NGL Energy Partners LP (NYSE:NGL) (“NGL,” “our,” “we,” or the
“Partnership”) today reported its second quarter fiscal 2021
results. Highlights for the quarter include:
- Income from continuing operations for the second quarter of
Fiscal 2021 of $6.0 million, compared to a loss from continuing
operations of $15.6 million for the second quarter of Fiscal
2020
- Adjusted EBITDA from continuing operations for the second
quarter of Fiscal 2021 of $138.0 million, compared to $123.5
million for the second quarter of Fiscal 2020
- Successful completion of our Poker Lake pipeline, which has an
initial capacity of over 350,000 barrels per day and connects into
our integrated Delaware Basin produced water pipeline
infrastructure network
- New, long-term acreage dedications for water disposal services
and a long-term extension and expansion to an existing acreage
dedication with leading independent and super major producers in
the Delaware Basin
“Our second quarter results reflect the expected increase in
Adjusted EBITDA related to the sale of crude oil stored for
contango, as well as the sale of skim oil barrels we held during
our first fiscal quarter. Our second quarter earnings also reflect
the full benefit of reduced operating expenses in the Water
Solutions segment, with operating expense averaging $0.27 per
barrel, compared to $0.32 per barrel during the first quarter of
this fiscal year and $0.40 per barrel during Fiscal 2020. This
decrease in expenses is significant as it represents approximately
$50 - $60 million in annual cost savings based on average volumes
for the quarter,” stated Mike Krimbill, NGL’s CEO. “Additionally
during the quarter, we were able to enter into several new,
long-term water disposal contracts, as well as extend and expand
certain other water disposal contracts, in the Delaware Basin with
both high quality, independent and super major producers. Our Crude
Logistics segment continued to perform despite the noise around the
Extraction bankruptcy process and averaged approximately 123,000
barrels per day on Grand Mesa Pipeline. As previously stated, NGL
will continue to vigorously defend the value of its contracts with
Extraction and remains amenable to resolving the dispute through
commercial considerations. Finally, the Liquids and Refined
Products segment is heading into its peak earning season with
strong inventory positions and we are looking forward to a
successful year in this segment. In addition to maximizing results
from operations, we are focused on reducing indebtedness and our
bank commitments. We are reducing capital expenditures, further
cutting costs and have decreased the common unit distribution, all
of which increase our free cash flow. We are also evaluating assets
sales and joint venture opportunities. These remain challenging
times; however, we continue to manage the things we can control and
focus on the future to create value for our stakeholders,” Krimbill
concluded.
Quarterly Results of Operations
The following table summarizes operating income (loss) and
Adjusted EBITDA from continuing operations by reportable segment
for the periods indicated:
Quarter Ended
September 30, 2020
September 30, 2019
Operating
Income (Loss)
Adjusted EBITDA
Operating Income
(Loss)
Adjusted EBITDA
(in thousands)
Crude Oil Logistics
$
48,239
$
65,181
$
38,520
$
54,632
Liquids and Refined Products
14,338
21,257
8,798
23,273
Water Solutions
(13,277
)
61,047
21,274
56,879
Corporate and Other
(12,984
)
(9,514
)
(38,477
)
(11,318
)
Total
$
36,316
$
137,971
$
30,115
$
123,466
The tables included in this release reconcile operating income
(loss) to Adjusted EBITDA from continuing operations, a non-GAAP
financial measure, on a consolidated basis and for each of the
Partnership’s reportable segments.
Crude Oil Logistics
Operating income for the second quarter of Fiscal 2021 increased
compared to the second quarter of Fiscal 2020 primarily due to
increased margins. The increased margin realized during the current
quarter was due primarily to the sale of inventory that was
purchased at lower prices and held during the three months ended
June 30, 2020. During the three months ended September 30, 2020,
financial volumes on the Grand Mesa Pipeline averaged approximately
123,000 barrels per day.
In June 2020, Extraction Oil & Gas, Inc. (“Extraction”), a
significant shipper on the Grand Mesa Pipeline, filed a petition
for bankruptcy protection under Chapter 11 of the United States
Bankruptcy Code. Extraction has transportation contracts pursuant
to which it has committed to ship crude oil on the pipeline through
October 2026. As part of the bankruptcy filing, Extraction filed a
motion requesting that the court authorize it to reject these
transportation contracts, to which the Partnership filed an
objection and took various other legal steps within the bankruptcy
to protect the value of the contracts. On November 2, 2020, the
bankruptcy court issued a bench ruling granting the motion to
reject the transportation contracts effective as of June 14, 2020.
