Q1 2026 NGL Energy Partners LP Earnings Call

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All day.

At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded, I will now turn to conference over to your host Brad Cooper. You may begin

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 US Securities Law.

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.

During the first quarter, we closed on the sale of our rack marketing business, the interest in the Limestone Ranch and a majority of the wholesale propane business, that included, 17 terminals.

As discussed on previous calls, we will continue to look for opportunities to shrink the remaining footprint of the liquid segment with further asset sales.

In the quarter.

We did in the quarter with a small abl balance but this is expected as we began our butane build within the liquid segment.

In addition to paying down the ebl we opportunistically attacked other pieces of the capital structure. With the proceeds, Michael elaborate on these efforts during his prepared remarks

We continue to execute on our multi-year strategy of right-sizing. The asset footprint paying down debt and reducing overall, leverage of the company.

Let's get into the quarterly results.

Consolidated adjusted, but offered a quarter came in at 144 million versus 138.6 million. And the prior year, first quarter where approximately 4% higher than the prior Year's first quarter,

This increase was primarily primarily driven by the performance of our water solutions, business segments.

We are reaffirming our full year adjusted e but our guidance of 615 to 625 million.

Our water segment continues to perform above our expectations, thus far and we will reevaluate our full year guidance after the second quarter closes.

Water Solutions, adjusted e but all was 142.9 million in the first versus 125.6 million and the prior first quarter,

A 13.8% increase.

physical water, disposal volumes were 2.77 million, barrels per day in the first quarter versus 2.47 million barrels per day and the prior year first quarter, a 12.4% increase

Total volumes, we were paid to dispose that includes deficiency volumes, where 3.1 million barrels per day in the first quarter versus 2.6 million barrels per day in the prior year. First quarter

So total volumes, we were paid to dispose of were up approximately 18%. First quarter of fiscal 26 over first quarter of fiscal 2025.

The increase in ibida was primarily driven by higher disposal revenues. Due to an increase in produced water volumes processed from contracted customers as well as higher water pipeline Revenue due to the Lex 2 pipeline commencing operations during the quarter. Ended December 31st 2024

Operating expenses for the quarter on a per barrel basis for lower by 2 cents when compared to the same quarter of the previous year.

For the first quarter, our operating expenses and Water Solutions was 22, cents per barrel.

With the current market sentiment and oil price uncertainty. We have not seen any drop off in activity, from our customers in the core of the basin.

We have continuous conversations with the producers to monitor activity levels and the impacts the macro backdrop could have on our water solution segment.

As highlighted in our earnings call presentation. We are well positioned with 90% of our volumes committed through acreage dedications and mvc's.

Recall, 80% of our total volumes are with investment grade counterparties.

Crude oil Logistics agency, but all was 9.6 million in the first quarter of fiscal, 26 versus 18.6 million in the prior Year's first quarter.

During the quarter volumes on the Grand Mesa pipeline averaged approximately 55,000 barrels per day.

Compared to 63,000 barrels per day, for the first quarter of 2025.

The decrease was due primarily to reduce sales as a result of lower production on an acreage dedicated to us from a DJ Basin and lower crude oil prices.

As we have previously discussed on these calls, we have been anticipating an increase in volumes on the Grand Mesa system for a while now.

For the month of July volumes were approximately 25% higher than June volumes. So we anticipate stronger, quarters ahead for the crew Logistics segment.

Liquid's Logistics adjusted evida was 2.9 Million in the first quarter versus 5.7 million in the prior first quarter.

This is adjusted for the previously announced asset sales that closed in the quarter.

The primary ibido, contributor of the liquid's logistics segment going forward, will be our butane blending business.

And recall that a majority of the ibid off from this segment occurs in the back half of the fiscal year.

With that I would now like to turn the call over to our CEO. Mike crimble.

Thanks Brad, good afternoon. I have just some brief comments with respect to the first quarter results as Branson. We have exceeded our expectations Water Solutions, experienced a strong quarter. Continues to reduce its cost per barrel.

We expect strength in the back half of the Year from our crude oil Logistics segment as volumes on Grand Mesa ramp up.

The remaining liquids logistic business. Generates enough adjusted Eva do to cover our corporate costs.

If our results continue to exceed expectations, we will consider raising guidance at the time of our second quarter earnings. Call in early November,

Now, as you can see from our first quarter actions, we are exercising an opportunistic strategy with regards to the use of our free cash flow.

That provides the highest return and greatest benefit to the partnership while considering liquidity and leverage. These opportunities may change as the markets continue to move.

So first, during the quarter, we purchased $19 million of our outstanding 2032 notes at a discount. This occurred as our bond prices temporarily declined due to the tariff announcement in early April. We also paid off $72 million of debt that was outstanding on our ABL as of March 31.

