NGL Energy Partners Q3 2025 Earnings Report

NGL Energy Partners EPS Results

• Actual EPS: -$0.12
• Consensus EPS: $0.13
• Beat/Miss: Missed by -$0.25
• One Year Ago EPS: N/A

NGL Energy Partners Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $1.72 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

NGL Energy Partners Announcement Details

• Quarter: Q3 2025
• Date: 2/10/2025
• Time: After Market Closes
• Conference Call Date: Monday, February 10, 2025
• Conference Call Time: 5:00PM ET

NGL Energy Partners (NYSE:NGL) is a vertically integrated master limited partnership operating a network of midstream pipelines and storage facilities. The company is a diversified play on mid-stream operations offering multiple services for producers and consumers alike. Founded in 1944, the company is headquartered in Tulsa, Oklahoma.

The company, through a network of subsidiaries, is in business to transport, store, blend, and market crude oil, natural gas liquids, refined products, renewables, and water solutions in the United States. The company seeks to generate positive cash flow through its businesses and deliver returns to shareholders in the form of dividends, organic, and accretive growth. Organic growth is achieved by investing in new assets while accretive growth includes the acquisition of assets that complement the existing portfolio.

NGL Energy Partners operates in three segments that include Water Solutions, Crude Oil Logistics, and Natural Gas Liquids Logistics.

The Water Solutions segment transports, sells, reclaims, and recycles water for oil and natural gas production. This segment also aggregates recovered crude oil for sale, disposes of wastes, and performs cleaning services for trucks and fracking tanks along with other services.

The Crude Oil Logistics segment buys and transports crude oil and equivalents to refiners for processing and sale at pipeline heads and other trade hubs. This segment also provides storage and transportation services for third parties.

The Liquids Logistics segment supplies LNG, refined petroleum products, and biodiesel to commercial, retail, and industrial consumers in North America. This segment operates through a network of 24 terminals that are supported by third-party storage facilities, common carrier pipelines, and a fleet of leased railcars.

NGL Energy Partners Q3 2025 Earnings Call Transcript

Presentation

[Operator]

Welcome to the NGL Energy Partners 3Q twenty five Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded.

[Operator]

I will now turn the conference over to your host, Brad Cooper, CFO. You may begin.

[Brad Cooper, Executive VP & CFO of NGL Energy Holdings LLC at NGL Energy Partners]

Thank you. Good afternoon and thank you to everyone for joining us on the call today. Our comments today will include plans, forecasts and estimates that are forward looking statements under The U. S. Securities law.

[Brad Cooper, Executive VP & CFO of NGL Energy Holdings LLC at NGL Energy Partners]

These comments are subject to assumptions, risks and uncertainties that could cause actual results to differ from the forward looking statements. Please take note of the cautionary language and risk factors provided in our presentation materials and our other public disclosure materials. Before we start discussing our third quarter results, I would like to update everyone on some of the operational and corporate strategic initiatives that we completed during the third quarter and subsequent to quarter end. First, a few quarters ago, we mentioned on an earnings call that we had line of sight to a few new customers that would put additional barrels on Grand Mesa, and these new volumes could build our volume up to 100,000 barrels per day of crude oil on the pipeline. In November, we entered into a deal with Prairie Operating for a long term acreage dedication, where we will provide water disposal services as well as gather and ship crude oil on Grand Mesa.

[Brad Cooper, Executive VP & CFO of NGL Energy Holdings LLC at NGL Energy Partners]

This transaction was press released by Prairie on November 18. After the quarter ended, we entered into an additional contract with a producer. In addition to these two deals, the recent news regarding Prairie Operations acquisition of Bayswater, we believe provides some additional upside to our volume projections for Grand Mesa. Second, on February 5, we signed a purchase and sale agreement to sell 17 of our natural gas liquids terminals. In late January, we signed an additional agreement to sell one terminal in Green Bay, Wisconsin.

