TULSA, Okla.--(BUSINESS WIRE)--NGL Energy Partners LP (NYSE:NGL) ("NGL," "we," "us," "our," or the "Partnership") today reported its third quarter Fiscal 2024 financial results. Highlights include:
- Net income for the third quarter of Fiscal 2024 of $45.8 million, compared to net income of $59.0 million for the third quarter of Fiscal 2023 which included income of $29.5 million from the settlement of a dispute
- Adjusted EBITDA(1) for the third quarter of Fiscal 2024 of $151.7 million, compared to $193.3 million for the third quarter of Fiscal 2023
- Total leverage at the end of the quarter was 4.26 times, versus 5.28 times at the end of the third quarter of Fiscal 2023
- On December 6, 2023, we announced an open season for the Grand Mesa Pipeline. This open season ended at the close of business on January 5, 2024, and resulted in a new shipper with a five-year minimum volume commitment contract.
- NGL now expects total asset sales in Fiscal 2025 of $150 million plus, versus previous guidance of $100 million plus.
Highlights for the period subsequent to December 31, 2023 included:
- On January 19, 2024, we delivered notice to the holders of our 2025 and 2026 senior unsecured notes and to the holders of our 2026 senior secured notes of our intention to redeem all of the existing notes. The 2026 senior secured notes were redeemed on February 6, 2024, and the 2025 and 2026 senior unsecured notes will be redeemed on February 20, 2024 and April 14, 2024, respectively.
- On January 22, 2024, we announced that our Water Solutions business is commencing expansion of its Lea County Express Pipeline System from a capacity of 140,000 barrels of water per day to 340,000 barrels per day in 2024, with the ability to expand the capacity to 500,000 barrels of water per day. This project is fully underwritten by a recently executed minimum volume commitment contract that includes an acreage dedication extension with an investment grade oil and gas producer. We expect the pipeline expansion to be completed during the second half of our 2025 fiscal year.
- On February 2, 2024, we closed a debt refinancing transaction of $2.9 billion consisting of a private offering of $2.2 billion of senior secured notes, which includes $900.0 million of 8.125% senior secured notes due 2029 and $1.3 billion of 8.375% senior secured notes due 2032. We also entered into a new seven-year $700.0 million senior secured term loan "B" credit facility. The net proceeds from these transactions were used and will primarily be used to fund the redemption of the 2026 senior secured notes and the 2025 and 2026 senior unsecured notes.
- On February 6, 2024, the Board of Directors of our general partner declared a distribution of 50% of the outstanding arrearages earned for Class B, Class C, and Class D preferred unit holders through December 31, 2023. The distribution will be made on February 27, 2024 to the holders of record at the close of trading on February 16, 2024.
"The Partnership has achieved many significant accomplishments since our previous quarter ended September 30, 2023. First, Crude Oil Logistics completed a successful open season on Grand Meas Pipeline. Second, Water Solutions is expanding its Lea County Express Pipeline system, which is fully underwritten by an executed minimum volume commitment contract that includes an acreage dedication extension with an investment grade oil and gas producer. Third, we completed a $2.9 billion global refinancing extending maturities and amending and extending the ABL Facility to 2029. Fourth, the Board of Directors approved a 50% arrearage distribution payment for the Class B, Class C, and Class D preferred units as of December 31, 2023." stated Mike Krimbill NGL's CEO. "All of these actions taken have positioned the Partnership to continue to optimize the capital structure, and increase future Adjusted EBITDA(1), which benefits all stakeholders. We are also reaffirming our Fiscal 2024 Adjusted EBITDA(2) guidance for Water Solutions of $500 million plus and consolidated Adjusted EBITDA(2) of $645 million," Krimbill concluded.
