NGL Energy Partners LP (NYSE:NGL) (“NGL,” “our,” “we,” or the
“Partnership”) today reported its third quarter fiscal 2021
results. Highlights for the quarter include:
- Loss from continuing operations for the third quarter of Fiscal
2021 of $380.4 million, primarily a result of a $383.6 million
write down of goodwill and certain intangibles related to the
impact of the bankruptcy rejection of transportation contracts with
Extraction Oil & Gas, Inc. (“Extraction”), compared to income
from continuing operations of $49.1 million for the third quarter
of Fiscal 2020
- Announcement of a global settlement agreement with Extraction
which, among other consideration, provides for: (i) a new long-term
supply agreement, which includes a significant acreage dedication
in the DJ Basin, and retains Extraction’s crude oil volumes for
shipping on the Grand Mesa Pipeline; (ii) a new rate structure
under the supply agreement, with an agreed upon differential plus
an increase in the rate when New York Mercantile Exchange (“NYMEX”)
prices exceed $50.00 per barrel; and (iii) the receipt of $35.0
million from Extraction as a liquidated payment for the
Partnership’s unsecured claims
- Successful start-up 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
- Adjusted EBITDA from continuing operations for the third
quarter of Fiscal 2021 of $125.0 million, impacted by lower volumes
on the Grand Mesa Pipeline, lower demand in the Liquids and Refined
Products segment due to the COVID-19 pandemic and lower earnings
associated with biodiesel tax credits, compared to $200.5 million
for the third quarter of Fiscal 2020
Subsequent to December 31, 2020, the Partnership announced the
completion of a private offering of $2.05 billion of 7.5% 2026
senior secured notes (“2026 Secured Notes”) and a new $500.0
million asset-based revolving credit facility (“ABL Facility”). The
proceeds received from these transactions were used to repay all
outstanding amounts under the Partnership’s existing $1.915 billion
revolving credit facility due in October 2021 and its $250.0
million term loan facility and terminate those agreements, as well
as to pay all fees and expenses associated with the transactions.
In connection with these transactions, the Partnership has
temporarily suspended all common unit and preferred unit
distributions until total leverage has been reduced to an agreed
upon level.
“The Partnership made significant progress on numerous fronts
during its fiscal third quarter. The successful completion of the
Poker Lake pipeline allowed our Water Solutions segment to begin
receiving disposal volumes from its Poker Lake Dedication and will
facilitate future growth from the development. The finalization of
our negotiations with Extraction around our future operating
relationship preserved barrels to be transported on the Grand Mesa
Pipeline and removed a significant point of uncertainty in our
future earnings.” stated Mike Krimbill, NGL’s CEO. “Subsequent to
the quarter’s end, we successfully extended our short-term debt
maturities and provided the Partnership with improved liquidity and
a long-term runway with which it can concentrate on deleveraging
the balance sheet with an eye towards reinstating both the
preferred and common unit distributions as soon as possible. Before
entering into the agreement that restricts distributions,
management and the Board first considered many other options and,
based on the totality of the circumstances, determined and strongly
believes the chosen path forward is in the best interest of all
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
December 31, 2020
December 31, 2019
Operating Income
(Loss)
Adjusted EBITDA
Operating Income
(Loss)
Adjusted EBITDA
(in thousands)
Crude Oil Logistics
$
(382,192
)
$
26,332
$
28,696
$
55,575
Liquids and Refined Products
32,438
41,824
89,038
93,211
Water Solutions
15,821
65,554
(583
)
62,214
Corporate and Other
(12,374
)
(8,670
)
(20,756
)
(10,489
)
Total
$
(346,307
)
$
125,040
$
96,395
$
200,511
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
On December 21, 2020, the Partnership announced a global
settlement agreement with Extraction, as it relates to Extraction’s
emergence from bankruptcy, which occurred on January 21, 2021.
