NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in Thousands, except unit amounts)
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
March 31, 2017
|
ASSETS
|
|
|
|
CURRENT ASSETS:
|
|
|
|
Cash and cash equivalents
|
$
|
19,548
|
|
|
$
|
12,264
|
|
Accounts receivable-trade, net of allowance for doubtful accounts of $5,407 and $5,234, respectively
|
652,729
|
|
|
800,607
|
|
Accounts receivable-affiliates
|
1,552
|
|
|
6,711
|
|
Inventories
|
563,093
|
|
|
561,432
|
|
Prepaid expenses and other current assets
|
96,812
|
|
|
103,193
|
|
Total current assets
|
1,333,734
|
|
|
1,484,207
|
|
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $400,857 and $375,594, respectively
|
1,769,618
|
|
|
1,790,273
|
|
GOODWILL
|
1,451,716
|
|
|
1,451,716
|
|
INTANGIBLE ASSETS, net of accumulated amortization of $447,392 and $414,605, respectively
|
1,130,073
|
|
|
1,163,956
|
|
INVESTMENTS IN UNCONSOLIDATED ENTITIES
|
190,948
|
|
|
187,423
|
|
LOAN RECEIVABLE-AFFILIATE
|
3,700
|
|
|
3,200
|
|
OTHER NONCURRENT ASSETS
|
238,926
|
|
|
239,604
|
|
Total assets
|
$
|
6,118,715
|
|
|
$
|
6,320,379
|
|
LIABILITIES AND EQUITY
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
Accounts payable-trade
|
$
|
522,155
|
|
|
$
|
658,021
|
|
Accounts payable-affiliates
|
1,777
|
|
|
7,918
|
|
Accrued expenses and other payables
|
192,849
|
|
|
207,125
|
|
Advance payments received from customers
|
57,071
|
|
|
35,944
|
|
Current maturities of long-term debt
|
42,793
|
|
|
29,590
|
|
Total current liabilities
|
816,645
|
|
|
938,598
|
|
LONG-TERM DEBT, net of debt issuance costs of $31,007 and $33,458, respectively, and current maturities
|
2,834,325
|
|
|
2,963,483
|
|
OTHER NONCURRENT LIABILITIES
|
176,568
|
|
|
184,534
|
|
COMMITMENTS AND CONTINGENCIES (NOTE 9)
|
|
|
|
|
|
|
|
|
|
CLASS A 10.75% CONVERTIBLE PREFERRED UNITS, 19,942,169 and 19,942,169 preferred units issued and outstanding, respectively
|
67,048
|
|
|
63,890
|
|
REDEEMABLE NONCONTROLLING INTEREST
|
3,251
|
|
|
3,072
|
|
|
|
|
|
EQUITY:
|
|
|
|
General partner, representing a 0.1% interest, 120,974 and 120,300 notional units, respectively
|
(50,648
|
)
|
|
(50,529
|
)
|
Limited partners, representing a 99.9% interest, 120,853,481 and 120,179,407 common units issued and outstanding, respectively
|
2,063,467
|
|
|
2,192,413
|
|
Class B preferred limited partners, 8,400,000 and 0 preferred units issued and outstanding, respectively
|
202,977
|
|
|
—
|
|
Accumulated other comprehensive loss
|
(2,203
|
)
|
|
(1,828
|
)
|
Noncontrolling interests
|
7,285
|
|
|
26,746
|
|
Total equity
|
2,220,878
|
|
|
2,166,802
|
|
Total liabilities and equity
|
$
|
6,118,715
|
|
|
$
|
6,320,379
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(in Thousands, except unit and per unit amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
2017
|
|
2016
|
REVENUES:
|
|
|
|
|
Crude Oil Logistics
|
|
$
|
504,915
|
|
|
$
|
425,951
|
|
Water Solutions
|
|
46,967
|
|
|
35,753
|
|
Liquids
|
|
277,814
|
|
|
205,049
|
|
Retail Propane
|
|
67,072
|
|
|
60,387
|
|
Refined Products and Renewables
|
|
2,884,637
|
|
|
1,994,563
|
|
Other
|
|
161
|
|
|
267
|
|
Total Revenues
|
|
3,781,566
|
|
|
2,721,970
|
|
COST OF SALES:
|
|
|
|
|
Crude Oil Logistics
|
|
469,470
|
|
|
405,230
|
|
Water Solutions
|
|
153
|
|
|
5,201
|
|
Liquids
|
|
271,074
|
|
|
190,992
|
|
Retail Propane
|
|
29,636
|
|
|
24,820
|
|
Refined Products and Renewables
|
|
2,871,702
|
|
|
1,940,087
|
|
Other
|
|
73
|
|
|
110
|
|
Total Cost of Sales
|
|
3,642,108
|
|
|
2,566,440
|
|
OPERATING COSTS AND EXPENSES:
|
|
|
|
|
Operating
|
|
76,469
|
|
|
75,172
|
|
General and administrative
|
|
24,991
|
|
|
41,871
|
|
Depreciation and amortization
|
|
63,879
|
|
|
48,906
|
|
Gain on disposal or impairment of assets, net
|
|
(11,214
|
)
|
|
(204,319
|
)
|
Operating (Loss) Income
|
|
(14,667
|
)
|
|
193,900
|
|
OTHER INCOME (EXPENSE):
|
|
|
|
|
Equity in earnings of unconsolidated entities
|
|
1,816
|
|
|
394
|
|
Revaluation of investments
|
|
—
|
|
|
(14,365
|
)
|
Interest expense
|
|
(49,226
|
)
|
|
(30,438
|
)
|
(Loss) gain on early extinguishment of liabilities, net
|
|
(3,281
|
)
|
|
29,952
|
|
Other income, net
|
|
2,110
|
|
|
3,772
|
|
(Loss) Income Before Income Taxes
|
|
(63,248
|
)
|
|
183,215
|
|
INCOME TAX EXPENSE
|
|
(459
|
)
|
|
(462
|
)
|
Net (Loss) Income
|
|
(63,707
|
)
|
|
182,753
|
|
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
|
|
(52
|
)
|
|
(5,833
|
)
|
LESS: NET LOSS ATTRIBUTABLE TO REDEEMABLE NONCONTROLLING INTERESTS
|
|
397
|
|
|
—
|
|
NET (LOSS) INCOME ATTRIBUTABLE TO NGL ENERGY PARTNERS LP
|
|
(63,362
|
)
|
|
176,920
|
|
LESS: DISTRIBUTIONS TO PREFERRED UNITHOLDERS
|
|
(9,684
|
)
|
|
(3,384
|
)
|
LESS: NET LOSS (INCOME) ALLOCATED TO GENERAL PARTNER
|
|
40
|
|
|
(203
|
)
|
LESS: REPURCHASE OF WARRANTS
|
|
(349
|
)
|
|
—
|
|
NET (LOSS) INCOME ALLOCATED TO COMMON UNITHOLDERS
|
|
$
|
(73,355
|
)
|
|
$
|
173,333
|
|
BASIC (LOSS) INCOME PER COMMON UNIT
|
|
$
|
(0.61
|
)
|
|
$
|
1.66
|
|
DILUTED (LOSS) INCOME PER COMMON UNIT
|
|
$
|
(0.61
|
)
|
|
$
|
1.38
|
|
BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING
|
|
120,535,909
|
|
|
104,169,573
|
|
DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING
|
|
120,535,909
|
|
|
128,453,733
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Comprehensive
(Loss) Income
(in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
2017
|
|
2016
|
Net (loss) income
|
|
$
|
(63,707
|
)
|
|
$
|
182,753
|
|
Other comprehensive loss
|
|
(375
|
)
|
|
(152
|
)
|
Comprehensive (loss) income
|
|
$
|
(64,082
|
)
|
|
$
|
182,601
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Statement of Changes in Equity
Three Months Ended June 30, 2017
(in Thousands, except unit amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Limited Partners
|
|
|
|
|
|
|
|
|
|
|
Class B Preferred
|
|
Common
|
|
Accumulated
Other
|
|
|
|
|
|
|
General
Partner
|
|
Units
|
|
Amount
|
|
Units
|
|
Amount
|
|
Comprehensive
Loss
|
|
Noncontrolling
Interests
|
|
Total
Equity
|
BALANCES AT MARCH 31, 2017
|
|
$
|
(50,529
|
)
|
|
—
|
|
|
$
|
—
|
|
|
120,179,407
|
|
|
$
|
2,192,413
|
|
|
$
|
(1,828
|
)
|
|
$
|
26,746
|
|
|
$
|
2,166,802
|
|
Distributions to partners (Note 10)
|
|
(80
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(53,319
|
)
|
|
—
|
|
|
—
|
|
|
(53,399
|
)
|
Distributions to noncontrolling interest owners
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,898
|
)
|
|
(2,898
|
)
|
Contributions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23
|
|
|
23
|
|
Purchase of noncontrolling interest (Note 4)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,245
|
)
|
|
—
|
|
|
(16,638
|
)
|
|
(22,883
|
)
|
Redemption valuation adjustment (Note 2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(576
|
)
|
|
—
|
|
|
—
|
|
|
(576
|
)
|
Repurchase of warrants (Note 10)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,549
|
)
|
|
—
|
|
|
—
|
|
|
(10,549
|
)
|
Equity issued pursuant to incentive compensation plan (Note 10)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
66,421
|
|
|
8,294
|
|
|
—
|
|
|
—
|
|
|
8,295
|
|
Conversion of warrants (Note 10)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
607,653
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
Accretion of beneficial conversion feature of Class A convertible preferred units (Note 10)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,235
|
)
|
|
—
|
|
|
—
|
|
|
(3,235
|
)
|
Issuance of Class B preferred units (Note 10)
|
|
—
|
|
|
8,400,000
|
|
|
202,977
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
202,977
|
|
Net (loss) income
|
|
(40
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(63,322
|
)
|
|
—
|
|
|
52
|
|
|
(63,310
|
)
|
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(375
|
)
|
|
—
|
|
|
(375
|
)
|
BALANCES AT JUNE 30, 2017
|
|
$
|
(50,648
|
)
|
|
8,400,000
|
|
|
$
|
202,977
|
|
|
120,853,481
|
|
|
$
|
2,063,467
|
|
|
$
|
(2,203
|
)
|
|
$
|
7,285
|
|
|
$
|
2,220,878
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
2017
|
|
2016
|
OPERATING ACTIVITIES:
|
|
|
|
|
Net (loss) income
|
|
$
|
(63,707
|
)
|
|
$
|
182,753
|
|
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
|
|
|
|
|
Depreciation and amortization, including amortization of debt issuance costs
|
|
68,201
|
|
|
53,090
|
|
Loss (gain) on early extinguishment or revaluation of liabilities, net
|
|
3,281
|
|
|
(29,952
|
)
|
Non-cash equity-based compensation expense
|
|
8,821
|
|
|
22,337
|
|
Gain on disposal or impairment of assets, net
|
|
(11,214
|
)
|
|
(204,319
|
)
|
Provision for doubtful accounts
|
|
519
|
|
|
12
|
|
Net adjustments to fair value of commodity derivatives
|
|
(36,500
|
)
|
|
59,700
|
|
Equity in earnings of unconsolidated entities
|
|
(1,816
|
)
|
|
(394
|
)
|
Distributions of earnings from unconsolidated entities
|
|
1,426
|
|
|
177
|
|
Revaluation of investments
|
|
—
|
|
|
14,365
|
|
Other
|
|
3,670
|
|
|
(1,378
|
)
|
Changes in operating assets and liabilities, exclusive of acquisitions:
|
|
|
|
|
Accounts receivable-trade and affiliates
|
|
150,748
|
|
|
(75,403
|
)
|
Inventories
|
|
(5,739
|
)
|
|
(154,625
|
)
|
Other current and noncurrent assets
|
|
13,510
|
|
|
(57,692
|
)
|
Accounts payable-trade and affiliates
|
|
(142,007
|
)
|
|
108,844
|
|
Other current and noncurrent liabilities
|
|
11,798
|
|
|
11,945
|
|
Net cash provided by (used in) operating activities
|
|
991
|
|
|
(70,540
|
)
|
INVESTING ACTIVITIES:
|
|
|
|
|
Capital expenditures
|
|
(31,491
|
)
|
|
(140,179
|
)
|
Acquisitions, net of cash acquired
|
|
(19,897
|
)
|
|
(14,458
|
)
|
Cash flows from settlements of commodity derivatives
|
|
23,287
|
|
|
(21,535
|
)
|
Proceeds from sales of assets
|
|
20,135
|
|
|
438
|
|
Proceeds from sale of TLP common units
|
|
—
|
|
|
112,370
|
|
Investments in unconsolidated entities
|
|
(5,250
|
)
|
|
—
|
|
Distributions of capital from unconsolidated entities
|
|
2,115
|
|
|
2,941
|
|
Payments on loan for natural gas liquids facility
|
|
2,401
|
|
|
2,130
|
|
Loan to affiliate
|
|
(500
|
)
|
|
(1,000
|
)
|
Payments on loan to affiliate
|
|
—
|
|
|
655
|
|
Payment to terminate development agreement
|
|
—
|
|
|
(16,875
|
)
|
Net cash used in investing activities
|
|
(9,200
|
)
|
|
(75,513
|
)
|
FINANCING ACTIVITIES:
|
|
|
|
|
Proceeds from borrowings under Revolving Credit Facility
|
|
299,500
|
|
|
433,500
|
|
Payments on Revolving Credit Facility
|
|
(344,500
|
)
|
|
(454,500
|
)
|
Repurchase of senior secured and senior notes
|
|
(74,391
|
)
|
|
(15,129
|
)
|
Payments on other long-term debt
|
|
(1,327
|
)
|
|
(2,102
|
)
|
Debt issuance costs
|
|
(2,096
|
)
|
|
(45
|
)
|
Contributions from noncontrolling interest owners, net
|
|
23
|
|
|
329
|
|
Distributions to partners
|
|
(53,399
|
)
|
|
(40,696
|
)
|
Distributions to noncontrolling interest owners
|
|
—
|
|
|
(1,355
|
)
|
Proceeds from sale of preferred units, net of offering costs
|
|
202,977
|
|
|
235,180
|
|
Repurchase of warrants
|
|
(10,549
|
)
|
|
—
|
|
Payments for settlement and early extinguishment of liabilities
|
|
(745
|
)
|
|
(26,374
|
)
|
Other
|
|
—
|
|
|
(53
|
)
|
Net cash provided by financing activities
|
|
15,493
|
|
|
128,755
|
|
Net increase (decrease) in cash and cash equivalents
|
|
7,284
|
|
|
(17,298
|
)
|
Cash and cash equivalents, beginning of period
|
|
12,264
|
|
|
28,176
|
|
Cash and cash equivalents, end of period
|
|
$
|
19,548
|
|
|
$
|
10,878
|
|
Supplemental cash flow information:
|
|
|
|
|
Cash interest paid
|
|
$
|
54,335
|
|
|
$
|
29,187
|
|
Income taxes paid (net of income tax refunds)
|
|
$
|
1,247
|
|
|
$
|
1,684
|
|
Supplemental non-cash investing and financing activities:
|
|
|
|
|
Accrued capital expenditures
|
|
$
|
1,389
|
|
|
$
|
6,800
|
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
Note 1
—Organization and Operations
NGL Energy Partners LP (“we,” “us,” “our,” or the “Partnership”) is
a Delaware limited partnership
.