As a result, we intend to appeal the bankruptcy court’s ruling and
raise what we respectfully believe are numerous infirmities with
the ruling.
Liquids and Refined Products
Total product margin per gallon, excluding the impact of
derivatives, was $0.036 for the quarter ended September 30, 2020,
compared to $0.031 for the quarter ended September 30, 2019. This
increase was primarily due to propane inventory values aligning
with increased commodity prices. This increase was partially offset
by lower margins for butane and refined products due to lower
demand resulting from the COVID-19 pandemic.
Refined products volumes decreased by approximately 111.7
million gallons, or 33.6%, during the quarter ended September 30,
2020 compared to the quarter ended September 30, 2019. Propane
volumes decreased by approximately 9.5 million gallons, or 3.6%,
and butane volumes decreased by approximately 26.8 million gallons,
or 15.7%, when compared to the quarter ended September 30, 2019.
Other product volumes decreased by approximately 37.1 million
gallons, or 24.5%, during the quarter ended September 30, 2020
compared to the same period in the prior year. The decrease in
refined products, propane, butane and other product volumes was
also primarily due to the continued lower demand as a result of the
COVID-19 pandemic.
Water Solutions
The Partnership processed approximately 1.28 million barrels of
water per day during the quarter ended September 30, 2020, a 1.9%
increase when compared to produced water processed per day during
the quarter ended September 30, 2019. This increase was primarily
driven by our acquisition of Hillstone Environmental Partners, LLC
in November 2019 in the Delaware Basin and was offset by lower
disposal volumes in all other basins during the period resulting
from lower crude oil prices, drilling activity and production
volumes.
Revenues from recovered crude oil, including the impact from
realized skim oil hedges, totaled $12.5 million for the quarter
ended September 30, 2020, a decrease of $3.9 million from the prior
year period. This decrease was the result of lower volumes and
lower crude oil prices. The percentage of recovered crude oil per
barrel of produced water processed has declined over the past
several periods due to an increase in produced water transported
through pipelines (which contains less oil per barrel of produced
water) and the addition of contract structures that allow producers
to keep the skim oil recovered from produced water. This decrease
was partially offset by the sale of crude oil during the three
months ended September 30, 2020, that we stored as of June 30, 2020
due to the lower crude oil prices.
Operating expenses in the Water Solutions segment decreased to
$0.27 per barrel compared to $0.38 per barrel in the comparative
quarter last year. The Partnership has taken significant steps to
reduce operating costs and continues to evaluate cost saving
initiatives in the current environment.
In October 2020, the Partnership successfully completed its
Poker Lake pipeline and tie-ins, which has an initial capacity of
over 350,000 barrels per day and connects into its integrated
Delaware Basin produced water pipeline infrastructure network. NGL
began receiving produced water volumes from Exxon’s Poker Lake
Development. Additionally, the Partnership recently announced new
agreements, including acreage dedications, water transportation and
disposal agreements, and water supply agreements, with leading
super major producers and other key producers in the Delaware
Basin. The Partnership expects to service these customers’ produced
water needs with its existing infrastructure with minimal capital
expenditure requirements in the foreseeable future.
Corporate and Other
Corporate and Other expenses decreased from the comparable prior
year period primarily due to lower compensation expense, in
particular cash and non-cash incentive compensation, and a
reduction in acquisition related expenses. These decreases were
partially offset by legal costs incurred for defending the
rejection of our transportation contracts in Extraction bankruptcy
proceedings.
Capitalization and Liquidity
Total debt outstanding was $3.29 billion at September 30, 2020
compared to $3.15 billion at March 31, 2020, an increase of $139
million due primarily to the funding of certain capital
expenditures incurred prior to and accrued on March 31, 2020 and
$83.1 million of the remaining $100.0 million deferred purchase
price of Mesquite Disposals Unlimited, LLC (“Mesquite”). Capital
expenditures incurred totaled $24.4 million during the second
quarter (including $6.8 million in maintenance expenditures) and
$54.4 million year-to-date. These expenditures are expected to
continue to decrease throughout Fiscal 2021 with full year
expectations totaling $100 million or less for both growth and
maintenance capital expenditures combined. Total liquidity (cash
plus available capacity on our revolving credit facility) was
approximately $122.1 million as of September 30, 2020 and the
Partnership is in compliance with all of its debt covenants.