Among other consideration, the global settlement agreement provides
for the following: (i) a new long-term supply agreement, which
includes a significant acreage dedication in the DJ Basin, and
retains Extraction’s crude oil volumes for shipping on the Grand
Mesa Pipeline; (ii) a new rate structure under the supply
agreement, with an agreed upon differential plus an increase in the
rate when NYMEX prices exceed $50.00 per barrel; and (iii) the
receipt of $35.0 million from Extraction as a liquidated payment
for the Partnership’s unsecured claims related to the rejected
transportation contracts, which was received on January 21,
2021.
Operating income for the third quarter of Fiscal 2021 decreased
compared to the third quarter of Fiscal 2020 primarily due to
impairment charges of $383.6 million related to the write down of
goodwill and certain intangible assets due to the impact of the
rejection of transportation contracts with Extraction in connection
with its bankruptcy. During the three months ended December 31,
2020, financial volumes on the Grand Mesa Pipeline averaged
approximately 69,000 barrels per day, compared to approximately
134,000 barrels per day for the three months ended December 31,
2019. These volumes are expected to increase going forward as the
global settlement agreement with Extraction begins to take effect
and as drilling and completion activity increases in the DJ
Basin.
Liquids and Refined Products
Total product margin per gallon, excluding the impact of
derivatives, was $0.048 for the quarter ended December 31, 2020,
compared to $0.091 for the quarter ended December 31, 2019. This
decrease was primarily due to higher supply costs and lower demand
resulting from the COVID-19 pandemic.
Refined products volumes decreased by approximately 112.8
million gallons, or 34.5%, during the quarter ended December 31,
2020 compared to the quarter ended December 31, 2019. Propane
volumes decreased by approximately 86.7 million gallons, or 18.5%,
and butane volumes decreased by approximately 63.3 million gallons,
or 22.9%, when compared to the quarter ended December 31, 2019.
Other product volumes decreased by approximately 46.4 million
gallons, or 27.5%, during the quarter ended December 31, 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.
Additionally, the Partnership received the $13.8 million
one-time benefit of certain biofuel tax credits that had been
accumulated in prior periods and recognized in the quarter ended
December 31, 2019.
Water Solutions
The Partnership processed approximately 1.41 million barrels of
water per day during the quarter ended December 31, 2020, a 10.9%
decrease when compared to produced water processed per day during
the quarter ended December 31, 2019. This decrease was primarily
due to lower disposal volumes in all basins, other than the
Northern Delaware basin, during the period resulting from lower
crude oil prices, drilling activity and production volumes. The
increase in disposal volumes during the three months ended December
31, 2020 in the Northern Delaware basin was primarily driven by
three months of activity from the assets acquired from Hillstone
Environmental Partners, LLC (“Hillstone”) in November 2019 as well
as new produced water volumes received upon the completion and
commencement of the Partnership’s Poker Lake pipeline. The pipeline
and tie-ins, which have the initial capacity of over 350,000
barrels per day and connects into the Partnership’s integrated
Delaware Basin produced water pipeline infrastructure network, was
successfully completed in October 2020.
Revenues from recovered crude oil, including the impact from
realized skim oil hedges, totaled $11.4 million for the quarter
ended December 31, 2020, a decrease of $6.4 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 certain
producers to keep the skim oil recovered from produced water.
Operating expenses in the Water Solutions segment decreased to
$0.27 per barrel compared to $0.42 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.
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 the Extraction
bankruptcy proceedings.
Capitalization and Liquidity
Total debt outstanding was $3.28 billion at December 31, 2020
compared to $3.15 billion at March 31, 2020, an increase of $131
million due primarily to the funding of certain capital
expenditures incurred prior to and accrued on March 31, 2020 as
well as $100.0 million of deferred purchase price of Mesquite
Disposals Unlimited, LLC (“Mesquite”). Capital expenditures
incurred totaled $11.5 million during the third quarter (including
$6.3 million in maintenance expenditures) and $65.9 million
year-to-date (including $22.3 million in maintenance expenditures).
