NGL-PC — NGL Energy Partners LP

NGL Energy Partners Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Adjusted EBITDA: $167.3 million for Q2 2026, up 12% from $149.4 million in Q2 2025.
• Water Solutions Segment: Adjusted EBITDA increased to $151.9 million, an 18% rise year-over-year.
• Physical Water Disposal Volumes: Averaged 2.8 million barrels per day, a 4% increase from the previous year.
• Total Disposal Volumes: Increased to 3.15 million barrels per day, a 14% rise year-over-year.
• Operating Expenses: Remained stable at $0.22 per barrel.
• Leverage: Expected to be approximately 4x by fiscal year-end, with a projected zero balance on the Asset-Based Lending (ABL) facility.

2. Strategic Updates and Business Highlights

• Growth in Water Solutions: Record water volumes and 30% growth in Grand Mesa pipeline volumes.
• Capital Structure Management: Purchased 88,506 units of Class D preferred shares, saving $10.4 million annually in distributions. Repriced Term Loan B, achieving $15 million in annual interest savings.
• Unit Repurchase Program: Acquired 4.4 million units in the quarter, totaling 6.8 million units or about 5% of outstanding units.
• New Growth Projects: Underwritten projects for 750,000 barrels per day of new contracted volume commitments, expected to be operational by year-end.

3. Forward Guidance and Outlook

• Adjusted EBITDA Guidance: Increased for the full year from $615-$625 million to $650-$660 million.
• Fiscal 2027 Guidance: Initial adjusted EBITDA guidance set at a minimum of $700 million, driven by new projects and increased capital expenditures.
• Growth Capital Expenditures: Increased from $60 million to approximately $160 million to support new water-related projects.

4. Bad News, Challenges, or Points of Concern

• Market Competition: Increased competition in the Delaware Basin, particularly following the acquisition of Aris by WES, could impact customer acquisition and pricing.
• Regulatory Risks: Ongoing efforts to secure permits for new projects, including a large-scale produced water treatment plant, may face delays or challenges.
• Capital Allocation Risks: While the increased capital expenditure is aimed at growth, it raises concerns about the effective management of financial resources and potential impacts on leverage.

5. Notable Q&A Insights

• Customer Acquisition: The company is seeing growth from existing large producers, indicating a strong commitment to their services.
• Pore Space Development: Plans to access significant pore space in Andrews County will require substantial capital investment, estimated between $50 million to $150 million for infrastructure development.
• New SWD Wells: The company plans to drill 15 to 20 new saltwater disposal (SWD) wells this fiscal year, leveraging its extensive inventory of legacy permits.

Overall, NGL Energy Partners demonstrated strong financial performance and strategic growth in its Water Solutions segment, while also navigating competitive pressures and regulatory challenges. The outlook remains positive with increased guidance and a focus on capitalizing on growth opportunities.