[Brad Cooper, Executive VP & CFO of NGL Energy Holdings LLC at NGL Energy Partners]

Total proceeds for both transactions inclusive of working capital is approximately $95,000,000 We anticipate closing both transactions by March 31. During the third quarter, we also wound down the majority of our biodiesel marketing business. I will get into the impacts this decision had on our financials for the quarter, but the elimination of this business permanently reduces our working capital needs by $30,000,000 to $40,000,000 on average per year. With the additional sale of substantially all of the wholesale propane business, we have eliminated a total of $60,000,000 to $70,000,000 of working capital on average per year. During the peak inventory builds throughout the year, the working capital requirements for these two has been historically as high as $100,000,000 These strategic actions are the next step in our strategy to simplify the asset base, reduce working capital, smooth out the seasonality of our EBITDA on free cash flow and ultimately reduce debt by selling non core assets at attractive deleveraging multiples.

[Brad Cooper, Executive VP & CFO of NGL Energy Holdings LLC at NGL Energy Partners]

Third, the LEX II project commenced operations in October and is performing as expected. Fourth, as previously mentioned on November 22, we purchased $23,375,000 of the $25,500,000 outstanding warrants for $6,900,000 This transaction represented approximately 92% of the outstanding warrants and eliminates the potential future dilution to our LP unitholders. Fifth, due to the structural changes in the biodiesel market and our desire to exit the business, we started the process of winding down our biodiesel marketing business by allowing our storage lease and certain railcar leases to expire and closing out the open purchase and sale contracts. Other than the railcar and storage leases, this business did not have any other long lived assets. We expect to have all our inventory liquidated by the February and to sublease the remaining railcars by 03/31/2025.

[Brad Cooper, Executive VP & CFO of NGL Energy Holdings LLC at NGL Energy Partners]

Year to date, biodiesel has generated negative adjusted EBITDA of $10,300,000 with negative $12,100,000 in adjusted EBITDA in the third quarter. And lastly, in January and February, we sold 143 railcars for proceeds of $12,500,000 and expect to close on additional railcars before March 31. Total proceeds are expected to be approximately $20,000,000 All of the sales proceeds I have mentioned will be deployed to the balance sheet and we currently project an undrawn ABL balance at March 31. Let's get into the quarterly results. Consolidated adjusted EBITDA for the quarter came in at $147,700,000 in the third quarter versus $151,700,000 in the prior year third quarter.

[Brad Cooper, Executive VP & CFO of NGL Energy Holdings LLC at NGL Energy Partners]

As I just mentioned, we are winding our biodiesel business, which negatively impacted adjusted EBITDA in the quarter by 12,100,000 So if you exclude the impact of biodiesel, adjusted EBITDA was approximately $160,000,000 for the quarter or approximately 5% higher than the prior third quarter. Water Solutions adjusted EBITDA was $132,700,000 in the third quarter versus $121,300,000 in the prior third quarter. Physical water disposal volumes were 2,620,000 barrels per day in the third quarter versus 2,380,000 barrels per day in the prior third quarter. Total volumes we were paid to dispose that includes deficiency volumes were 2,910,000 barrels per day in the third quarter versus 2,600,000 barrels per day in the prior third quarter. So total volumes we were paid to dispose of were up twelve percent third quarter of fiscal twenty twenty five over the third quarter of fiscal twenty twenty four.

[Brad Cooper, Executive VP & CFO of NGL Energy Holdings LLC at NGL Energy Partners]

The team continues to maximize the expense side of the ledger. Operating expenses in the Water Solutions segment decreased for the quarter ended 12/31/2024 compared to the quarter ended 12/31/2023 due to primarily due to lower utility expenses, lower chemical expense and lower repairs and maintenance expense. Operating expense per produced barrel process was $0.21 for the quarter ended 12/31/2024, compared to $0.25 in the comparative quarter last year. Crude oil logistics adjusted EBITDA was $17,400,000 in the third quarter of fiscal 'twenty five versus $17,000,000 in the prior year's third quarter. Fiscal volumes on Grand Mesa averaged approximately 61,000 barrels per day compared to 70,000 barrels per day for the quarter ended 12/31/2023.