These expenditures have decreased throughout Fiscal 2021 with
original 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 $103.1 million as of December 31,
2020.
On February 4, 2021, the Partnership closed on the 2026 Secured
Notes and the ABL Facility. The proceeds received were used to
repay all outstanding amounts under the Partnership’s existing
$1.915 billion revolving credit facility and repay its $250 million
term credit facility, along with all fees and expenses associated
with these repayments and the issuance of the 2026 Secured Notes
and the ABL Facility. The Partnership currently has approximately
$340 million in availability under the ABL Facility, net of all
currently outstanding borrowings and letters of credit.
In connection with the refinancing, the Partnership agreed to
certain restricted payment provisions under the 2026 Secured Notes
and the ABL Facility. One of these provisions requires the
Partnership to temporarily suspend the quarterly common unit
distribution beginning with respect to the quarter ended December
31, 2020, as well as distributions on all of the Partnership’s
preferred units, until the total leverage ratio falls below 4.75x.
The cash savings from this suspension should accelerate the
deleveraging of the Partnership’s balance sheet and increase
liquidity, thereby creating more financial flexibility for the
Partnership going forward.
Third Quarter Conference Call Information
A conference call to discuss NGL’s results of operations is
scheduled for 4:00 pm Central Time on Tuesday, February 9, 2021.
Analysts, investors, and other interested parties may access the
conference call by dialing (800) 291-4083 and providing access code
5176744. An archived audio replay of the conference call will be
available for 7 days beginning at 1:00 pm Central Time on February
10, 2021, which can be accessed by dialing (855) 859-2056 and
providing access code 5176744.
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 (loss) income, (loss) income 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)
December 31, 2020
March 31, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
9,223
$
22,704
Accounts receivable-trade, net of
allowance for expected credit losses of $3,681 and $4,540,
respectively
599,207
566,834
Accounts receivable-affiliates
17,194
12,934
Inventories
169,654
69,634
Prepaid expenses and other current
assets
120,414
101,981
Total current assets
915,692
774,087
PROPERTY, PLANT AND EQUIPMENT, net of
accumulated depreciation of $663,185 and $529,068, respectively
2,744,374
2,851,555
GOODWILL
744,439
993,587
INTANGIBLE ASSETS, net of accumulated
amortization of $494,910 and $631,449, respectively
1,322,697
1,612,480
INVESTMENTS IN UNCONSOLIDATED ENTITIES
21,589
23,182
OPERATING LEASE RIGHT-OF-USE ASSETS
156,398
180,708
OTHER NONCURRENT ASSETS
46,521
63,137
Total assets
$
5,951,710
$
6,498,736
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable-trade
$
506,792
$
515,049
Accounts payable-affiliates
42,604
17,717
Accrued expenses and other payables
102,769
232,062
Advance payments received from
customers
17,024
19,536
Current maturities of long-term debt
2,146
4,683
Operating lease obligations
