non-GAAP Financial Measures” section above for a further discussion.

(2)

Amount represents the difference between the market value of the inventory at the balance sheet date and its cost. See “Non-GAAP Financial Measures” section above for a further discussion.

(3)

Amounts represent accretion expense for asset retirement obligations and expenses incurred related to legal and advisory costs associated with acquisitions and dispositions. Also, amounts for the three months and six months ended September 30, 2023 included unrealized gains/losses on marketable securities.

(4)

Amounts represent interest expense payable in cash, excluding changes in the accrued interest balance.

(5)

Amounts represent the cash portion of the adjustments of the Partnership’s CMA Differential Roll derivative instrument positions, as discussed above, that settled during the period.

(6)

Amounts represent cash paid to settle asset retirement obligations.

ADJUSTED EBITDA RECONCILIATION BY SEGMENT

(unaudited)

 

 

Three Months Ended September 30, 2024

 

Water Solutions

 

Crude Oil Logistics

 

Liquids Logistics

 

Corporate and Other

 

Consolidated

 

(in thousands)

Operating income (loss)

$

72,829

 

 

$

14,840

 

 

$

(1,133

)

 

$

(8,807

)

 

$

77,729

 

Depreciation and amortization

 

52,523

 

 

 

6,285

 

 

 

2,421

 

 

 

702

 

 

 

61,931

 

Amortization recorded to cost of sales

 

—

 

 

 

—

 

 

 

102

 

 

 

—

 

 

 

102

 

Net unrealized losses (gains) on derivatives

 

388

 

 

 

(4,012

)

 

 

9,256

 

 

 

—

 

 

 

5,632

 

Lower of cost or net realizable value adjustments

 

—

 

 

 

540

 

 

 

(1,441

)

 

 

—

 

 

 

(901

)

Loss (gain) on disposal or impairment of assets, net

 

1,951

 

 

 

(442

)

 

 

—

 

 

 

—

 

 

 

1,509

 

Other income (expense), net

 

1,805

 

 

 

(1

)

 

 

(12

)

 

 

30

 

 

 

1,822

 

Adjusted EBITDA attributable to unconsolidated entities

 

1,649

 

 

 

—

 

 

 

(19

)

 

 

—

 

 

 

1,630

 

Adjusted EBITDA attributable to noncontrolling interest

 

(1,522

)

 

 

—

 

 

 

—

 

 

 

(34

)

 

 

(1,556

)

Other

 

(761

)

 

 

53

 

 

 

61

 

 

 

19

 

 

 

(628

)

Adjusted EBITDA

$

128,862

 

 

$

17,263

 

 

$

9,235

 

 

$

(8,090

)

 

$

147,270

 

 

Three Months Ended September 30, 2023

 

Water Solutions

 

Crude Oil Logistics

 

Liquids Logistics

 

Corporate and Other

 

Consolidated

 

(in thousands)

Operating income (loss)

$

59,118

 

 

$

14,778

 

 

$

23,577

 

 

$

(11,443

)

 

$

86,030

 

Depreciation and amortization

 

52,053

 

 

 

9,573

 

 

 

2,383

 

 

 

1,517

 

 

 

65,526

 

Amortization recorded to cost of sales

 

—

 

 

 

—

 

 

 

65

 

 

 

—

 

 

 

65

 

Net unrealized losses (gains) on derivatives

 

4,471

 

 

 

4,554

 

 

 

3,230

 

 

 

(2,564

)

 

 

9,691

 

CMA Differential Roll net losses (gains)

 

—

 

 

 

2,233

 

 

 

—

 

 

 

—

 

 

 

2,233

 

Inventory valuation adjustment

 

—

 

 

 

—

 

 

 

(6,436

)

 

 

—

 

 

 

(6,436

)

Lower of cost or net realizable value adjustments

 

—

 

 

 

—

 

 

 

1,080

 

 

 

—

 

 

 

1,080

 

Loss (gain) on disposal or impairment of assets, net

 

23,599

 

 

 

(467

)

 

 

(6,925

)

 

 

—

 

 

 

16,207

 

Equity-based compensation expense

 

—

 

 

 

—

 

 

 

—

 

 

 

410

 

 

 

410

 

Other income (expense), net

 

248

 

 

 

(1

)

 

 

14

 

 

 

49

 

 

 

310

 

Adjusted EBITDA attributable to unconsolidated entities

 

1,032

 

 

 

—

 

 

 

(21

)

 

 

51

 

 

 

1,062

 

Adjusted EBITDA attributable to noncontrolling interest

 

(542

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(542

)

Other

 

410

 

 

 

43

 

 

 

119

 

 

 

6

 

 

 

578

 

Adjusted EBITDA

$

140,389

 

 

$

30,713

 

 

$

17,086

 

 

$

(11,974

)

 

$

176,214

 

 

Six Months Ended September 30, 2024

 

Water Solutions

 

Crude Oil Logistics

 

Liquids Logistics

 

Corporate and Other

 

Consolidated

 

(in thousands)

Operating income (loss)

$

157,187

 

 

$

28,929

 

 

$

(12,683

)

 

$

(20,753

)

 

$

152,680

 

Depreciation and amortization

 

105,235

 

 

 

12,726

 

 

 

4,832

 

 

 

1,357

 

 

 

124,150

 

Amortization recorded to cost of sales

 

—

 

 

 

—

 

 

 

167

 

 

 

—

 

 

 

167

 

Net unrealized (gains) losses on derivatives

 

(473

)

 

 

(5,992

)

 

 

30,053

 

 

 

—

 

 

 

23,588

 

Lower of cost or net realizable value adjustments

 

—

 

 

