NGL-PC - Fundamentals, Financials, History, and Analysis
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Business Overview and History

NGL Energy Partners LP (NGL) is a diversified midstream company that has carved out a significant presence in the energy infrastructure landscape. With operations spanning water solutions, crude oil logistics, and liquids logistics, NGL has demonstrated its ability to adapt and thrive amidst the industry’s evolving dynamics.

NGL Energy Partners LP is a Delaware master limited partnership that was formed in 2010. The company serves as a diversified midstream energy company, providing various services including water solutions, crude oil logistics, and liquids logistics.

In the early years, NGL Energy Partners focused on building out its water solutions and crude oil logistics businesses. The water solutions segment grew through acquisitions and organic projects, establishing the company as a leading provider of produced water handling and disposal services in key basins like the Delaware, DJ, and Eagle Ford. The crude oil logistics segment also expanded, adding assets like the Grand Mesa Pipeline to transport crude oil from the DJ Basin.

Over time, NGL Energy Partners broadened its service offerings by entering the liquids logistics market. This segment includes natural gas liquids supply, logistics, and marketing activities. Several acquisitions and greenfield projects allowed NGL to build a network of terminals, pipelines, and transportation assets to service this business line.

The company has faced some challenges over the years, including the broader industry downturn in 2020 and 2021 that impacted volumes and profitability across its segments. NGL Energy Partners worked to optimize operations, divest non-core assets, and strengthen its balance sheet during this period. The company also dealt with some legal matters, including an adverse judgment in 2024 that required a $63.3 million payment.

Despite these headwinds, NGL Energy Partners has remained a diversified midstream service provider, leveraging its asset base and customer relationships to generate stable cash flows. The company has focused on maximizing utilization of its existing infrastructure while selectively investing in expansion projects underpinned by long-term commitments from creditworthy customers.

Financial Performance and Liquidity

NGL Energy Partners has navigated the industry’s challenges with commendable financial discipline. As of the company’s latest fiscal year ended March 31, 2024, NGL reported annual revenue of $6.96 billion and a net loss of $143.1 million. The net loss was primarily attributable to one-time charges, including a goodwill impairment and litigation-related expenses.

Despite the net loss, NGL’s Adjusted EBITDA, a key metric for midstream companies, remained resilient at $610.1 million for the full fiscal year. This performance showcases the company’s ability to generate consistent cash flows from its diversified operations.

For the most recent quarter (Q2 2025), NGL reported revenue of $1,352,675,000, net income of $2,454,000, operating cash flow of $6,718,000, and free cash flow of -$82,904,000. The company’s consolidated Adjusted EBITDA for Q2 2025 was $147.3 million, which was in line with their internal expectations and consolidated budget on a year-to-date basis.

In terms of liquidity, NGL maintains a solid financial position. As of the most recent quarter, the company had $4.5 million in cash and cash equivalents, and access to a $600 million asset-based revolving credit facility (ABL Facility), providing ample resources to fund ongoing operations and capital expenditures. The ABL Facility has a $200 million sub-limit for letters of credit and matures on the earlier of February 2, 2029, or 91 days prior to the earliest maturity date of any of the company’s indebtedness over $50 million.

NGL’s current ratio stands at 1.21, while its quick ratio is 0.98, indicating a reasonably healthy short-term liquidity position.

Recent Developments and Outlook

NGL Energy Partners has remained proactive in addressing the industry’s evolving landscape. In the fiscal year 2024, the company completed the sale of its North and South Ranches in New Mexico, generating approximately $70 million in proceeds. This divestiture aligned with NGL’s focus on optimizing its asset portfolio and strengthening its balance sheet.

Furthermore, the company recently repriced and amended its Term Loan B agreement, reducing the SOFR margin from 4.50% to 3.75%. This move is expected to result in annual interest expense savings of approximately $5.25 million, enhancing the company’s financial flexibility.

Looking ahead, NGL Energy Partners remains focused on growth opportunities within its Water Solutions segment, capitalizing on the increasing demand for reliable and environmentally-responsible water management services. The company’s recently completed Lea County Express Pipeline (LEX II) expansion project, with an initial capacity of 200,000 barrels per day, is a testament to its strategic vision and operational excellence.

NGL has slightly reduced its full fiscal year 2025 EBITDA guidance to a range of $640 million to $650 million, which is a 2% to 4% reduction from their previous guidance. For the Water Solutions segment, NGL’s EBITDA guidance remains unchanged at $550 million to $560 million. The company’s total capital expenditure guidance for fiscal year 2025 remains unchanged at $210 million.

Segment Performance

NGL Energy Partners operates through three reportable segments: Water Solutions, Crude Oil Logistics, and Liquids Logistics.

The Water Solutions segment transports, treats, recycles, and disposes of produced and flowback water generated from crude oil and natural gas production. It also sells produced water for reuse and recycle and brackish non-potable water to producer customers. During Q3 2024, this segment reported revenues of $181.87 million, a decrease from $197.24 million in the prior year period, primarily due to lower fees for produced water processed. However, operating income increased to $72.83 million from $59.12 million, driven by lower costs and expenses.

The Crude Oil Logistics segment purchases crude oil from producers and marketers and transports it to refineries or for resale. In Q3 2024, this segment reported revenues of $243.76 million, down from $489.71 million in the prior year period, primarily due to lower sales volumes. Operating income remained relatively flat at $14.84 million.

The Liquids Logistics segment conducts supply operations for natural gas liquids, refined petroleum products, and biodiesel across the United States and Canada. In Q3 2024, this segment reported revenues of $926.98 million, down from $1.15 billion in the prior year period, with operating income decreasing to $1.13 million from $23.58 million, due to lower product margins.

Risks and Challenges

As with any energy infrastructure company, NGL Energy Partners faces a range of risks and challenges. Fluctuations in commodity prices, changes in regulatory environments, and potential disruptions in supply chains or transportation networks can all impact the company’s financial performance.

Additionally, the midstream industry’s capital-intensive nature and the need for ongoing maintenance and upgrades of infrastructure can strain NGL’s financial resources. The company’s ability to effectively manage its debt levels and execute value-accretive acquisitions will be crucial in navigating these challenges.

Conclusion

NGL Energy Partners has demonstrated its resilience and adaptability in the face of an evolving energy landscape. By diversifying its operations, maintaining financial discipline, and capitalizing on growth opportunities, the company has positioned itself as a midstream powerhouse capable of weathering industry headwinds. As NGL continues to navigate the complexities of the energy sector, its commitment to operational excellence and strategic decision-making will be key to delivering long-term value for its stakeholders.

Disclaimer: This article is for informational purposes only. It does not constitute financial, legal, or other types of advice. While every effort has been made to ensure the accuracy of the information presented here, the author and the publisher do not make any guarantees about the completeness, reliability, and accuracy of this information.

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