The Partnership is currently working with the syndicate of
lenders that are a party to its revolving credit facility to extend
the maturity of the facility by at least one year. The
Partnership’s proposal was submitted to all of the syndicate
lenders in October 2020, and remains subject to approval by each
lender.
Second Quarter Conference Call Information
A conference call to discuss NGL’s results of operations is
scheduled for 4:00 pm Central Time on Monday, November 9, 2020.
Analysts, investors, and other interested parties may access the
conference call by dialing (800) 291-4083 and providing access code
8880357. An archived audio replay of the conference call will be
available for 7 days beginning at 1:00 pm Central Time on November
10, 2020, which can be accessed by dialing (855) 859-2056 and
providing access code 8880357.
Non-GAAP Financial Measures
NGL defines EBITDA as net income (loss) attributable to NGL
Energy Partners LP, plus interest expense, income tax expense
(benefit), and depreciation and amortization expense. NGL defines
Adjusted EBITDA as EBITDA excluding net unrealized gains and losses
on derivatives, lower of cost or net realizable value adjustments,
gains and losses on disposal or impairment of assets, gains and
losses on early extinguishment of liabilities, equity-based
compensation expense, acquisition expense, revaluation of
liabilities, certain legal settlements and other. NGL also includes
in Adjusted EBITDA certain inventory valuation adjustments related
to TransMontaigne Product Services, LLC (“TPSL”), our refined
products business in the mid-continent region of the United States
(“Mid-Con”) and our gas blending business in the southeastern and
eastern regions of the United States (“Gas Blending”), which are
included in discontinued operations, and certain refined products
businesses within NGL’s Liquids and Refined Products segment, as
discussed below. EBITDA and Adjusted EBITDA should not be
considered as alternatives to net income (loss), income (loss) from
continuing operations before income taxes, cash flows from
operating activities, or any other measure of financial performance
calculated in accordance with GAAP, as those items are used to
measure operating performance, liquidity or the ability to service
debt obligations. NGL believes that EBITDA provides additional
information to investors for evaluating NGL’s ability to make
quarterly distributions to NGL’s unitholders and is presented
solely as a supplemental measure. NGL believes that Adjusted EBITDA
provides additional information to investors for evaluating NGL’s
financial performance without regard to NGL’s financing methods,
capital structure and historical cost basis. Further, EBITDA and
Adjusted EBITDA, as NGL defines them, may not be comparable to
EBITDA, Adjusted EBITDA, or similarly titled measures used by other
entities.
Other than for the TPSL, Mid-Con, and Gas Blending businesses,
which are included in discontinued operations, and certain
businesses within NGL’s Liquids and Refined Products segment, for
purposes of the Adjusted EBITDA calculation, NGL makes a
distinction between realized and unrealized gains and losses on
derivatives. During the period when a derivative contract is open,
NGL records changes in the fair value of the derivative as an
unrealized gain or loss. When a derivative contract matures or is
settled, NGL reverses the previously recorded unrealized gain or
loss and record a realized gain or loss. NGL does not draw such a
distinction between realized and unrealized gains and losses on
derivatives of the TPSL, Mid-Con, and Gas Blending businesses,
which are included in discontinued operations, and certain
businesses within NGL’s Liquids and Refined Products segment. The
primary hedging strategy of these businesses is to hedge against
the risk of declines in the value of inventory over the course of
the contract cycle, and many of the hedges cover extended periods
of time. The “inventory valuation adjustment” row in the
reconciliation table reflects the difference between the market
value of the inventory of these businesses at the balance sheet
date and its cost, adjusted for the impact of seasonal market
movements related to our base inventory and the related hedge. NGL
includes this in Adjusted EBITDA because the unrealized gains and
losses associated with derivative contracts associated with the
inventory of this segment, which are intended primarily to hedge
inventory holding risk and are included in net income, also affect
Adjusted EBITDA.
Distributable Cash Flow is defined as Adjusted EBITDA minus
maintenance capital expenditures, income tax expense, cash interest
expense, preferred unit distributions and other. Maintenance
capital expenditures represent capital expenditures necessary to
maintain the Partnership’s operating capacity. Distributable Cash
Flow is a performance metric used by senior management to compare
cash flows generated by the Partnership (excluding growth capital
expenditures and prior to the establishment of any retained cash
reserves by the Board of Directors) to the cash distributions
expected to be paid to unitholders. Using this metric, management
can quickly compute the coverage ratio of estimated cash flows to
planned cash distributions. This financial measure also is
important to investors as an indicator of whether the Partnership
is generating cash flow at a level that can sustain, or support an
increase in, quarterly distribution rates. Actual distribution
amounts are set by the Board of Directors.