| _______________________________________ | |
(1) | See the "Non-GAAP Financial Measures" section of this release for the definition of Adjusted EBITDA (as used herein) and a discussion of this non-GAAP financial measure. |
(2) | Certain of the forward-looking financial measures are provided on a non-GAAP basis. A reconciliation of forward-looking financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP is potentially misleading and not practical given the difficulty of projecting event driven transactional and other non-core operating items in any future period. The magnitude of these items, however, may be significant.. |
Quarterly Results of Operations
The following table summarizes operating income (loss) and Adjusted EBITDA(1) by reportable segment for the periods indicated:
Quarter Ended | |||||||||||||||
December 31, 2023 | December 31, 2022 | ||||||||||||||
Operating Income (Loss) | Adjusted EBITDA(1) | Operating Income (Loss) | Adjusted EBITDA(1) | ||||||||||||
(in thousands) | |||||||||||||||
Water Solutions | $ | 74,270 | $ | 121,285 | $ | 59,721 | $ | 121,712 | |||||||
Crude Oil Logistics | 17,010 | 17,044 | 35,096 | 33,260 | |||||||||||
Liquids Logistics | 22,449 | 26,302 | 20,513 | 18,763 | |||||||||||
Corporate and Other | (11,940 | ) | (12,961 | ) | (12,660 | ) | 19,521 | ||||||||
Total | $ | 101,789 | $ | 151,670 | $ | 102,670 | $ | 193,256 | |||||||
Water Solutions
Operating income for the Water Solutions segment increased $14.5 million for the quarter ended December 31, 2023, compared to the quarter ended December 31, 2022. The Partnership processed approximately 2.38 million barrels of produced water per day during the quarter ended December 31, 2023, a 2.0% decrease when compared to approximately 2.43 million barrels of water per day processed during the quarter ended December 31, 2022. The decrease in produced water volumes processed was primarily due to certain producers in the Delaware Basin reusing their water in their operations. Though the produced water volumes processed declined in the quarter, water disposal service fee revenue increased due primarily to increased fees from new contracts entered into during fiscal year 2023 and higher fees charged for interruptible spot volumes. In addition, there was also an increase in payments made by certain producers for committed volumes not delivered.
Revenues from recovered skim oil, including the impact from realized skim oil hedges, totaled $24.0 million for the quarter ended December 31, 2023, a decrease of $6.3 million from the prior year period. The decrease was due primarily to a decrease in skim oil barrels sold as a result of lower skim oil recovered from decreased produced water processed and lower realized crude oil prices received from the sale of skim oil barrels.
Operating expenses in the Water Solutions segment decreased $0.8 million for the quarter ended December 31, 2023, compared to the quarter ended December 31, 2022 due primarily to lower chemical expense, lower generator rental expense, lower utilities expense and lower severance taxes due to a decrease in revenue from recovered crude oil. These decreases were partially offset by higher repairs and maintenance expense due to the timing of repairs, preventative maintenance and tank cleaning. Operating expense per produced barrel processed was $0.25 for the quarter ended December 31, 2023, unchanged when compared to the same quarter in the prior year.
Crude Oil Logistics
Operating income for the Crude Oil Logistics segment decreased $18.1 million for the quarter ended December 31, 2023, compared to the quarter ended December 31, 2022. Product margin for crude oil sales decreased due to lower crude oil prices, which lowered contracted rates with certain producers, and lower contract differentials negatively impacted certain other sales contracts. In addition, volume decreased due to lower production on acreage dedicated to us in the DJ Basin. During the quarter ended December 31, 2023, physical volumes on the Grand Mesa Pipeline averaged approximately 70,000 barrels per day, compared to approximately 77,000 barrels per day for the quarter ended December 31, 2022. The decrease in operating income was also impacted by the sale of our marine assets on March 30, 2023.
Liquids Logistics
Operating income for the Liquids Logistics segment increased by $1.9 million for the quarter ended December 31, 2023, compared to the quarter ended December 31, 2022. Product margins (excluding the impact of derivatives) increased for butane in the current quarter primarily due to the higher demand for butane blending. This was offset by lower propane margins due to lower volumes, lower margins from refined products as the supply issues seen in certain markets in the prior year, resulting in higher margins, were resolved and supply and demand were more in balance and lower margins from the sale of other products due to lower biodiesel prices and lower natural gas liquid volumes due to the loss of certain supply contracts. Additionally, we recorded net derivative losses of $0.5 million during the quarter ended December 31, 2023, compared to derivative losses of $6.1 million during the quarter ended December 31, 2022.
Corporate and Other
The operating loss for Corporate and Other was lower by $0.7 million for the quarter ended December 31, 2023, compared to the quarter ended December 31, 2022. Results for the current period include gains from derivatives of $1.8 million as we have entered into economic hedges to protect our liquidity positions and leverage from a significant increase in commodity prices. All of these hedges matured as of December 31, 2023, and there were no open hedge positions. These gains were offset by an increase in expenses due to lower allocations of expense to the other business segments.