48,082
56,776
Total current liabilities
719,417
845,823
LONG-TERM DEBT, net of debt issuance costs
of $20,426 and $19,795, respectively, and current maturities
3,278,443
3,144,848
OPERATING LEASE OBLIGATIONS
106,292
121,013
OTHER NONCURRENT LIABILITIES
103,888
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, 129,297 and 128,901 notional units, respectively
(51,935)
(51,390)
Limited partners, representing a 99.9%
interest, 129,168,035 and 128,771,715 common units issued and
outstanding, respectively
826,973
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
(266)
(385)
Noncontrolling interests
69,442
72,954
Total equity
1,192,573
1,735,690
Total liabilities and equity
$
5,951,710
$
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 December
31,
Nine Months Ended December
31,
2020
2019
2020
2019
REVENUES:
Crude Oil Logistics
$
485,289
$
690,989
$
1,228,169
$
2,048,301
Water Solutions
98,925
121,607
275,668
294,639
Liquids and Refined Products
877,491
1,413,653
1,969,813
3,559,017
Other
314
280
942
799
Total Revenues
1,462,019
2,226,529
3,474,592
5,902,756
COST OF SALES:
Crude Oil Logistics
448,933
628,443
1,053,261
1,847,382
Water Solutions
3,280
14,004
8,559
4,701
Liquids and Refined Products
826,211
1,292,588
1,857,633
3,361,185
Other
455
437
1,363
1,337
Total Cost of Sales
1,278,879
1,935,472
2,920,816
5,214,605
OPERATING COSTS AND EXPENSES:
Operating
61,427
94,412
182,468
230,610
General and administrative
16,044
29,150
50,677
93,400
Depreciation and amortization
78,200
73,726
249,655
190,593
Loss (gain) on disposal or impairment of
assets, net
373,776
(12,626
)
391,752
(10,482
)
Revaluation of liabilities
—
10,000
—
10,000
Operating (Loss) Income
(346,307
)
96,395
(320,776
)
174,030
OTHER INCOME (EXPENSE):
Equity in earnings of unconsolidated
entities
344
534
1,134
277
Interest expense
(47,252
)
(46,920
)
(138,148
)
(131,814
)
Gain on early extinguishment of
liabilities, net
11,190
—
44,292
—
Other income (expense), net
440
(226
)
3,060
967
(Loss) Income From Continuing Operations
Before Income Taxes
(381,585
)
49,783
(410,438
)
43,460
INCOME TAX BENEFIT (EXPENSE)
1,162
(677
)
2,237
(996
)
(Loss) Income From Continuing
Operations
(380,423
)
49,106
(408,201
)
42,464
Loss From Discontinued Operations, net of
Tax
(107
)
(6,115
)
(1,746
)
(192,800
)
Net (Loss) Income
(380,530
)
42,991
(409,947
)
(150,336
)
LESS: NET LOSS (INCOME) ATTRIBUTABLE TO
NONCONTROLLING INTERESTS
34
166
(185
)
563
NET (LOSS) INCOME ATTRIBUTABLE TO NGL
ENERGY PARTNERS LP
$
(380,496
)
$
43,157
$
(410,132
)
$
(149,773
)
NET (LOSS) INCOME FROM CONTINUING
OPERATIONS ALLOCATED TO COMMON UNITHOLDERS
$
(403,755
)
$
28,895
$
(477,503
)
$
(123,792
)
NET LOSS FROM DISCONTINUED OPERATIONS
ALLOCATED TO COMMON UNITHOLDERS
$
(107
)
$
(6,109
)
$
(1,744
)
$
(192,607
)
NET (LOSS) INCOME ALLOCATED TO COMMON
UNITHOLDERS
$
(403,862
)
$
22,786
$
(479,247
)
$
(316,399
)
BASIC (LOSS) INCOME PER COMMON UNIT
(Loss) Income From Continuing
Operations
$
(3.13
)
$
0.23
$
(3.71
)
$
(0.97
)
Loss From Discontinued Operations, net of
Tax
$
—
$
(0.05
)
$
(0.01
)
$
(1.52
)
Net (Loss) Income
$
(3.13
)
$
0.18
$
(3.72
)
$
(2.49
)
DILUTED (LOSS) INCOME PER COMMON UNIT
