NGL NGL Energy Partners LP

NGL Energy Partners LP (NYSE:NGL) (“NGL,” “our,” “we,” or the “Partnership”) today reported its second quarter Fiscal 2024 financial results. Highlights include:

• Net income for the second quarter of Fiscal 2024 of $28.3 million, compared to net income of $3.6 million for the second quarter of Fiscal 2023
• Adjusted EBITDA(1) for the second quarter of Fiscal 2024 of $176.2 million, compared to $142.2 million for the second quarter of Fiscal 2023
• Produced water volumes processed of approximately 2.44 million barrels per day during the second quarter of Fiscal 2024, growing 7.7% from the second quarter of Fiscal 2023. Including minimum volume commitment payments, the Partnership received revenue on an additional 20.8 million barrels in the second quarter of Fiscal 2024
• Record Water Solutions’ quarterly Adjusted EBITDA(1) of $140.4 million for the second quarter of Fiscal 2024, a 34.0% increase compared to the second quarter of Fiscal 2023
• Total leverage at the end of the quarter was 4.14 times, versus 6.11 times at the end of the second quarter of Fiscal 2023

“Our Water Solutions segment continues to outperform, so we are increasing our Fiscal 2024 Adjusted EBITDA(2) guidance for this segment to $500 million plus. The significant reduction in total leverage should provide the financial flexibility to deal with our capital structure. Currently, we are reducing indebtedness on our ABL Facility, rather than the 2025 unsecured notes, as it is our highest cost of debt. We will continue to utilize operational free cash flow, reduced working capital, and asset sale proceeds to further improve the balance sheet. We are reaffirming our full year consolidated Adjusted EBITDA(2) guidance of $645 million plus rather than increasing it commensurate with the Water Solutions’ increase as we are anticipating asset sales plus uncertainty around the Liquid Logistics segment’s performance in the face of a potentially warmer than normal winter.” stated Mike Krimbill NGL’s CEO.

  (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.

Quarterly Results of Operations

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

 

 

Quarter Ended

 

 

September 30, 2023

 

September 30, 2022

 

 

Operating Income (Loss)

 

Adjusted EBITDA(1)

 

Operating Income (Loss)

 

Adjusted EBITDA(1)

 

 

(in thousands)

Water Solutions

 

$

59,118

 

 

$

140,389

 

 

$

47,128

 

 

$

104,774

 

Crude Oil Logistics

 

 

14,778

 

 

 

30,713

 

 

 

32,927

 

 

 

32,863

 

Liquids Logistics

 

 

23,577

 

 

 

17,086

 

 

 

1,653

 

 

 

16,513

 

Corporate and Other

 

 

(11,443

)

 

 

(11,974

)

 

 

(12,938

)

 

 

(11,908

)

Total

 

$

86,030

 

 

$

176,214

 

 

$

68,770

 

 

$

142,242

 

Water Solutions

Operating income for the Water Solutions segment increased $12.0 million for the quarter ended September 30, 2023, compared to the quarter ended September 30, 2022. The Partnership processed approximately 2.44 million barrels of produced water per day during the quarter ended September 30, 2023, a 7.7% increase when compared to approximately 2.27 million barrels of water per day processed during the quarter ended September 30, 2022. The increase was due primarily to higher produced water volumes processed from contracted customers mainly in the Delaware Basin, increased fees from new contracts entered into during fiscal year 2023 and higher fees charged for interruptible spot volumes. Also, there was an increase in payments made by certain producers for committed volumes not delivered. In addition, during July 2023, we entered into a transaction in which a portion of the total consideration received was allocated to revenue due to the termination of a minimum volume water disposal contract.

Revenues from recovered skim oil, including the impact from realized skim oil hedges, totaled $31.1 million for the quarter ended September 30, 2023, an increase of $6.9 million from the prior year period. The increase was due primarily to greater skim oil barrels sold as a result of higher skim oil recovered from increased produced water processed, and the sale during the current quarter of approximately 53,000 barrels of skim oil that were stored at the end of the prior quarter due to tighter pipeline specifications.