[Brad Cooper, Executive VP & CFO of NGL Energy Holdings LLC at NGL Energy Partners]

As I discussed earlier, Prairie operating signed and press released a long term dedication in the PJ Basin with the Partnership and we entered into another acreage dedication agreement with a second producer. These are the potential contracts on Grand Mesa we alluded to in prior earnings calls that would get us to 100,000 barrels per day. With variable maintenance capital needed for this business segment, the growth in the EBITDA will create a dollar for dollar increase in our free cash flow. Liquids Logistics adjusted EBITDA was $8,200,000 in the third quarter versus $26,300,000 in the prior third quarter. The winding down of biodiesel significantly impacted the quarter with negative adjusted EBITDA of $12,100,000 for the quarter.

[Brad Cooper, Executive VP & CFO of NGL Energy Holdings LLC at NGL Energy Partners]

So excluding the impact of biodiesel, the remaining businesses within liquids logistics generated $20,300,000 for the quarter. We are optimistic with the cold weather most of the country has experienced in January and that looks to continue through February that we will have strong results from the wholesale propane division to report for the fiscal fourth quarter. As for our full year results, we are updating the guide to reflect additional weakness in our Liquids segment. For the full year, we are guiding to $620,000,000 of EBITDA. With that, I would now like to turn the call over to our CEO, Mike Crimble.

[Michael Krimbill, CEO at NGL Energy Partners]

Thanks, Brad. Good afternoon, everyone. For several years now, we have experienced performance below expectations in certain of our liquids logistics businesses, as well as declining volumes on Grand Mesa crude oil pipeline. Our results have reflected this volatility. And in addition, our liquids businesses contained a seasonality that made it difficult to predict quarterly earnings and was further complicated by warm weather.

[Michael Krimbill, CEO at NGL Energy Partners]

That is changing going forward as we are now on our way to becoming a Water Solutions partnership with the Crude Oil Logistics segment. Exiting the biodiesel business and selling substantially all of our wholesale propane business will improve the repeatability of our cash flows and reduce the seasonality and volatility of our adjusted EBITDA. With respect to crude oil logistics, we are bouncing off the bottom of our DJ Basin performance, adding new customers, which we expect to significantly enhance the volumes and profitability of Grand Mesa going forward. We continue to work on other non core asset sales, which will further reduce indebtedness and leverage. If successful, we expect to announce these in the next few months.

[Michael Krimbill, CEO at NGL Energy Partners]

Once we have reduced our leverage further, we can begin redemption of our Class D preferred shares. So with that, operator, please open up the line for Q and A.

[Operator]

Thank you. You. The first question comes from Derek Whitfield with Texas Capital. Please proceed.

[Derrick Whitfield, Managing Director at Texas Capital]

Good afternoon, all, and congrats on your divestiture announcements.

[Brad Cooper, Executive VP & CFO of NGL Energy Holdings LLC at NGL Energy Partners]

Thanks, Derek.

[Derrick Whitfield, Managing Director at Texas Capital]

Perhaps starting there with your announced NGL terminal and railcar transactions, how should we think about the annual run rate EBITDA of your remaining assets in liquid logistics following these transactions?

[Brad Cooper, Executive VP & CFO of NGL Energy Holdings LLC at NGL Energy Partners]

So historically, Derek, that segment's got four really four legs of the stool, wholesale propane, biodiesel, Iraq marketing, our Centennial business. Between bio the wind down of bio and the wholesale transaction, it's probably 15% to 20% of our EBITDA in that business unit historically.