NGL Energy Holdings LLC serves as our general partner.
At
June 30, 2017
,
our operations include:
|
|
•
|
Our Crude Oil Logistics segment purchases crude oil from producers and transports it to refineries or for resale at pipeline injection stations, storage terminals, barge loading facilities, rail facilities, refineries, and other trade hubs.
|
|
|
•
|
Our Water Solutions segment provides services for the treatment and disposal of wastewater generated from crude oil and natural gas production and for the disposal of solids such as tank bottoms and drilling fluids and performs truck and frac tank washouts. In addition, our Water Solutions segment sells the recovered hydrocarbons that result from performing these services.
|
|
|
•
|
Our Liquids segment supplies natural gas liquids to retailers, wholesalers, refiners, and petrochemical plants throughout the United States and in Canada using its leased underground storage and fleet of leased railcars, markets regionally through its
21
owned terminals throughout the United States, and provides terminaling and storage services at its salt dome storage facility in Utah.
|
|
|
•
|
Our Retail Propane segment sells propane, distillates, equipment and supplies to end users consisting of residential, agricultural, commercial, and industrial customers and to certain resellers in
30
states and the District of Columbia.
|
|
|
•
|
Our Refined Products and Renewables segment conducts gasoline, diesel, ethanol, and biodiesel marketing operations, purchases refined petroleum and renewable products primarily in the Gulf Coast, Southeast and Midwest regions of the United States and schedules them for delivery at various locations throughout the country.
|
Note 2
—Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include our accounts and those of our controlled subsidiaries. Intercompany transactions and account balances have been eliminated in consolidation.
Investments we cannot control, but can exercise significant influence over, are accounted for using the equity method of accounting.
We also own an undivided interest in a crude oil pipeline, and include our proportionate share of assets, liabilities, and expenses related to this pipeline in our unaudited condensed consolidated financial statements.
Our unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim consolidated financial information in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, the unaudited condensed consolidated financial statements exclude certain information and notes required by GAAP for complete annual consolidated financial statements. However, we believe that the disclosures made are adequate to make the information presented not misleading. The unaudited condensed consolidated financial statements include all adjustments that we consider necessary for a fair presentation of our consolidated financial position and results of operations for the interim periods presented. Such adjustments consist only of normal recurring items, unless otherwise disclosed in this Quarterly Report. The unaudited condensed consolidated balance sheet at
March 31, 2017
was derived from our audited consolidated financial statements for the fiscal
year ended March 31, 2017
included in our Annual Report on Form 10-K (“Annual Report”) filed with the SEC on May 26, 2017.
These interim unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report. Due to the seasonal nature of certain of our operations and other factors, the results of operations for interim periods are not necessarily indicative of the results of operations to be expected for future periods or for the full fiscal year ending
March 31, 2018
.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amount of assets and liabilities reported at the date of the consolidated financial statements and the amount of revenues and expenses reported during the periods presented.
Critical estimates we make in the preparation of our unaudited condensed consolidated financial statements include, among others, determining the fair value of assets and liabilities acquired in business combinations, the collectibility of accounts receivable, the recoverability of inventories, useful lives and recoverability of property, plant and equipment and amortizable intangible assets, the impairment of assets, the fair value of asset retirement obligations, the value of equity-based compensation, and accruals for environmental matters. Although we believe these estimates are reasonable, actual results could differ from those estimates.
Significant Accounting Policies
Our significant accounting policies are consistent with those disclosed in Note 2 of our audited consolidated financial statements included in our Annual Report.
Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Fair value is based upon assumptions that market participants would use when pricing an asset or liability. We use the following fair value hierarchy, which prioritizes valuation technique inputs used to measure fair value into three broad levels:
|
|
•
|
Level 1: Quoted prices in active markets for identical assets and liabilities that we have the ability to access at the measurement date.
|
|
|
•
|
Level 2: Inputs (other than quoted prices included within Level 1) that are either directly or indirectly observable for the asset or liability, including (i) quoted prices for similar assets or liabilities in active markets, (ii) quoted prices for identical or similar assets or liabilities in inactive markets, (iii) inputs other than quoted prices that are observable for the asset or liability, and (iv) inputs that are derived from observable market data by correlation or other means. Instruments categorized in Level 2 include non-exchange traded derivatives such as over-the-counter commodity price swap and option contracts and forward commodity contracts. We determine the fair value of all of our derivative financial instruments utilizing pricing models for similar instruments. Inputs to the pricing models include publicly available prices and forward curves generated from a compilation of data gathered from third parties.
|
|
|
•
|
Level 3: Unobservable inputs for the asset or liability including situations where there is little, if any, market activity for the asset or liability.
|
The fair value hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3). In some cases, the inputs used to measure fair value might fall into different levels of the fair value hierarchy. The lowest level input that is significant to a fair value measurement determines the applicable level in the fair value hierarchy. Assessing the significance of a particular input to a fair value measurement requires judgment, considering factors specific to the asset or liability.
Derivative Financial Instruments
We record all derivative financial instrument contracts at fair value in our unaudited condensed consolidated balance sheets except for certain contracts that qualify for the
normal purchase and normal sale election
.
Under this accounting policy election, we do not record the contracts at fair value at each balance sheet date; instead, we record the purchase or sale at the contracted value once the delivery occurs.
We have not designated any financial instruments as hedges for accounting purposes. All changes in the fair value of our commodity derivative instruments that do not qualify as normal purchases and normal sales (whether cash transactions or
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
non-cash mark-to-market adjustments) are reported within cost of sales in our unaudited condensed consolidated statements of operations, regardless of whether the contract is physically or financially settled.
We utilize various commodity derivative financial instrument contracts to attempt to reduce our exposure to price fluctuations. We do not enter into such contracts for trading purposes. Changes in assets and liabilities from commodity derivative financial instruments result primarily from changes in market prices, newly originated transactions, and the timing of settlements. We attempt to balance our contractual portfolio in terms of notional amounts and timing of performance and delivery obligations. However, net unbalanced positions can exist or are established based on our assessment of anticipated market movements. Inherent in the resulting contractual portfolio are certain business risks, including commodity price risk and credit risk.
Commodity price risk is the risk that the market value of crude oil, natural gas liquids, or refined and renewables products will change, either favorably or unfavorably, in response to changing market conditions.
Credit risk is the risk of loss from nonperformance by suppliers, customers or financial counterparties to a contract.
Procedures and limits for managing commodity price risks and credit risks are specified in our market risk policy and credit risk policy, respectively.
Open commodity positions and market price changes are monitored daily and are reported to senior management and to marketing operations personnel.
Credit risk is monitored daily and exposure is minimized through customer deposits, restrictions on product liftings, letters of credit, and entering into master netting agreements that allow for offsetting counterparty receivable and payable balances for certain transactions.
Revenue Recognition
We record product sales revenues when title to the product transfers to the purchaser, which typically occurs when the purchaser receives the product. We record terminaling, transportation, storage, and service revenues when the service is performed, and we record tank and other rental revenues over the lease term. Revenues for our Water Solutions segment are recognized when we obtain the wastewater at our treatment and disposal facilities.
The tariffs we charge for our pipeline transportation systems are primarily regulated by the Federal Energy Regulatory Commission. Our tariffs include provisions which allow us to deduct from our customer’s inventory a small percentage of the products our customers transport on our pipeline systems. We refer to these product quantities as pipeline loss allowance. We receive pipeline loss allowances from our customers as consideration for product losses during the transportation of their products on our pipeline systems. Our customers are guaranteed delivery of the amount of their injected volumes, net of pipeline loss allowance, irrespective of what our actual product losses may be during the delivery process.
We report taxes collected from customers and remitted to taxing authorities, such as sales and use taxes, on a net basis. We include amounts billed to customers for shipping and handling costs in revenues in our unaudited condensed consolidated statements of operations. We enter into certain contracts whereby we agree to purchase product from a counterparty and sell the same volume of product to the same counterparty at a different location or time. When such agreements are entered into at the same time and in contemplation of each other, we record the revenues for these transactions net of cost of sales.
Revenues during the
three months ended
June 30, 2017
and
2016
include
$0.3 million
and
$1.2 million
, respectively, associated with the amortization of a liability recorded in the acquisition accounting for an acquired business related to certain out-of-market revenue contracts.
Income Taxes
We qualify as a partnership for income tax purposes. As such, we generally do not pay United States federal income tax. Rather, each owner reports his or her share of our income or loss on his or her individual tax return. The aggregate difference in the basis of our net assets for financial and tax reporting purposes cannot be readily determined, as we do not have access to information regarding each partner’s basis in the Partnership.
We have certain taxable corporate subsidiaries in the United States and in Canada, and our operations in Texas are subject to a state franchise tax that is calculated based on revenues net of cost of sales.
We evaluate uncertain tax positions for recognition and measurement in the consolidated financial statements. To recognize a tax position, we determine whether it is more likely than not that the tax position will be sustained upon examination, including resolution of any related appeals or litigation, based on the technical merits of the position. A tax position that meets the more likely than not threshold is measured to determine the amount of benefit to be recognized in the
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
consolidated financial statements. We had no material uncertain tax positions that required recognition in our unaudited condensed consolidated financial statements at
June 30, 2017
or
March 31, 2017
.
Inventories
We value our inventories at the lower of cost or market, with cost determined using either the weighted-average cost or the first in, first out (FIFO) methods, including the cost of transportation and storage. Market is determined based on estimated replacement cost using prices at the end of the reporting period. On April 1, 2017, we adopted the new inventory standard, Accounting Standards Update (“ASU”) No. 2015-11. Under this ASU, inventory is to be measured at the lower of cost or net realizable value, which is defined as the estimated selling price in the ordinary course of business, less reasonable predictable costs of completion, disposal, and transportation. In performing this analysis, we consider fixed-price forward commitments and the opportunity to transfer propane inventory from our wholesale Liquids business to our Retail Propane business to sell the inventory in retail markets.
Inventories consist of the following at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
March 31, 2017
|
|
|
(in thousands)
|
Crude oil
|
|
$
|
85,715
|
|
|
$
|
146,857
|
|
Natural gas liquids:
|
|
|
|
|
Propane
|
|
66,108
|
|
|
38,631
|
|
Butane
|
|
49,706
|
|
|
5,992
|
|
Other
|
|
6,638
|
|
|
6,035
|
|
Refined products:
|
|
|
|
|
Gasoline
|
|
171,329
|
|
|
193,051
|
|
Diesel
|
|
123,770
|
|
|
98,237
|
|
Renewables:
|
|
|
|
|
Ethanol
|
|
38,100
|
|
|
42,009
|
|
Biodiesel
|
|
12,447
|
|
|
21,410
|
|
Other
|
|
9,280
|
|
|
9,210
|
|
Total
|
|
$
|
563,093
|
|
|
$
|
561,432
|
|
Investments in Unconsolidated Entities
Investments we cannot control, but can exercise significant influence over, are accounted for using the equity method of accounting.
Investments in partnerships and limited liability companies, unless our investment is considered to be minor, and investments in unincorporated joint ventures are also accounted for using the equity method of accounting. Under the equity method, we do not report the individual assets and liabilities of these entities on our unaudited condensed consolidated balance sheets; instead, our ownership interests are reported within investments in unconsolidated entities on our unaudited condensed consolidated balance sheets. Under the equity method, the investment is recorded at acquisition cost, increased by our proportionate share of any earnings and additional capital contributions and decreased by our proportionate share of any losses, distributions paid, and amortization of any excess investment. Excess investment is the amount by which our total investment exceeds our proportionate share of the historical net book value of the net assets of the investee. We use the cumulative earnings approach to classify distributions received from unconsolidated entities as either operating activities or investing activities in our unaudited condensed consolidated statements of cash flows.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Our investments in unconsolidated entities consist of the following at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Entity
|
|
Segment
|
|
Ownership
Interest (1)
|
|
Date Acquired
or Formed
|
|
June 30, 2017
|
|
March 31, 2017
|
|
|
|
|
|
|
|
|
(in thousands)
|
Glass Mountain Pipeline, LLC (2)
|
|
Crude Oil Logistics
|
|
50%
|
|
December 2013
|
|
$
|
175,215
|
|
|
$
|
172,098
|
|
E Energy Adams, LLC
|
|
Refined Products and Renewables
|
|
19%
|
|
December 2013
|
|
13,445
|
|
|
12,952
|
|
Water treatment and disposal facility (3)
|
|
Water Solutions
|
|
50%
|
|
August 2015
|
|
2,165
|
|
|
2,147
|
|
Victory Propane, LLC
|
|
Retail Propane
|
|
50%
|
|
April 2015
|
|
123
|
|
|
226
|
|
Total
|
|
|
|
|
|
|
|
$
|
190,948
|
|
|
$
|
187,423
|
|
|
|
(1)
|
Ownership interest percentages are at
June 30, 2017
.
|
|
|
(2)
|
Our investment in Glass Mountain Pipeline, LLC (“Glass Mountain”) exceeds our proportionate share of the historical net book value of Glass Mountain’s net assets by
$72.0 million
at
June 30, 2017
. This difference relates primarily to goodwill and customer relationships. We amortize the value of the customer relationships and record the expense within equity in earnings of unconsolidated entities in our unaudited condensed consolidated statement of operations.
|
|
|
(3)
|
This is an investment in an unincorporated joint venture.
|
Other Noncurrent Assets
Other noncurrent assets consist of the following at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
March 31, 2017
|
|
|
(in thousands)
|
Loan receivable (1)
|
|
$
|
38,004
|
|
|
$
|
40,684
|
|
Line fill (2)
|
|
30,628
|
|
|
30,628
|
|
Tank bottoms (3)
|
|
42,044
|
|
|
42,044
|
|
Minimum shipping fees - pipeline commitments (4)
|
|
71,048
|
|
|
67,996
|
|
Other
|
|
57,202
|
|
|
58,252
|
|
Total
|
|
$
|
238,926
|
|
|
$
|
239,604
|
|
|
|
(1)
|
Represents
a loan receivable associated with our financing of the construction of a natural gas liquids facility to be utilized by a third party
.
|
|
|
(2)
|
Represents minimum volumes of crude oil we are required to leave on certain third-party owned pipelines under long-term shipment commitments. At
June 30, 2017
and
March 31, 2017
, line fill consisted of
427,193
barrels and
427,193
barrels of crude oil, respectively. Line fill held in pipelines we own is included within property, plant and equipment (see
Note 5
).
|
|
|
(3)
|
Tank bottoms, which are product volumes required for the operation of storage tanks, are recorded at historical cost. We recover tank bottoms when the storage tanks are removed from service.
At
June 30, 2017
and
March 31, 2017
, tank bottoms held in third party terminals consisted of
366,212
barrels and
366,212
barrels of refined products, respectively. Tank bottoms held in terminals we own are included within property, plant and equipment (see
Note 5
).
|
|
|
(4)
|
Represents the minimum shipping fees paid in excess of volumes shipped. This amount can be recovered when volumes shipped exceed the minimum monthly volume commitment (see
Note 9
).