Capitalization and Liquidity
Total liquidity (cash plus available capacity on our asset-based revolving credit facility ("ABL Facility")) was approximately $415.6 million as of December 31, 2023. Borrowings on the Partnership's ABL Facility totaled approximately $55.0 million as of December 31, 2023. The decrease from March 31, 2023 was primarily due to cash generated during the quarter being used to pay down the outstanding balance under the ABL Facility rather than to retire other indebtedness.
The Partnership is in compliance with all of its debt covenants and has no upcoming debt maturities.
Third Quarter Conference Call Information
A conference call to discuss NGL's results of operations is scheduled for 4:00 pm Central Time on Thursday, February 8, 2024. Analysts, investors, and other interested parties may join the webcast via the event link: https://www.webcaster4.com/Webcast/Page/2808/49742 or by dialing (888) 506-0062 and providing access code: 847654. An archived audio replay of the call will be available for 14 days, which can be accessed by dialing (877) 481-4010 and providing replay passcode 49742.
Non-GAAP Financial Measures
We define EBITDA as net income (loss) attributable to NGL Energy Partners LP, plus interest expense, income tax expense (benefit), and depreciation and amortization expense. We define 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. We also include in Adjusted EBITDA certain inventory valuation adjustments related to certain refined products businesses within our Liquids Logistics segment as discussed below. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income, income 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. We believe that EBITDA provides additional information to investors for evaluating our ability to make quarterly distributions to our unitholders and is presented solely as a supplemental measure. We believe that Adjusted EBITDA provides additional information to investors for evaluating our financial performance without regard to our financing methods, capital structure and historical cost basis. Further, EBITDA and Adjusted EBITDA, as we define them, may not be comparable to EBITDA, Adjusted EBITDA, or similarly titled measures used by other entities.
Other than for certain businesses within our Liquids Logistics segment, for purposes of our Adjusted EBITDA calculation, we make a distinction between realized and unrealized gains and losses on derivatives. During the period when a derivative contract is open, we record changes in the fair value of the derivative as an unrealized gain or loss. When a derivative contract matures or is settled, we reverse the previously recorded unrealized gain or loss and record a realized gain or loss. We do not draw such a distinction between realized and unrealized gains and losses on derivatives of certain businesses within our Liquids Logistics 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. We include 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. In our Crude Oil Logistics segment, we purchase certain crude oil barrels using the West Texas Intermediate ("WTI") calendar month average ("CMA") price and sell the crude oil barrels using the WTI CMA price plus the Argus CMA Differential Roll Component ("CMA Differential Roll") per our contracts. To eliminate the volatility of the CMA Differential Roll, we entered into derivative instrument positions in January 2021 to secure a margin of approximately $0.20 per barrel on 1.5 million barrels per month from May 2021 through December 2023. Due to the nature of these positions, the cash flow and earnings recognized on a GAAP basis differed from period to period depending on the current crude oil price and future estimated crude oil price which were valued utilizing third-party market quoted prices. We recognized in Adjusted EBITDA the gains and losses from the derivative instrument positions entered into in January 2021 to properly align with the physical margin we hedged each month through the term of this transaction. This representation aligns with management's evaluation of the transaction. The derivative instrument positions we entered into related to the CMA Differential Roll expired as of December 31, 2023, and we have not entered into any new derivative instrument positions related to the CMA Differential Roll.
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. For the CMA Differential Roll transaction, as discussed above, we have included an adjustment to Distributable Cash Flow to reflect, in the period for which they relate, the actual cash flows for the positions that settled that are not being recognized in Adjusted EBITDA. 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 of our general partner) 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 of our general partner.
We do not provide a reconciliation for non-GAAP estimates on a forward-looking basis where we are unable to provide a meaningful calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing or amount of various items that would impact the most directly comparable forward-looking U.S. GAAP financial measure that have not yet occurred, are out of the Partnership's control and/or cannot be reasonably predicted. Forward-looking non-GAAP financial measures provided without the most directly comparable U.S. GAAP financial measures may vary materially from the corresponding U.S. GAAP financial measures.