Forward-Looking Statements
This press release includes “forward-looking statements.” All
statements other than statements of historical facts included or
incorporated herein may constitute forward-looking statements.
Actual results could vary significantly from those expressed or
implied in such statements and are subject to a number of risks and
uncertainties. While NGL believes such forward-looking statements
are reasonable, NGL cannot assure they will prove to be correct.
The forward-looking statements involve risks and uncertainties that
affect operations, financial performance, and other factors as
discussed in filings with the Securities and Exchange Commission.
Other factors that could impact any forward-looking statements are
those risks described in NGL’s Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q, and other public filings. You are
urged to carefully review and consider the cautionary statements
and other disclosures made in those filings, specifically those
under the heading “Risk Factors.” NGL undertakes no obligation to
publicly update or revise any forward-looking statements except as
required by law.
NGL provides Adjusted EBITDA guidance that does not include
certain charges and costs, which in future periods are generally
expected to be similar to the kinds of charges and costs excluded
from Adjusted EBITDA in prior periods, such as income taxes,
interest and other non-operating items, depreciation and
amortization, net unrealized gains and losses on derivatives, lower
of cost or net realizable value adjustments, gains and losses on
disposal or impairment of assets, gains and losses on early
extinguishment of liabilities, equity-based compensation expense,
acquisition expense, revaluation of liabilities and items that are
unusual in nature or infrequently occurring. The exclusion of these
charges and costs in future periods will have a significant impact
on the Partnership’s Adjusted EBITDA, and the Partnership is not
able to provide a reconciliation of its Adjusted EBITDA guidance to
net income (loss) without unreasonable efforts due to the
uncertainty and variability of the nature and amount of these
future charges and costs and the Partnership believes that such
reconciliation, if possible, would imply a degree of precision that
would be potentially confusing or misleading to investors.
About NGL Energy Partners LP
NGL Energy Partners LP, a Delaware limited partnership, is a
diversified midstream energy company that transports, stores,
markets and provides other logistics services for crude oil,
natural gas liquids and other products and transports, treats and
disposes of produced water generated as part of the oil and natural
gas production process.
For further information, visit the Partnership’s website at
www.nglenergypartners.com.
NGL ENERGY PARTNERS LP AND
SUBSIDIARIES
Unaudited Condensed
Consolidated Balance Sheets
(in Thousands, except unit
amounts)
September 30, 2020
March 31, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
16,912
$
22,704
Accounts receivable-trade, net of
allowance for expected credit losses of $3,399 and $4,540,
respectively
439,889
566,834
Accounts receivable-affiliates
14,904
12,934
Inventories
182,859
69,634
Prepaid expenses and other current
assets
74,150
101,981
Total current assets
728,714
774,087
PROPERTY, PLANT AND EQUIPMENT, net of
accumulated depreciation of $619,820 and $529,068, respectively
2,799,725
2,851,555
GOODWILL
982,239
993,587
INTANGIBLE ASSETS, net of accumulated
amortization of $706,259 and $631,449, respectively
1,538,417
1,612,480
INVESTMENTS IN UNCONSOLIDATED ENTITIES
21,215
23,182
OPERATING LEASE RIGHT-OF-USE ASSETS
168,349
180,708
OTHER NONCURRENT ASSETS
47,752
63,137
Total assets
$
6,286,411
$
6,498,736
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable-trade
$