Operating expenses in the Water Solutions segment decreased $1.7 million for the quarter ended September 30, 2023, compared to the quarter ended September 30, 2022 due primarily to lower chemical expense and lower severance taxes as a result of a severance tax refund in September 2023 related to prior periods. Operating expense per produced barrel processed was $0.24 for the quarter ended September 30, 2023, compared to $0.27 in the comparative quarter last year.

Crude Oil Logistics

Operating income for the Crude Oil Logistics segment decreased $18.1 million for the quarter ended September 30, 2023, compared to the quarter ended September 30, 2022. The decrease was primarily due to net losses on derivative contracts of $15.4 million compared to net gains in the prior year of $27.8 million. Product margin for crude oil sales increased due to the selling of lower priced inventory into a rising price market. The decrease in operating income was offset by a decrease in expenses of $5.3 million primarily related to the sale of our marine assets on March 30, 2023. During the quarter ended September 30, 2023, physical volumes on the Grand Mesa Pipeline averaged approximately 70,000 barrels per day, compared to approximately 72,000 barrels per day for the quarter ended September 30, 2022.

Liquids Logistics

Operating income for the Liquids Logistics segment increased by $21.9 million for the quarter ended September 30, 2023, compared to the quarter ended September 30, 2022. The increase was primarily due to increased product margins (excluding the impact of derivatives) for propane and butane, offset by lower product margins for refined and other products. Propane margins increased due to our selling lower priced inventory into a market with rising prices. Butane product margins increased due to higher demand for butane blending for the quarter ended September 30, 2023. Margins for refined products declined as the supply issues in certain regions, resulting in higher margins, were resolved and supply and demand were more in balance. Margins for certain other products decreased due to an increase in supply in the market as the final renewable fuel standards mandate released by the EPA lowered the required amount of biodiesel required for blending. In addition, derivative gains increased by approximately $3.4 million and the sale of two propane terminals in July 2023 netted a gain of approximately $6.9 million.

Corporate and Other

The operating loss for Corporate and Other was lower by $1.5 million for the quarter ended September 30, 2023, compared to the quarter ended September 30, 2022. Results for the current period include gains from derivatives of $3.4 million as we have entered into economic hedges to protect our liquidity positions and leverage from a significant increase in commodity prices. These positions will expire between November 2023 and March 2024. The gains were partially offset by an increase in business insurance and legal expenses.

Capitalization and Liquidity

Total liquidity (cash plus available capacity on our asset-based revolving credit facility (“ABL Facility”)) was approximately $307.7 million as of September 30, 2023. Borrowings on the Partnership’s ABL Facility totaled approximately $156.0 million. The increase from March 31, 2023 was primarily due to increases in working capital balances driven by increased inventory volumes and higher net account receivable balances.

The Partnership is in compliance with all of its debt covenants and has no significant debt maturities before March 2025.

Second Quarter Conference Call Information

A conference call to discuss NGL’s results of operations is scheduled for 4:00 pm Central Time on Thursday, November 9, 2023. Analysts, investors, and other interested parties may join the webcast via the event link: https://www.webcaster4.com/Webcast/Page/2808/49346 or by dialing (877) 545-0320 and providing access code: 476458. 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 49346.

Upcoming Events

Brad Cooper, NGL Energy Partners CFO, and other members of the management team will be attending the Bank of America Leverage Finance/Credit Conference in Boca Raton, FL on November 28, 2023 and the Wells Fargo Annual Midstream and Utilities Symposium in New York City, NY on December 6, 2023.