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
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December 31, 2023 | March 31, 2023 | ||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 738 | $ | 5,431 | |||
Accounts receivable-trade, net of allowance for expected credit losses of $1,928 and $1,964, respectively | 999,503 | 1,033,956 | |||||
Accounts receivable-affiliates | 15,459 | 12,362 | |||||
Inventories | 201,575 | 142,607 | |||||
Prepaid expenses and other current assets | 123,292 | 98,089 | |||||
Total current assets | 1,340,567 | 1,292,445 | |||||
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $945,414 and $898,184, respectively | 2,137,386 | 2,223,380 | |||||
GOODWILL | 707,583 | 712,364 | |||||
INTANGIBLE ASSETS, net of accumulated amortization of $371,703 and $580,860, respectively | 999,636 | 1,058,668 | |||||
INVESTMENTS IN UNCONSOLIDATED ENTITIES | 19,535 | 21,090 | |||||
OPERATING LEASE RIGHT-OF-USE ASSETS | 101,549 | 90,220 | |||||
OTHER NONCURRENT ASSETS | 56,231 | 57,977 | |||||
Total assets | $ | 5,362,487 | $ | 5,456,144 | |||
LIABILITIES AND EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Accounts payable-trade | $ | 831,991 | $ | 927,591 | |||
Accounts payable-affiliates | 28 | 65 | |||||
Accrued expenses and other payables | 195,427 | 133,616 | |||||
Advance payments received from customers | 27,727 | 14,699 | |||||
Operating lease obligations | 32,839 | 34,166 | |||||
Total current liabilities | 1,088,012 | 1,110,137 | |||||
LONG-TERM DEBT, net of debt issuance costs of $21,729 and $30,117, respectively | 2,683,918 | 2,857,805 | |||||
OPERATING LEASE OBLIGATIONS | 70,830 | 58,450 | |||||
OTHER NONCURRENT LIABILITIES | 107,806 | 111,226 | |||||
CLASS D 9.00% PREFERRED UNITS, 600,000 and 600,000 preferred units issued and outstanding, respectively | 551,097 | 551,097 | |||||
EQUITY: | |||||||
General partner, representing a 0.1% interest, 132,645 and 132,059 notional units, respectively | (52,562 | ) | (52,551 | ) | |||
Limited partners, representing a 99.9% interest, 132,512,766 and 131,927,343 common units issued and outstanding, respectively | 549,600 | 455,564 | |||||
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 | (457 | ) | (450 | ) | |||
Noncontrolling interests | 15,884 | 16,507 | |||||
Total equity | 860,824 | 767,429 | |||||
Total liabilities and equity | $ | 5,362,487 | $ | 5,456,144 | |||
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
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Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
REVENUES: | ||||||||||||||||
Water Solutions | $ | 179,301 | $ | 180,242 | $ | 557,847 | $ | 511,231 | ||||||||
Crude Oil Logistics | 425,294 | 531,613 | 1,379,397 | 1,971,767 | ||||||||||||
Liquids Logistics | 1,265,182 | 1,427,385 | 3,389,733 | 4,163,072 | ||||||||||||
Total Revenues | 1,869,777 | 2,139,240 | 5,326,977 | 6,646,070 | ||||||||||||
COST OF SALES: | ||||||||||||||||
Water Solutions | (2,573 | ) | 2,534 | 7,420 | 13,679 | |||||||||||
Crude Oil Logistics | 386,418 | 471,891 | 1,266,644 | 1,808,460 | ||||||||||||
Liquids Logistics | 1,224,059 | 1,385,943 | 3,290,784 | 4,057,360 | ||||||||||||
Corporate and Other | (1,772 | ) | - | (939 | ) | - | ||||||||||
Total Cost of Sales | 1,606,132 | 1,860,368 | 4,563,909 | 5,879,499 | ||||||||||||
OPERATING COSTS AND EXPENSES: | ||||||||||||||||
Operating | 79,115 | 81,353 | 233,185 | 237,371 | ||||||||||||