379,420
$
515,049
Accounts payable-affiliates
23,985
17,717
Accrued expenses and other payables
138,572
232,062
Advance payments received from
customers
24,143
19,536
Current maturities of long-term debt
13,123
4,683
Operating lease obligations
50,709
56,776
Total current liabilities
629,952
845,823
LONG-TERM DEBT, net of debt issuance costs
of $22,267 and $19,795, respectively, and current maturities
3,275,166
3,144,848
OPERATING LEASE OBLIGATIONS
114,833
121,013
OTHER NONCURRENT LIABILITIES
105,835
114,079
CLASS D 9.00% PREFERRED UNITS, 600,000 and
600,000 preferred units issued and outstanding, respectively
551,097
537,283
EQUITY:
General partner, representing a 0.1%
interest, 128,901 and 128,901 notional units, respectively
(51,518
)
(51,390
)
Limited partners, representing a 99.9%
interest, 128,771,715 and 128,771,715 common units issued and
outstanding, respectively
1,242,676
1,366,152
Class B preferred limited partners,
12,585,642 and 12,585,642 preferred units issued and outstanding,
respectively
305,468
305,468
Class C preferred limited partners,
1,800,000 and 1,800,000 preferred units issued and outstanding,
respectively
42,891
42,891
Accumulated other comprehensive loss
(307
)
(385
)
Noncontrolling interests
70,318
72,954
Total equity
1,609,528
1,735,690
Total liabilities and equity
$
6,286,411
$
6,498,736
NGL ENERGY PARTNERS LP AND
SUBSIDIARIES
Unaudited Condensed
Consolidated Statements of Operations
(in Thousands, except unit and
per unit amounts)
Three Months Ended September
30,
Six Months Ended September
30,
2020
2019
2020
2019
REVENUES:
Crude Oil Logistics
$
466,841
$
641,152
$
742,880
$
1,357,312
Water Solutions
88,678
101,249
176,743
173,032
Liquids and Refined Products
612,324
1,061,671
1,092,322
2,145,364
Other
315
264
628
519
Total Revenues
1,168,158
1,804,336
2,012,573
3,676,227
COST OF SALES:
Crude Oil Logistics
386,771
569,699
604,328
1,218,939
Water Solutions
579
(6,496
)
5,279
(9,303
)
Liquids and Refined Products
577,086
1,025,565
1,031,422
2,068,597
Other
454
435
908
900
Total Cost of Sales
964,890
1,589,203
1,641,937
3,279,133
OPERATING COSTS AND EXPENSES:
Operating
56,054
74,886
121,041
136,198
General and administrative
17,475
43,908
34,633
64,250
Depreciation and amortization
87,469
63,113
171,455
116,867
Loss on disposal or impairment of assets,
net
5,954
3,111
17,976
2,144
Operating Income
36,316
30,115
25,531
77,635
OTHER INCOME (EXPENSE):
Equity in earnings (loss) of
unconsolidated entities
501
(265
)
790
(257
)
Interest expense
(46,935
)
(45,017
)
(90,896
)
(84,894
)
Gain on early extinguishment of
liabilities, net
13,747
—
33,102
—
Other income, net
1,585
183
2,620
1,193
Income (Loss) From Continuing Operations
Before Income Taxes
5,214
(14,984
)
(28,853
)
(6,323
)
INCOME TAX BENEFIT (EXPENSE)
774
(640
)
1,075
(319
)
Income (Loss) From Continuing
Operations
5,988
(15,624
)
(27,778
)
(6,642
)
Loss From Discontinued Operations, net of
Tax
(153
)
(185,742
)
(1,639
)
(186,685
)
Net Income (Loss)
5,835
(201,366
)
(29,417
)
(193,327
)
LESS: NET (INCOME) LOSS ATTRIBUTABLE TO
NONCONTROLLING INTERESTS
(168
)
129
(219
)
397
NET INCOME (LOSS) ATTRIBUTABLE TO NGL
ENERGY PARTNERS LP
$
5,667
$
(201,237
)
$
(29,636
)
$
(192,930
)
NET LOSS FROM CONTINUING OPERATIONS
ALLOCATED TO COMMON UNITHOLDERS
$
(17,933
)
$
(32,561
)
$
(73,748
)
$
(152,687
)
NET LOSS FROM DISCONTINUED OPERATIONS
ALLOCATED TO COMMON UNITHOLDERS
$
(152
)
$
(185,556
)
$
(1,637
)
$
(186,498
)
NET LOSS ALLOCATED TO COMMON
UNITHOLDERS
$
(18,085
)
$
(218,117
)
$
(75,385
)
$
(339,185
)
BASIC LOSS PER COMMON UNIT
Loss From Continuing Operations
$
(0.14
)
$
(0.26
)
$
(0.57
)
$
(1.21
)
Loss From Discontinued Operations, net of
Tax
$
—
$
(1.46
)
$
(0.01
)
$
(1.47
)
Net Loss
$
(0.14
)
$
(1.72
)
$
(0.58
)
$
(2.68
)
DILUTED LOSS PER COMMON UNIT
Loss From Continuing Operations
$
(0.14
)