[Michael Krimbill, CEO at NGL Energy Partners]

I'll add to that, Brad. I think it's too early for us to give any numbers. We are still looking at some additional opportunities. So we don't want to mislead you by giving you a number that turns out to be not accurate.

[Derrick Whitfield, Managing Director at Texas Capital]

Understood. Maybe shifting over to the Crude Oil Logistics segment. How should we think about the growth trajectory associated with the announcements from this quarter to really achieve that 100,000 barrel mark you referenced in your prepared remarks?

[Michael Krimbill, CEO at NGL Energy Partners]

I'd say again, we'll probably wait for

[Michael Krimbill, CEO at NGL Energy Partners]

our fiscal twenty twenty six guidance to really quantify that, I think you can see that the volume increase will be 50%. So if nothing else, you could take 50% of EBITDA this year and add it to our numbers.

[Derrick Whitfield, Managing Director at Texas Capital]

That's great. Thanks for taking my questions.

[Operator]

The next question comes from James Spicer with TD Securities. Please proceed.

[James Spicer, Analyst at TD Securities]

Yes. Hi. Thanks for taking the question. It sounds like if you're projecting an undrawn revolver balance at the end of next quarter, that would imply that the majority of your asset sale proceeds and free cash flow were all going to pay down the ABL balance. Just wondering if that's the case?

[James Spicer, Analyst at TD Securities]

And if so, what metrics are you looking for to hit before you start addressing the principle on the Series D preferreds?

[Brad Cooper, Executive VP & CFO of NGL Energy Holdings LLC at NGL Energy Partners]

Yes, that's correct. Assuming that all the assets as well as they go straight to the ABL. I think it's probably just continued deleveraging. I don't know if we have a hard fast line in the sand in terms of where we want to be, but the way that our growth capital projects typically occur and we don't have anything lined up for next year. If you take this year as an example, the Lex two spin was in the first half of the year.

[Brad Cooper, Executive VP & CFO of NGL Energy Holdings LLC at NGL Energy Partners]

So assuming there is a repeatable transaction like that, James, I would assume kind of a back half of fiscal twenty twenty six in terms of Class D redemption. That's not signaling that we've got another deal lined up. It's really just trying to illustrate if we have a repeat of this year how our free cash flow really flows through the partnership.

[James Spicer, Analyst at TD Securities]

Okay, got it. And then on the liquid logistics business, just a point of clarification. What assets are left in the liquids logistics business now post these divestitures and which are the primary sources of cash flow at this point?

[Brad Cooper, Executive VP & CFO of NGL Energy Holdings LLC at NGL Energy Partners]

Yes, recall that wholesale propane is really the only business unit within the four legs of the stool that had hard assets. What's remaining is Ambassador, so that's the propane pipeline there in Michigan, Chesapeake, which is a butane export facility and then Port Hudson and West Point, we have a terminal in West Point, Virginia. So those four residual assets.

[James Spicer, Analyst at TD Securities]

Okay, thanks. And then just one more. I think you have been guiding to Water Solutions EBITDA of I can't remember the number now, like $540,000,000 to $550,000,000 or something in that range. Just wondering with your updated total guidance, what that implies in terms of water?

[Michael Krimbill, CEO at NGL Energy Partners]

Yes, it implies water will be below that range, but it's not clear to us where we're going to end up. So we decided not to provide another any more guidance on water.

[James Spicer, Analyst at TD Securities]

Okay. That's it for me. Thanks guys.

[Operator]

Okay. The next question comes from Tarek Hamed with JPMorgan. Please proceed.

[Nevin Mathew, High Yield Credit Research Associate at JP Morgan]

Hi, good afternoon. This is Nevan on for Tarek. I was just wondering if you could comment on the relative profitability on the volumes related to Lex two compared to the previously existing assets.

[Brad Cooper, Executive VP & CFO of NGL Energy Holdings LLC at NGL Energy Partners]

No, I mean in my prepared comments, it's performing as expected. That's really all we've got at this point.