General and administrative | 17,934 | 17,216 | 55,721 | 50,601 | ||||||||||||
Depreciation and amortization | 65,597 | 69,327 | 200,102 | 204,105 | ||||||||||||
(Gain) loss on disposal or impairment of assets, net | (790 | ) | 8,306 | 14,221 | 15,791 | |||||||||||
Operating Income | 101,789 | 102,670 | 259,839 | 258,703 | ||||||||||||
OTHER INCOME (EXPENSE): | ||||||||||||||||
Equity in earnings of unconsolidated entities | 838 | 1,213 | 1,780 | 3,094 | ||||||||||||
Interest expense | (57,221 | ) | (75,920 | ) | (175,370 | ) | (211,528 | ) | ||||||||
Gain on early extinguishment of liabilities, net | - | 2,667 | 6,871 | 6,808 | ||||||||||||
Other income, net | 515 | 28,100 | 1,131 | 28,731 | ||||||||||||
Income Before Income Taxes | 45,921 | 58,730 | 94,251 | 85,808 | ||||||||||||
INCOME TAX (EXPENSE) BENEFIT | (154 | ) | 252 | (636 | ) | (113 | ) | |||||||||
Net Income | 45,767 | 58,982 | 93,615 | 85,695 | ||||||||||||
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | (85 | ) | (448 | ) | (604 | ) | (790 | ) | ||||||||
NET INCOME ATTRIBUTABLE TO NGL ENERGY PARTNERS LP | $ | 45,682 | $ | 58,534 | $ | 93,011 | $ | 84,905 | ||||||||
NET INCOME (LOSS) ALLOCATED TO COMMON UNITHOLDERS - BASIC | $ | 10,244 | $ | 26,007 | $ | (10,947 | ) | $ | (5,571 | ) | ||||||
NET INCOME (LOSS) ALLOCATED TO COMMON UNITHOLDERS - DILUTED | $ | 10,244 | $ | 26,123 | $ | (10,947 | ) | $ | (5,571 | ) | ||||||
BASIC INCOME (LOSS) PER COMMON UNIT | $ | 0.08 | $ | 0.20 | $ | (0.08 | ) | $ | (0.04 | ) | ||||||
DILUTED INCOME (LOSS) PER COMMON UNIT | $ | 0.08 | $ | 0.19 | $ | (0.08 | ) | $ | (0.04 | ) | ||||||
BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING | 132,220,055 | 131,015,658 | 132,025,268 | 130,802,920 | ||||||||||||
DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING | 132,498,734 | 134,485,325 | 132,025,268 | 130,802,920 | ||||||||||||
EBITDA, ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW RECONCILIATION
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The following table reconciles NGL's net income to NGL's EBITDA, Adjusted EBITDA and Distributable Cash Flow for the periods indicated: | ||||||||||||||||
Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
(in thousands) | ||||||||||||||||
Net income | $ | 45,767 | $ | 58,982 | $ | 93,615 | $ | 85,695 | ||||||||
Less: Net income attributable to noncontrolling interests | (85 | ) | (448 | ) | (604 | ) | (790 | ) | ||||||||
Net income attributable to NGL Energy Partners LP | 45,682 | 58,534 | 93,011 | 84,905 | ||||||||||||
Interest expense | 57,274 | 75,934 | 175,452 | 211,573 | ||||||||||||
Income tax expense (benefit) | 154 | (252 | ) | 636 | 113 | |||||||||||
Depreciation and amortization | 65,582 | 69,308 | 200,005 | 204,025 | ||||||||||||
EBITDA | 168,692 | 203,524 | 469,104 | 500,616 | ||||||||||||
Net unrealized losses (gains) on derivatives | 47,558 | 4,800 | 56,617 | (56,930 | ) | |||||||||||
CMA Differential Roll net losses (gains) (1) | (64,381 | ) | (8,678 | ) | (71,285 | ) | 19,424 | |||||||||
Inventory valuation adjustment (2) | 709 | (2,650 | ) | (5,391 | ) | (6,765 | ) | |||||||||
Lower of cost or net realizable value adjustments | (575 | ) | (12,568 | ) | 3,269 | (11,711 | ) | |||||||||
(Gain) loss on disposal or impairment of assets, net | (1,107 | ) | 8,290 | 13,904 | 15,775 | |||||||||||
Gain on early extinguishment of liabilities, net | - | (2,667 | ) | (6,871 | ) | (6,808 | ) | |||||||||