(Loss) Income From Continuing
Operations
$
(3.13
)
$
0.22
$
(3.71
)
$
(0.97
)
Loss From Discontinued Operations, net of
Tax
$
—
$
(0.05
)
$
(0.01
)
$
(1.52
)
Net (Loss) Income
$
(3.13
)
$
0.17
$
(3.72
)
$
(2.49
)
BASIC WEIGHTED AVERAGE COMMON UNITS
OUTSTANDING
128,991,414
128,201,369
128,845,214
127,026,510
DILUTED WEIGHTED AVERAGE COMMON UNITS
OUTSTANDING
128,991,414
129,358,590
128,845,214
127,026,510
EBITDA, ADJUSTED EBITDA AND
DISTRIBUTABLE CASH FLOW RECONCILIATION
(Unaudited)
The following table reconciles
NGL’s net (loss) income to NGL’s EBITDA, Adjusted EBITDA and
Distributable Cash Flow:
Three Months Ended December
31,
Nine Months Ended December
31,
2020
2019
2020
2019
(in thousands)
Net (loss) income
$
(380,530
)
$
42,991
$
(409,947
)
$
(150,336
)
Less: Net loss (income) attributable to
noncontrolling interests
34
166
(185
)
563
Net (loss) income attributable to NGL
Energy Partners LP
(380,496
)
43,157
(410,132
)
(149,773
)
Interest expense
47,253
46,946
138,159
131,969
Income tax (benefit) expense
(1,163
)
676
(2,291
)
1,015
Depreciation and amortization
77,531
72,939
247,555
191,049
EBITDA
(256,875
)
163,718
(26,709
)
174,260
Net unrealized losses on derivatives
16,529
16,787
47,657
7,851
Inventory valuation adjustment (1)
(786
)
(370
)
1,393
(25,555
)
Lower of cost or net realizable value
adjustments
321
(646
)
(33,213
)
(2,465
)
Loss (gain) on disposal or impairment of
assets, net
373,777
(4,837
)
392,924
171,757
Gain on early extinguishment of
liabilities, net
(11,190
)
—
(44,292
)
—
Equity-based compensation expense (2)
1,120
2,213
5,678
27,209
Acquisition expense (3)
589
11,419
915
18,595
Revaluation of liabilities (4)
—
10,000
—
10,000
Other (5)
1,448
4,026
9,049
10,681
Adjusted EBITDA
$
124,933
$
202,310
$
353,402
$
392,333
Adjusted EBITDA - Discontinued Operations
(6)
$
(107
)
$
1,799
$
(591
)
$
(35,362
)
Adjusted EBITDA - Continuing
Operations
$
125,040
$
200,511
$
353,993
$
427,695
Less: Cash interest expense (7)
43,993
43,919
127,960
124,406
Less: Income tax (benefit) expense
(1,162
)
676
(2,237
)
995
Less: Maintenance capital expenditures
6,269
16,964
22,267
50,354
Less: Preferred unit distributions
paid
23,770
12,612
53,908
31,484
Less: Other (8)
9
515
9
642
Distributable Cash Flow - Continuing
Operations
$
52,161
$
125,825
$
152,086
$
219,814
(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 December 31, 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 Hillstone during the three months ended December 31,
2019, and Mesquite and Hillstone during the nine months ended
December 31, 2019.
(4)
Amounts for the three months and nine
months ended December 31, 2019 represent the non-cash valuation
adjustment of our contingent consideration liability issued by us
as part of our acquisition of Mesquite.
(5)
Amounts for the three months and nine
months ended December 31, 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.
(6)
Amounts include the operations of TPSL,
Gas Blending and Mid-Con.
(7)
Amounts represent interest expense payable
in cash for the period presented, excluding changes in the accrued
interest balance.
(8)
Amounts represents cash paid to settle
asset retirement obligations.