$
(0.26
)
$
(0.57
)
$
(1.21
)
Loss From Discontinued Operations, net of
Tax
$
—
$
(1.46
)
$
(0.01
)
$
(1.47
)
Net Loss
$
(0.14
)
$
(1.72
)
$
(0.58
)
$
(2.68
)
BASIC WEIGHTED AVERAGE COMMON UNITS
OUTSTANDING
128,771,715
126,979,034
128,771,715
126,435,870
DILUTED WEIGHTED AVERAGE COMMON UNITS
OUTSTANDING
128,771,715
126,979,034
128,771,715
126,435,870
EBITDA, ADJUSTED EBITDA AND
DISTRIBUTABLE CASH FLOW RECONCILIATION
(Unaudited)
The following table reconciles
NGL’s net income (loss) to NGL’s EBITDA, Adjusted EBITDA and
Distributable Cash Flow:
Three Months Ended September
30,
Six Months Ended September
30,
2020
2019
2020
2019
(in thousands)
Net income (loss)
$
5,835
$
(201,366
)
$
(29,417
)
$
(193,327
)
Less: Net (income) loss attributable to
noncontrolling interests
(168
)
129
(219
)
397
Net income (loss) attributable to NGL
Energy Partners LP
5,667
(201,237
)
(29,636
)
(192,930
)
Interest expense
46,840
45,113
90,906
85,023
Income tax (benefit) expense
(827
)
650
(1,128
)
339
Depreciation and amortization
86,822
63,266
170,024
118,110
EBITDA
138,502
(92,208
)
230,166
10,542
Net unrealized losses (gains) on
derivatives
4,457
(5,462
)
31,128
(8,936
)
Inventory valuation adjustment (1)
(1,641
)
(5,439
)
2,179
(25,185
)
Lower of cost or net realizable value
adjustments
(1,531
)
(901
)
(33,534
)
(1,819
)
Loss on disposal or impairment of assets,
net
6,063
177,561
19,147
176,594
Gain on early extinguishment of
liabilities, net
(13,747
)
—
(33,102
)
—
Equity-based compensation expense (2)
2,256
21,295
4,558
24,996
Acquisition expense (3)
169
5,085
326
7,176
Other (4)
3,253
3,332
7,601
6,655
Adjusted EBITDA
$
137,781
$
103,263
$
228,469
$
190,023
Adjusted EBITDA - Discontinued Operations
(5)
$
(190
)
$
(20,203
)
$
(484
)
$
(37,161
)
Adjusted EBITDA - Continuing
Operations
$
137,971
$
123,466
$
228,953
$
227,184
Less: Cash interest expense (6)
43,568
42,712
83,967
80,487
Less: Income tax (benefit) expense
(774
)
640
(1,075
)
319
Less: Maintenance capital expenditures
6,830
16,461
15,998
33,390
Less: Preferred unit distributions
paid
15,108
5,796
30,138
18,872
Less: Other (7)
—
127
—
127
Distributable Cash Flow - Continuing
Operations
$
73,239
$
57,730
$
99,925
$
93,989
(1)
Amount reflects the difference between the
market value of the inventory at the balance sheet date and its
cost, adjusted for the impact of seasonal market movements related
to our base inventory and the related hedge position. See “Non-GAAP
Financial Measures” section above for a further discussion.
(2)
Equity-based compensation expense in the
table above may differ from equity-based compensation expense
reported in the footnotes to our unaudited condensed consolidated
financial statements included in the Partnership’s Quarterly Report
on Form 10-Q for the quarter ended September 30, 2020. Amounts
reported in the table above include expense accruals for bonuses
expected to be paid in common units, whereas the amounts reported
in the footnotes to our unaudited condensed consolidated financial
statements only include expenses associated with equity-based
awards that have been formally granted.
(3)
Amounts represent expenses we incurred
related to legal and advisory costs associated with acquisitions,
including Mesquite during the three months and six months ended
September 30, 2019.
(4)
Amounts for the three months and six
months ended September 30, 2020 and 2019 represent non-cash
operating expenses related to our Grand Mesa Pipeline, unrealized
losses on marketable securities and accretion expense for asset
retirement obligations.
(5)
Amounts include the operations of TPSL,
Gas Blending and Mid-Con.
(6)
Amounts represent interest expense payable
in cash for the period presented, excluding changes in the accrued
interest balance.
(7)
Amounts represents cash paid to settle
asset retirement obligations.