Non-GAAP Financial Measures

NGL defines EBITDA as net income (loss) attributable to NGL Energy Partners LP, plus interest expense, income tax expense (benefit), and depreciation and amortization expense. NGL defines 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, acquisition expense, revaluation of liabilities, certain legal settlements and other. NGL also includes in Adjusted EBITDA certain inventory valuation adjustments related to certain refined products businesses within NGL’s Liquids Logistics segment as discussed below. 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. NGL believes that EBITDA provides additional information to investors for evaluating NGL’s ability to make quarterly distributions to NGL’s unitholders and is presented solely as a supplemental measure. NGL believes that Adjusted EBITDA provides additional information to investors for evaluating NGL’s financial performance without regard to NGL’s financing methods, capital structure and historical cost basis. Further, EBITDA and Adjusted EBITDA, as NGL defines them, may not be comparable to EBITDA, Adjusted EBITDA, or similarly titled measures used by other entities.

Other than for certain businesses within NGL’s Liquids Logistics segment, for purposes of the Adjusted EBITDA calculation, NGL makes a distinction between realized and unrealized gains and losses on derivatives. During the period when a derivative contract is open, NGL records changes in the fair value of the derivative as an unrealized gain or loss. When a derivative contract matures or is settled, NGL reverses the previously recorded unrealized gain or loss and records a realized gain or loss. NGL does not draw such a distinction between realized and unrealized gains and losses on derivatives of certain businesses within NGL’s 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. NGL includes this in Adjusted EBITDA because the unrealized gains and losses associated with 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. In NGL’s Crude Oil Logistics segment, they 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 NGL’s contracts. To eliminate the volatility of the CMA Differential Roll, NGL 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 will differ from period to period depending on the current crude oil price and future estimated crude oil price which are valued utilizing third-party market quoted prices. NGL is recognizing in Adjusted EBITDA the gains and losses from the derivative instrument positions entered into in January 2021 to properly align with the physical margin NGL is hedging each month through the term of this transaction. This representation aligns with management’s evaluation of the transaction.

Distributable Cash Flow is defined as Adjusted EBITDA minus maintenance capital expenditures, income tax expense, cash interest expense, preferred unit distributions 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) 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.

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 limited partnership, is a diversified midstream energy company that transports, stores, markets and provides other logistics services for crude oil, natural gas liquids and other products and transports, treats and disposes of produced water generated as part of the oil and natural gas production process.

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, 2023

 

March 31, 2023

ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

2,680

 

 

$

5,431

 

Accounts receivable-trade, net of allowance for expected credit losses of $1,840 and $1,964, respectively

 

1,157,710

 

 

 

1,033,956

 

Accounts receivable-affiliates

 

15,035

 

 

 

12,362

 

Inventories

 

250,572

 

 

 

142,607

 

Prepaid expenses and other current assets

 

137,585

 

 

 

98,089

 

Total current assets

 

1,563,582

 

 

 

1,292,445

 

PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $908,595 and $898,184, respectively

 

2,166,103

 

 

 

2,223,380

 

GOODWILL

 

707,583

 

 

 

712,364

 

INTANGIBLE ASSETS, net of accumulated amortization of $406,653 and $580,860, respectively

 

1,016,820

 

 

 

1,058,668

 

INVESTMENTS IN UNCONSOLIDATED ENTITIES

 

20,900

 

 

 

21,090

 

OPERATING LEASE RIGHT-OF-USE ASSETS

 

95,231

 

 

 

90,220

 

OTHER NONCURRENT ASSETS

 

57,696

 

 

 

57,977

 

Total assets

$

5,627,915

 

 

$

5,456,144

 

LIABILITIES AND EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Accounts payable-trade

$

1,080,673

 

 

$

927,591

 

Accounts payable-affiliates

 

44

 

 

 

65

 

Accrued expenses and other payables

 

164,115

 

 

 

133,616

 

Advance payments received from customers

 

29,239

 

 

 

14,699

 

Operating lease obligations

 

33,376

 

 

 

34,166

 

Total current liabilities

 

1,307,447

 

 

 

1,110,137

 

