NGL Energy Partners LP Announces Fourth Quarter and Full Year Fiscal 2023 Financial Results; Guidance for Fiscal 2024

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TULSA, Okla., May 31, 2023--(BUSINESS WIRE)--NGL Energy Partners LP (NYSE:NGL) ("NGL," "our," "we," or the "Partnership") today reported its fourth quarter and full year fiscal 2023 results.

Highlights for the fiscal year and quarter ended March 31, 2023 include:

  • Net income for full year Fiscal 2023 of $52.5 million, compared to a net loss of $184.1 million for full year Fiscal 2022; a net loss for the fourth quarter of Fiscal 2023 of $33.2 million, compared to a net loss of $29.4 million for the fourth quarter of Fiscal 2022

  • Adjusted EBITDA(1) for full year Fiscal 2023 of $632.7 million, compared to $542.5 million for full year Fiscal 2022; Adjusted EBITDA(1) for the fourth quarter of Fiscal 2023 of $173.3 million, compared to $157.4 million for the fourth quarter of Fiscal 2022

Water Solutions record year:

  • Record produced water volumes processed of approximately 2.33 million barrels per day for Fiscal 2023, a 29.4% increase over the prior year and approximately 2.46 million barrels per day during the fourth quarter of Fiscal 2023, growing 28.0% compared to the prior fourth quarter

  • Record Water Solutions’ Adjusted EBITDA(1) of $463.1 million for full year Fiscal 2023, a 35% increase over the prior year and $131.6 million for the fourth quarter of Fiscal 2023, a 45.7% increase compared to the prior fourth quarter

  • In the face of significant inflationary pressure, Water Solutions reduced operating expense to $0.25 per barrel for Fiscal 2023, a 7.4% reduction compared to the prior year and $0.24 per barrel for the fourth quarter of Fiscal 2023, versus $0.28 per barrel compared to the prior fourth quarter

Debt reduction, leverage and asset sales:

  • Reduced indebtedness by approximately $530 million in Fiscal 2023

    • Retired all $475.7 million of the outstanding 2023 unsecured notes

    • Paid off the outstanding equipment note of $41.7 million

    • Purchased $12.5 million of the outstanding 2026 unsecured notes

  • Reduced total leverage to 4.56 times on March 31, 2023, surpassing initial target of 4.75 times

  • Subsequent to March 31, 2023, purchased $99.3 million of the outstanding 2025 unsecured notes, leaving a remaining balance of $280.7 million

  • Closed $141 million(2) of asset sales, including marine assets for $111.7 million in cash. Based on the trailing twelve months of Adjusted EBITDA generated by these assets the resulting sales multiple was approximately 13.0 times.

"The Partnership had a strong Fiscal 2023, exceeding expectations with record Adjusted EBITDA(1), record water disposal volumes, accelerated debt reduction, declining leverage and significant asset sales at attractive multiples. Our team pulled on all the levers available to improve the balance sheet and financial metrics. Fiscal 2024 holds more of the same as we have closed additional asset sales, purchased 2025 unsecured notes and guided to increased Adjusted EBITDA(3). As soon as the 2025 unsecured notes are retired we will address the Preferred securities," stated Mike Krimbill, NGL’s CEO. "Providing for potential crude oil volatility, we are guiding fiscal 2024 Water Solutions Adjusted EBITDA(3) to a range of $485 - $500 million and full year consolidated Adjusted EBITDA(3) of $645 million plus. Also, we are guiding to $125 million in total maintenance and growth capital expenditures for Fiscal 2024," Krimbill concluded.

____________________

(1) See the "Non-GAAP Financial Measures" section of this release for the definition of Adjusted EBITDA (as used herein) and a discussion of this non-GAAP financial measure.

(2) Excludes the sale of linefill of $16.6 million.

(3) Certain of the forward-looking financial measures are provided on a non-GAAP basis. A reconciliation of forward-looking financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP is potentially misleading and not practical given the difficulty of projecting event driven transactional and other non-core operating items in any future period. The magnitude of these items, however, may be significant.