Equity-based compensation expense | 214 | 890 | 1,098 | 1,866 | ||||||||||||
Acquisition expense (3) | - | - | 47 | - | ||||||||||||
Other (4) | 560 | 2,315 | 2,047 | 3,907 | ||||||||||||
Adjusted EBITDA | $ | 151,670 | $ | 193,256 | $ | 462,539 | $ | 459,374 | ||||||||
Less: Cash interest expense (5) | 53,042 | 71,751 | 162,936 | 198,972 | ||||||||||||
Less: Income tax expense (benefit) | 154 | (252 | ) | 636 | 113 | |||||||||||
Less: Maintenance capital expenditures | 8,780 | 11,464 | 41,665 | 41,050 | ||||||||||||
Less: CMA Differential Roll (6) | (9,118 | ) | (15,147 | ) | (27,165 | ) | (13,213 | ) | ||||||||
Less: Other (7) | - | 1 | 222 | 171 | ||||||||||||
Distributable Cash Flow | $ | 98,812 | $ | 125,439 | $ | 284,245 | $ | 232,281 | ||||||||
| _______________________________________ | |
(1) | Adjustment to align, within Adjusted EBITDA, the net gains and losses of the Partnership's CMA Differential Roll derivative instruments positions with the physical margin being hedged. See "Non-GAAP Financial Measures" section above for a further discussion. |
(2) | Amounts represent the difference between the market value of the inventory at the balance sheet date and its cost. See "Non-GAAP Financial Measures" section above for a further discussion. |
(3) | Amounts represent expenses we incurred related to legal and advisory costs associated with acquisitions. |
(4) | Amounts represent unrealized gains/losses on marketable securities and accretion expense for asset retirement obligations. Also, the amount for the nine months ended December 31, 2022 includes non-cash operating expenses related to our Grand Mesa Pipeline. |
(5) | Amounts represent interest expense payable in cash, excluding changes in the accrued interest balance. |
(6) | Amounts represent the cash portion of the adjustments of the Partnership's CMA Differential Roll derivative instrument positions, as discussed above, that settled during the period. |
(7) | Amounts represent cash paid to settle asset retirement obligations. |
ADJUSTED EBITDA RECONCILIATION BY SEGMENT | |||||||||||||||||||
Three Months Ended December 31, 2023 | |||||||||||||||||||
Water Solutions | Crude Oil Logistics | Liquids Logistics | Corporate and Other | Consolidated | |||||||||||||||
(in thousands) | |||||||||||||||||||
Operating income (loss) | $ | 74,270 | $ | 17,010 | $ | 22,449 | $ | (11,940 | ) | $ | 101,789 | ||||||||
Depreciation and amortization | 52,643 | 9,545 | 2,438 | 971 | 65,597 | ||||||||||||||
Amortization recorded to cost of sales | - | - | 65 | - | 65 | ||||||||||||||
Net unrealized (gains) losses on derivatives | (6,440 | ) | 51,984 | 3,581 | (1,567 | ) | 47,558 | ||||||||||||
CMA Differential Roll net losses (gains) | - | (64,381 | ) | - | - | (64,381 | ) | ||||||||||||
Inventory valuation adjustment | - | - | 709 | - | 709 | ||||||||||||||
Lower of cost or net realizable value adjustments | - | 785 | (1,360 | ) | - | (575 | ) | ||||||||||||
(Gain) loss on disposal or impairment of assets, net | (478 | ) | 2,042 | (1,639 | ) | (715 | ) | (790 | ) | ||||||||||
Equity-based compensation expense | - | - | - | 214 | 214 | ||||||||||||||
Other income (expense), net | 488 | 1 | (8 | ) | 34 | 515 | |||||||||||||
Adjusted EBITDA attributable to unconsolidated entities | 715 | - | 7 | 42 | 764 | ||||||||||||||
Adjusted EBITDA attributable to noncontrolling interest | (362 | ) | - | - | - | (362 | ) | ||||||||||||