[Nevin Mathew, High Yield Credit Research Associate at JP Morgan]

Got it. But in terms of additional volumes coming online compared to original, our LexOne, is there any difference in terms of the contract that was struck?

[Brad Cooper, Executive VP & CFO of NGL Energy Holdings LLC at NGL Energy Partners]

Could you repeat the question? It's a little fuzzy here on this side breaking up.

[Nevin Mathew, High Yield Credit Research Associate at JP Morgan]

Sorry, just looking for whether or not you could provide any commentary on the contracts that were struck for Lexus II in terms of pricing and profitability.

[Brad Cooper, Executive VP & CFO of NGL Energy Holdings LLC at NGL Energy Partners]

At this time, there's no additional contracts that we've signed up as a result of Lex two pipeline, if that's what you're asking.

[Nevin Mathew, High Yield Credit Research Associate at JP Morgan]

Got it. Thank you.

[Operator]

Okay. We have a follow-up coming from Derrick Whitfield with Texas Capital. Please proceed.

[Derrick Whitfield, Managing Director at Texas Capital]

Good afternoon, guys. Just to clarify the comment on modern logistics volumes. Should we be thinking about that more from a seasonal perspective? I mean, it's certainly not surprising to see seasonal CapEx down across upstream industry. I mean, I would think that you would start to see that front loaded in the first half of the year.

[Derrick Whitfield, Managing Director at Texas Capital]

So that's I mean, it's just a seasonal factor. Is that the right way to think about it?

[Brad Cooper, Executive VP & CFO of NGL Energy Holdings LLC at NGL Energy Partners]

So my comments on the growth capital, Derek, around next to?

[Derrick Whitfield, Managing Director at Texas Capital]

No. More around those, the volumes. So you had a slight decline in logistics water logistics volumes in Delaware in Q3 versus Q2. And I thought the previous question yes, go ahead, sorry.

[Brad Cooper, Executive VP & CFO of NGL Energy Holdings LLC at NGL Energy Partners]

I think the third quarter we've seen we saw quite a bit of recycling from some of our larger customers. I don't know if that's seasonal. Doug, are you there? Maybe you've got some thoughts on the seasonality of recycling versus the rest of the year and how it lays out in the calendar year?

[Doug White, Executive Vice President-Water Solutions at NGL Energy Partners]

This is Doug. Typically, we see the slowdown over the holidays. That began to change in 2023, where we saw the producers stay very busy through the holiday season. But once again, it's flipped back in 2024. We saw the and I don't know if it's the calendar situation where there was Thanksgiving and Christmas certainly had a lot more leaned a lot more towards time off just in general.

[Doug White, Executive Vice President-Water Solutions at NGL Energy Partners]

But we did see a slowdown compared to prior year because of that. And can we call it seasonal? Maybe it's more operational. Things are going certainly in the Delaware, staying very steady, but there was a ramp of recycling this year in that last quarter of the calendar year and we're already seeing those numbers quickly turn back around in this first calendar quarter of the year with a lot of wells being brought online.

[Derrick Whitfield, Managing Director at Texas Capital]

Terrific. That's what I was expecting.

[Operator]

We've reached the end of the question and answer session. And I will now turn the call over to Brad Cooper for closing remarks.

[Brad Cooper, Executive VP & CFO of NGL Energy Holdings LLC at NGL Energy Partners]

Thanks everyone for your interest in NGL and we look forward to catching up with everyone in a couple of months on the year end earnings call. Thanks and have a nice week.

[Operator]

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Brad Cooper, Executive VP & CFO of NGL Energy Holdings LLC
• Michael Krimbill, CEO
• Doug White, Executive Vice President-Water Solutions

Analysts

• Derrick Whitfield, Managing Director at Texas Capital
• James Spicer, Analyst at TD Securities
• Nevin Mathew, High Yield Credit Research Associate at JP Morgan