Quarterly Results of Operations

The following table summarizes operating income (loss) and Adjusted EBITDA(1) by reportable segment for the periods indicated:

Quarter Ended

March 31, 2023

March 31, 2022

Operating
Income (Loss)

Adjusted
EBITDA(1)

Operating
Income (Loss)

Adjusted
EBITDA(1)

(in thousands)

Water Solutions

$

38,470

$

131,558

$

34,645

$

90,279

Crude Oil Logistics

(5,488

)

29,715

7,092

54,459

Liquids Logistics

17,818

28,469

10,349

24,546

Corporate and Other

(20,340

)

(16,441

)

(13,637

)

(11,870

)

Total

$

30,460

$

173,301

$

38,449

$

157,414

Water Solutions

Operating income for the Water Solutions segment increased $3.8 million for the quarter ended March 31, 2023, compared to the quarter ended March 31, 2022. The Partnership processed approximately 2.46 million barrels of water per day during the quarter ended March 31, 2023, a 28.0% increase when compared to approximately 1.93 million barrels of water per day processed during the quarter ended March 31, 2022. This increase was due to higher production volumes (and associated produced water) primarily in the Delaware Basin driven by higher completion activity as well as higher fees charged for spot volumes. In addition, there was an increase in payments made by certain producers for committed volumes not delivered. Service fees for produced water processed ($/barrel) also benefited from these deficiency payments. These increases were partially offset by lower crude oil prices. The Partnership also sold approximately 76,000 barrels per day of produced and recycled water for use in our customers’ completion activities.

Revenues from recovered skim oil totaled $24.5 million for the quarter ended March 31, 2023, a decrease of $3.9 million from the prior year period. This decrease was due to lower skim oil volumes per barrel of produced water processed and lower realized crude oil prices received from the sale of skim oil barrels partially offset by higher volumes of skim oil barrels sold due to an increase in produced water volumes processed. In addition, for the quarter ended March 31, 2023, approximately 33,480 barrels of skim oil were stored and will be sold during fiscal year 2024.

Operating expenses in the Water Solutions segment decreased to $0.24 per produced barrel processed compared to $0.28 per produced barrel processed in the comparative quarter last year primarily due to the increase in produced water processed. Three of the Water Solutions segment’s largest variable expenses, utility, royalty and chemical expenses, were not (and are not expected to be) impacted by the rise in inflation due to negotiated long-term utility contracts with fixed rates, royalty contracts with no escalation clauses and a fixed chemical expense per barrel with our chemical provider.

Crude Oil Logistics

Operating income for the fourth quarter of Fiscal 2023 decreased by $12.6 million, compared to the same quarter in Fiscal 2022. Operating income for the fourth quarter of Fiscal 2023 includes a loss from the disposal or impairment of assets of $32.4 million, compared to a gain of $5.3 million in the same period of the prior year. Excluding these amounts, operating income increased by $25.1 million for the fourth quarter of Fiscal 2023. This increase is primarily due to net gains on derivative contracts of $57.5 million, which is comprised of net gains of $7.4 million in the current year, versus a net loss of $50.2 million in the prior year period. This increase was partially offset by lower product margins due to the sale of higher priced inventory into a market in which prices were declining in the current quarter period, versus the opposite in the prior year period; we sold lower priced inventory into a market in which prices were rising. In addition, we experienced lower differentials on certain sales contracts which lowered current period product margin and partially offsets the increase discussed above. During the three months ended March 31, 2023, physical volumes on the Grand Mesa Pipeline averaged approximately 76,000 barrels per day, compared to approximately 74,000 barrels per day for the three months ended March 31, 2022. This increase was due to increased production in the Denver-Julesburg basin.

As a part of continued efforts to optimize the Partnership’s asset portfolio, we sold our crude marine assets during the quarter, which generated a $8.0 million loss on the sale of assets.

