NGL Energy Partners LP Affirms Fiscal 2020 EBITDA Guidance & Provides Update on Current Operations & Capital Expenditure Redu...
March 19 2020 - 8:17AM
Business Wire
NGL Energy Partners LP (NYSE:NGL) (“NGL” or “the Partnership”)
is providing an update on its operations in the current commodity
price environment. The Partnership’s three primary businesses
should continue to perform as expected in the near term and as a
result management can confirm the following:
- Fiscal Year 2020 (ending March 31, 2020) Adjusted EBITDA from
continuing operations guidance range remains unchanged at $565
million to $595 million
- Current produced water transportation and disposal volumes on
its systems have increased in March to a record 1.9 million barrels
per day, including approximately 1.5 million barrels per day in the
Delaware Basin
- Management expects approximately $1.5 billion outstanding under
the Partnership’s $1.9 billion Revolving Credit Facility at March
31, 2020
“Like many companies across our industry, the current
environment will present us with real challenges going forward, but
also presents us with new opportunities,” stated Mike Krimbill,
NGL’s CEO. “We must be thoughtful and prudent in our response to
greater crude oil supply and lower demand resulting from the
effects of the coronavirus. We have taken a number of pro-active
steps to solidify our financial position while keeping our
operations running smoothly.”
Specifically, the Partnership has taken the following
actions:
- High graded its Fiscal 2021 planned capital expenditure budget
to leverage off the significant infrastructure investment made
during this past year and the current operating environment. As a
result, management expects that for the fiscal year beginning April
1, 2020, growth capital expenditures will approximate $50 million
all of which would be funded using free cash flow;
- Reached an agreement to exit its Gas Blending business by March
31, 2020, with an expected reduction in working capital
indebtedness of at least $50 million and a further decrease in
earnings volatility going forward; and
- Remains fully focused on the health and safety of our employees
and continuing to provide best-in-class service to our customers.
To this end, the Partnership has instituted several actions to
protect our employees’ and contractors’ health and well-being in
dealing with the coronavirus. NGL’s management team has established
redundancy planning and implemented preventative measures at all
our terminals, salt water disposal facilities and pipelines with
the goal to provide our customers uninterrupted service.
The Partnership remains in close communication with its
customers and will continue to adjust its plans and expectations
accordingly as new information warrants. The following points
highlight general industry and NGL specific factors in this
environment:
- The Partnership operates in the most economic basins in the
United States with some of strongest producers in the country under
long-term, fee-based contracts and management views this as an
opportunity to grow and strengthen those relationships and
demonstrate NGL’s reliability as a midstream service provider;
- Producers that are significantly hedged in calendar 2020 should
continue producing and drilling, albeit at a reduced pace in most
basins. NGL has also hedged approximately 3,000 barrels per day of
its calendar 2020 skim oil volumes at $55.00 per barrel to limit
the Partnership’s direct commodity-price exposure this year.
Calendar 2021 will likely be more a challenging period as
producers’ hedge positions decline, assuming commodity prices
remain at current levels.
- Due to the recent reduction in interest rates, NGL’s floating
rate interest expense is expected to decrease by at least $15
million this year based on the current interest rate curve, which
along with expected lower working capital borrowings, will improve
cash flows, coverage and leverage.
- Crude oil forward prices now reflect a contango market from
which NGL can benefit by utilizing its approximately 1.5 million
barrels of crude oil storage.
Added Mike Krimbill, “We are responding quickly in anticipation
of an environment that could get increasingly challenging in
calendar 2021. While our businesses continue to perform as
expected, we are taking steps that will bolster our operating and
financial results should the current commodity price environment
continue for an extended period. We will continue to drive our
costs down, seek out creative ways to use excess capacity across
all of our assets, and maximize our financial position, while
maintaining a safe and healthy working environment for our
employees. Nothing is off the table.”
Forward-Looking Statements
Certain matters contained in this press release include
“forward-looking statements.” All statements, other than statements
of historical fact, included in this press release may constitute
forward-looking statements. Although we believe that the
expectations reflected in these forward-looking statements are
reasonable, we cannot assure you that these expectations will prove
to be correct. These forward-looking statements are subject to
certain known and unknown risks and uncertainties, as well as
assumptions that could cause actual results to differ materially
from those reflected in these forward-looking statements. Factors
that might cause actual results to differ include, but are not
limited to, the risk factors discussed from time to time in each of
our documents and reports filed with the SEC.
Readers are cautioned not to place undue reliance on any
forward-looking statements contained in this press release, which
reflect management’s opinions only as of the date hereof. Except as
required by law, we undertake no obligation to revise or publicly
release the results of any revision to any forward-looking
statements.
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.
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version on businesswire.com: https://www.businesswire.com/news/home/20200319005373/en/
NGL Energy Partners LP Investor Relations: Trey Karlovich,
918-481-1119 Chief Financial Officer and Executive Vice President
Trey.Karlovich@nglep.com or Linda Bridges, 918-481-1119 Senior Vice
President - Finance and Treasurer Linda.Bridges@nglep.com
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