LONG-TERM DEBT, net of debt issuance costs of $24,385 and $30,117, respectively

 

2,782,262

 

 

 

2,857,805

 

OPERATING LEASE OBLIGATIONS

 

63,975

 

 

 

58,450

 

OTHER NONCURRENT LIABILITIES

 

107,945

 

 

 

111,226

 

 

 

 

 

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

 

551,097

 

 

 

551,097

 

 

 

 

 

EQUITY:

 

 

 

General partner, representing a 0.1% interest, 132,059 and 132,059 notional units, respectively

 

(52,572

)

 

 

(52,551

)

Limited partners, representing a 99.9% interest, 131,927,343 and 131,927,343 common units issued and outstanding, respectively

 

503,798

 

 

 

455,564

 

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

 

(473

)

 

 

(450

)

Noncontrolling interests

 

16,077

 

 

 

16,507

 

Total equity

 

815,189

 

 

 

767,429

 

Total liabilities and equity

$

5,627,915

 

 

$

5,456,144

 

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,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

REVENUES:

 

 

 

 

 

 

 

 

Water Solutions

 

$

197,244

 

 

$

164,910

 

 

$

378,546

 

 

$

330,989

 

Crude Oil Logistics

 

 

489,713

 

 

 

574,783

 

 

 

954,103

 

 

 

1,440,154

 

Liquids Logistics

 

 

1,154,139

 

 

 

1,269,754

 

 

 

2,124,551

 

 

 

2,735,687

 

Total Revenues

 

 

1,841,096

 

 

 

2,009,447

 

 

 

3,457,200

 

 

 

4,506,830

 

COST OF SALES:

 

 

 

 

 

 

 

 

Water Solutions

 

 

7,424

 

 

 

920

 

 

 

9,993

 

 

 

11,145

 

Crude Oil Logistics

 

 

454,927

 

 

 

514,199

 

 

 

880,226

 

 

 

1,336,569

 

Liquids Logistics

 

 

1,119,478

 

 

 

1,249,001

 

 

 

2,066,725

 

 

 

2,671,417

 

Corporate and Other

 

 

(3,381

)

 

 

—

 

 

 

833

 

 

 

—

 

Total Cost of Sales

 

 

1,578,448

 

 

 

1,764,120

 

 

 

2,957,777

 

 

 

4,019,131

 

OPERATING COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

Operating

 

 

77,389

 

 

 

84,158

 

 

 

154,070

 

 

 

156,018

 

General and administrative

 

 

17,496

 

 

 

16,628

 

 

 

37,787

 

 

 

33,385

 

Depreciation and amortization

 

 

65,526

 

 

 

68,118

 

 

 

134,505

 

 

 

134,778

 

Loss on disposal or impairment of assets, net

 

 

16,207

 

 

 

7,653

 

 

 

15,011

 

 

 

7,485

 

Operating Income

 

 

86,030

 

 

 

68,770

 

 

 

158,050

 

 

 

156,033

 

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated entities

 

 

851

 

 

 

1,207

 

 

 

942

 

 

 

1,881

 

Interest expense

 

 

(58,627

)

 

 

(68,297

)

 

 

(118,149

)

 

 

(135,608

)

Gain on early extinguishment of liabilities, net

 

 

63

 

 

 

2,479

 

 

 

6,871

 

 

 

4,141

 

Other income (expense), net

 

 

310

 

 

 

(15

)

 

 

616

 

 

 

631

 

Income Before Income Taxes

 

 

28,627

 

 

 

4,144

 

 

 

48,330

 

 

 

27,078

 

INCOME TAX EXPENSE

 

 

(342

)

 

 

(537

)

 

 

(482

)

 

 

(365

)

Net Income

 

 

28,285

 

 

 

3,607

 

 

 

47,848

 

 

 

26,713

 

LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS

 

 

(257

)

 

 

(97

)

 

 

(519

)