ADJUSTED EBITDA RECONCILIATION BY SEGMENT
Three Months Ended December
31, 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 (loss) income
$
(382,192)
$
15,821
$
32,438
$
(12,374)
$
(346,307)
$
—
$
(346,307)
Depreciation and amortization
16,513
53,327
6,976
1,384
78,200
—
78,200
Amortization recorded to cost of sales
—
—
77
—
77
—
77
Net unrealized losses on derivatives
7,878
5,800
2,851
—
16,529
—
16,529
Inventory valuation adjustment
—
—
(802)
—
(802)
—
(802)
Lower of cost or net realizable value
adjustments
(166)
—
502
—
336
—
336
Loss (gain) on disposal or impairment of
assets, net
383,251
(9,967)
(43)
535
373,776
—
373,776
Equity-based compensation expense
—
—
—
1,120
1,120
—
1,120
Acquisition expense
—
4
—
585
589
—
589
Other income, net
2
1
341
96
440
—
440
Adjusted EBITDA attributable to
unconsolidated entities
—
573
3
(16)
560
—
560
Adjusted EBITDA attributable to
noncontrolling interest
—
(389)
(544)
—
(933)
—
(933)
Other
1,046
384
25
—
1,455
—
1,455
Discontinued operations
—
—
—
—
—
(107)
(107)
Adjusted EBITDA
$
26,332
$
65,554
$
41,824
$
(8,670)
$
125,040
$
(107)
$
124,933
Three Months Ended December
31, 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)
$
28,696
$
(583
)
$
89,038
$
(20,756
)
$
96,395
$
—
$
96,395
Depreciation and amortization
17,950
48,074
6,943
759
73,726
—
73,726
Amortization recorded to cost of sales
—
—
86
—
86
—
86
Net unrealized losses (gains) on
derivatives
6,060
11,924
(1,197
)
—
16,787
—
16,787
Inventory valuation adjustment
—
—
(2,099
)
—
(2,099
)
—
(2,099
)
Lower of cost or net realizable value
adjustments
—
—
(18
)
—
(18
)
—
(18
)
Gain on disposal or impairment of assets,
net
(182
)
(12,176
)
(26
)
(242
)
(12,626
)
—
(12,626
)
Equity-based compensation expense
—
—
—
2,213
2,213
—
2,213
Acquisition expense
—
3,967
—
7,452
11,419
—
11,419
Other income (expense), net
64
(450
)
41
119
(226
)
—
(226
)
Adjusted EBITDA attributable to
unconsolidated entities
—
685
17
(34
)
668
—
668
Adjusted EBITDA attributable to
noncontrolling interest
—
(203
)
(616
)
—
(819
)
—
(819
)
Revaluation of liabilities
—
10,000
—
—
10,000
—
10,000
Intersegment transactions (1)
—
—
979
—
979
—
979
Other
2,987
976
63
—
4,026
—
4,026
Discontinued operations
—
—
—
—
—
1,799
1,799
Adjusted EBITDA
$
55,575
$
62,214
$
93,211
$
(10,489
)
$
200,511
$
1,799
$
202,310
Nine Months Ended December 31,
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 (loss) income
$
(310,633)
$
(13,503)
$
51,338
$
(47,978)
(320,776)
$
—
$
(320,776)
Depreciation and amortization
50,540
173,680
22,158
3,277
249,655
—
249,655
Amortization recorded to cost of sales
—
—
230
—
230
—
230
Net unrealized losses on derivatives
19,199
23,525
4,933
—
47,657
—
47,657
Inventory valuation adjustment
—
—
1,399
—
1,399
—
1,399
Lower of cost or net realizable value
adjustments
(29,245)
—
(3,974)
—
(33,219)
—
(33,219)
Loss (gain) on disposal or impairment of
assets, net
384,391
(3,415)
4
10,772
391,752
—
391,752
Equity-based compensation expense
—
—
—
5,678
5,678
—
5,678
Acquisition expense
—
17
—
898
915
—
915
Other income, net
1,515
259
1,004
282
3,060
—
3,060
Adjusted EBITDA attributable to
unconsolidated entities
—
1,883
(11)
(143)
1,729
—
1,729
Adjusted EBITDA attributable to
noncontrolling interest
—
(1,317)
(1,816)
—
(3,133)
—
(3,133)
Intersegment transactions (1)
—
—
(27)
—
(27)
—
(27)
Other
6,600
2,398
75
—
9,073
—
9,073