Liquids Logistics

Operating income for the Liquids Logistics segment increased $7.5 million for the quarter ended March 31, 2023, compared to the quarter ended March 31, 2022. Operating income for the fourth quarter of Fiscal 2023 includes a loss from the disposal or impairment of assets of $10.2 million. Excluding these amounts, operating income increased by $17.7 million for the fourth quarter of Fiscal 2023. This increase is primarily due to higher propane margins as customers pulled their fixed priced contracts later in the current year. Margins for refined products also increased as we continued to be well positioned from a supply and inventory perspective in certain markets experiencing tight supply. This increase was partially offset by lower butane margins (excluding the impact of derivatives) as our product purchased earlier in the season continued to compete with product purchased in a discounted market, resulting in our product being more expensive. For the current quarter, we recognized $2.3 million of gains from net derivative activity, compared to $16.8 million in losses in the prior year quarter.

Capitalization and Liquidity

Total liquidity (cash plus available capacity on our asset-based revolving credit facility ("ABL Facility")) was approximately $315.4 million as of March 31, 2023. On March 31, 2023, the Partnership reported $138.0 million in outstanding borrowings on its ABL Facility, compared to $116.0 million in outstanding borrowings at March 31, 2022. This increase was due to the payoff of the 2023 Notes, which was offset by the seasonal decline in inventory levels and the sale of our marine assets.

As of March 31, 2023, the Partnership is in compliance with all of its debt covenants and has no significant current debt maturities before March 2025.

Fourth Quarter Conference Call Information

A conference call to discuss NGL’s results of operations is scheduled for 4:30 pm Central Time on Wednesday, May 31, 2023. Analysts, investors, and other interested parties may join the webcast via the event link: https://www.webcaster4.com/Webcast/Page/2808/48242 or by dialing (888) 506-0062 and providing access code: 106759. An archived audio replay of the call will be available for 14 days, which can be accessed by dialing (877) 481-4010 and providing replay passcode 48242.

NGL filed its Annual Report on Form 10-K for the year ended March 31, 2023 with the Securities and Exchange Commission after market on May 31, 2023. A copy of the Form 10-K can be found on the Partnership’s website at www.nglenergypartners.com. Unitholders may also request, free of charge, a hard copy of our Form 10-K and our complete audited financial statements.

Non-GAAP Financial Measures

NGL defines EBITDA as net income (loss) attributable to NGL Energy Partners LP, plus interest expense, income tax expense (benefit), and depreciation and amortization expense. NGL defines Adjusted EBITDA as EBITDA excluding net unrealized gains and losses on derivatives, lower of cost or net realizable value adjustments, gains and losses on disposal or impairment of assets, gains and losses on early extinguishment of liabilities, equity-based compensation expense, acquisition expense, revaluation of liabilities, certain legal settlements and other. NGL also includes in Adjusted EBITDA certain inventory valuation adjustments related to certain refined products businesses within NGL’s Liquids Logistics segment, as discussed below. EBITDA and Adjusted EBITDA should not be considered alternatives to net (loss) income, (loss) income before income taxes, cash flows from operating activities, or any other measure of financial performance calculated in accordance with GAAP, as those items are used to measure operating performance, liquidity or the ability to service debt obligations. NGL believes that EBITDA provides additional information to investors for evaluating NGL’s ability to make quarterly distributions to NGL’s unitholders and is presented solely as a supplemental measure. NGL believes that Adjusted EBITDA provides additional information to investors for evaluating NGL’s financial performance without regard to NGL’s financing methods, capital structure and historical cost basis. Further, EBITDA and Adjusted EBITDA, as NGL defines them, may not be comparable to EBITDA, Adjusted EBITDA, or similarly titled measures used by other entities.