Other | 449 | 58 | 60 | - | 567 | ||||||||||||||
Adjusted EBITDA | $ | 121,285 | $ | 17,044 | $ | 26,302 | $ | (12,961 | ) | $ | 151,670 | ||||||||
Three Months Ended December 31, 2022 | |||||||||||||||||||
Water Solutions | Crude Oil Logistics | Liquids Logistics | Corporate and Other | Consolidated | |||||||||||||||
(in thousands) | |||||||||||||||||||
Operating income (loss) | $ | 59,721 | $ | 35,096 | $ | 20,513 | $ | (12,660 | ) | $ | 102,670 | ||||||||
Depreciation and amortization | 52,591 | 11,664 | 3,417 | 1,655 | 69,327 | ||||||||||||||
Amortization recorded to cost of sales | - | - | 68 | - | 68 | ||||||||||||||
Net unrealized (gains) losses on derivatives | - | (1,810 | ) | 6,610 | - | 4,800 | |||||||||||||
CMA Differential Roll net losses (gains) | - | (8,678 | ) | - | - | (8,678 | ) | ||||||||||||
Inventory valuation adjustment | - | - | (2,650 | ) | - | (2,650 | ) | ||||||||||||
Lower of cost or net realizable value adjustments | - | (3,321 | ) | (9,247 | ) | - | (12,568 | ) | |||||||||||
Loss (gain) on disposal or impairment of assets, net | 7,959 | 277 | (1 | ) | 71 | 8,306 | |||||||||||||
Equity-based compensation expense | - | - | - | 890 | 890 | ||||||||||||||
Other income (expense), net | 2 | 59 | (1,481 | ) | 29,520 | 28,100 | |||||||||||||
Adjusted EBITDA attributable to unconsolidated entities | 1,357 | - | 21 | 45 | 1,423 | ||||||||||||||
Adjusted EBITDA attributable to noncontrolling interest | (747 | ) | - | - | - | (747 | ) | ||||||||||||
Other | 829 | (27 | ) | 1,513 | - | 2,315 | |||||||||||||
Adjusted EBITDA | $ | 121,712 | $ | 33,260 | $ | 18,763 | $ | 19,521 | $ | 193,256 | |||||||||
Nine Months Ended December 31, 2023 | |||||||||||||||||||
Water Solutions | Crude Oil Logistics | Liquids Logistics | Corporate and Other | Consolidated | |||||||||||||||
(in thousands) | |||||||||||||||||||
Operating income (loss) | $ | 202,719 | $ | 48,795 | $ | 53,857 | $ | (45,532 | ) | $ | 259,839 | ||||||||
Depreciation and amortization | 159,119 | 28,864 | 8,035 | 4,084 | 200,102 | ||||||||||||||
Amortization recorded to cost of sales | - | - | 195 | - | 195 | ||||||||||||||
Net unrealized (gains) losses on derivatives | (1,969 | ) | 61,673 | (1,908 | ) | (1,179 | ) | 56,617 | |||||||||||
CMA Differential Roll net losses (gains) | - | (71,285 | ) | - | - | (71,285 | ) | ||||||||||||
Inventory valuation adjustment | - | - | (5,391 | ) | - | (5,391 | ) | ||||||||||||
Lower of cost or net realizable value adjustments | - | 785 | 2,484 | - | 3,269 | ||||||||||||||
Loss (gain) on disposal or impairment of assets, net | 21,840 | 2,471 | (9,375 | ) | (715 | ) | 14,221 | ||||||||||||
Equity-based compensation expense | - | - | - | 1,098 | 1,098 | ||||||||||||||
Acquisition expense | (28 | ) | - | 84 | (9 | ) | 47 | ||||||||||||
Other income, net | 916 | 106 | 7 | 102 | 1,131 | ||||||||||||||
Adjusted EBITDA attributable to unconsolidated entities | 1,974 | - | (19 | ) | 137 | 2,092 | |||||||||||||
Adjusted EBITDA attributable to noncontrolling interest | (1,450 | ) | - | - | - | (1,450 | ) | ||||||||||||
Other | 1,747 | 139 | 168 | - | 2,054 | ||||||||||||||
Adjusted EBITDA | $ | 384,868 | $ | 71,548 | $ | 48,137 | $ | (42,014 | ) | $ | 462,539 | ||||||||
Nine Months Ended December 31, 2022 | |||||||||||||||||||
Water Solutions | Crude Oil Logistics | Liquids Logistics | Corporate and Other | Consolidated | |||||||||||||||
