NGL Energy Partners LP Q2 FY2026 earnings call

Management Statement and Operational Highlights

• Brad Cooper noted NGL had a solid quarter with record water volumes and 30% growth in Grand Mesa volumes. Consolidated adjusted EBITDA was $167.3 million, 12% higher than prior year. Increased full-year adjusted EBITDA guidance to $650 million to $660 million. Water Solutions averaged over 3 million bpd of physical disposal volume in October. Purchased 88,506 Class D preferred units, saving $10.4 million annually. Repriced Term Loan B twice, achieving $15 million annual interest savings. Purchased 4.4 million common units in the quarter.
• Doug White highlighted Water Solutions surpassed 3 million bpd physical volumes, underwrote new growth projects for 750,000 bpd, and has 1.5 million bpd volume commitments. Has over 5 million bpd permitted injection capacity in Delaware Basin, increased pore space in Andrews County by ~1 million bpd, and received first draft permit for treated produced water discharge.
• Mike Krimbill discussed operations, contracting 500,000 bpd volume commitments, exceeding EBITDA guidance, increased fiscal 2025 adjusted EBITDA to $650-660 million, and initial fiscal 2027 adjusted EBITDA guidance of at least $700 million. Mentioned selling non-core assets to reduce leverage, redeeming Class D preferred units, and common unit repurchases as accretive to common unitholders.

Segment Performance

• Water Solutions: Second quarter adjusted EBITDA was $151.9 million, an 18% increase from the prior year. Physical water disposal volumes were 2.8 million barrels per day (bpd) vs. 2.68 million bpd prior year, a 4% increase. Total volumes paid to dispose were 3.15 million bpd vs. 2.77 million bpd prior year, up ~14%. Driven by higher disposal revenues, LEX II pipeline commencement, and skim oil revenue growth. Operating expenses were $0.22 per barrel, in line with previous quarters.
• Crude Oil Logistics: Adjusted EBITDA was $16.6 million in the second quarter of fiscal 2026. Grand Mesa pipeline physical volumes averaged ~72,000 bpd during the quarter, up 30% from the prior fiscal quarter, with October volumes over 80,000 bpd.

Guidance

• Increased full-year adjusted EBITDA guidance from $615 million to $625 million to $650 million to $660 million.
• Project zero ABL balance and approximately 4x leverage at the end of the fiscal year.
• Initial fiscal 2027 adjusted EBITDA guidance of at least $700 million.

Risks

• No specific risks detailed in the transcript beyond general cautionary language about forward-looking statements being subject to assumptions, risks, and uncertainties that could cause actual results to differ.

Question and Answer

Q: Gave color on macro/micro events leading to customer acquisition growth, specifically regarding Aris being acquired by WES.

A: Doug White responded that growth is seen in base customer mix, with larger producers showing greater commitment to growth due to basin infrastructure maturation and economic efficiencies.

Q: Shifted to pore space, asked about capital required to access 4 million barrels in Andrews County.

A: Doug White said projects to access pore space range $50 million to $150 million, paced over several years, with secured pore space unburdened by seismicity, existing injection, etc.

Q: Asked about growth capital for SWD wells.

A: Doug White mentioned 35-45 legacy permits, drilling 15-20 new SWDs this fiscal year