ADJUSTED EBITDA RECONCILIATION BY SEGMENT
Three Months Ended September
30, 2020
Crude Oil
Logistics
Water Solutions
Liquids and Refined
Products
Corporate and
Other
Continuing
Operations
Discontinued Operations
(TPSL, Mid-Con, Gas Blending)
Consolidated
(in thousands)
Operating income (loss)
$
48,239
$
(13,277
)
$
14,338
$
(12,984
)
$
36,316
$
—
$
36,316
Depreciation and amortization
17,232
62,220
7,026
991
87,469
—
87,469
Amortization recorded to cost of sales
—
—
76
—
76
—
76
Net unrealized (gains) losses on
derivatives
(3,317
)
4,413
3,361
—
4,457
—
4,457
Inventory valuation adjustment
—
—
(1,639
)
—
(1,639
)
—
(1,639
)
Lower of cost or net realizable value
adjustments
(19
)
—
(1,513
)
—
(1,532
)
—
(1,532
)
(Gain) loss on disposal or impairment of
assets, net
(310
)
6,223
43
(2
)
5,954
—
5,954
Equity-based compensation expense
—
—
—
2,256
2,256
—
2,256
Acquisition expense
—
1
—
168
169
—
169
Other income, net
1,175
2
286
122
1,585
—
1,585
Adjusted EBITDA attributable to
unconsolidated entities
—
845
(13
)
(65
)
767
—
767
Adjusted EBITDA attributable to
noncontrolling interest
—
(441
)
(736
)
—
(1,177
)
—
(1,177
)
Other
2,181
1,061
28
—
3,270
—
3,270
Discontinued operations
—
—
—
—
—
(190
)
(190
)
Adjusted EBITDA
$
65,181
$
61,047
$
21,257
$
(9,514
)
$
137,971
$
(190
)
$
137,781
Three Months Ended September
30, 2019
Crude Oil
Logistics
Water Solutions
Liquids and Refined
Products
Corporate and
Other
Continuing
Operations
Discontinued Operations
(TPSL, Mid-Con, Gas Blending)
Consolidated
(in thousands)
Operating income (loss)
$
38,520
$
21,274
$
8,798
$
(38,477
)
$
30,115
$
—
$
30,115
Depreciation and amortization
17,693
37,921
6,736
763
63,113
—
63,113
Amortization recorded to cost of sales
—
—
89
—
89
—
89
Net unrealized (gains) losses on
derivatives
(4,126
)
(5,870
)
4,534
—
(5,462
)
—
(5,462
)
Inventory valuation adjustment
—
—
1,801
—
1,801
—
1,801
Lower of cost or net realizable value
adjustments
—
—
152
—
152
—
152
(Gain) loss on disposal or impairment of
assets, net
(630
)
3,744
(4
)
1
3,111
—
3,111
Equity-based compensation expense
—
—
—
21,295
21,295
—
21,295
Acquisition expense
—
—
—
5,085
5,085
—
5,085
Other income (expense), net
43
(2
)
(20
)
162
183
—
183
Adjusted EBITDA attributable to
unconsolidated entities
—
—
(26
)
(147
)
(173
)
—
(173
)
Adjusted EBITDA attributable to
noncontrolling interest
—
(319
)
(283
)
—
(602
)
—
(602
)
Intersegment transactions (1)
—
—
1,427
—
1,427
—
1,427
Other
3,132
131
69
—
3,332
—
3,332
Discontinued operations
—
—
—
—
—
(20,203
)
(20,203
)
Adjusted EBITDA
$
54,632
$
56,879
$
23,273
$
(11,318
)
$
123,466
$
(20,203
)
$
103,263
Six Months Ended September 30,
2020
Crude Oil
Logistics
Water Solutions
Liquids and Refined
Products
Corporate and
Other
Continuing
Operations
Discontinued Operations
(TPSL, Mid-Con, Gas Blending)
Consolidated
(in thousands)
Operating income (loss)
$
71,559
$
(29,324
)
$
18,900
$
(35,604
)
25,531
$
—
$
25,531
Depreciation and amortization
34,027
120,353
15,182
1,893
171,455
—
171,455
Amortization recorded to cost of sales
—
—
153
—
153
—
153
Net unrealized losses on derivatives
11,321
17,725
2,082
—
31,128
—
31,128
Inventory valuation adjustment
—
—
2,201
—
2,201
—
2,201
Lower of cost or net realizable value
adjustments
(29,079
)
—
(4,476
)
—
(33,555
)
—
(33,555
)
Loss on disposal or impairment of assets,
net
1,140
6,552
47
10,237
17,976
—
17,976
Equity-based compensation expense
—
—
—
4,558
4,558
—
4,558
Acquisition expense
—
13
—
313
326
—
326
Other income, net
1,513
258
663
186
2,620
—
2,620
Adjusted EBITDA attributable to
unconsolidated entities
—
1,310
(14
)
(127
)
1,169
—
1,169