Discontinued operations
—
—
—
—
—
(591)
(591)
Adjusted EBITDA
$
122,367
$
183,527
$
75,313
$
(27,214)
$
353,993
$
(591)
$
353,402
Nine Months Ended December 31,
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)
$
101,018
$
34,380
$
113,207
$
(74,575)
$
174,030
$
—
$
174,030
Depreciation and amortization
53,228
114,066
21,034
2,265
190,593
—
190,593
Amortization recorded to cost of sales
—
—
262
—
262
—
262
Net unrealized losses on derivatives
76
5,887
1,888
—
7,851
—
7,851
Inventory valuation adjustment
—
—
(264)
—
(264)
—
(264)
Lower of cost or net realizable value
adjustments
—
—
(1,489)
—
(1,489)
—
(1,489)
Gain on disposal or impairment of assets,
net
(1,428)
(9,021)
(33)
—
(10,482)
—
(10,482)
Equity-based compensation expense
—
—
—
27,209
27,209
—
27,209
Acquisition expense
—
3,987
—
14,608
18,595
—
18,595
Other income (expense), net
103
(452)
41
1,275
967
—
967
Adjusted EBITDA attributable to
unconsolidated entities
—
685
(5)
(170)
510
—
510
Adjusted EBITDA attributable to
noncontrolling interest
—
(597)
(1,296)
—
(1,893)
—
(1,893)
Revaluation of liabilities
—
10,000
—
—
10,000
—
10,000
Intersegment transactions (1)
—
—
1,125
—
1,125
—
1,125
Other
9,284
1,247
150
—
10,681
—
10,681
Discontinued operations
—
—
—
—
—
(35,362)
(35,362)
Adjusted EBITDA
$
162,281
$
160,182
$
134,620
$
(29,388)
$
427,695
$
(35,362)
$
392,333
(1)
Amount reflects the transactions with
TPSL, Mid-Con and Gas Blending that are eliminated in
consolidation.
OPERATIONAL DATA
(Unaudited)
Three Months Ended
Nine Months Ended
December 31,
December 31,
2020
2019
2020
2019
(in thousands, except per day
amounts)
Crude Oil Logistics:
Crude oil sold (barrels)
10,733
11,217
30,203
32,929
Crude oil transported on owned pipelines
(barrels)
6,368
12,202
26,836
34,913
Crude oil storage capacity - owned and
leased (barrels) (1)
5,239
5,362
Crude oil inventory (barrels) (1)
1,019
866
Water Solutions:
Produced water processed (barrels per
day)
Northern Delaware Basin (2)
1,032,335
845,817
939,085
788,630
Delaware Basin
183,790
279,074
188,691
271,469
Eagle Ford Basin
72,951
242,238
83,151
263,064
DJ Basin
96,383
162,456
114,256
167,178
Other Basins
26,503
55,800
28,262
62,724
Total
1,411,962
1,585,385
1,353,445
1,553,065
Solids processed (barrels per day)
1,433
6,132
1,396
5,779
Skim oil sold (barrels per day)
2,004
3,429
1,771
3,124
Liquids and Refined Products:
Refined products sold (gallons)
214,132
326,928
646,349
980,406
Propane sold (gallons)
381,590
468,332
886,572
975,782
Butane sold (gallons)
212,697
276,046
475,655
588,694
Other products sold (gallons)
122,645
169,092
351,591
475,586
Liquids and Refined Products storage
capacity - owned and leased (gallons) (1)
426,962
405,281
Refined products inventory (gallons)
(1)
1,190
5,208
Propane inventory (gallons) (1)
128,568
123,265
Butane inventory (gallons) (1)
31,847
50,867
Other products inventory (gallons) (1)
21,326
23,166
(1)
Information is presented as of
December 31, 2020 and December 31, 2019,
respectively.
(2)
Barrels per day of produced water
processed by the assets acquired in the Mesquite and Hillstone
transaction are calculated by the number of days in which we owned
the assets for the periods presented.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210209006222/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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