Other than for certain businesses within NGL’s Liquids Logistics segment, for purposes of the Adjusted EBITDA calculation, NGL makes a distinction between realized and unrealized gains and losses on derivatives. During the period when a derivative contract is open, NGL records changes in the fair value of the derivative as an unrealized gain or loss. When a derivative contract matures or is settled, NGL reverses the previously recorded unrealized gain or loss and records a realized gain or loss. NGL does not draw such a distinction between realized and unrealized gains and losses on derivatives of certain businesses within NGL’s Liquids Logistics segment. The primary hedging strategy of these businesses is to hedge against the risk of declines in the value of inventory over the course of the contract cycle, and many of the hedges cover extended periods of time. The "inventory valuation adjustment" row in the reconciliation table reflects the difference between the market value of the inventory of these businesses at the balance sheet date and its cost. NGL includes this in Adjusted EBITDA because the unrealized gains and losses associated with derivative contracts associated with the inventory of this segment, which are intended primarily to hedge inventory holding risk and are included in net income, also affect Adjusted EBITDA. In NGL’s Crude Oil Logistics segment, they purchase certain crude oil barrels using the West Texas Intermediate ("WTI") calendar month average ("CMA") price and sell the crude oil barrels using the WTI CMA price plus the Argus CMA Differential Roll Component ("CMA Differential Roll") per NGL’s contracts. To eliminate the volatility of the CMA Differential Roll, NGL entered into derivative instrument positions in January 2021 to secure a margin of approximately $0.20 per barrel on 1.5 million barrels per month from May 2021 through December 2023. Due to the nature of these positions, the cash flow and earnings recognized on a GAAP basis will differ from period to period depending on the current crude oil price and future estimated crude oil price which are valued utilizing third-party market quoted prices. NGL is recognizing in Adjusted EBITDA the gains and losses from the derivative instrument positions entered into in January 2021 to properly align with the physical margin we are hedging each month through the term of this transaction. This representation aligns with management’s evaluation of the transaction.

Distributable Cash Flow is defined as Adjusted EBITDA minus maintenance capital expenditures, income tax expense, cash interest expense, preferred unit distributions and other. Maintenance capital expenditures represent capital expenditures necessary to maintain the Partnership’s operating capacity. For the CMA Differential Roll transaction, as discussed above, we have included an adjustment to Distributable Cash Flow to reflect, in the period for which they relate, the actual cash flows for the positions that settled that are not being recognized in Adjusted EBITDA. Distributable Cash Flow is a performance metric used by senior management to compare cash flows generated by the Partnership (excluding growth capital expenditures and prior to the establishment of any retained cash reserves by the Board of Directors) to the cash distributions expected to be paid to unitholders. Using this metric, management can quickly compute the coverage ratio of estimated cash flows to planned cash distributions. This financial measure also is important to investors as an indicator of whether the Partnership is generating cash flow at a level that can sustain, or support an increase in, quarterly distribution rates. Actual distribution amounts are set by the Board of Directors.

We do not provide a reconciliation for non-GAAP estimates on a forward-looking basis where we are unable to provide a meaningful calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing or amount of various items that would impact the most directly comparable forward-looking U.S. GAAP financial measure that have not yet occurred, are out of the Partnership’s control and/or cannot be reasonably predicted. Forward-looking non-GAAP financial measures provided without the most directly comparable U.S. GAAP financial measures may vary materially from the corresponding U.S. GAAP financial measures.

Forward-Looking Statements

This press release includes "forward-looking statements." All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Actual results could vary significantly from those expressed or implied in such statements and are subject to a number of risks and uncertainties. While NGL believes such forward-looking statements are reasonable, NGL cannot assure they will prove to be correct. The forward-looking statements involve risks and uncertainties that affect operations, financial performance, and other factors as discussed in filings with the Securities and Exchange Commission. Other factors that could impact any forward-looking statements are those risks described in NGL’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other public filings. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, specifically those under the heading "Risk Factors." NGL undertakes no obligation to publicly update or revise any forward-looking statements except as required by law.

NGL provides Adjusted EBITDA guidance that does not include certain charges and costs, which in future periods are generally expected to be similar to the kinds of charges and costs excluded from Adjusted EBITDA in prior periods, such as income taxes, interest and other non-operating items, depreciation and amortization, net unrealized gains and losses on derivatives, lower of cost or net realizable value adjustments, gains and losses on disposal or impairment of assets, gains and losses on early extinguishment of liabilities, equity-based compensation expense, acquisition expense, revaluation of liabilities and items that are unusual in nature or infrequently occurring. The exclusion of these charges and costs in future periods will have a significant impact on the Partnership’s Adjusted EBITDA, and the Partnership is not able to provide a reconciliation of its Adjusted EBITDA guidance to net income (loss) without unreasonable efforts due to the uncertainty and variability of the nature and amount of these future charges and costs and the Partnership believes that such reconciliation, if possible, would imply a degree of precision that would be potentially confusing or misleading to investors.