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Accrued Expenses and Other Payables
Accrued expenses and other payables consist of the following at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
March 31, 2017
|
|
|
(in thousands)
|
Accrued compensation and benefits
|
|
$
|
18,337
|
|
|
$
|
22,227
|
|
Excise and other tax liabilities
|
|
61,284
|
|
|
64,051
|
|
Derivative liabilities
|
|
23,428
|
|
|
27,622
|
|
Accrued interest
|
|
36,454
|
|
|
44,418
|
|
Product exchange liabilities
|
|
8,844
|
|
|
1,693
|
|
Deferred gain on sale of general partner interest in TLP
|
|
30,113
|
|
|
30,113
|
|
Other
|
|
14,389
|
|
|
17,001
|
|
Total
|
|
$
|
192,849
|
|
|
$
|
207,125
|
|
Deferred Gain on Sale of General Partner Interest in TLP
On February 1, 2016, we sold our general partner interest in TransMontaigne Partners L.P. (“TLP”) to an affiliate of ArcLight Capital Partners. We deferred a portion of the gain on the sale and will recognize this amount over our future lease payment obligations, which is approximately
seven years
. During the
three months ended
June 30, 2017
and
2016
, we recognized
$7.5 million
and
$7.5 million
, respectively, of the deferred gain in our unaudited condensed consolidated statements of operations. Within our unaudited condensed consolidated balance sheet, the current portion of the deferred gain,
$30.1 million
, is recorded in accrued expenses and other payables and the long-term portion,
$131.8 million
, is recorded in other noncurrent liabilities.
Noncontrolling Interests
Noncontrolling interests represent the portion of certain consolidated subsidiaries that are owned by third parties.
Amounts are adjusted by the noncontrolling interest holder’s proportionate share of the subsidiaries’ earnings or losses each period and any distributions that are paid. Noncontrolling interests are reported as a component of equity, unless the noncontrolling interest is considered redeemable, in which case the noncontrolling interest is recorded between liabilities and equity (mezzanine or temporary equity) in our unaudited condensed consolidated balance sheet. The redeemable noncontrolling interest is adjusted at the balance sheet date to its maximum redemption value if the amount is greater than the carrying value. During the
three months ended
June 30, 2017
, we recorded
$0.6 million
to adjust the redeemable noncontrolling interest to its maximum redemption value.
Business Combination Measurement Period
We record the assets acquired and liabilities assumed in a business combination at their acquisition date fair values. Pursuant to GAAP, an entity is allowed a reasonable period of time (not to exceed one year) to obtain the information necessary to identify and measure the fair value of the assets acquired and liabilities assumed in a business combination. As discussed in
Note 4
, certain of our acquisitions are still within this measurement period, and as a result, the acquisition date fair values we have recorded for the assets acquired and liabilities assumed are subject to change.
Reclassifications
We have reclassified certain prior period financial statement information to be consistent with the classification methods used in the current fiscal year. These reclassifications did not impact previously reported amounts of equity, net income, or cash flows. Also, certain line items in our unaudited condensed consolidated statement of cash flows were combined and the prior period amounts were combined to be consistent with the classification methods used in the current fiscal year.
Recent Accounting Pronouncements
In August 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-15, “Statement of Cash Flows-Classification of Certain Cash Receipts and Cash Payments.” The ASU requires cash payments not made soon after the
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
acquisition date of a business combination by an acquirer to settle a contingent consideration liability to be separated and classified as cash outflows for financing activities and operating activities. Cash payments up to the amount of the contingent consideration liability recognized at the acquisition date (including measurement-period adjustments) should be classified as financing activities and any excess should be classified as operating activities. We adopted this ASU effective April 1, 2017 and have revised previously reported information.
In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses.” The ASU requires a financial asset (or a group of financial assets) measured at amortized cost to be presented at the net amount expected to be collected, which would include accounts receivable. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. The ASU is effective for the Partnership beginning April 1, 2020, and requires a modified retrospective method of adoption, although early adoption is permitted. We are currently in the process of assessing the impact of this ASU on our consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, “Leases.” The ASU will replace previous lease accounting guidance in GAAP. The ASU requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. The ASU retains a distinction between finance leases and operating leases. The ASU is effective for the Partnership beginning April 1, 2019, and requires a modified retrospective method of adoption. We are currently in the process of compiling a database of leases and analyzing each lease to assess the impact under this ASU on our consolidated financial statements.
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers.” The ASU will replace most existing revenue recognition guidance in GAAP. The core principle of this ASU is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. The ASU is effective for the Partnership beginning April 1, 2018, and allows for both full retrospective and modified retrospective methods of adoption.
We are in the process of evaluating our revenue contracts by segment and type to determine the potential impact of adopting this ASU. At this point in our evaluation process, we have determined that the timing and/or amount of revenue that we recognize on certain contracts may be impacted by the adoption of this ASU; however, we are still in the process of quantifying these impacts and have not yet determined whether they would be material to our consolidated financial statements. In addition, we are in the process of implementing appropriate changes to our business processes, systems and controls to support recognition and disclosure under this ASU. We continue to monitor additional authoritative or interpretive guidance related to this ASU as it becomes available, as well as comparing our conclusions on specific interpretative issues to other peers in our industry, to the extent that such information is available to us. We currently anticipate utilizing a modified retrospective adoption as of April 1, 2018.
Note 3—Income (Loss) Per Common Unit
The following table presents our calculation of basic and diluted weighted average units outstanding for the periods indicated:
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
2017
|
|
2016
|
Weighted average units outstanding during the period:
|
|
|
|
Common units - Basic
|
120,535,909
|
|
|
104,169,573
|
|
Effect of Dilutive Securities:
|
|
|
|
Warrants
|
—
|
|
|
4,341,991
|
|
Class A Preferred Units
|
—
|
|
|
19,942,169
|
|
Common units - Diluted
|
120,535,909
|
|
|
128,453,733
|
|
For the
three months ended
June 30, 2017
, Class A Preferred Units (as defined herein), warrants, Performance Awards (as defined herein), and Service Awards (as defined herein) were considered antidilutive. For the
three months ended
June 30, 2016
, the Service Awards and Performance Awards were considered antidilutive.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Our income (loss) per common unit is as follows for the periods indicated:
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
2017
|
|
2016
|
|
(in thousands, except unit and per unit amounts)
|
Net (loss) income
|
$
|
(63,707
|
)
|
|
$
|
182,753
|
|
Less: Net income attributable to noncontrolling interests
|
(52
|
)
|
|
(5,833
|
)
|
Less: Net loss attributable to redeemable noncontrolling interests
|
397
|
|
|
—
|
|
Net (loss) income attributable to NGL Energy Partners LP
|
(63,362
|
)
|
|
176,920
|
|
Less: Distributions to preferred unitholders
|
(9,684
|
)
|
|
(3,384
|
)
|
Less: Net loss (income) allocated to general partner (1)
|
40
|
|
|
(203
|
)
|
Less: Repurchase of warrants (2)
|
(349
|
)
|
|
—
|
|
Net (loss) income allocated to common unitholders (basic)
|
(73,355
|
)
|
|
173,333
|
|
Effect of dilutive securities
|
—
|
|
|
3,381
|
|
Net (loss) income allocated to common unitholders (diluted)
|
$
|
(73,355
|
)
|
|
$
|
176,714
|
|
Basic (loss) income per common unit
|
$
|
(0.61
|
)
|
|
$
|
1.66
|
|
Diluted (loss) income per common unit
|
$
|
(0.61
|
)
|
|
$
|
1.38
|
|
Basic weighted average common units outstanding
|
120,535,909
|
|
|
104,169,573
|
|
Diluted weighted average common units outstanding
|
120,535,909
|
|
|
128,453,733
|
|
|
|
(1)
|
Net loss (income) allocated to the general partner includes distributions to which it is entitled as the holder of incentive distribution rights, which are discussed in
Note 10
.
|
|
|
(2)
|
This amount represents the excess of the repurchase price over the fair value of the warrants, as discussed further in
Note 10
.
|
Note 4
—Acquisitions
The following summarizes our acquisitions during the
three months ended
June 30, 2017
:
Acquisition of Remaining Interest in NGL Solids Solutions, LLC
On April 17, 2017, we entered into a purchase and sale agreement with the party owning the
50%
noncontrolling interest in NGL Solids Solutions, LLC, a consolidated subsidiary, in our Water Solutions segment. Total consideration was
$23.1 million
, which consisted of cash of
$20.0 million
and the termination of a non-compete agreement that we valued at
$3.1 million
and in return we received the following:
|
|
•
|
The remaining
50%
interest in NGL Solids Solutions, LLC; and
|
|
|
•
|
Two
parcels of land to develop saltwater disposal wells.
|
We accounted for the transaction as an acquisition of assets. Acquiring assets in groups requires not only ascertaining the cost of the asset (or net asset) group but also allocating that cost to the individual assets (or individual assets and liabilities) that make up the group. The cost of a group of assets acquired in an asset acquisition is allocated to the individual assets acquired or liabilities assumed/released based on their relative fair values and does not give rise to goodwill or bargain purchase gains. We allocated
$22.9 million
to noncontrolling interest and
$0.2 million
to land. The acquisition of the remaining interest was accounted for as an equity transaction, no gain or loss was recorded and the carrying value of the noncontrolling interest was adjusted to reflect the change in ownership interest of the subsidiary. As of the date of the transaction, the
50%
noncontrolling interest had a carrying value of
$16.6 million
. For the termination of the non-compete agreement, we recorded a gain of
$1.3 million
, which included the carrying value of the non-compete agreement intangible asset that was written off (see
Note 7
). This gain was recorded within
gain on disposal or impairment of assets, net
in our unaudited condensed consolidated statement of operations during the
three months ended
June 30, 2017
.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
The following summarizes the status of the preliminary purchase price allocation of acquisitions prior to April 1, 2017:
Water Solutions Facilities
During the
three months ended
June 30, 2017
, we completed the acquisition accounting for
one
water solutions facility. There were no adjustments to the fair value of assets acquired and liabilities assumed during the
three months ended
June 30, 2017
.
We are in the process of finalizing the fair value of the property, plant and equipment acquired and asset retirement obligations assumed for
one
water solutions facility acquired in September 2016, and as a result, the estimates of fair value at
March 31, 2017
are subject to change.
Retail Propane Businesses
During the
three months ended
June 30, 2017
, we completed the acquisition accounting for
two
retail propane businesses. There were no adjustments to the fair value of assets acquired and liabilities assumed during the
three months ended
June 30, 2017
.
We are in the process of finalizing the fair value of the property, plant and equipment acquired for
one
retail propane business acquired in October 2016, and as a result, the estimates of fair value at
March 31, 2017
are subject to change.
Natural Gas Liquids Facilities
During the
three months ended
June 30, 2017
, we completed the acquisition accounting for certain natural gas liquids facilities acquired in January 2017. There were no material adjustments to the fair value of assets acquired and liabilities assumed during the
three months ended
June 30, 2017
.
Note 5
—Property, Plant and Equipment
Our property, plant and equipment consists of the following at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Estimated
Useful Lives
|
|
June 30, 2017
|
|
March 31, 2017
|
|
|
|
|
(in thousands)
|
Natural gas liquids terminal and storage assets
|
|
2–30 years
|
|
$
|
236,363
|
|
|
$
|
207,825
|
|
Pipeline and related facilities
|
|
30–40 years
|
|
253,022
|
|
|
248,582
|
|
Refined products terminal assets and equipment
|
|
15–25 years
|
|
6,736
|
|
|
6,736
|
|
Retail propane equipment
|
|
2–30 years
|
|
240,861
|
|
|
239,417
|
|
Vehicles and railcars
|
|
3–25 years
|
|
196,576
|
|
|
198,480
|
|
Water treatment facilities and equipment
|
|
3–30 years
|
|
566,306
|
|
|
557,100
|
|
Crude oil tanks and related equipment
|
|
2–30 years
|
|
220,732
|
|
|
203,003
|
|
Barges and towboats
|
|
5–30 years
|
|
91,263
|
|
|
91,037
|
|
Information technology equipment
|
|
3–7 years
|
|
44,009
|
|
|
43,880
|
|
Buildings and leasehold improvements
|
|
3–40 years
|
|
170,651
|
|
|
161,957
|
|
Land
|
|
|
|
59,261
|
|
|
56,545
|
|
Tank bottoms and line fill (1)
|
|
|
|
24,462
|
|
|
24,462
|
|
Other
|
|
3–20 years
|
|
23,630
|
|
|
39,132
|
|
Construction in progress
|
|
|
|
36,603
|
|
|
87,711
|
|
|
|
|
|
2,170,475
|
|
|
2,165,867
|
|
Accumulated depreciation
|
|
|
|
(400,857
|
)
|
|
(375,594
|
)
|
Net property, plant and equipment
|
|
|
|
$
|
1,769,618
|
|
|
$
|
1,790,273
|
|
|
|
(1)
|
Tank bottoms, which are product volumes required for the operation of storage tanks, are recorded at historical cost. We recover tank bottoms when the storage tanks are removed from service.
Line fill, which represents our portion of the product volume required for the operation of the proportionate share of a pipeline we own, is recorded at historical cost.
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
The following table summarizes depreciation expense and capitalized interest expense for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
2017
|
|
2016
|
|
|
(in thousands)
|
Depreciation expense
|
|
$
|
32,344
|
|
|
$
|
27,654
|
|
Capitalized interest expense
|
|
$
|
—
|
|
|
$
|
3,735
|
|
We record losses (gains) from the sales of property, plant and equipment and any write-downs in value due to impairment within
gain on disposal or impairment of assets, net
in our unaudited condensed consolidated statements of operations. During the
three months ended
June 30, 2017
, we recorded a net gain of
$2.5 million
, of which
$3.4 million
related to a gain on
the sale of excess pipe in our Crude Oil Logistics segment
.
Note 6—Goodwill
There were no changes to goodwill during the
three months ended
June 30, 2017
.
Note 7
—Intangible Assets
Our intangible assets consist of the following at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
March 31, 2017
|
Description
|
|
Amortizable Lives
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
|
|
|
|
(in thousands)
|
Amortizable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships
|
|
3–20 years
|
|
$
|
906,782
|
|
|
$
|
337,455
|
|
|
$
|
569,327
|
|
|
$
|
906,782
|
|
|
$
|
316,242
|
|
|
$
|
590,540
|
|
Customer commitments
|
|
10 years
|
|
310,000
|
|
|
20,667
|
|
|
289,333
|
|
|
310,000
|
|
|
12,917
|
|
|
297,083
|
|
Pipeline capacity rights
|
|
30 years
|
|
161,785
|
|
|
13,000
|
|
|
148,785
|
|
|
161,785
|
|
|
11,652
|
|
|
150,133
|
|
Rights-of-way and easements
|
|
1–40 years
|
|
63,766
|
|
|
2,931
|
|
|
60,835
|
|
|
63,402
|
|
|
2,154
|
|
|
61,248
|
|
Executory contracts and other agreements
|
|
3–30 years
|
|
29,036
|
|
|
21,468
|
|
|
7,568
|
|
|
29,036
|
|
|
20,457
|
|
|
8,579
|
|
Non-compete agreements
|
|
2–32 years
|
|
29,718
|
|
|
17,274
|
|
|
12,444
|
|
|
32,984
|
|
|
17,762
|
|
|
15,222
|
|
Trade names
|
|
1–10 years
|
|
15,439
|
|
|
13,486
|
|
|
1,953
|
|
|
15,439
|
|
|
13,396
|
|
|
2,043
|
|
Debt issuance costs
(1)
|
|
5 years
|
|
40,789
|
|
|
21,111
|
|
|
19,678
|
|
|
38,983
|
|
|
20,025
|
|
|
18,958
|
|
Total amortizable
|
|
|
|
1,557,315
|
|
|
447,392
|
|
|
1,109,923
|
|
|
1,558,411
|
|
|
414,605
|
|
|
1,143,806
|
|
Non-amortizable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade names
|
|
|
|
20,150
|
|
|
—
|
|
|
20,150
|
|
|
20,150
|
|
|
—
|
|
|
20,150
|
|
Total non-amortizable
|
|
|
|
20,150
|
|
|
—
|
|
|
20,150
|
|
|
20,150
|
|
|
—
|
|
|
20,150
|
|
Total
|
|
|
|
$
|
1,577,465
|
|
|
$
|
447,392
|
|
|
$
|
1,130,073
|
|
|
$
|
1,578,561
|
|
|
$
|
414,605
|
|
|
$
|
1,163,956
|
|
|
|
(1)
|
Includes debt issuance costs related to the Revolving Credit Facility (as defined herein). Debt issuance costs related to fixed-rate notes are reported as a reduction of the carrying amount of long-term debt. We incurred
$1.8 million
in debt issuance costs related to the June 2017 amendment and restatement of our Credit Agreement (as defined herein).
|
The weighted-average remaining amortization period for intangible assets is approximately
11.0 years
.
