NGL-PB — NGL Energy Partners LP

NGL Energy Partners Q3 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Adjusted EBITDA from continuing operations was $172.5 million, a 9.2% increase from $158 million in Q3 2025.
• Water Solutions segment generated adjusted EBITDA of $154.5 million, up 16.5% from $132.7 million in the prior year.
• Crude Oil Logistics adjusted EBITDA decreased to $15.4 million from $17.3 million year-over-year.
• Liquids Logistics adjusted EBITDA also declined to $15.2 million from $18.6 million in the prior year.
• Operating expenses were reported at $0.18 per barrel, benefiting from nonrecurring expense reductions.

2. Strategic Updates and Business Highlights:

• Achieved record water disposal volumes, processing 3.07 million barrels per day, up 17.1% from the prior year.
• Redeemed 15% of the original Class D preferred equity and repurchased 1.6 million common units, totaling 8.7 million units since the program's inception.
• Focus on transitioning to a predominantly water solutions company, reducing non-water assets to improve cash flow predictability.
• Significant capital investments in the Delaware Basin, including the Western Express pipeline expansion.
• Ongoing development of an AI machine-learning project aimed at enhancing operational efficiencies.

3. Forward Guidance and Outlook:

• Full-year EBITDA guidance maintained at $650 to $660 million for fiscal 2026.
• Anticipating over $700 million of EBITDA for the first time in fiscal 2027, supported by new contracted volumes.
• Continued focus on eliminating Class D preferred units and opportunistic repurchases of common units.

4. Bad News, Challenges, or Points of Concern:

• Crude oil price volatility could impact producer commitments to future water disposal needs, although current projects are financially firm.
• Decline in margins for Crude Oil Logistics due to lower oil prices and reduced volumes from committed producers.
• Concerns regarding the long-term capital obligations associated with new projects, particularly the partnership with Natura Resources for water treatment.

5. Notable Q&A Insights:

• Management expressed confidence in the stability of existing volume commitments despite crude price fluctuations.
• The AI project is expected to improve operational efficiencies, but quantifying its financial impact remains challenging at this stage.
• No immediate discussions with Devon Energy following their recent deal announcement, indicating a focus on current operations and preparations for the earnings call.

Overall, NGL Energy Partners reported a strong quarter with significant growth in water disposal volumes and strategic initiatives aimed at enhancing operational efficiency and financial stability. However, challenges related to crude price volatility and declining margins in certain segments were noted.