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NGL Energy Partners LP Affirms Fiscal 2020 EBITDA Guidance and Provides Update on Current Operations and Capital Expenditure Reductions

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·5 min read
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NGL Energy Partners LP (NYSE:NGL) ("NGL" or "the Partnership") is providing an update on its operations in the current commodity price environment. The Partnership’s three primary businesses should continue to perform as expected in the near term and as a result management can confirm the following:

  • Fiscal Year 2020 (ending March 31, 2020) Adjusted EBITDA from continuing operations guidance range remains unchanged at $565 million to $595 million

  • Current produced water transportation and disposal volumes on its systems have increased in March to a record 1.9 million barrels per day, including approximately 1.5 million barrels per day in the Delaware Basin

  • Management expects approximately $1.5 billion outstanding under the Partnership’s $1.9 billion Revolving Credit Facility at March 31, 2020

"Like many companies across our industry, the current environment will present us with real challenges going forward, but also presents us with new opportunities," stated Mike Krimbill, NGL’s CEO. "We must be thoughtful and prudent in our response to greater crude oil supply and lower demand resulting from the effects of the coronavirus. We have taken a number of pro-active steps to solidify our financial position while keeping our operations running smoothly."

Specifically, the Partnership has taken the following actions:

  • High graded its Fiscal 2021 planned capital expenditure budget to leverage off the significant infrastructure investment made during this past year and the current operating environment. As a result, management expects that for the fiscal year beginning April 1, 2020, growth capital expenditures will approximate $50 million all of which would be funded using free cash flow;

  • Reached an agreement to exit its Gas Blending business by March 31, 2020, with an expected reduction in working capital indebtedness of at least $50 million and a further decrease in earnings volatility going forward; and

  • Remains fully focused on the health and safety of our employees and continuing to provide best-in-class service to our customers. To this end, the Partnership has instituted several actions to protect our employees’ and contractors’ health and well-being in dealing with the coronavirus. NGL’s management team has established redundancy planning and implemented preventative measures at all our terminals, salt water disposal facilities and pipelines with the goal to provide our customers uninterrupted service.

The Partnership remains in close communication with its customers and will continue to adjust its plans and expectations accordingly as new information warrants. The following points highlight general industry and NGL specific factors in this environment:

  • The Partnership operates in the most economic basins in the United States with some of strongest producers in the country under long-term, fee-based contracts and management views this as an opportunity to grow and strengthen those relationships and demonstrate NGL’s reliability as a midstream service provider;

  • Producers that are significantly hedged in calendar 2020 should continue producing and drilling, albeit at a reduced pace in most basins. NGL has also hedged approximately 3,000 barrels per day of its calendar 2020 skim oil volumes at $55.00 per barrel to limit the Partnership’s direct commodity-price exposure this year. Calendar 2021 will likely be more a challenging period as producers’ hedge positions decline, assuming commodity prices remain at current levels.

  • Due to the recent reduction in interest rates, NGL’s floating rate interest expense is expected to decrease by at least $15 million this year based on the current interest rate curve, which along with expected lower working capital borrowings, will improve cash flows, coverage and leverage.

  • Crude oil forward prices now reflect a contango market from which NGL can benefit by utilizing its approximately 1.5 million barrels of crude oil storage.

Added Mike Krimbill, "We are responding quickly in anticipation of an environment that could get increasingly challenging in calendar 2021. While our businesses continue to perform as expected, we are taking steps that will bolster our operating and financial results should the current commodity price environment continue for an extended period. We will continue to drive our costs down, seek out creative ways to use excess capacity across all of our assets, and maximize our financial position, while maintaining a safe and healthy working environment for our employees. Nothing is off the table."

Forward-Looking Statements

Certain matters contained in this press release include "forward-looking statements." All statements, other than statements of historical fact, included in this press release may constitute forward-looking statements. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that these expectations will prove to be correct. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. Factors that might cause actual results to differ include, but are not limited to, the risk factors discussed from time to time in each of our documents and reports filed with the SEC.

Readers are cautioned not to place undue reliance on any forward-looking statements contained in this press release, which reflect management’s opinions only as of the date hereof. Except as required by law, we undertake no obligation to revise or publicly release the results of any revision to any forward-looking statements.

About NGL Energy Partners LP

NGL Energy Partners LP, a Delaware limited partnership, is a diversified midstream energy company that transports, stores, markets and provides other logistics services for crude oil, natural gas liquids and other products and transports, treats and disposes of produced water generated as part of the oil and natural gas production process. For further information, visit the Partnership’s website at www.nglenergypartners.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200319005373/en/


NGL Energy Partners LP
Investor Relations:
Trey Karlovich, 918-481-1119
Chief Financial Officer and Executive Vice President
Linda Bridges, 918-481-1119
Senior Vice President - Finance and Treasurer