Adjusted EBITDA attributable to
noncontrolling interest
—
(928
)
(1,272
)
—
(2,200
)
—
(2,200
)
Intersegment transactions (1)
—
—
(27
)
—
(27
)
—
(27
)
Other
5,554
2,014
50
—
7,618
—
7,618
Discontinued operations
—
—
—
—
—
(484
)
(484
)
Adjusted EBITDA
$
96,035
$
117,973
$
33,489
$
(18,544
)
$
228,953
$
(484
)
$
228,469
Six Months Ended September 30,
2019
Crude Oil
Logistics
Water Solutions
Liquids and Refined
Products
Corporate and
Other
Continuing
Operations
Discontinued Operations
(TPSL, Mid-Con, Gas Blending)
Consolidated
(in thousands)
Operating income (loss)
$
72,322
$
34,963
$
24,169
$
(53,819
)
$
77,635
$
—
$
77,635
Depreciation and amortization
35,278
65,992
14,091
1,506
116,867
—
116,867
Amortization recorded to cost of sales
—
—
176
—
176
—
176
Net unrealized (gains) losses on
derivatives
(5,984
)
(6,037
)
3,085
—
(8,936
)
—
(8,936
)
Inventory valuation adjustment
—
—
1,835
—
1,835
—
1,835
Lower of cost or net realizable value
adjustments
—
—
(1,471
)
—
(1,471
)
—
(1,471
)
(Gain) loss on disposal or impairment of
assets, net
(1,246
)
3,155
(7
)
242
2,144
—
2,144
Equity-based compensation expense
—
—
—
24,996
24,996
—
24,996
Acquisition expense
—
20
—
7,156
7,176
—
7,176
Other income (expense), net
39
(2
)
—
1,156
1,193
—
1,193
Adjusted EBITDA attributable to
unconsolidated entities
—
—
(22
)
(136
)
(158
)
—
(158
)
Adjusted EBITDA attributable to
noncontrolling interest
—
(394
)
(680
)
—
(1,074
)
—
(1,074
)
Intersegment transactions (1)
—
—
146
—
146
—
146
Other
6,297
271
87
—
6,655
—
6,655
Discontinued operations
—
—
—
—
—
(37,161
)
(37,161
)
Adjusted EBITDA
$
106,706
$
97,968
$
41,409
$
(18,899
)
$
227,184
$
(37,161
)
$
190,023
(1)
Amount reflects the transactions with
TPSL, Mid-Con and Gas Blending that are eliminated in
consolidation.
OPERATIONAL DATA
(Unaudited)
Three Months Ended
Six Months Ended
September 30,
September 30,
2020
2019
2020
2019
(in thousands, except per day
amounts)
Crude Oil Logistics:
Crude oil sold (barrels)
10,178
10,421
19,470
21,712
Crude oil transported on owned pipelines
(barrels)
9,992
10,922
20,468
22,711
Crude oil storage capacity - owned and
leased (barrels) (1)
5,239
5,232
Crude oil inventory (barrels) (1)
1,507
1,425
Water Solutions:
Produced water processed (barrels per
day)
Northern Delaware Basin
869,472
465,453
892,205
277,802
Delaware Basin
190,881
282,365
191,155
267,646
Eagle Ford Basin
81,260
279,754
88,279
273,533
DJ Basin
114,219
169,485
123,242
169,552
Other Basins
26,264
61,296
29,146
66,206
Total
1,282,096
1,258,353
1,324,027
1,054,739
Solids processed (barrels per day)
863
5,759
1,378
5,601
Skim oil sold (barrels per day)
2,611
3,079
1,654
2,970
Liquids and Refined Products:
Refined products sold (gallons)
220,243
331,898
432,217
653,532
Propane sold (gallons)
252,693
262,183
504,982
507,450
Butane sold (gallons)
143,392
170,169
262,958
312,648
Other products sold (gallons)
114,734
151,871
228,956
306,463
Liquids and Refined Products storage
capacity - owned and leased (gallons) (1)
427,004
401,249
Refined products inventory (gallons)
(1)
1,209
55,119
Propane inventory (gallons) (1)
116,462
104,048
Butane inventory (gallons) (1)
92,672
80,839
Other products inventory (gallons) (1)
18,671
69,116
(1)
Information is presented as of September
30, 2020 and September 30, 2019, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201109006146/en/
NGL Energy Partners LP Trey Karlovich, 918-481-1119 Chief
Financial Officer and Executive Vice President Trey.Karlovich@nglep.com
or
Linda Bridges, 918-481-1119 Senior Vice President - Finance and
Treasurer Linda.Bridges@nglep.com
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