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.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Unaudited Consolidated Balance Sheets

(in Thousands, except unit amounts)

March 31,

2023

2022

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

5,431

$

3,822

Accounts receivable-trade, net of allowance for expected credit losses of $1,964 and $2,626, respectively

1,033,956

1,123,163

Accounts receivable-affiliates

12,362

8,591

Inventories

142,607

251,277

Prepaid expenses and other current assets

98,089

159,486

Total current assets

1,292,445

1,546,339

PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $898,184 and $887,006, respectively

2,223,380

2,462,390

GOODWILL

712,364

744,439

INTANGIBLE ASSETS, net of accumulated amortization of $580,860 and $507,285, respectively

1,058,668

1,135,354

INVESTMENTS IN UNCONSOLIDATED ENTITIES

21,090

21,897

OPERATING LEASE RIGHT-OF-USE ASSETS

90,220

114,124

OTHER NONCURRENT ASSETS

57,977

45,802

Total assets

$

5,456,144

$

6,070,345

LIABILITIES AND EQUITY

CURRENT LIABILITIES:

Accounts payable-trade

$

927,591

$

1,084,837

Accounts payable-affiliates

65

73

Accrued expenses and other payables

133,616

140,719

Advance payments received from customers

14,699

7,934

Current maturities of long-term debt

—

2,378

Operating lease obligations

34,166

41,261

Total current liabilities

1,110,137

1,277,202

LONG-TERM DEBT, net of debt issuance costs of $30,117 and $42,988, respectively, and current maturities

2,857,805

3,350,463

OPERATING LEASE OBLIGATIONS

58,450

72,784

OTHER NONCURRENT LIABILITIES

111,226

104,346

CLASS D 9.00% PREFERRED UNITS, 600,000 and 600,000 preferred units issued and outstanding, respectively

551,097

551,097

EQUITY:

General partner, representing a 0.1% interest, 132,059 and 130,827 notional units, respectively

(52,551

)

(52,478

)

Limited partners, representing a 99.9% interest, 131,927,343 and 130,695,970 common units issued and outstanding, respectively

455,564

401,486

Class B preferred limited partners, 12,585,642 and 12,585,642 preferred units issued and outstanding, respectively

305,468

305,468

Class C preferred limited partners, 1,800,000 and 1,800,000 preferred units issued and outstanding, respectively

42,891

42,891

Accumulated other comprehensive loss

(450

)

(308

)

Noncontrolling interests

16,507

17,394

Total equity

767,429

714,453

Total liabilities and equity

$

5,456,144

$

6,070,345

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Unaudited Consolidated Statements of Operations

(in Thousands, except unit and per unit amounts)

Three Months Ended March 31,

Year Ended March 31,

2023

2022

2023

2022

REVENUES:

Water Solutions

$

185,807

$

147,777

$

697,038

$

544,866

Crude Oil Logistics

493,055

789,839

2,464,822

2,505,496

Liquids Logistics

1,369,972

1,595,631

5,533,044

4,897,553

Total Revenues

2,048,834

2,533,247

8,694,904

7,947,915

COST OF SALES:

Water Solutions

421

12,189

14,100

33,980

Crude Oil Logistics

442,474

761,055

2,250,934

2,352,932

Liquids Logistics

1,326,449

1,565,361

5,383,809

4,752,400

Corporate and Other

1,181

—

1,181

—

Total Cost of Sales

1,770,525

2,338,605

7,650,024

7,139,312

OPERATING COSTS AND EXPENSES:

Operating

76,354

77,925

313,725

285,535

General and administrative

21,217

17,397

71,818

63,546

Depreciation and amortization

69,516

66,575

273,621

288,720

Loss on disposal or impairment of assets, net

71,097

791

86,888

94,254

Revaluation of liabilities

9,665

(6,495

)

9,665

(6,495

)

Operating Income

30,460

38,449

289,163

83,043

OTHER INCOME (EXPENSE):

Equity in earnings of unconsolidated entities

1,026

635

4,120

1,400

Interest expense

(63,917

)

(67,636

)

(275,445

)

(271,640

)

(Loss) gain on early extinguishment of liabilities, net

(631

)