Write off of Intangible Assets
During the
three months ended
June 30, 2017
, we wrote off
$1.8 million
related to the non-compete agreement which was terminated as part of our acquisition of the remaining interest in NGL Solids Solutions, LLC (see
Note 4
).
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Amortization expense is as follows for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
Recorded In
|
|
2017
|
|
2016
|
|
|
(in thousands)
|
Depreciation and amortization
|
|
$
|
31,535
|
|
|
$
|
21,252
|
|
Cost of sales
|
|
1,585
|
|
|
1,596
|
|
Interest expense
|
|
1,086
|
|
|
1,725
|
|
Total
|
|
$
|
34,206
|
|
|
$
|
24,573
|
|
Expected amortization of our intangible assets is as follows (in thousands):
|
|
|
|
|
Fiscal Year Ending March 31,
|
|
2018 (nine months)
|
$
|
99,985
|
|
2019
|
128,423
|
|
2020
|
125,036
|
|
2021
|
111,928
|
|
2022
|
96,825
|
|
Thereafter
|
547,726
|
|
Total
|
$
|
1,109,923
|
|
Note 8
—Long-Term Debt
Our long-term debt consists of the following at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
March 31, 2017
|
|
|
Face
Amount
|
|
Unamortized
Debt Issuance
Costs (1)
|
|
Book
Value
|
|
Face
Amount
|
|
Unamortized
Debt Issuance
Costs (1)
|
|
Book
Value
|
|
|
(in thousands)
|
Revolving credit facility:
|
|
|
|
|
|
|
|
|
|
|
|
|
Expansion capital borrowings
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Working capital borrowings
|
|
769,500
|
|
|
—
|
|
|
769,500
|
|
|
814,500
|
|
|
—
|
|
|
814,500
|
|
Senior secured notes
|
|
195,000
|
|
|
(3,417
|
)
|
|
191,583
|
|
|
250,000
|
|
|
(4,559
|
)
|
|
245,441
|
|
Senior notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
5.125% Notes due 2019
|
|
362,256
|
|
|
(2,697
|
)
|
|
359,559
|
|
|
379,458
|
|
|
(3,191
|
)
|
|
376,267
|
|
6.875% Notes due 2021
|
|
367,048
|
|
|
(5,472
|
)
|
|
361,576
|
|
|
367,048
|
|
|
(5,812
|
)
|
|
361,236
|
|
7.500% Notes due 2023
|
|
700,000
|
|
|
(11,043
|
)
|
|
688,957
|
|
|
700,000
|
|
|
(11,329
|
)
|
|
688,671
|
|
6.125% Notes due 2025
|
|
500,000
|
|
|
(8,378
|
)
|
|
491,622
|
|
|
500,000
|
|
|
(8,567
|
)
|
|
491,433
|
|
Other long-term debt
|
|
14,321
|
|
|
—
|
|
|
14,321
|
|
|
15,525
|
|
|
—
|
|
|
15,525
|
|
|
|
2,908,125
|
|
|
(31,007
|
)
|
|
2,877,118
|
|
|
3,026,531
|
|
|
(33,458
|
)
|
|
2,993,073
|
|
Less: Current maturities
|
|
42,793
|
|
|
—
|
|
|
42,793
|
|
|
29,590
|
|
|
—
|
|
|
29,590
|
|
Long-term debt
|
|
$
|
2,865,332
|
|
|
$
|
(31,007
|
)
|
|
$
|
2,834,325
|
|
|
$
|
2,996,941
|
|
|
$
|
(33,458
|
)
|
|
$
|
2,963,483
|
|
|
|
(1)
|
Debt issuance costs related to the Revolving Credit Facility are reported within intangible assets, rather than as a reduction of the carrying amount of long-term debt.
|
Amortization expense for debt issuance costs related to long-term debt in the table above was
$1.7 million
and
$0.9 million
during the
three months ended
June 30, 2017
and
2016
, respectively.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Expected amortization of debt issuance costs is as follows (in thousands):
|
|
|
|
|
|
Fiscal Year Ending March 31,
|
|
|
2018 (nine months)
|
|
$
|
4,645
|
|
2019
|
|
6,099
|
|
2020
|
|
5,171
|
|
2021
|
|
4,788
|
|
2022
|
|
4,207
|
|
Thereafter
|
|
6,097
|
|
Total
|
|
$
|
31,007
|
|
Credit Agreement
We are party to a
$1.765 billion
credit agreement (the “Credit Agreement”) with a syndicate of banks. As of
June 30, 2017
, the Credit Agreement includes a revolving credit facility to fund working capital needs, which had a capacity of
$1.0 billion
for cash borrowings and letters of credit, (the “Working Capital Facility”) and a revolving credit facility to fund acquisitions and expansion projects, which had a capacity of
$765.0 million
(the “Expansion Capital Facility,” and together with the Working Capital Facility, the “Revolving Credit Facility”). We had letters of credit of
$71.7 million
on the Working Capital Facility at
June 30, 2017
.
At
June 30, 2017
, the borrowings under the Credit Agreement had a weighted average interest rate of
3.99%
, calculated as the weighted average LIBOR rate of
1.19%
plus a margin of
2.75%
for LIBOR borrowings and the prime rate of
4.25%
plus a margin of
1.75%
on alternate base rate borrowings. At
June 30, 2017
, the interest rate in effect on letters of credit was
2.75%
. Commitment fees were charged at a rate ranging from
0.375%
to
0.50%
on any unused capacity.
On June 2, 2017, we amended our Credit Agreement.
The amendment, among other things, restricts us from increasing our distribution rate over the amount paid in the preceding quarter if our leverage ratio is greater than 4.25 to 1
and modifies our financial covenants. The following table summarizes the debt covenant levels specified in the Credit Agreement as of
June 30, 2017
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Secured
|
|
Interest
|
Period Beginning
|
|
Leverage Ratio (1)
|
|
Leverage Ratio (1)
|
|
Coverage Ratio (2)
|
March 31, 2017
|
|
4.75
|
|
|
3.25
|
|
|
2.75
|
|
June 30, 2017
|
|
5.50
|
|
|
2.50
|
|
|
2.25
|
|
March 31, 2018
|
|
4.75
|
|
|
3.25
|
|
|
2.75
|
|
March 31, 2019 and thereafter
|
|
4.50
|
|
|
3.25
|
|
|
2.75
|
|
|
|
(1)
|
Amount represents the maximum ratio for the period presented.
|
|
|
(2)
|
Amount represents the minimum ratio for the period presented.
|
At
June 30, 2017
our leverage ratio was approximately
5.18
to
1
, our senior secured leverage ratio was approximately
0.49
to
1
and our interest coverage ratio was approximately
2.53
to
1
.
At
June 30, 2017
,
we were in compliance with the covenants under the Credit Agreement.
Senior Secured Notes
During the
three months ended
June 30, 2017
, we repurchased
$55.0 million
of our senior secured notes for an aggregate purchase price of
$57.2 million
(excluding payments of accrued interest), and recorded a loss on the early extinguishment of
$3.2 million
(net of
$1.0 million
of debt issuance costs.)
Following the repurchase, semi-annual installment payments will be
$19.5 million
beginning on December 19, 2017 and ending on the maturity date of June 19, 2022.
On August 2, 2017, we amended the note purchase agreement for our senior secured notes with an effective date of June 2, 2017. The amendment, among other things, conforms the financial covenants to match the amended terms of Credit
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Agreement and provides for an increase in interest charged if our leverage ratio exceeds certain predetermined levels.
In addition, the amendment also restricts us from increasing our distribution rate over the amount paid in the preceding quarter if our interest coverage ratio is less than 3.00 to 1.
At
June 30, 2017
,
we were in compliance with the covenants under the note purchase agreement for our senior secured notes.
Senior Notes
During the
three months ended
June 30, 2017
, we repurchased
$17.2 million
of our
5.125% senior notes due 2019
for an aggregate purchase price of
$17.2 million
(excluding payments of accrued interest), and recorded a loss on the early extinguishment of
$0.1 million
(net of
$0.1 million
of debt issuance costs.)
At
June 30, 2017
,
we were in compliance with the covenants under the indentures for all of the senior notes.
Other Long-Term Debt
We have executed various non-interest bearing notes payable, primarily related to non-compete agreements entered into in connection with acquisitions of businesses. These instruments have a principal balance of
$7.8 million
at
June 30, 2017
, and the implied interest rates on these instruments range from
1.91%
to
7.00%
per year. We also have certain notes payable related to equipment financing. These instruments have a principal balance of
$6.5 million
at
June 30, 2017
, and the interest rates on these instruments range from
4.13%
to
7.10%
per year.
Debt Maturity Schedule
The scheduled maturities of our long-term debt are as follows at
June 30, 2017
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ending March 31,
|
|
Revolving
Credit
Facility
|
|
Senior Secured Notes
|
|
Senior Notes
|
|
Other
Long-Term
Debt
|
|
Total
|
|
|
(in thousands)
|
2018 (nine months)
|
|
$
|
—
|
|
|
$
|
19,500
|
|
|
$
|
—
|
|
|
$
|
3,359
|
|
|
$
|
22,859
|
|
2019
|
|
—
|
|
|
39,000
|
|
|
—
|
|
|
3,027
|
|
|
42,027
|
|
2020
|
|
—
|
|
|
39,000
|
|
|
362,256
|
|
|
2,228
|
|
|
403,484
|
|
2021
|
|
—
|
|
|
39,000
|
|
|
—
|
|
|
5,407
|
|
|
44,407
|
|
2022
|
|
769,500
|
|
|
39,000
|
|
|
367,048
|
|
|
241
|
|
|
1,175,789
|
|
Thereafter
|
|
—
|
|
|
19,500
|
|
|
1,200,000
|
|
|
59
|
|
|
1,219,559
|
|
Total
|
|
$
|
769,500
|
|
|
$
|
195,000
|
|
|
$
|
1,929,304
|
|
|
$
|
14,321
|
|
|
$
|
2,908,125
|
|
Note 9
—Commitments and Contingencies
Legal Contingencies
We are party to various claims, legal actions, and complaints arising in the ordinary course of business. In the opinion of our management, the ultimate resolution of these claims, legal actions, and complaints, after consideration of amounts accrued, insurance coverage, and other arrangements, is not expected to have a material adverse effect on our consolidated financial position, results of operations or cash flows. However, the outcome of such matters is inherently uncertain, and estimates of our liabilities may change materially as circumstances develop.
Environmental Matters
Our unaudited condensed consolidated balance sheet at
June 30, 2017
includes a liability, measured on an undiscounted basis, of
$2.3 million
related to environmental matters, which is recorded within accrued expenses and other payables in our unaudited condensed consolidated balance sheet. Our operations are subject to extensive federal, state, and local environmental laws and regulations. Although we believe our operations are in substantial compliance with applicable environmental laws and regulations, risks of additional costs and liabilities are inherent in our business, and there can be no
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
assurance that we will not incur significant costs. Moreover, it is possible that other developments, such as increasingly stringent environmental laws, regulations and enforcement policies thereunder, and claims for damages to property or persons resulting from the operations, could result in substantial costs. Accordingly, we have adopted policies, practices, and procedures in the areas of pollution control, product safety, occupational health, and the handling, storage, use, and disposal of hazardous materials designed to prevent material environmental or other damage, and to limit the financial liability that could result from such events. However, some risk of environmental or other damage is inherent in our business.
As previously disclosed, the U.S. Environmental Protection Agency (“EPA”) had informed NGL Crude Logistics, LLC, formerly known as Gavilon, LLC (“Gavilon Energy”), of alleged violations in 2011 by Gavilon Energy of the Clean Air Act’s renewable fuel standards regulations (prior to its acquisition by us in December 2013). On October 4, 2016, the U.S. Department of Justice, acting at the request of the EPA, filed a civil complaint in the Northern District of Iowa against Gavilon Energy and one of its then suppliers, Western Dubuque Biodiesel LLC (“Western Dubuque”). Consistent with the earlier allegations by the EPA, the civil complaint related to transactions between Gavilon Energy and Western Dubuque and the generation of biodiesel renewable identification numbers (“RINs”) sold by Western Dubuque to Gavilon Energy in 2011. On December 19, 2016, we filed a motion to dismiss the complaint. On January 9, 2017, the EPA filed an amended complaint. The amended complaint seeks an order declaring Western Dubuque’s RINs invalid and requiring the defendants to retire an equivalent number of valid RINs and that the defendants pay statutory civil penalties. On January 23, 2017, we filed a motion to dismiss the amended complaint, which was denied on May 24, 2017. Consistent with our position against the previous EPA allegations, and the original complaint, we deny the allegations in this amended civil complaint and intend to continue vigorously defending ourselves in the civil action. However, at this time we are unable to determine the outcome of this action or its significance to us.
Asset Retirement Obligations
We have contractual and regulatory obligations at certain facilities for which we have to perform remediation, dismantlement, or removal activities when the assets are retired. Our liability for asset retirement obligations is discounted to present value. To calculate the liability, we make estimates and assumptions about the retirement cost and the timing of retirement. Changes in our assumptions and estimates may occur as a result of the passage of time and the occurrence of future events. The following table summarizes changes in our asset retirement obligation, which is reported within other noncurrent liabilities in our unaudited condensed consolidated balance sheets (in thousands):
|
|
|
|
|
Balance at March 31, 2017
|
$
|
8,181
|
|
Liabilities incurred
|
94
|
|
Accretion expense
|
145
|
|
Balance at June 30, 2017
|
$
|
8,420
|
|
In addition to the obligations described above, we may be obligated to remove facilities or perform other remediation upon retirement of certain other assets. However, the fair value of the asset retirement obligation cannot currently be reasonably estimated because the settlement dates are indeterminable. We will record an asset retirement obligation for these assets in the periods in which settlement dates are reasonably determinable.
