NGL — NGL Energy Partners LP

NGL Energy Partners Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Consolidated Adjusted EBITDA: $167.3 million, up 12% from $149.4 million in Q2 2025.
• Water Solutions Segment: Adjusted EBITDA increased to $151.9 million from $128.9 million, an 18% rise.
• Physical Water Disposal Volumes: Averaged 2.8 million barrels per day, a 4% increase year-over-year.
• Total Volumes for Disposal: Increased 14% to 3.15 million barrels per day.
• Operating Expenses: Remained stable at $0.22 per barrel.
• Class D Preferred Units: 88,506 units purchased, saving $10.4 million in annual distributions.
• Term Loan B Repricing: Reduced SOFR margin from 375 to 350 basis points, saving $15 million annually.

2. Strategic Updates and Business Highlights

• Growth in Water Solutions: Record water volumes and a 30% increase in Grand Mesa pipeline volumes.
• New Growth Projects: Underwritten for approximately 750,000 barrels per day of new contracted volume commitments, with expected service by year-end 2026.
• Delaware Basin Capacity: Over 5 million barrels per day of permitted injection capacity established.
• Pioneering Treatment Plant: Efforts to permit a large-scale produced water treatment plant in Texas are underway, aiming for 800,000 barrels per day influent capacity.

3. Forward Guidance and Outlook

• Adjusted EBITDA Guidance: Increased from $615-$625 million to $650-$660 million for FY 2026.
• Fiscal 2027 Guidance: Initial adjusted EBITDA guidance set at a minimum of $700 million, driven by new projects.
• Leverage Projection: Anticipated to reach approximately 4x by fiscal year-end, with a goal to reduce leverage further.

4. Bad News, Challenges, or Points of Concern

• Market Competition: Increased competition in the Delaware Basin, particularly following the acquisition of Aris by WES, may impact customer acquisition and pricing.
• Capital Expenditure: Increased growth capital spending from $60 million to $160 million may strain cash flows in the short term.
• Regulatory Risks: Ongoing permitting processes for new projects could face delays or challenges.

5. Notable Q&A Insights

• Customer Acquisition: Growth attributed to larger producers' commitments and improved infrastructure economics in the Delaware Basin.
• Pore Space Development: Significant capital will be required to access new pore space, with projects estimated between $50 million to $150 million.
• SWD Wells: Plans to drill 15 to 20 new saltwater disposal wells this fiscal year, leveraging a backlog of legacy permits.

Overall, NGL Energy Partners reported a strong quarter with significant growth in its Water Solutions segment, while also planning for future expansion and addressing competitive pressures in the market.