682

6,177

1,813

Other income, net

17

251

28,748

2,254

(Loss) Income Before Income Taxes

(33,045

)

(27,619

)

52,763

(183,130

)

INCOME TAX EXPENSE

(158

)

(1,791

)

(271

)

(971

)

Net (Loss) Income

(33,203

)

(29,410

)

52,492

(184,101

)

LESS: NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS

(316

)

50

(1,106

)

(655

)

NET (LOSS) INCOME ATTRIBUTABLE TO NGL ENERGY PARTNERS LP

$

(33,519

)

$

(29,360

)

$

51,386

$

(184,756

)

NET LOSS ALLOCATED TO COMMON UNITHOLDERS

$

(67,661

)

$

(56,269

)

$

(73,232

)

$

(288,630

)

BASIC AND DILUTED LOSS PER COMMON UNIT

$

(0.51

)

$

(0.43

)

$

(0.56

)

$

(2.22

)

BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING

131,631,271

130,371,691

131,007,171

129,840,234

DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING

131,631,271

130,371,691

131,007,171

129,840,234

EBITDA, ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW RECONCILIATION

(Unaudited)

The following table reconciles NGL’s net (loss) income to NGL’s EBITDA, Adjusted EBITDA and Distributable Cash Flow for the periods indicated:

Three Months Ended March 31,

Year Ended March 31,

2023

2022

2023

2022

(in thousands)

Net (loss) income

$

(33,203

)

$

(29,410

)

$

52,492

$

(184,101

)

Less: Net (income) loss attributable to noncontrolling interests

(316

)

50

(1,106

)

(655

)

Net (loss) income attributable to NGL Energy Partners LP

(33,519

)

(29,360

)

51,386

(184,756

)

Interest expense

63,932

67,652

275,505

271,689

Income tax expense

158

1,791

271

971

Depreciation and amortization

69,519

66,591

273,544

287,943

EBITDA

100,090

106,674

600,706

375,847

Net unrealized losses (gains) on derivatives

6,492

33,277

(50,438

)

(14,977

)

CMA Differential Roll net losses (gains) (1)

(15,877

)

6,751

3,547

67,738

Inventory valuation adjustment (2)

(1,030

)

6,497

(7,795

)

8,409

Lower of cost or net realizable value adjustments

177

8,226

(11,534

)

10,862

Loss on disposal or impairment of assets, net

71,097

791

86,872

94,059

Loss (gain) on early extinguishment of liabilities, net

631

(683

)

(6,177

)

(1,851

)

Equity-based compensation expense

852

(8

)

2,718

(1,052

)

Acquisition expense (3)

118

—

118

67

Revaluation of liabilities (4)

9,665

(6,495

)

9,665

(6,495

)

Other (5)

1,086

2,384

4,993

9,909

Adjusted EBITDA

$

173,301

$

157,414

$

632,675

$

542,516

Less: Cash interest expense (6)

59,707

63,482

258,679

254,619

Less: Income tax expense

158

1,791

271

971

Less: Maintenance capital expenditures

20,599

21,414

61,649

59,468

Less: CMA Differential Roll (7)

(14,439

)

5,563

(27,652

)

54,817

Less: Other (8)

220

—

391

—

Distributable Cash Flow

$

107,056

$

65,164

$

339,337

$

172,641

____________________

(1)

Adjustment to align, within Adjusted EBITDA, the net gains and losses of the Partnership’s CMA Differential Roll derivative instruments positions with the physical margin being hedged. See "Non-GAAP Financial Measures" section above for a further discussion.

(2)

Amounts represent the difference between the market value of the inventory at the balance sheet date and its cost. See "Non-GAAP Financial Measures" section above for a further discussion.

(3)

Amounts represent expenses we incurred related to legal and advisory costs associated with acquisitions.

(4)

Amounts represent the non-cash valuation adjustment of contingent consideration liabilities, offset by the cash payments, related to royalty agreements acquired as part of acquisitions in our Water Solutions segment.

(5)

Amounts represent non-cash operating expenses related to our Grand Mesa Pipeline, unrealized gains/losses on marketable securities and accretion expense for asset retirement obligations. Also, the amount for the year ended March 31, 2023 includes the write off of an asset acquired in a prior period acquisition.