 

540

 

 

 

(1,771

)

 

 

—

 

 

 

(1,231

)

Gain on disposal or impairment of assets, net

 

(8,745

)

 

 

(412

)

 

 

—

 

 

 

—

 

 

 

(9,157

)

Other income, net

 

1,911

 

 

 

1

 

 

 

10

 

 

 

67

 

 

 

1,989

 

Adjusted EBITDA attributable to unconsolidated entities

 

2,036

 

 

 

—

 

 

 

(35

)

 

 

—

 

 

 

2,001

 

Adjusted EBITDA attributable to noncontrolling interest

 

(2,836

)

 

 

—

 

 

 

—

 

 

 

(34

)

 

 

(2,870

)

Other

 

150

 

 

 

106

 

 

 

120

 

 

 

(81

)

 

 

295

 

Adjusted EBITDA

$

254,465

 

 

$

35,898

 

 

$

20,693

 

 

$

(19,444

)

 

$

291,612

 

 

Six Months Ended September 30, 2023

 

Water Solutions

 

Crude Oil Logistics

 

Liquids Logistics

 

Corporate and Other

 

Consolidated

 

(in thousands)

Operating income (loss)

$

128,449

 

 

$

31,785

 

 

$

31,408

 

 

$

(33,592

)

 

$

158,050

 

Depreciation and amortization

 

106,476

 

 

 

19,319

 

 

 

5,597

 

 

 

3,113

 

 

 

134,505

 

Amortization recorded to cost of sales

 

—

 

 

 

—

 

 

 

130

 

 

 

—

 

 

 

130

 

Net unrealized losses (gains) on derivatives

 

4,471

 

 

 

9,689

 

 

 

(5,489

)

 

 

388

 

 

 

9,059

 

CMA Differential Roll net losses (gains)

 

—

 

 

 

(6,904

)

 

 

—

 

 

 

—

 

 

 

(6,904

)

Inventory valuation adjustment

 

—

 

 

 

—

 

 

 

(6,100

)

 

 

—

 

 

 

(6,100

)

Lower of cost or net realizable value adjustments

 

—

 

 

 

—

 

 

 

3,844

 

 

 

—

 

 

 

3,844

 

Loss (gain) on disposal or impairment of assets, net

 

22,318

 

 

 

429

 

 

 

(7,736

)

 

 

—

 

 

 

15,011

 

Equity-based compensation expense

 

—

 

 

 

—

 

 

 

—

 

 

 

884

 

 

 

884

 

Other income, net

 

428

 

 

 

105

 

 

 

15

 

 

 

68

 

 

 

616

 

Adjusted EBITDA attributable to unconsolidated entities

 

1,259

 

 

 

—

 

 

 

(26

)

 

 

95

 

 

 

1,328

 

Adjusted EBITDA attributable to noncontrolling interest

 

(1,088

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(1,088

)

Other

 

1,270

 

 

 

81

 

 

 

192

 

 

 

(9

)

 

 

1,534

 

Adjusted EBITDA

$

263,583

 

 

$

54,504

 

 

$

21,835

 

 

$

(29,053

)

 

$

310,869

 

OPERATIONAL DATA

(Unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

September 30,

 

September 30,

 

2024

 

2023

 

2024

 

2023

 

(in thousands, except per day amounts)

Water Solutions:

 

 

 

 

 

 

 

Produced water processed (barrels per day)

 

 

 

 

 

 

 

Delaware Basin

2,349,333

 

2,156,733

 

2,255,861

 

2,154,906

Eagle Ford Basin

188,250

 

138,509

 

182,311

 

135,737

DJ Basin

143,947

 

146,124

 

135,867

 

157,745

Other Basins

—

 

—

 

—

 

1,481

Total

2,681,530

 

2,441,366

 

2,574,039

 

2,449,869

Recycled water (barrels per day)

92,301

 

35,341

 

98,334

 

67,213

Total (barrels per day)

2,773,831

 

2,476,707

 

2,672,373

 

2,517,082

Skim oil sold (barrels per day)

3,776

 

4,378

 

4,099

 

4,046

 

 

 

 

 

 

 

 

Crude Oil Logistics:

 

 

 

 

 

 

 

Crude oil sold (barrels)

2,868

 

5,636

 

6,042

 

11,643

Crude oil transported on owned pipelines (barrels)

5,807

 

6,484

 

11,520

 

13,047

Crude oil storage capacity - owned and leased (barrels) (1)

 

 

 

 

5,232

 

5,232

Crude oil inventory (barrels) (1)

 

 

 

 

450

 

660

 

 

 

 

 

 

 

 

Liquids Logistics:

 

 

 

 

 

 

 

Refined products sold (gallons)

206,915

 

209,919

 

406,864

 

430,006

Propane sold (gallons)

108,589

 

129,988

 

221,093

 

269,741

Butane sold (gallons)

109,783

 

108,085

 

204,972

 

186,574

Other products sold (gallons)

121,317

 

100,389

 

208,124

 

191,488

Natural gas liquids and refined products storage capacity - owned and leased (gallons) (1)

 

 

 

 

124,141

 

157,589

Refined products inventory (gallons) (1)

 

 

 

 

1,404

 

707

Propane inventory (gallons) (1)

 

 

 

 

80,323

 

115,491

Butane inventory (gallons) (1)

 

 

 

 

81,441

 

92,651

Other products inventory (gallons) (1)

 

 

 

 

12,813

 

18,012

_______________

(1)

Information is presented as of September 30, 2024 and September 30, 2023, respectively.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241112929360/en/

David Sullivan, 918-495-4631 Vice President - Finance David.Sullivan@nglep.com