(in thousands) | |||||||||||||||||||
Operating income (loss) | $ | 160,454 | $ | 87,012 | $ | 48,806 | $ | (37,569 | ) | $ | 258,703 | ||||||||
Depreciation and amortization | 153,766 | 35,193 | 10,194 | 4,952 | 204,105 | ||||||||||||||
Amortization recorded to cost of sales | - | - | 205 | - | 205 | ||||||||||||||
Net unrealized (gains) losses on derivatives | (4,464 | ) | (57,390 | ) | 4,924 | - | (56,930 | ) | |||||||||||
CMA Differential Roll net losses (gains) | - | 19,424 | - | - | 19,424 | ||||||||||||||
Inventory valuation adjustment | - | - | (6,765 | ) | - | (6,765 | ) | ||||||||||||
Lower of cost or net realizable value adjustments | - | (2,247 | ) | (9,464 | ) | - | (11,711 | ) | |||||||||||
Loss (gain) on disposal or impairment of assets, net | 17,935 | (1,279 | ) | 51 | (916 | ) | 15,791 | ||||||||||||
Equity-based compensation expense | - | - | - | 1,866 | 1,866 | ||||||||||||||
Other income (expense), net | 10 | 390 | (1,665 | ) | 29,996 | 28,731 | |||||||||||||
Adjusted EBITDA attributable to unconsolidated entities | 3,569 | - | (3 | ) | 134 | 3,700 | |||||||||||||
Adjusted EBITDA attributable to noncontrolling interest | (1,652 | ) | - | - | - | (1,652 | ) | ||||||||||||
Other | 1,915 | 98 | 1,894 | - | 3,907 | ||||||||||||||
Adjusted EBITDA | $ | 331,533 | $ | 81,201 | $ | 48,177 | $ | (1,537 | ) | $ | 459,374 | ||||||||
OPERATIONAL DATA
| |||||||
Three Months Ended | Nine Months Ended | ||||||
December 31, | December 31, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
(in thousands, except per day amounts) | |||||||
Water Solutions: | |||||||
Produced water processed (barrels per day) | |||||||
Delaware Basin | 2,097,428 | 2,128,673 | 2,135,677 | 2,001,242 | |||
Eagle Ford Basin | 136,185 | 131,551 | 135,887 | 114,191 | |||
DJ Basin | 142,978 | 151,265 | 152,805 | 151,792 | |||
Other Basins | - | 14,335 | 985 | 15,114 | |||
Total | 2,376,591 | 2,425,824 | 2,425,354 | 2,282,339 | |||
Recycled water (barrels per day) | 115,141 | 167,774 | 83,247 | 132,851 | |||
Total (barrels per day) | 2,491,732 | 2,593,598 | 2,508,601 | 2,415,190 | |||
Skim oil sold (barrels per day) | 3,663 | 4,099 | 3,918 | 3,757 | |||
Crude Oil Logistics: | |||||||
Crude oil sold (barrels) | 5,087 | 5,955 | 16,730 | 19,428 | |||
Crude oil transported on owned pipelines (barrels) | 6,473 | 7,062 | 19,520 | 20,832 | |||
Crude oil storage capacity - owned and leased (barrels) (1) | 5,232 | 5,232 | |||||
Crude oil inventory (barrels) (1) | 790 | 892 | |||||
Liquids Logistics: | |||||||
Refined products sold (gallons) | 201,796 | 192,340 | 631,802 | 566,997 | |||
Propane sold (gallons) | 254,266 | 305,067 | 524,007 | 639,686 | |||
Butane sold (gallons) | 207,544 | 177,061 | 394,118 | 409,137 | |||
Other products sold (gallons) | 85,410 | 96,349 | 276,898 | 294,965 | |||
Natural gas liquids and refined products storage capacity - owned and leased (gallons) (1) | 157,409 | 159,999 | |||||
Refined products inventory (gallons) (1) | 2,020 | 1,738 | |||||
Propane inventory (gallons) (1) | 92,861 | 97,283 | |||||
Butane inventory (gallons) (1) | 35,951 | 31,029 | |||||
Other products inventory (gallons) (1) | 19,526 | 13,360 | |||||
| _______________________________________ | |
(1) | Information is presented as of December 31, 2023 and December 31, 2022, respectively. |
Contacts
David Sullivan, 918-495-4631
Vice President - Finance
David.Sullivan@nglep.com