 

 

(342

)

NET INCOME ATTRIBUTABLE TO NGL ENERGY PARTNERS LP

 

$

28,028

 

 

$

3,510

 

 

$

47,329

 

 

$

26,371

 

NET LOSS ALLOCATED TO COMMON UNITHOLDERS

 

$

(6,709

)

 

$

(26,899

)

 

$

(21,191

)

 

$

(31,578

)

BASIC AND DILUTED LOSS PER COMMON UNIT

 

$

(0.05

)

 

$

(0.21

)

 

$

(0.16

)

 

$

(0.24

)

BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING

 

 

131,927,343

 

 

 

130,695,970

 

 

 

131,927,343

 

 

 

130,695,970

 

DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING

 

 

131,927,343

 

 

 

130,695,970

 

 

 

131,927,343

 

 

 

130,695,970

 

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,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

(in thousands)

Net income

 

$

28,285

 

 

$

3,607

 

 

$

47,848

 

 

$

26,713

 

Less: Net income attributable to noncontrolling interests

 

 

(257

)

 

 

(97

)

 

 

(519

)

 

 

(342

)

Net income attributable to NGL Energy Partners LP

 

 

28,028

 

 

 

3,510

 

 

 

47,329

 

 

 

26,371

 

Interest expense

 

 

58,642

 

 

 

68,313

 

 

 

118,178

 

 

 

135,639

 

Income tax expense

 

 

342

 

 

 

537

 

 

 

482

 

 

 

365

 

Depreciation and amortization

 

 

65,502

 

 

 

68,103

 

 

 

134,423

 

 

 

134,717

 

EBITDA

 

 

152,514

 

 

 

140,463

 

 

 

300,412

 

 

 

297,092

 

Net unrealized losses (gains) on derivatives

 

 

9,691

 

 

 

(4,828

)

 

 

9,059

 

 

 

(61,730

)

CMA Differential Roll net losses (gains) (1)

 

 

2,233

 

 

 

(6,518

)

 

 

(6,904

)

 

 

28,102

 

Inventory valuation adjustment (2)

 

 

(6,436

)

 

 

(3,560

)

 

 

(6,100

)

 

 

(4,115

)

Lower of cost or net realizable value adjustments

 

 

1,080

 

 

 

10,143

 

 

 

3,844

 

 

 

857

 

Loss on disposal or impairment of assets, net

 

 

16,207

 

 

 

7,653

 

 

 

15,011

 

 

 

7,485

 

Gain on early extinguishment of liabilities, net

 

 

(63

)

 

 

(2,479

)

 

 

(6,871

)

 

 

(4,141

)

Equity-based compensation expense

 

 

410

 

 

 

479

 

 

 

884

 

 

 

976

 

Acquisition expense (3)

 

 

42

 

 

 

—

 

 

 

47

 

 

 

—

 

Other (4)

 

 

536

 

 

 

889

 

 

 

1,487

 

 

 

1,592

 

Adjusted EBITDA

 

$

176,214

 

 

$

142,242

 

 

$

310,869

 

 

$

266,118

 

Less: Cash interest expense (5)

 

 

54,483

 

 

 

64,096

 

 

 

109,894

 

 

 

127,221

 

Less: Income tax expense

 

 

342

 

 

 

537

 

 

 

482

 

 

 

365

 

Less: Maintenance capital expenditures

 

 

16,358

 

 

 

14,219

 

 

 

32,885

 

 

 

29,586

 

Less: CMA Differential Roll (6)

 

 

(7,352

)

 

 

(16,274

)

 

 

(18,047

)

 

 

1,934

 

Less: Other (7)

 

 

4

 

 

 

77

 

 

 

222

 

 

 

170

 

Distributable Cash Flow

 

$

112,379

 

 

$

79,587

 

 

$

185,433

 

 

$

106,842

 

 

(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)

Amounts represent 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 expenses we incurred related to legal and advisory costs associated with acquisitions.