Uh, we then repurchased 70,000 units or approximately 12% of our outstanding class. D preferred units.

The successful refinancing in February last year in the full payment of the preferred. A Rees allows us to purchase any of our preferred classes, b c and d in the open market or call them at our discretion.

We have a couple of years to redeem the class D preferred, so we are beginning that process now and anticipate additional purchases this fiscal year.

And finally under the board, authorized common unit repurchase plan. We have purchased a total of approximately 4.7 million common units at an average price of $4.30 per unit. Uh this represents approximately 3 and a half percent of the outstanding common units,

In conclusion, as we move forward, the balance sheet remains a priority. However, we are very focused on growing our adjusted Leverage as it reduces leverage and provides additional cash for the balance sheet improvement.

And so, with that operator, let's open up the line for Q&A.

Certainly at this.

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1 moment, please while we pull for questions.

Your first question for today is from Tariq Hamed with JP Morgan.

Hi. This is Nevin on for taric. Um, I know you just mentioned that. Um you'd be remaining on opportunistic with capital allocation but just uh going forward. Uh do you expect further common unit repurchases? Or is this would you consider this quarter more of the 1 off and you'll be remaining more concentrated on the class D's.

This is Brad. I I think we'll continue to be opportunistic. If the unit price is kind of hang out in the same level. They've been this last quarter. I think you'll see us nibble at that.

Um, you know, if the bonds trade down based on some macro event, we'll nibble at those, and we'll continue to attack the Class D. So I don't...

I don't think we're going to set a path right now. In terms of what we're just going to go after solely, it'll be a little bit of each at these levels.

Got it. Thank you.

Your next question is from, Derek Whitfield with Texas Capitol.

Um, good afternoon guys and congrats on the opportunity to purchases.

Thanks. Derek with

Um, with respect to the produced water volumes for the quarter, they were a little bit lighter than what we were expecting. I just wanted to see if you could add some color to perhaps, uh, some of the moving parts for the quarter itself.

Doug. You want to take kind of q1's water, water, water, volume question.

um,

They were quite a bit close to where we were expecting.

Um, there were some

There were in June. There were uh,

Recycling jobs that ramped up which we're now seeing, you know, those volumes on the takeaway side. This quarter.

um, but

we feel pretty good about the volumes and, and q1.

Um, we came in, about 79, 79,000 barrels, a day over budget for the quarter, uh, over our internal budget. Uh, so we thought those were pretty solid. Uh, we see that continuing for the balance of the Year based on our customer forecast at this time,

very good and then

please go ahead. Eric, let me add to that.

so so this, when we look at volumes, we see the physical volumes, we move, then we see the, we call the financial volumes under mbc's, we get paid for the physically didn't move and then what we do, not

Get paid for next quarter.

So, you're not seeing all the volumes.

Um, that the system is actually I'll say this evening.

And you won't see it until next quarter. When we, when, you know, when we settle up on an NBC

Got it, that makes sense. And then maybe

Just higher level wanted to get your thoughts on the arrows acquisition by by Western.

Um I mean from our perspective while we look at it in question the timing from a value recognition perspective, it definitely supports the Delaware Water thesis that we have for for your business and and the revaluing of that core space over time.

You know, I'll start and Doug, you may have some thoughts too. But I think we, we congratulate Eris for getting a a premium price for their business. That's the price. We would never have paid.

uh and you know, our model is a little different too, because we do not

Focus on recycling. There's some other companies out there that do a great job who's really focused on that business.

And Doug, you got any other thoughts?

Yes, I think it's great for the industry. Uh, great sign consolidation um has been positive in the Delaware for even on the producer side. Um, once these the consolidation happens, you know, their start you build and continue to to build a more of a foundation of an asset base? Be it whether the producer side or the Midstream side. Um so we welcome seeing consolidation um which also includes um you know fewer fewer parties at the ball game. Um you know

The the remaining groups that are out there, I think a couple more of them are looking to be consolidated.

Um, so, you know, over time this will come down to a, a few parties in the Midstream water business and it will then eliminate the spending of capex on duplicate assets, uh, duplicating such the existing other competitor assets, which I think is good for the good for the industry. Um, you know, the larger diameter pipes, uh, more centralized operation of a larger contiguous area of assets. Um, I think that's just good good for the industry and what's good for the producers?

That's perfect. Thanks for your time and color, guys.

Thanks Derek.

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

Thanks everyone for your interest in. Go, we look forward to catching up with everyone in early November. During our second quarter, call for fiscal 26.

This concludes today's conference and you may disconnect.

Thank you for your participation.