(6)

Amounts represent interest expense payable in cash, excluding changes in the accrued interest balance.

(7)

Amounts represent the cash portion of the adjustments of the Partnership’s CMA Differential Roll derivative instrument positions, as discussed above, that settled during the period.

(8)

Amounts represent cash paid to settle asset retirement obligations.

ADJUSTED EBITDA RECONCILIATION BY SEGMENT

(Unaudited)

Three Months Ended March 31, 2023

Water
Solutions

Crude Oil
Logistics

Liquids
Logistics

Corporate
and Other

Consolidated

(in thousands)

Operating income (loss)

$

38,470

$

(5,488

)

$

17,818

$

(20,340

)

$

30,460

Depreciation and amortization

53,315

11,384

3,107

1,710

69,516

Amortization recorded to cost of sales

—

—

69

—

69

Net unrealized losses (gains) on derivatives

—

7,286

(1,973

)

1,179

6,492

CMA Differential Roll net losses (gains)

—

(15,877

)

—

—

(15,877

)

Inventory valuation adjustment

—

—

(1,030

)

—

(1,030

)

Lower of cost or net realizable value adjustments

—

—

177

—

177

Loss on disposal or impairment of assets, net

28,496

32,365

10,232

4

71,097

Equity-based compensation expense

—

—

—

852

852

Acquisition expense

29

—

—

89

118

Other income (expense), net

60

(60

)

—

17

17

Adjusted EBITDA attributable to unconsolidated entities

1,190

—

30

42

1,262

Adjusted EBITDA attributable to noncontrolling interest

(617

)

—

—

—

(617

)

Revaluation of liabilities

9,665

—

—

—

9,665

Other

950

105

39

6

1,100

Adjusted EBITDA

$

131,558

$

29,715

$

28,469

$

(16,441

)

$

173,301

Three Months Ended March 31, 2022

Water
Solutions

Crude Oil
Logistics

Liquids
Logistics

Corporate
and Other

Consolidated

(in thousands)

Operating income (loss)

$

34,645

$

7,092

$

10,349

$

(13,637

)

$

38,449

Depreciation and amortization

50,092

11,460

3,305

1,718

66,575

Amortization recorded to cost of sales

—

—

68

—

68

Net unrealized losses (gains) on derivatives

4,807

30,144

(1,674

)

—

33,277

CMA Differential Roll net losses (gains)

—

6,751

—

—

6,751

Inventory valuation adjustment

—

—

6,497

—

6,497

Lower of cost or net realizable value adjustments

—

2,246

5,980

—

8,226

Loss (gain) on disposal or impairment of assets, net

6,148

(5,307

)

—

(50

)

791

Equity-based compensation expense

—

—

—

(8

)

(8

)

Other income, net

102

3

84

62

251

Adjusted EBITDA attributable to unconsolidated entities

804

—

23

45

872

Adjusted EBITDA attributable to noncontrolling interest

(225

)

—

1

—

(224

)

Revaluation of liabilities

(6,495

)

—

—

—

(6,495

)

Other

401

2,070

(87

)

—

2,384

Adjusted EBITDA

$

90,279

$

54,459

$

24,546

$

(11,870

)

$

157,414

Year Ended March 31, 2023

Water
Solutions

Crude Oil
Logistics

Liquids
Logistics

Corporate
and Other

Consolidated

(in thousands)

Operating income (loss)

$

198,924

$

81,524

$

66,624

$

(57,909

)

$

289,163

Depreciation and amortization

207,081

46,577

13,301

6,662

273,621

Amortization recorded to cost of sales

—

—

274

—

274

Net unrealized (gains) losses on derivatives

(4,464

)

(50,104

)

2,951

1,179

(50,438

)

CMA Differential Roll net losses (gains)

—

3,547

—

—

3,547

Inventory valuation adjustment

—

—

(7,795

)

—

(7,795

)

Lower of cost or net realizable value adjustments

—

(2,247

)

(9,287

)

—

(11,534

)

Loss (gain) on disposal or impairment of assets, net

46,431

31,086

10,283

(912

)