Operating Leases
We have executed various noncancelable operating lease agreements for product storage, office space, vehicles, real estate, railcars, and equipment. The following table summarizes future minimum lease payments under these agreements at
June 30, 2017
(in thousands):
|
|
|
|
|
Fiscal Year Ending March 31,
|
|
2018 (nine months)
|
$
|
107,711
|
|
2019
|
117,029
|
|
2020
|
105,320
|
|
2021
|
91,837
|
|
2022
|
61,832
|
|
Thereafter
|
90,749
|
|
Total
|
$
|
574,478
|
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Rental expense relating to operating leases was
$31.3 million
and
$29.9 million
during the
three months ended
June 30, 2017
and
2016
, respectively.
Pipeline Capacity Agreements
We have executed noncancelable agreements with crude oil pipeline operators, which guarantee us minimum monthly shipping capacity on the pipelines. As a result, we are required to pay the minimum shipping fees if actual shipments are less than our allotted capacity. Under certain agreements we have the ability to recover minimum shipping fees previously paid if our shipping volumes exceed the minimum monthly shipping commitment during each month remaining under the agreement. We currently have a receivable recorded in other noncurrent assets in our unaudited condensed consolidated balance sheet for minimum shipping fees paid in previous periods that are expected to be recovered in future periods by exceeding the minimum monthly volumes (see
Note 2
).
The following table summarizes future minimum throughput payments under these agreements at
June 30, 2017
(in thousands):
|
|
|
|
|
Fiscal Year Ending March 31,
|
|
2018 (nine months)
|
$
|
39,078
|
|
2019
|
52,170
|
|
2020
|
42,418
|
|
Total
|
$
|
133,666
|
|
Construction Commitments
At
June 30, 2017
, we had construction commitments of
$23.4 million
.
Sales and Purchase Contracts
We have entered into product sales and purchase contracts for which we expect the parties to physically settle and deliver the inventory in future periods.
At
June 30, 2017
, we had the following purchase commitments (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil
|
|
Natural Gas Liquids
|
|
|
Value
|
|
Volume
(in barrels)
|
|
Value
|
|
Volume
(in gallons)
|
Fixed-Price Purchase Commitments:
|
|
|
|
|
|
|
|
|
2018 (nine months)
|
|
$
|
64,882
|
|
|
1,425
|
|
|
$
|
20,282
|
|
|
34,984
|
|
2019
|
|
—
|
|
|
—
|
|
|
1,341
|
|
|
2,268
|
|
Total
|
|
$
|
64,882
|
|
|
1,425
|
|
|
$
|
21,623
|
|
|
37,252
|
|
|
|
|
|
|
|
|
|
|
Index-Price Purchase Commitments:
|
|
|
|
|
|
|
|
|
2018 (nine months)
|
|
$
|
602,405
|
|
|
14,444
|
|
|
$
|
567,089
|
|
|
917,281
|
|
2019
|
|
309,448
|
|
|
7,547
|
|
|
22,702
|
|
|
37,674
|
|
2020
|
|
287,148
|
|
|
6,808
|
|
|
—
|
|
|
—
|
|
2021
|
|
247,219
|
|
|
5,722
|
|
|
—
|
|
|
—
|
|
2022
|
|
148,782
|
|
|
3,355
|
|
|
—
|
|
|
—
|
|
Total
|
|
$
|
1,595,002
|
|
|
37,876
|
|
|
$
|
589,791
|
|
|
954,955
|
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
At
June 30, 2017
, we had the following sale commitments (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crude Oil
|
|
Natural Gas Liquids
|
|
|
Value
|
|
Volume
(in barrels)
|
|
Value
|
|
Volume
(in gallons)
|
Fixed-Price Sale Commitments:
|
|
|
|
|
|
|
|
|
2018 (nine months)
|
|
$
|
114,945
|
|
|
2,425
|
|
|
$
|
89,357
|
|
|
119,500
|
|
2019
|
|
—
|
|
|
—
|
|
|
4,206
|
|
|
5,880
|
|
2020
|
|
—
|
|
|
—
|
|
|
163
|
|
|
215
|
|
Total
|
|
$
|
114,945
|
|
|
2,425
|
|
|
$
|
93,726
|
|
|
125,595
|
|
|
|
|
|
|
|
|
|
|
Index-Price Sale Commitments:
|
|
|
|
|
|
|
|
|
2018 (nine months)
|
|
$
|
565,811
|
|
|
12,540
|
|
|
$
|
489,789
|
|
|
577,141
|
|
2019
|
|
87,299
|
|
|
1,825
|
|
|
3,989
|
|
|
5,979
|
|
2020
|
|
52,426
|
|
|
1,070
|
|
|
—
|
|
|
—
|
|
Total
|
|
$
|
705,536
|
|
|
15,435
|
|
|
$
|
493,778
|
|
|
583,120
|
|
We account for the contracts shown in the tables above using the
normal purchase and normal sale election
.
Under this accounting policy election, we do not record the contracts at fair value at each balance sheet date; instead, we record the purchase or sale at the contracted value once the delivery occurs.
Contracts in the tables above may have offsetting derivative contracts (described in
Note 11
) or inventory positions (described in
Note 2
).
Certain other forward purchase and sale contracts do not qualify for the normal purchase and normal sale election. These contracts are recorded at fair value in our unaudited condensed consolidated balance sheet and are not included in the tables above. These contracts are included in the derivative disclosures in
Note 11
, and represent
$36.0 million
of our prepaid expenses and other current assets and
$23.3 million
of our accrued expenses and other payables at
June 30, 2017
.
Note 10
—Equity
Partnership Equity
The Partnership’s equity consists of a
0.1%
general partner interest and a
99.9%
limited partner interest, which consists of common units. Our general partner has the right, but not the obligation, to contribute a proportionate amount of capital to us to maintain its
0.1%
general partner interest. Our general partner is not required to guarantee or pay any of our debts and obligations.
General Partner Contributions
In connection with the issuance of common units for the vesting of restricted units and the warrants that were converted to common units during the
three months ended
June 30, 2017
, we issued
674
notional units to our general partner for
less than $0.1 million
in order to maintain its
0.1%
interest in us.
Our Distributions
The following table summarizes distributions declared on our common units during the last two quarters:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date Declared
|
|
Record Date
|
|
Date Paid/Payable
|
|
Amount Per Unit
|
|
Amount Paid/Payable to Limited Partners
|
|
Amount Paid/Payable to General Partner
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
(in thousands)
|
April 24, 2017
|
|
May 8, 2017
|
|
May 15, 2017
|
|
$
|
0.3900
|
|
|
$
|
46,870
|
|
|
$
|
80
|
|
July 20, 2017
|
|
August 4, 2017
|
|
August 14, 2017
|
|
$
|
0.3900
|
|
|
$
|
47,132
|
|
|
$
|
81
|
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Class A Convertible Preferred Units
During the
three months ended
June 30, 2016
, we received net proceeds
$235.0 million
(net of offering costs of
$5.0 million
) in connection with the issuance of
19,942,169
Class A Convertible Preferred Units (“Class A Preferred Units”) and
4,375,112
warrants.
We allocated the net proceeds on a relative fair value basis to the Class A Preferred Units, which includes the value of a beneficial conversion feature, and the warrants. Accretion for the beneficial conversion feature, recorded as a deemed distribution, was
$3.2 million
for the
three months ended
June 30, 2017
.
The holders of the warrants may convert one-third of the warrants from and after the first anniversary of the original issue date, another one-third of the warrants from and after the second anniversary and the final one-third of the warrants from and after the third anniversary. The warrants have an exercise price of
$0.01
and an
eight
year term. During the
three months ended
June 30, 2017
,
607,653
warrants were converted to common units and we received proceeds of
less than $0.1 million
. In addition, we repurchased
850,716
unvested warrants for total proceeds of
$10.5 million
on June 23, 2017.
We pay a cumulative, quarterly distribution in arrears at an annual rate of
10.75%
on the Class A Preferred Units to the extent declared by the board of directors of our general partner.
The following table summarizes distributions declared on our Class A Preferred Units during the last two quarters:
|
|
|
|
|
|
|
|
|
|
|
|
Amount Paid/Payable to Class A
|
Date Declared
|
|
Date Paid/Payable
|
|
Preferred Unitholders
|
|
|
|
|
(in thousands)
|
April 24, 2017
|
|
May 15, 2017
|
|
$
|
6,449
|
|
July 20, 2017
|
|
August 14, 2017
|
|
$
|
6,449
|
|
Class B Preferred Units
During the
three months ended
June 30, 2017
, we issued
8,400,000
of our
9.00%
Class B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class B Preferred Units”) representing limited partner interests at a price of
$25.00
per unit for net proceeds of
$203.0 million
(net of the underwriters’ discount of
$6.6 million
and offering costs of
$0.4 million
).
Distributions on the Class B Preferred Units are payable on the 15th day of each January, April, July and October of each year (beginning on October 15, 2017) to holders of record on the first day of each payment month. The initial distribution rate for the Class B Preferred Units from and including the date of original issue to, but not including, July 1, 2022 is 9.00% per year of the $25.00 liquidation preference per unit (equal to $2.25 per unit per year). On and after July 1, 2022, distributions on the Class B Preferred Units will accumulate at a percentage of the $25.00 liquidation preference equal to the applicable three-month LIBOR plus a spread of 7.213%.
At any time on or after July 1, 2022, we may redeem our Class B Preferred Units, in whole or in part, at a redemption price of $25.00 per Class B Preferred Unit plus an amount equal to all accumulated and unpaid distributions to, but not including, the date of redemption, whether or not declared. We may also redeem the Class B Preferred Units upon a change of control as defined in our partnership agreement. If we choose not to redeem the Class B Preferred Units, the Class B preferred unitholders may have the ability to convert the Class B Preferred Units to common units at the then applicable conversion rate. Class B preferred unitholders have no voting rights except with respect to certain matters set forth in our partnership agreement.
Amended and Restated Partnership Agreement
On June 13, 2017, NGL Energy Holdings LLC executed the Fourth Amended and Restated Agreement of Limited Partnership. The preferences, rights, powers and duties of holders of the Class B Preferred Units are defined in the amended and restated partnership agreement. The Class B Preferred Units rank senior to the common units, with respect to the payment of distributions and distribution of assets upon liquidation, dissolution and winding up and are on parity with the Class A Preferred Units. The Class B Preferred Units have no stated maturity but we may redeem the Class B Preferred Units at any time on or after July 1, 2022. Upon the occurrence of a change in control, we may redeem the Class B Preferred Units.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
At-The-Market Program
On August 24, 2016, we entered into an equity distribution agreement in connection with an at-the-market program (the “ATM Program”) pursuant to which we may issue and sell up to
$200.0 million
of common units. We did not issue any common units under the ATM Program during the
three months ended
June 30, 2017
, and approximately
$134.7 million
remained available for sale under the ATM Program at
June 30, 2017
.
Equity-Based Incentive Compensation
Our general partner has adopted a long-term incentive plan (“LTIP”), which allows for the issuance of equity-based compensation. Our general partner has granted certain restricted units to employees and directors, which vest in tranches, subject to the continued service of the recipients. The awards may also vest upon a change of control, at the discretion of the board of directors of our general partner.
No
distributions accrue to or are paid on the restricted units during the vesting period.
The restricted units include both awards that: (i) vest contingent on the continued service of the recipients through the vesting date (the “Service Awards”) and (ii) vest contingent both on the continued service of the recipients through the vesting date and also on the performance of our common units relative to other entities in the Alerian MLP Index (the “Index”) over specified periods of time (the “Performance Awards”).
On April 1, 2017, we made an accounting policy election to account for actual forfeitures, rather than estimate forfeitures each period (as previously required). As a result, the cumulative effect adjustment, which represents the differential between the amount of compensation expense previously recorded and the amount that would have been recorded without assuming forfeitures, had
no
impact on our consolidated financial statements.
The following table summarizes the Service Award activity during the
three months ended
June 30, 2017
:
|
|
|
|
|
Unvested Service Award units at March 31, 2017
|
|
2,708,500
|
|
Units granted
|
|
80,421
|
|
Units vested and issued
|
|
(66,421
|
)
|
Units forfeited
|
|
(25,300
|
)
|
Unvested Service Award units at June 30, 2017
|
|
2,697,200
|
|
The following table summarizes the scheduled vesting of our unvested Service Award units at
June 30, 2017
:
|
|
|
|
|
Fiscal Year Ending March 31,
|
|
|
2018 (nine months)
|
|
875,400
|
|
2019
|
|
911,850
|
|
2020
|
|
907,450
|
|
2021
|
|
2,500
|
|
Total
|
|
2,697,200
|
|
Service Awards are valued at the closing price as of the grant date less the present value of the expected distribution stream over the vesting period using a risk-free interest rate. We record the expense for each Service Award on a straight-line basis over the requisite period for the entire award (that is, over the requisite service period of the last separately vesting portion of the award), ensuring that the amount of compensation cost recognized at any date at least equals the portion of the grant-date value of the award that is vested at that date. During the
three months ended
June 30, 2017
and
2016
, we recorded compensation expense related to Service Award units of
$5.3 million
and
$20.9 million
, respectively.
Of the restricted units granted and vested during the
three months ended
June 30, 2017
,
66,421
units were granted as a bonus for performance during the fiscal
year ended March 31, 2017
. We accrued expense of
$0.9 million
during the fiscal year ended
March 31, 2017
as an estimate of the value of such bonus units that would be granted.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
The following table summarizes the estimated future expense we expect to record on the unvested Service Award units at
June 30, 2017
(in thousands):
|
|
|
|
|
|
Fiscal Year Ending March 31,
|
|
|
2018 (nine months)
|
|
$
|
9,038
|
|
2019
|
|
10,631
|
|
2020
|
|
2,804
|
|
2021
|
|
10
|
|
Total
|
|
$
|
22,483
|
|
During April 2015, our general partner granted Performance Award units to certain employees. The number of Performance Award units that will vest is contingent on the performance of our common units relative to the performance of the other entities in the Index. Performance will be calculated based on the return on our common units (including changes in the market price of the common units and distributions paid during the performance period) relative to the returns on the common units of the other entities in the Index. As of
June 30, 2017
, performance will be measured over the following periods:
|
|
|
|
Vesting Date of Tranche
|
|
Performance Period for Tranche
|
July 1, 2017
|
|
July 1, 2014 through June 30, 2017
|
July 1, 2018
|
|
July 1, 2015 through June 30, 2018
|
July 1, 2019
|
|
July 1, 2016 through June 30, 2019
|
During the
three months ended
June 30, 2017
, there was
no
activity related to our Performance Award units.
During the July 1, 2014 through June 30, 2017 performance period, the return on our common units was below the return of the
50th
percentile of our peer companies in the Index. As a result,
no
Performance Award units vested on July 1, 2017 and performance units with the July 1, 2017 vesting date are considered to be forfeited.
The fair value of the Performance Awards is estimated using a Monte Carlo simulation at the grant date. We record the expense for each of the tranches of the Performance Awards on a straight-line basis over the period beginning with the grant date and ending with the vesting date of the tranche. Any Performance Awards that do not become earned Performance Awards will terminate, expire and otherwise be forfeited by the participants. During the
three months ended
June 30, 2017
and
2016
, we recorded compensation expense related to Performance Award units of
$2.1 million
and
$1.5 million
, respectively.