(4)

Amounts represent unrealized gains/losses on marketable securities and accretion expense for asset retirement obligations. Also, the amount for the six months ended September 30, 2022 includes non-cash operating expenses related to our Grand Mesa Pipeline.

(5)

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

(6)

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

(7)

Amounts represents cash paid to settle asset retirement obligations.

ADJUSTED EBITDA RECONCILIATION BY SEGMENT  

 

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

 

Acquisition expense

 

(29

)

 

 

—

 

 

 

65

 

 

 

6

 

 

 

42

 

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

 

439

 

 

 

43

 

 

 

54

 

 

 

—

 

 

 

536

 

Adjusted EBITDA

$

140,389

 

 

$

30,713

 

 

$

17,086

 

 

$

(11,974

)

 

$

176,214

 

 

Three Months Ended September 30, 2022

 

Water Solutions

 

Crude Oil Logistics

 

Liquids Logistics

 

Corporate and Other

 

Consolidated

 

(in thousands)

Operating income (loss)

$

47,128

 

 

$

32,927

 

 

$

1,653

 

 

$

(12,938

)

 

$

68,770

 

Depreciation and amortization

 

51,327

 

 

 

11,775

 

 

 

3,396

 

 

 

1,620

 

 

 

68,118

 

Amortization recorded to cost of sales

 

—

 

 

 

—

 

 

 

69

 

 

 

—

 

 

 

69

 

Net unrealized (gains) losses on derivatives

 

(4,340

)

 

 

(4,575

)

 

 

4,087

 

 

 

—

 

 

 

(4,828

)

CMA Differential Roll net losses (gains)

 

—

 

 

 

(6,518

)

 

 

—

 

 

 

—

 

 

 

(6,518

)

Inventory valuation adjustment

 

—

 

 

 

—

 

 

 

(3,560

)

 

 

—

 

 

 

(3,560

)

Lower of cost or net realizable value adjustments

 

—

 

 

 

(493

)

 

 

10,636

 

 

 

—

 

 

 

10,143

 

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

 

9,035

 

 

 

(296

)

 

 

52

 

 

 

(1,138

)

 

 

7,653

 

Equity-based compensation expense

 

—

 

 

 

—

 

 

 

—

 

 

 

479

 

 

 

479

 

Other (expense) income, net

 

(251

)

 

 

303

 

 

 

(91

)

 

 

24

 

 

 

(15

)

Adjusted EBITDA attributable to unconsolidated entities

 

1,387

 

 

 

—

 

 

 

(17

)

 

 

45

 

 

 

1,415

 

Adjusted EBITDA attributable to noncontrolling interest

 

(373

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(373

)

Other

 

861

 

 

 

(260

)

 

 

288

 

 

 

—

 

 

 

889

 

Adjusted EBITDA

$

104,774

 

 

$

32,863

 

 

$

16,513

 

 

$

(11,908

)

 

$

142,242

 

 

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

 

Acquisition expense

 

(28

)

 

 

—

 

 

 

84

 

 

 

(9

)

 

 

47

 

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

 

1,298

 

 

 

81

 

 

 

108

 

 

 

—

 

 

 

1,487

 

Adjusted EBITDA

$

263,583

 

 

$

54,504

 

 

$

21,835

 

 

$

(29,053

)

 

$

310,869

 

 

Six Months Ended September 30, 2022

 

Water Solutions

 

Crude Oil Logistics

 

Liquids Logistics

 

Corporate and Other

 

Consolidated

 

(in thousands)

Operating income (loss)

$

100,733

 

 

$

51,916

 

 

$

28,293

 

 

$

(24,909

)

 

$

156,033

 

Depreciation and amortization

 

101,175

 

 

 

23,529

 

 

 

6,777

 

 

 

3,297

 

 

 

134,778

 

Amortization recorded to cost of sales

 

—

 

 