86,888

Equity-based compensation expense

—

—

—

2,718

2,718

Acquisition expense

29

—

—

89

118

Other income (expense), net

70

330

(1,665

)

30,013

28,748

Adjusted EBITDA attributable to unconsolidated entities

4,759

—

27

176

4,962

Adjusted EBITDA attributable to noncontrolling interest

(2,269

)

—

—

—

(2,269

)

Revaluation of liabilities

9,665

—

—

—

9,665

Other

2,865

203

1,933

6

5,007

Adjusted EBITDA

$

463,091

$

110,916

$

76,646

$

(17,978

)

$

632,675

Year Ended March 31, 2022

Water
Solutions

Crude Oil
Logistics

Liquids
Logistics

Corporate
and Other

Consolidated

(in thousands)

Operating income (loss)

$

94,851

$

45,033

$

(8,441

)

$

(48,400

)

$

83,043

Depreciation and amortization

214,558

48,489

18,714

6,959

288,720

Amortization recorded to cost of sales

—

—

281

—

281

Net unrealized losses (gains) on derivatives

11,652

(23,664

)

(2,965

)

—

(14,977

)

CMA Differential Roll net losses (gains)

—

67,738

—

—

67,738

Inventory valuation adjustment

—

—

8,409

—

8,409

Lower of cost or net realizable value adjustments

—

2,235

8,627

—

10,862

Loss (gain) on disposal or impairment of assets, net

25,598

(3,101

)

71,807

(50

)

94,254

Equity-based compensation expense

—

—

—

(1,052

)

(1,052

)

Acquisition expense

4

—

—

63

67

Other income, net

718

353

711

472

2,254

Adjusted EBITDA attributable to unconsolidated entities

2,363

—

14

(145

)

2,232

Adjusted EBITDA attributable to noncontrolling interest

(2,212

)

—

(528

)

—

(2,740

)

Revaluation of liabilities

(6,495

)

—

—

—

(6,495

)

Other

921

9,064

(65

)

—

9,920

Adjusted EBITDA

$

341,958

$

146,147

$

96,564

$

(42,153

)

$

542,516

OPERATIONAL DATA

(Unaudited)

Three Months Ended

Year Ended

March 31,

March 31,

2023

2022

2023

2022

(in thousands, except per day amounts)

Water Solutions:

Produced water processed (barrels per day)

Delaware Basin

2,169,690

1,664,140

2,042,777

1,531,830

Eagle Ford Basin

135,552

99,299

119,458

99,298

DJ Basin

147,033

142,628

150,619

142,611

Other Basins

12,555

20,091

14,483

24,179

Total

2,464,830

1,926,158

2,327,337

1,797,918

Recycled water (barrels per day)

76,056

145,944

118,847

93,487

Total (barrels per day)

2,540,886

2,072,102

2,446,184

1,891,405

Skim oil sold (barrels per day)

3,785

3,468

3,764

2,864

Crude Oil Logistics:

Crude oil sold (barrels)

6,069

8,064

25,497

31,091

Crude oil transported on owned pipelines (barrels)

6,882

6,653

27,714

28,410

Crude oil storage capacity - owned and leased (barrels) (1)

5,232

5,232

Crude oil inventory (barrels) (1)

684

1,339

Liquids Logistics:

Refined products sold (gallons)

202,154

190,661

769,151

776,797

Propane sold (gallons)

379,251

389,823

1,018,937

1,034,706

Butane sold (gallons)

130,521

160,386

539,658

588,032

Other products sold (gallons)

96,758

86,828

391,723

376,906

Natural gas liquids and refined products storage capacity - owned and leased (gallons) (1)

160,329

156,219

Refined products inventory (gallons) (1)

1,003

1,090

Propane inventory (gallons) (1)

48,379

37,719

Butane inventory (gallons) (1)

17,409

19,825

Other products inventory (gallons) (1)

12,893

18,614

____________________

(1) Information is presented as of March 31, 2023 and March 31, 2022, respectively.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230531005797/en/

Contacts

David Sullivan, 918-495-4631
Vice President - Finance
David.Sullivan@nglep.com

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