The following table summarizes the estimated future expense we expect to record on the unvested Performance Award units at
June 30, 2017
(in thousands):
|
|
|
|
|
|
Fiscal Year Ending March 31,
|
|
|
2018 (nine months)
|
|
$
|
4,127
|
|
2019
|
|
3,232
|
|
2020
|
|
655
|
|
Total
|
|
$
|
8,014
|
|
At
June 30, 2017
, approximately
2.4 million
common units remain available for issuance under the LTIP.
Note 11
—Fair Value of Financial Instruments
Our cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and other current assets and liabilities (excluding derivative instruments) are carried at amounts which reasonably approximate their fair values due to their short-term nature.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Commodity Derivatives
The following table summarizes the estimated fair values of our commodity derivative assets and liabilities reported in our unaudited condensed consolidated balance sheet at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
March 31, 2017
|
|
|
Derivative
Assets
|
|
Derivative
Liabilities
|
|
Derivative
Assets
|
|
Derivative
Liabilities
|
|
|
(in thousands)
|
Level 1 measurements
|
|
$
|
18,116
|
|
|
$
|
(1,800
|
)
|
|
$
|
2,590
|
|
|
$
|
(21,113
|
)
|
Level 2 measurements
|
|
36,686
|
|
|
(23,502
|
)
|
|
38,729
|
|
|
(27,799
|
)
|
|
|
54,802
|
|
|
(25,302
|
)
|
|
41,319
|
|
|
(48,912
|
)
|
|
|
|
|
|
|
|
|
|
Netting of counterparty contracts (1)
|
|
(1,800
|
)
|
|
1,800
|
|
|
(1,508
|
)
|
|
1,508
|
|
Net cash collateral provided (held)
|
|
(5,301
|
)
|
|
(11
|
)
|
|
(1,035
|
)
|
|
19,604
|
|
Commodity derivatives
|
|
$
|
47,701
|
|
|
$
|
(23,513
|
)
|
|
$
|
38,776
|
|
|
$
|
(27,800
|
)
|
|
|
(1)
|
Relates to commodity derivative assets and liabilities that are expected to be net settled on an exchange or through a netting arrangement with the counterparty.
|
The following table summarizes the accounts that include our commodity derivative assets and liabilities in our unaudited condensed consolidated balance sheets at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
March 31, 2017
|
|
|
(in thousands)
|
Prepaid expenses and other current assets
|
|
$
|
47,123
|
|
|
$
|
38,711
|
|
Other noncurrent assets
|
|
578
|
|
|
65
|
|
Accrued expenses and other payables
|
|
(23,428
|
)
|
|
(27,622
|
)
|
Other noncurrent liabilities
|
|
(85
|
)
|
|
(178
|
)
|
Net commodity derivative asset
|
|
$
|
24,188
|
|
|
$
|
10,976
|
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
The following table summarizes our open commodity derivative contract positions at the dates indicated. We do not account for these derivatives as hedges.
|
|
|
|
|
|
|
|
|
|
|
Contracts
|
|
Settlement Period
|
|
Net Long
(Short)
Notional Units
(in barrels)
|
|
Fair Value
of
Net Assets
(Liabilities)
|
|
|
|
|
(in thousands)
|
At June 30, 2017:
|
|
|
|
|
|
|
Crude oil fixed-price (1)
|
|
July 2017–September 2017
|
|
(775
|
)
|
|
$
|
604
|
|
Propane fixed-price (1)
|
|
July 2017–December 2018
|
|
560
|
|
|
583
|
|
Refined products fixed-price (1)
|
|
July 2017–January 2019
|
|
(4,037
|
)
|
|
25,419
|
|
Refined products index (1)
|
|
July 2017–December 2017
|
|
(12
|
)
|
|
(87
|
)
|
Other
|
|
July 2017–March 2022
|
|
|
|
2,981
|
|
|
|
|
|
|
|
29,500
|
|
Net cash collateral held
|
|
|
|
|
|
(5,312
|
)
|
Net commodity derivative asset
|
|
|
|
|
|
$
|
24,188
|
|
|
|
|
|
|
|
|
At March 31, 2017:
|
|
|
|
|
|
|
Crude oil fixed-price (1)
|
|
April 2017–May 2017
|
|
(800
|
)
|
|
$
|
(55
|
)
|
Propane fixed-price (1)
|
|
April 2017–December 2018
|
|
220
|
|
|
1,082
|
|
Refined products fixed-price (1)
|
|
April 2017–January 2019
|
|
(4,682
|
)
|
|
(7,729
|
)
|
Refined products index (1)
|
|
April 2017–December 2017
|
|
(18
|
)
|
|
(103
|
)
|
Other
|
|
April 2017–March 2022
|
|
|
|
(788
|
)
|
|
|
|
|
|
|
(7,593
|
)
|
Net cash collateral provided
|
|
|
|
|
|
18,569
|
|
Net commodity derivative asset
|
|
|
|
|
|
$
|
10,976
|
|
|
|
(1)
|
We may have fixed price physical purchases, including inventory, offset by floating price physical sales or floating price physical purchases offset by fixed price physical sales. These contracts are derivatives we have entered into as an economic hedge against the risk of mismatches between fixed and floating price physical obligations.
|
During the
three months ended
June 30, 2017
, we recorded
a net gain
of
$36.5 million
and during the
three months ended
June 30, 2016
, we recorded a net loss of
$59.7 million
from our commodity derivatives to cost of sales in our unaudited condensed consolidated statements of operations.
Credit Risk
We have credit policies that we believe minimize our overall credit risk, including an evaluation of potential counterparties’ financial condition (including credit ratings), collateral requirements under certain circumstances, and the use of industry standard master netting agreements, which allow for offsetting counterparty receivable and payable balances for certain transactions.
At
June 30, 2017
,
our primary counterparties were retailers, resellers, energy marketers, producers, refiners, and dealers.
This concentration of counterparties may impact our overall exposure to credit risk, either positively or negatively, as the counterparties may be similarly affected by changes in economic, regulatory or other conditions. If a counterparty does not perform on a contract, we may not realize amounts that have been recorded in our unaudited condensed consolidated balance sheets and recognized in our net income.
Interest Rate Risk
Our Revolving Credit Facility is variable-rate debt with interest rates that are generally indexed to bank prime or LIBOR interest rates.
At
June 30, 2017
,
we had
$769.5 million
of outstanding borrowings under our Revolving Credit Facility at a weighted average interest rate of
3.99%
.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Fair Value of Fixed-Rate Notes
The following table provides fair value estimates of our fixed-rate notes at
June 30, 2017
(in thousands):
|
|
|
|
|
Senior secured notes
|
$
|
200,935
|
|
Senior notes
|
|
5.125% Notes due 2019
|
$
|
361,695
|
|
6.875% Notes due 2021
|
$
|
366,130
|
|
7.500% Notes due 2023
|
$
|
690,393
|
|
6.125% Notes due 2025
|
$
|
460,625
|
|
For the senior secured notes, the fair value estimate was developed using observed yields on publicly traded notes issued by us, adjusted for differences in the key terms of those notes and the key terms of our notes (examples include differences in the tenor of the debt, credit standing of the issuer, whether the notes are publicly traded, and whether the notes are secured or unsecured). This fair value estimate would be classified as Level 3 in the fair value hierarchy. For the senior notes, the fair value estimates were developed based on publicly traded quotes and would be classified as Level 1 in the fair value hierarchy.
Note 12—Segments
The following table summarizes certain financial data related to our segments. Transactions between segments are recorded based on prices negotiated between the segments.
The “Corporate and Other” category in the table below includes certain corporate expenses that are not allocated to the reportable segments.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
2017
|
|
2016
|
|
|
(in thousands)
|
Revenues:
|
|
|
|
|
Crude Oil Logistics:
|
|
|
|
|
Crude oil sales
|
|
$
|
480,285
|
|
|
$
|
414,619
|
|
Crude oil transportation and other
|
|
26,986
|
|
|
12,934
|
|
Elimination of intersegment sales
|
|
(2,356
|
)
|
|
(1,602
|
)
|
Total Crude Oil Logistics revenues
|
|
504,915
|
|
|
425,951
|
|
Water Solutions:
|
|
|
|
|
Service fees
|
|
33,321
|
|
|
25,697
|
|
Recovered hydrocarbons
|
|
9,960
|
|
|
7,196
|
|
Other revenues
|
|
3,686
|
|
|
2,860
|
|
Total Water Solutions revenues
|
|
46,967
|
|
|
35,753
|
|
Liquids:
|
|
|
|
|
Propane sales
|
|
136,860
|
|
|
96,471
|
|
Butane sales
|
|
68,232
|
|
|
54,575
|
|
Other product sales
|
|
84,303
|
|
|
59,160
|
|
Other revenues
|
|
6,012
|
|
|
7,147
|
|
Elimination of intersegment sales
|
|
(17,593
|
)
|
|
(12,304
|
)
|
Total Liquids revenues
|
|
277,814
|
|
|
205,049
|
|
Retail Propane:
|
|
|
|
|
Propane sales
|
|
48,632
|
|
|
41,641
|
|
Distillate sales
|
|
9,555
|
|
|
10,455
|
|
Other revenues
|
|
8,893
|
|
|
8,307
|
|
Elimination of intersegment sales
|
|
(8
|
)
|
|
(16
|
)
|
Total Retail Propane revenues
|
|
67,072
|
|
|
60,387
|
|
Refined Products and Renewables:
|
|
|
|
|
Refined products sales
|
|
2,773,607
|
|
|
1,876,857
|
|
Renewables sales
|
|
110,966
|
|
|
106,482
|
|
Service fees
|
|
118
|
|
|
11,266
|
|
Elimination of intersegment sales
|
|
(54
|
)
|
|
(42
|
)
|
Total Refined Products and Renewables revenues
|
|
2,884,637
|
|
|
1,994,563
|
|
Corporate and Other
|
|
161
|
|
|
267
|
|
Total revenues
|
|
$
|
3,781,566
|
|
|
$
|
2,721,970
|
|
Depreciation and Amortization:
|
|
|
|
|
Crude Oil Logistics
|
|
$
|
20,835
|
|
|
$
|
8,968
|
|
Water Solutions
|
|
24,008
|
|
|
24,434
|
|
Liquids
|
|
6,330
|
|
|
4,449
|
|
Retail Propane
|
|
11,462
|
|
|
9,687
|
|
Refined Products and Renewables
|
|
324
|
|
|
417
|
|
Corporate and Other
|
|
920
|
|
|
951
|
|
Total depreciation and amortization
|
|
$
|
63,879
|
|
|
$
|
48,906
|
|
Operating Income (Loss):
|
|
|
|
|
Crude Oil Logistics
|
|
$
|
4,357
|
|
|
$
|
(625
|
)
|
Water Solutions
|
|
(1,154
|
)
|
|
79,464
|
|
Liquids
|
|
(8,772
|
)
|
|
(57
|
)
|
Retail Propane
|
|
(5,868
|
)
|
|
(2,502
|
)
|
Refined Products and Renewables
|
|
14,496
|
|
|
149,769
|
|
Corporate and Other
|
|
(17,726
|
)
|
|
(32,149
|
)
|
Total operating (loss) income
|
|
$
|
(14,667
|
)
|
|
$
|
193,900
|
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
The following table summarizes additions to property, plant and equipment and intangible assets by segment for the periods indicated. This information has been prepared on the accrual basis, and includes property, plant and equipment and intangible assets acquired in acquisitions.
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
2017
|
|
2016
|
|
|
(in thousands)
|
Crude Oil Logistics
|
|
$
|
7,058
|
|
|
$
|
72,305
|
|
Water Solutions
|
|
19,405
|
|
|
43,116
|
|
Liquids
|
|
542
|
|
|
6,468
|
|
Retail Propane
|
|
3,846
|
|
|
6,549
|
|
Refined Products and Renewables
|
|
—
|
|
|
24
|
|
Corporate and Other
|
|
269
|
|
|
1,118
|
|
Total
|
|
$
|
31,120
|
|
|
$
|
129,580
|
|
The following tables summarize long-lived assets (consisting of property, plant and equipment, intangible assets, and goodwill) and total assets by segment at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
March 31, 2017
|
|
|
(in thousands)
|
Long-lived assets, net:
|
|
|
|
|
Crude Oil Logistics
|
|
$
|
1,694,378
|
|
|
$
|
1,724,805
|
|
Water Solutions
|
|
1,255,070
|
|
|
1,261,944
|
|
Liquids
|
|
613,361
|
|
|
619,204
|
|
Retail Propane
|
|
538,254
|
|
|
547,960
|
|
Refined Products and Renewables
|
|
213,883
|
|
|
215,637
|
|
Corporate and Other
|
|
36,461
|
|
|
36,395
|
|
Total
|
|
$
|
4,351,407
|
|
|
$
|
4,405,945
|
|
|
|
|
|
|
Total assets:
|
|
|
|
|
Crude Oil Logistics
|
|
$
|
2,405,538
|
|
|
$
|
2,538,768
|
|
Water Solutions
|
|
1,307,086
|
|
|
1,301,415
|
|
Liquids
|
|
817,997
|
|
|
767,597
|
|
Retail Propane
|
|
606,537
|
|
|
622,859
|
|
Refined Products and Renewables
|
|
911,361
|
|
|
988,073
|
|
Corporate and Other
|
|
70,196
|
|
|
101,667
|
|
Total
|
|
$
|
6,118,715
|
|
|
$
|
6,320,379
|
|
Note 13
—Transactions with Affiliates
SemGroup Corporation (“SemGroup”) holds ownership interests in our general partner. We sell product to and purchase product from SemGroup, and these transactions are included within revenues and cost of sales, respectively, in our unaudited condensed consolidated statements of operations. We also lease crude oil storage from SemGroup.
We purchase ethanol from E Energy Adams, LLC, an equity method investee (see Note 2). These transactions are reported within cost of sales in our unaudited condensed consolidated statements of operations.
Certain members of our management and members of their families as well as other associated parties own interests in entities from which we have purchased products and services and to which we have sold products and services. During the
three months ended
June 30, 2017
,
less than $0.1 million
of these transactions were capital expenditures and were recorded as increases to property, plant and equipment.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
The following table summarizes these related party transactions for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
2017
|
|
2016
|
|
|
(in thousands)
|
Sales to SemGroup
|
|
$
|
123
|
|
|
$
|
71
|
|
Purchases from SemGroup
|
|
$
|
1,017
|
|
|
$
|
2,025
|
|
Sales to equity method investees
|
|
$
|
98
|
|
|
$
|
405
|
|
Purchases from equity method investees
|
|
$
|
27,906
|
|
|
$
|
30,647
|
|
Sales to entities affiliated with management
|
|
$
|
83
|
|
|
$
|
77
|
|
Purchases from entities affiliated with management
|
|
$
|
197
|
|
|
$
|
8,243
|
|
Accounts receivable from affiliates consist of the following at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
March 31, 2017
|
|
|
(in thousands)
|
Receivables from SemGroup
|
|
$
|
1,482
|
|
|
$
|
6,668
|
|
Receivables from equity method investees
|
|
16
|
|
|
15
|
|
Receivables from entities affiliated with management
|
|
54
|
|
|
28
|
|
Total
|
|
$
|
1,552
|
|
|
$
|
6,711
|
|
Accounts payable to affiliates consist of the following at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
March 31, 2017
|
|
|
(in thousands)
|
Payables to SemGroup
|
|
$
|
1,440
|
|
|
$
|
6,571
|
|
Payables to equity method investees
|
|
323
|
|
|
1,306
|
|
Payables to entities affiliated with management
|
|
14
|
|
|
41
|
|
Total
|
|
$
|
1,777
|
|
|
$
|
7,918
|
|
We have a loan receivable of
$3.7 million
at
June 30, 2017
from Victory Propane, LLC, an equity method investee (see Note 2), with an initial maturity date of March 31, 2021, which can be extended for successive
one
-year periods unless one of the parties terminates the loan agreement.