 

—

 

 

 

137

 

 

 

—

 

 

 

137

 

Net unrealized gains on derivatives

 

(4,464

)

 

 

(55,580

)

 

 

(1,686

)

 

 

—

 

 

 

(61,730

)

CMA Differential Roll net losses (gains)

 

—

 

 

 

28,102

 

 

 

—

 

 

 

—

 

 

 

28,102

 

Inventory valuation adjustment

 

—

 

 

 

—

 

 

 

(4,115

)

 

 

—

 

 

 

(4,115

)

Lower of cost or net realizable value adjustments

 

—

 

 

 

1,074

 

 

 

(217

)

 

 

—

 

 

 

857

 

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

 

9,976

 

 

 

(1,556

)

 

 

52

 

 

 

(987

)

 

 

7,485

 

Equity-based compensation expense

 

—

 

 

 

—

 

 

 

—

 

 

 

976

 

 

 

976

 

Other income (expense), net

 

8

 

 

 

331

 

 

 

(184

)

 

 

476

 

 

 

631

 

Adjusted EBITDA attributable to unconsolidated entities

 

2,212

 

 

 

—

 

 

 

(24

)

 

 

89

 

 

 

2,277

 

Adjusted EBITDA attributable to noncontrolling interest

 

(905

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(905

)

Other

 

1,086

 

 

 

125

 

 

 

381

 

 

 

—

 

 

 

1,592

 

Adjusted EBITDA

$

209,821

 

 

$

47,941

 

 

$

29,414

 

 

$

(21,058

)

 

$

266,118

 

OPERATIONAL DATA

(Unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

September 30,

 

September 30,

 

2023

 

2022

 

2023

 

2022

 

(in thousands, except per day amounts)

Water Solutions:

 

 

 

 

 

 

 

Produced water processed (barrels per day)

 

 

 

 

 

 

 

Delaware Basin

2,156,733

 

1,986,585

 

2,154,906

 

1,937,179

Eagle Ford Basin

138,509

 

112,337

 

135,737

 

105,463

DJ Basin

146,124

 

153,766

 

157,745

 

152,057

Other Basins

—

 

13,150

 

1,481

 

15,505

Total

2,441,366

 

2,265,838

 

2,449,869

 

2,210,204

Recycled water (barrels per day)

35,341

 

93,898

 

67,213

 

115,294

Total (barrels per day)

2,476,707

 

2,359,736

 

2,517,082

 

2,325,498

Skim oil sold (barrels per day)

4,378

 

3,216

 

4,046

 

3,584

 

 

 

 

 

 

 

 

Crude Oil Logistics:

 

 

 

 

 

 

 

Crude oil sold (barrels)

5,636

 

5,839

 

11,643

 

13,473

Crude oil transported on owned pipelines (barrels)

6,484

 

6,600

 

13,047

 

13,770

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

 

 

 

 

5,232

 

5,232

Crude oil inventory (barrels) (1)

 

 

 

 

660

 

660

 

 

 

 

 

 

 

 

Liquids Logistics:

 

 

 

 

 

 

 

Refined products sold (gallons)

209,919

 

186,031

 

430,006

 

374,657

Propane sold (gallons)

129,988

 

169,775

 

269,741

 

334,619

Butane sold (gallons)

108,085

 

111,551

 

186,574

 

232,076

Other products sold (gallons)

100,389

 

104,979

 

191,488

 

198,616

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

 

 

 

 

157,589

 

167,559

Refined products inventory (gallons) (1)

 

 

 

 

707

 

1,990

Propane inventory (gallons) (1)

 

 

 

 

115,491

 

101,880

Butane inventory (gallons) (1)

 

 

 

 

92,651

 

84,928

Other products inventory (gallons) (1)

 

 

 

 

18,012

 

33,653

 

(1)

Information is presented as of September 30, 2023 and September 30, 2022, respectively.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20231109572038/en/

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