On June 23, 2017, we repurchased outstanding warrants, as discussed further in
Note 10
, from funds managed by Oaktree Capital Management, L.P., who are represented on our board of directors.
Note 14—Unaudited Condensed Consolidating Guarantor and Non-Guarantor Financial Information
Certain of our wholly owned subsidiaries have, jointly and severally, fully and unconditionally guaranteed the senior notes (see
Note 8
). Pursuant to Rule 3-10 of Regulation S-X, we have presented in columnar format the unaudited condensed consolidating financial information for NGL Energy Partners LP (Parent), NGL Energy Finance Corp., the guarantor subsidiaries on a combined basis, and the non-guarantor subsidiaries on a combined basis in the tables below. NGL Energy Partners LP and NGL Energy Finance Corp. are co-issuers of the senior notes. Since NGL Energy Partners LP received the proceeds from the issuance of the senior notes, all activity has been reflected in the NGL Energy Partners LP (Parent) column in the tables below.
During the periods presented in the tables below, the status of certain subsidiaries changed, in that they either became guarantors of or ceased to be guarantors of the senior notes.
There are no significant restrictions that prevent the parent or any of the guarantor subsidiaries from obtaining funds from their respective subsidiaries by dividend or loan. None of the assets of the guarantor subsidiaries (other than the
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
investments in non-guarantor subsidiaries) are restricted net assets pursuant to Rule 4-08(e)(3) of Regulation S-X under the Securities Act of 1933, as amended.
For purposes of the tables below, (i) the unaudited condensed consolidating financial information is presented on a legal entity basis, (ii) investments in consolidated subsidiaries are accounted for as equity method investments, and (iii) contributions, distributions, and advances to (from) consolidated entities are reported on a net basis within net changes in advances with consolidated entities in the unaudited condensed consolidating statement of cash flow tables below.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Unaudited Condensed Consolidating Balance Sheet
(in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
|
NGL Energy
Partners LP
(Parent)
|
|
NGL Energy
Finance Corp.
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
9,847
|
|
|
$
|
—
|
|
|
$
|
6,980
|
|
|
$
|
2,721
|
|
|
$
|
—
|
|
|
$
|
19,548
|
|
Accounts receivable-trade, net of allowance for doubtful accounts
|
|
—
|
|
|
—
|
|
|
650,373
|
|
|
2,356
|
|
|
—
|
|
|
652,729
|
|
Accounts receivable-affiliates
|
|
—
|
|
|
—
|
|
|
1,552
|
|
|
—
|
|
|
—
|
|
|
1,552
|
|
Inventories
|
|
—
|
|
|
—
|
|
|
562,490
|
|
|
603
|
|
|
—
|
|
|
563,093
|
|
Prepaid expenses and other current assets
|
|
—
|
|
|
—
|
|
|
96,361
|
|
|
451
|
|
|
—
|
|
|
96,812
|
|
Total current assets
|
|
9,847
|
|
|
—
|
|
|
1,317,756
|
|
|
6,131
|
|
|
—
|
|
|
1,333,734
|
|
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation
|
|
—
|
|
|
—
|
|
|
1,737,694
|
|
|
31,924
|
|
|
—
|
|
|
1,769,618
|
|
GOODWILL
|
|
—
|
|
|
—
|
|
|
1,438,959
|
|
|
12,757
|
|
|
—
|
|
|
1,451,716
|
|
INTANGIBLE ASSETS, net of accumulated amortization
|
|
—
|
|
|
—
|
|
|
1,116,073
|
|
|
14,000
|
|
|
—
|
|
|
1,130,073
|
|
INVESTMENTS IN UNCONSOLIDATED ENTITIES
|
|
—
|
|
|
—
|
|
|
190,948
|
|
|
—
|
|
|
—
|
|
|
190,948
|
|
NET INTERCOMPANY RECEIVABLES (PAYABLES)
|
|
2,515,786
|
|
|
—
|
|
|
(2,494,298
|
)
|
|
(21,488
|
)
|
|
—
|
|
|
—
|
|
INVESTMENTS IN CONSOLIDATED SUBSIDIARIES
|
|
1,882,025
|
|
|
—
|
|
|
25,044
|
|
|
—
|
|
|
(1,907,069
|
)
|
|
—
|
|
LOAN RECEIVABLE-AFFILIATE
|
|
—
|
|
|
—
|
|
|
3,700
|
|
|
—
|
|
|
—
|
|
|
3,700
|
|
OTHER NONCURRENT ASSETS
|
|
—
|
|
|
—
|
|
|
238,926
|
|
|
—
|
|
|
—
|
|
|
238,926
|
|
Total assets
|
|
$
|
4,407,658
|
|
|
$
|
—
|
|
|
$
|
3,574,802
|
|
|
$
|
43,324
|
|
|
$
|
(1,907,069
|
)
|
|
$
|
6,118,715
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable-trade
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
521,538
|
|
|
$
|
617
|
|
|
$
|
—
|
|
|
$
|
522,155
|
|
Accounts payable-affiliates
|
|
1
|
|
|
—
|
|
|
1,776
|
|
|
—
|
|
|
—
|
|
|
1,777
|
|
Accrued expenses and other payables
|
|
33,719
|
|
|
—
|
|
|
158,387
|
|
|
743
|
|
|
—
|
|
|
192,849
|
|
Advance payments received from customers
|
|
—
|
|
|
—
|
|
|
56,529
|
|
|
542
|
|
|
—
|
|
|
57,071
|
|
Current maturities of long-term debt
|
|
39,000
|
|
|
—
|
|
|
3,409
|
|
|
384
|
|
|
—
|
|
|
42,793
|
|
Total current liabilities
|
|
72,720
|
|
|
—
|
|
|
741,639
|
|
|
2,286
|
|
|
—
|
|
|
816,645
|
|
LONG-TERM DEBT, net of debt issuance costs and current maturities
|
|
2,054,297
|
|
|
—
|
|
|
778,976
|
|
|
1,052
|
|
|
—
|
|
|
2,834,325
|
|
OTHER NONCURRENT LIABILITIES
|
|
—
|
|
|
—
|
|
|
172,162
|
|
|
4,406
|
|
|
—
|
|
|
176,568
|
|
CLASS A 10.75% CONVERTIBLE PREFERRED UNITS
|
|
67,048
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
67,048
|
|
REDEEMABLE NONCONTROLLING INTEREST
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,251
|
|
|
—
|
|
|
3,251
|
|
EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
Partners’ equity
|
|
2,213,593
|
|
|
—
|
|
|
1,884,016
|
|
|
32,541
|
|
|
(1,914,354
|
)
|
|
2,215,796
|
|
Accumulated other comprehensive loss
|
|
—
|
|
|
—
|
|
|
(1,991
|
)
|
|
(212
|
)
|
|
—
|
|
|
(2,203
|
)
|
Noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,285
|
|
|
7,285
|
|
Total equity
|
|
2,213,593
|
|
|
—
|
|
|
1,882,025
|
|
|
32,329
|
|
|
(1,907,069
|
)
|
|
2,220,878
|
|
Total liabilities and equity
|
|
$
|
4,407,658
|
|
|
$
|
—
|
|
|
$
|
3,574,802
|
|
|
$
|
43,324
|
|
|
$
|
(1,907,069
|
)
|
|
$
|
6,118,715
|
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Unaudited Condensed Consolidating Balance Sheet
(in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
|
NGL Energy
Partners LP
(Parent)
|
|
NGL Energy
Finance Corp.
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
6,257
|
|
|
$
|
—
|
|
|
$
|
2,903
|
|
|
$
|
3,104
|
|
|
$
|
—
|
|
|
$
|
12,264
|
|
Accounts receivable-trade, net of allowance for doubtful accounts
|
|
—
|
|
|
—
|
|
|
795,479
|
|
|
5,128
|
|
|
—
|
|
|
800,607
|
|
Accounts receivable-affiliates
|
|
—
|
|
|
—
|
|
|
6,711
|
|
|
—
|
|
|
—
|
|
|
6,711
|
|
Inventories
|
|
—
|
|
|
—
|
|
|
560,769
|
|
|
663
|
|
|
—
|
|
|
561,432
|
|
Prepaid expenses and other current assets
|
|
—
|
|
|
—
|
|
|
102,703
|
|
|
490
|
|
|
—
|
|
|
103,193
|
|
Total current assets
|
|
6,257
|
|
|
—
|
|
|
1,468,565
|
|
|
9,385
|
|
|
—
|
|
|
1,484,207
|
|
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation
|
|
—
|
|
|
—
|
|
|
1,725,383
|
|
|
64,890
|
|
|
—
|
|
|
1,790,273
|
|
GOODWILL
|
|
—
|
|
|
—
|
|
|
1,437,759
|
|
|
13,957
|
|
|
—
|
|
|
1,451,716
|
|
INTANGIBLE ASSETS, net of accumulated amortization
|
|
—
|
|
|
—
|
|
|
1,149,524
|
|
|
14,432
|
|
|
—
|
|
|
1,163,956
|
|
INVESTMENTS IN UNCONSOLIDATED ENTITIES
|
|
—
|
|
|
—
|
|
|
187,423
|
|
|
—
|
|
|
—
|
|
|
187,423
|
|
NET INTERCOMPANY RECEIVABLES (PAYABLES)
|
|
2,424,730
|
|
|
—
|
|
|
(2,408,189
|
)
|
|
(16,541
|
)
|
|
—
|
|
|
—
|
|
INVESTMENTS IN CONSOLIDATED SUBSIDIARIES
|
|
1,978,158
|
|
|
—
|
|
|
47,598
|
|
|
—
|
|
|
(2,025,756
|
)
|
|
—
|
|
LOAN RECEIVABLE-AFFILIATE
|
|
—
|
|
|
—
|
|
|
3,200
|
|
|
—
|
|
|
—
|
|
|
3,200
|
|
OTHER NONCURRENT ASSETS
|
|
—
|
|
|
—
|
|
|
239,436
|
|
|
168
|
|
|
—
|
|
|
239,604
|
|
Total assets
|
|
$
|
4,409,145
|
|
|
$
|
—
|
|
|
$
|
3,850,699
|
|
|
$
|
86,291
|
|
|
$
|
(2,025,756
|
)
|
|
$
|
6,320,379
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable-trade
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
657,077
|
|
|
$
|
944
|
|
|
$
|
—
|
|
|
$
|
658,021
|
|
Accounts payable-affiliates
|
|
1
|
|
|
—
|
|
|
7,907
|
|
|
10
|
|
|
—
|
|
|
7,918
|
|
Accrued expenses and other payables
|
|
42,150
|
|
|
—
|
|
|
164,012
|
|
|
963
|
|
|
—
|
|
|
207,125
|
|
Advance payments received from customers
|
|
—
|
|
|
—
|
|
|
35,107
|
|
|
837
|
|
|
—
|
|
|
35,944
|
|
Current maturities of long-term debt
|
|
25,000
|
|
|
—
|
|
|
4,211
|
|
|
379
|
|
|
—
|
|
|
29,590
|
|
Total current liabilities
|
|
67,151
|
|
|
—
|
|
|
868,314
|
|
|
3,133
|
|
|
—
|
|
|
938,598
|
|
LONG-TERM DEBT, net of debt issuance costs and current maturities
|
|
2,138,048
|
|
|
—
|
|
|
824,370
|
|
|
1,065
|
|
|
—
|
|
|
2,963,483
|
|
OTHER NONCURRENT LIABILITIES
|
|
—
|
|
|
—
|
|
|
179,857
|
|
|
4,677
|
|
|
—
|
|
|
184,534
|
|
CLASS A 10.75% CONVERTIBLE PREFERRED UNITS
|
|
63,890
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
63,890
|
|
REDEEMABLE NONCONTROLLING INTEREST
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,072
|
|
|
—
|
|
|
3,072
|
|
EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
Partners’ equity
|
|
2,140,056
|
|
|
—
|
|
|
1,979,785
|
|
|
74,545
|
|
|
(2,052,502
|
)
|
|
2,141,884
|
|
Accumulated other comprehensive loss
|
|
—
|
|
|
—
|
|
|
(1,627
|
)
|
|
(201
|
)
|
|
—
|
|
|
(1,828
|
)
|
Noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26,746
|
|
|
26,746
|
|
Total equity
|
|
2,140,056
|
|
|
—
|
|
|
1,978,158
|
|
|
74,344
|
|
|
(2,025,756
|
)
|
|
2,166,802
|
|
Total liabilities and equity
|
|
$
|
4,409,145
|
|
|
$
|
—
|
|
|
$
|
3,850,699
|
|
|
$
|
86,291
|
|
|
$
|
(2,025,756
|
)
|
|
$
|
6,320,379
|
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Unaudited Condensed Consolidating Statement of Operations
(in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2017
|
|
|
NGL Energy
Partners LP
(Parent)
|
|
NGL Energy
Finance Corp.
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,777,883
|
|
|
$
|
4,087
|
|
|
$
|
(404
|
)
|
|
$
|
3,781,566
|
|
COST OF SALES
|
|
—
|
|
|
—
|
|
|
3,641,494
|
|
|
1,018
|
|
|
(404
|
)
|
|
3,642,108
|
|
OPERATING COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
|
|
—
|
|
|
—
|
|
|
74,504
|
|
|
1,965
|
|
|
—
|
|
|
76,469
|
|
General and administrative
|
|
—
|
|
|
—
|
|
|
24,804
|
|
|
187
|
|
|
—
|
|
|
24,991
|
|
Depreciation and amortization
|
|
—
|
|
|
—
|
|
|
62,433
|
|
|
1,446
|
|
|
—
|
|
|
63,879
|
|
(Gain) loss on disposal or impairment of assets, net
|
|
—
|
|
|
—
|
|
|
(11,879
|
)
|
|
665
|
|
|
—
|
|
|
(11,214
|
)
|
Operating Loss
|
|
—
|
|
|
—
|
|
|
(13,473
|
)
|
|
(1,194
|
)
|
|
—
|
|
|
(14,667
|
)
|
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of unconsolidated entities
|
|
—
|
|
|
—
|
|
|
1,816
|
|
|
—
|
|
|
—
|
|
|
1,816
|
|
Interest expense
|
|
(38,371
|
)
|
|
—
|
|
|
(10,832
|
)
|
|
(226
|
)
|
|
203
|
|
|
(49,226
|
)
|
Loss on early extinguishment of liabilities, net
|
|
(3,281
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,281
|
)
|
Other income, net
|
|
—
|
|
|
—
|
|
|
2,274
|
|
|
39
|
|
|
(203
|
)
|
|
2,110
|
|
Loss Before Income Taxes
|
|
(41,652
|
)
|
|
—
|
|
|
(20,215
|
)
|
|
(1,381
|
)
|
|
—
|
|
|
(63,248
|
)
|
INCOME TAX EXPENSE
|
|
—
|
|
|
—
|
|
|
(459
|
)
|
|
—
|
|
|
—
|
|
|
(459
|
)
|
EQUITY IN NET LOSS OF CONSOLIDATED SUBSIDIARIES
|
|
(21,710
|
)
|
|
—
|
|
|
(1,036
|
)
|
|
—
|
|
|
22,746
|
|
|
—
|
|
Net Loss
|
|
(63,362
|
)
|
|
—
|
|
|
(21,710
|
)
|
|
(1,381
|
)
|
|
22,746
|
|
|
(63,707
|
)
|
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
|
|
|
|
|
|
|
|
|
|
(52
|
)
|
|
(52
|
)
|
LESS: NET LOSS ATTRIBUTABLE TO REDEEMABLE NONCONTROLLING INTERESTS
|
|
|
|
|
|
|
|
|
|
397
|
|
|
397
|
|
LESS: DISTRIBUTIONS TO PREFERRED UNITHOLDERS
|
|
|
|
|
|
|
|
|
|
(9,684
|
)
|
|
(9,684
|
)
|
LESS: NET LOSS ALLOCATED TO GENERAL PARTNER
|
|
|
|
|
|
|
|
|
|
40
|
|
|
40
|
|
LESS: REPURCHASE OF WARRANTS
|
|
|
|
|
|
|
|
|
|
(349
|
)
|
|
(349
|
)
|
NET LOSS ALLOCATED TO COMMON UNITHOLDERS
|
|
$
|
(63,362
|
)
|
|
$
|
—
|
|
|
$
|
(21,710
|
)
|
|
$
|
(1,381
|
)
|
|
$
|
13,098
|
|
|
$
|
(73,355
|
)
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Unaudited Condensed Consolidating Statement of Operations
(in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2016
|
|
|
NGL Energy
Partners LP
(Parent)
|
|
NGL Energy
Finance Corp.
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,714,981
|
|
|
$
|
7,351
|
|
|
$
|
(362
|
)
|
|
$
|
2,721,970
|
|
COST OF SALES
|
|
—
|
|
|
—
|
|
|
2,565,828
|
|
|
974
|
|
|
(362
|
)
|
|
2,566,440
|
|
OPERATING COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
|
|
—
|
|
|
—
|
|
|
70,881
|
|
|
4,291
|
|
|
—
|
|
|
75,172
|
|
General and administrative
|
|
—
|
|
|
—
|
|
|
41,626
|
|
|
245
|
|
|
—
|
|
|
41,871
|
|
Depreciation and amortization
|
|
—
|
|
|
—
|
|
|
46,309
|
|
|
2,597
|
|
|
—
|
|
|
48,906
|
|
(Gain) loss on disposal or impairment of assets, net
|
|
—
|
|
|
—
|
|
|
(204,339
|
)
|
|
20
|
|
|
—
|
|
|
(204,319
|
)
|
Operating Income (Loss)
|
|
—
|
|
|
—
|
|
|
194,676
|
|
|
(776
|
)
|
|
—
|
|
|
193,900
|
|
OTHER INCOME (EXPENSE):
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of unconsolidated entities
|
|
—
|
|
|
—
|
|
|
394
|
|
|
—
|
|
|
—
|
|
|
394
|
|
Revaluation of investments
|
|
—
|
|
|
—
|
|
|
(14,365
|
)
|
|
—
|
|
|
—
|
|
|
(14,365
|
)
|
Interest expense
|
|
(16,326
|
)
|
|
—
|
|
|
(14,028
|
)
|
|
(162
|
)
|
|
78
|
|
|
(30,438
|
)
|
Gain on early extinguishment of liabilities, net
|
|
8,614
|
|
|
—
|
|
|
21,338
|
|
|
—
|
|
|
—
|
|
|
29,952
|
|
Other income, net
|
|
—
|
|
|
—
|
|
|
3,836
|
|
|
14
|
|
|
(78
|
)
|
|
3,772
|
|
(Loss) Income Before Income Taxes
|
|
(7,712
|
)
|
|
—
|
|
|
191,851
|
|
|
(924
|
)
|
|
—
|
|
|
183,215
|
|
INCOME TAX EXPENSE
|
|
—
|
|
|
—
|
|
|
(462
|
)
|
|
—
|
|
|
—
|
|
|
(462
|
)
|
EQUITY IN NET INCOME (LOSS) OF CONSOLIDATED SUBSIDIARIES
|
|
184,632
|
|
|
—
|
|
|
(6,757
|
)
|
|
—
|
|
|
(177,875
|
)
|
|
—
|
|
Net Income (Loss)
|
|
176,920
|
|
|
—
|
|
|
184,632
|
|
|
(924
|
)
|
|
(177,875
|
)
|
|
182,753
|
|
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
|
|
|
|
|
|
|
|
|
|
(5,833
|
)
|
|
(5,833
|
)
|
LESS: DISTRIBUTIONS TO PREFERRED UNITHOLDERS
|
|
|
|
|
|
|
|
|
|
(3,384
|
)
|
|
(3,384
|
)
|
LESS: NET INCOME ALLOCATED TO GENERAL PARTNER
|
|
|
|
|
|
|
|
|
|
(203
|
)
|
|
(203
|
)
|
NET INCOME (LOSS) ALLOCATED TO COMMON UNITHOLDERS
|
|
$
|
176,920
|
|
|
$
|
—
|
|
|
$
|
184,632
|
|
|
$
|
(924
|
)
|
|
$
|
(187,295
|
)
|
|
$
|
173,333
|
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Unaudited Condensed Consolidating Statements of Comprehensive Income (Loss)
(in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2017
|
|
|
NGL Energy
Partners LP
(Parent)
|
|
NGL Energy
Finance Corp.
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
Net loss
|
|
$
|
(63,362
|
)
|
|
$
|
—
|
|
|
$
|
(21,710
|
)
|
|
$
|
(1,381
|
)
|
|
$
|
22,746
|
|
|
$
|
(63,707
|
)
|
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
(364
|
)
|
|
(11
|
)
|
|
—
|
|
|
(375
|
)
|
Comprehensive loss
|
|
$
|
(63,362
|
)
|
|
$
|
—
|
|
|
$
|
(22,074
|
)
|
|
$
|
(1,392
|
)
|
|
$
|
22,746
|
|
|
$
|
(64,082
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2016
|
|
|
NGL Energy
Partners LP
(Parent)
|
|
NGL Energy
Finance Corp.
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
Net income (loss)
|
|
$
|
176,920
|
|
|
$
|
—
|
|
|
$
|
184,632
|
|
|
$
|
(924
|
)
|
|
$
|
(177,875
|
)
|
|
$
|
182,753
|
|
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
(142
|
)
|
|
(10
|
)
|
|
—
|
|
|
(152
|
)
|
Comprehensive income (loss)
|
|
$
|
176,920
|
|
|
$
|
—
|
|
|
$
|
184,490
|
|
|
$
|
(934
|
)
|
|
$
|
(177,875
|
)
|
|
$
|
182,601
|
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Unaudited Condensed Consolidating Statement of Cash Flows
(in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2017
|
|
|
NGL Energy
Partners LP
(Parent)
|
|
NGL Energy
Finance Corp.
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidated
|
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities
|
|
$
|
(60,756
|
)
|
|
$
|
—
|
|
|
$
|
26,788
|
|
|
$
|
34,959
|
|
|
$
|
991
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
—
|
|
|
—
|
|
|
(31,164
|
)
|
|
(327
|
)
|
|
(31,491
|
)
|
Acquisitions, net of cash acquired
|
|
—
|
|
|
—
|
|
|
(19,897
|
)
|
|
—
|
|
|
(19,897
|
)
|
Cash flows from settlements of commodity derivatives
|
|
—
|
|
|
—
|
|
|
23,287
|
|
|
—
|
|
|
23,287
|
|
Proceeds from sales of assets
|
|
—
|
|
|
—
|
|
|
20,135
|
|
|
—
|
|
|
20,135
|
|
Investments in unconsolidated entities
|
|
—
|
|
|
—
|
|
|
(5,250
|
)
|
|
—
|
|
|
(5,250
|
)
|
Distributions of capital from unconsolidated entities
|
|
—
|
|
|
—
|
|
|
2,115
|
|
|
—
|
|
|
2,115
|
|
Payments on loan for natural gas liquids facility
|
|
—
|
|
|
—
|
|
|
2,401
|
|
|
—
|
|
|
2,401
|
|
Loan to affiliate
|
|
—
|
|
|
—
|
|
|
(500
|
)
|
|
—
|
|
|
(500
|
)
|
Net cash used in investing activities
|
|
—
|
|
|
—
|
|
|
(8,873
|
)
|
|
(327
|
)
|
|
(9,200
|
)
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings under Revolving Credit Facility
|
|
—
|
|
|
—
|
|
|
299,500
|
|
|
—
|
|
|
299,500
|
|
Payments on Revolving Credit Facility
|
|
—
|
|
|
—
|
|
|
(344,500
|
)
|
|
—
|
|
|
(344,500
|
)
|
Repurchase of senior secured and senior notes
|
|
(74,391
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(74,391
|
)
|
Payments on other long-term debt
|
|
—
|
|
|
—
|
|
|
(1,297
|
)
|
|
(30
|
)
|
|
(1,327
|
)
|
Debt issuance costs
|
|
(294
|
)
|
|
—
|
|
|
(1,802
|
)
|
|
—
|
|
|
(2,096
|
)
|
Contributions from noncontrolling interest owners, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23
|
|
|
23
|
|
Distributions to partners
|
|
(53,399
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(53,399
|
)
|
Proceeds from sale of preferred units, net of offering costs
|
|
202,977
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
202,977
|
|
Repurchase of warrants
|
|
(10,549
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,549
|
)
|
Payments for settlement and early extinguishment of liabilities
|
|
—
|
|
|
—
|
|
|
(745
|
)
|
|
—
|
|
|
(745
|
)
|
Net changes in advances with consolidated entities
|
|
2
|
|
|
—
|
|
|
35,006
|
|
|
(35,008
|
)
|
|
—
|
|
Net cash provided by (used in) financing activities
|
|
64,346
|
|
|
—
|
|
|
(13,838
|
)
|
|
(35,015
|
)
|
|
15,493
|
|
Net increase (decrease) in cash and cash equivalents
|
|
3,590
|
|
|
—
|
|
|
4,077
|
|
|
(383
|
)
|
|
7,284
|
|
Cash and cash equivalents, beginning of period
|
|
6,257
|
|
|
—
|
|
|
2,903
|
|
|
3,104
|
|
|
12,264
|
|
Cash and cash equivalents, end of period
|
|
$
|
9,847
|
|
|
$
|
—
|
|
|
$
|
6,980
|
|
|
$
|
2,721
|
|
|
$
|
19,548
|
|
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Unaudited Condensed Consolidating Statement of Cash Flows
(in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2016
|
|
|
NGL Energy
Partners LP
(Parent)
|
|
NGL Energy
Finance Corp.
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidated
|
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
$
|
(18,411
|
)
|
|
$
|
—
|
|
|
$
|
(47,551
|
)
|
|
$
|
(4,578
|
)
|
|
$
|
(70,540
|
)
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
—
|
|
|
—
|
|
|
(138,832
|
)
|
|
(1,347
|
)
|
|
(140,179
|
)
|
Acquisitions, net of cash acquired
|
|
—
|
|
|
—
|
|
|
(14,458
|
)
|
|
—
|
|
|
(14,458
|
)
|
Cash flows from settlements of commodity derivatives
|
|
—
|
|
|
—
|
|
|
(21,535
|
)
|
|
—
|
|
|
(21,535
|
)
|
Proceeds from sales of assets
|
|
—
|
|
|
—
|
|
|
421
|
|
|
17
|
|
|
438
|
|
Proceeds from sale of TLP common units
|
|
—
|
|
|
—
|
|
|
112,370
|
|
|
—
|
|
|
112,370
|
|
Distributions of capital from unconsolidated entities
|
|
—
|
|
|
—
|
|
|
2,941
|
|
|
—
|
|
|
2,941
|
|
Payments on loan for natural gas liquids facility
|
|
—
|
|
|
—
|
|
|
2,130
|
|
|
—
|
|
|
2,130
|
|
Loan to affiliate
|
|
—
|
|
|
—
|
|
|
(1,000
|
)
|
|
—
|
|
|
(1,000
|
)
|
Payments on loan to affiliate
|
|
—
|
|
|
—
|
|
|
655
|
|
|
—
|
|
|
655
|
|
Payment to terminate development agreement
|
|
—
|
|
|
—
|
|
|
(16,875
|
)
|
|
—
|
|
|
(16,875
|
)
|
Net cash used in investing activities
|
|
—
|
|
|
—
|
|
|
(74,183
|
)
|
|
(1,330
|
)
|
|
(75,513
|
)
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings under Revolving Credit Facility
|
|
—
|
|
|
—
|
|
|
433,500
|
|
|
—
|
|
|
433,500
|
|
Payments on Revolving Credit Facility
|
|
—
|
|
|
—
|
|
|
(454,500
|
)
|
|
—
|
|
|
(454,500
|
)
|
Repurchase of senior notes
|
|
(15,129
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,129
|
)
|
Payments on other long-term debt
|
|
—
|
|
|
—
|
|
|
(1,777
|
)
|
|
(325
|
)
|
|
(2,102
|
)
|
Debt issuance costs
|
|
(11
|
)
|
|
—
|
|
|
(34
|
)
|
|
—
|
|
|
(45
|
)
|
Contributions from noncontrolling interest owners, net
|
|
(501
|
)
|
|
—
|
|
|
—
|
|
|
830
|
|
|
329
|
|
Distributions to partners
|
|
(40,696
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(40,696
|
)
|
Distributions to noncontrolling interest owners
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,355
|
)
|
|
(1,355
|
)
|
Proceeds from sale of preferred units, net of offering costs
|
|
235,180
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
235,180
|
|
Payments for settlement and early extinguishment of liabilities
|
|
—
|
|
|
—
|
|
|
(26,374
|
)
|
|
—
|
|
|
(26,374
|
)
|
Net changes in advances with consolidated entities
|
|
(177,872
|
)
|
|
—
|
|
|
171,715
|
|
|
6,157
|
|
|
—
|
|
Other
|
|
—
|
|
|
—
|
|
|
(53
|
)
|
|
—
|
|
|
(53
|
)
|
Net cash provided by financing activities
|
|
971
|
|
|
—
|
|
|
122,477
|
|
|
5,307
|
|
|
128,755
|
|
Net (decrease) increase in cash and cash equivalents
|
|
(17,440
|
)
|
|
—
|
|
|
743
|
|
|
(601
|
)
|
|
(17,298
|
)
|
Cash and cash equivalents, beginning of period
|
|
25,749
|
|
|
—
|
|
|
784
|
|
|
1,643
|
|
|
28,176
|
|
Cash and cash equivalents, end of period
|
|
$
|
8,309
|
|
|
$
|
—
|
|
|
$
|
1,527
|
|
|
$
|
1,042
|
|
|
$
|
10,878
|
|