NGL Energy Partners LP Announces Third Quarter Fiscal 2022 Financial Results

NGL Energy Partners LP (NYSE:NGL) (“NGL,” “our,” “we,” or the “Partnership”) today reported its third quarter Fiscal 2022 results. Highlights for the quarter include:

  • Loss from continuing operations for the third quarter of Fiscal 2022 of $19.0 million, compared to a loss from continuing operations of $380.4 million for the third quarter of Fiscal 2021, primarily a result of a $383.6 million write down of goodwill and certain intangibles related to the impact of the bankruptcy rejection of transportation contracts with Extraction Oil & Gas, Inc. (“Extraction”). Excluding losses on the disposal or impairment of assets, loss from continuing operations for the third quarter of Fiscal 2022 was $6.7 million, compared to a loss from continuing operations of $6.6 million for the third quarter of Fiscal 2021
  • Adjusted EBITDA1 from continuing operations for the third quarter of Fiscal 2022 of $147.7 million, compared to $125.0 million for the third quarter of Fiscal 2021
  • Produced water volumes processed increased approximately 30% versus the same period in the prior year, with volumes growing 4.5% versus the preceding quarter
  • Announced collaboration with XRI Holdings, LLC (“XRI”) to advance full cycle produced water management across operations in the Delaware Basin and to support increasing demand for sustainable use of produced water in completion activities
  • Updated guidance for Fiscal 2022 Adjusted EBITDA to $550 million - $560 million and expected full year capital expenditures to $125 million -$130 million, net of anticipated reimbursements from insurance claims2

“We continue to see growth in our Water Solutions segment due to increased customer activities as well as additional agreements negotiated with producer customers. Additionally, the collaboration we previously announced with XRI will allow us to service produced water reuse and recycle demand in the Delaware Basin while focusing on environmentally-friendly solutions for our customers” stated Mike Krimbill, NGL’s CEO. “While warmer than normal weather and commodity price movements affected our wholesale propane and crude oil logistics businesses, our butane and refined products businesses performed quite well. Looking towards our fourth fiscal quarter, we continue to see produced water volumes increasing, winter weather has finally arrived and crude oil prices have increased, which will benefit us going forward” 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 See the “Forward-Looking Statements” section of this release for more information.

Quarterly Results of Operations

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

 

 

Quarter Ended

 

 

December 31, 2021

 

December 31, 2020

 

 

Operating

Income (Loss)

 

Adjusted

EBITDA

 

Operating

Income (Loss)

 

Adjusted

EBITDA

 

 

(in thousands)

Water Solutions

 

$

19,851

 

 

$

82,744

 

 

$

15,821

 

 

$

65,554

 

Crude Oil Logistics

 

 

21,291

 

 

 

29,764

 

 

 

(382,192

)

 

 

26,332

 

Liquids Logistics

 

 

23,158

 

 

 

47,979

 

 

 

32,438

 

 

 

41,824

 

Corporate and Other

 

 

(15,190

)

 

 

(12,747

)

 

 

(12,374

)

 

 

(8,670

)

Total

 

$

49,110

 

 

$

147,740

 

 

$

(346,307

)

 

$

125,040

 

Water Solutions

Operating income for the Water Solutions segment increased $4.0 million for the quarter ended December 31, 2021, compared to the quarter ended December 31, 2020. The Partnership processed approximately 1.84 million barrels of water per day during the quarter ended December 31, 2021, a 30.3% increase when compared to approximately 1.41 million barrels of water per day processed during the quarter ended December 31, 2020, due to higher production volumes primarily in the Delaware Basin driven by the recovery in crude oil prices from the prior year.

Revenues from recovered crude oil, including the impact from realized skim oil hedges, totaled $19.5 million for the quarter ended December 31, 2021, an increase of $8.2 million from the prior year period. This increase was due to increased skim oil barrels sold due to higher produced water volumes processed and higher realized crude oil prices.

Operating expenses in the Water Solutions segment decreased to $0.26 per barrel compared to $0.27 per barrel in the comparative quarter last year primarily due to continued efforts to reduce operating costs per barrel along with higher produced water volumes processed.

Crude Oil Logistics

Operating income for the third quarter of Fiscal 2022 increased compared to the third quarter of Fiscal 2021 primarily due to an impairment charge of $383.6 million in the prior year related to the write down of goodwill of the Extraction transportation agreement (as part of its bankruptcy). Excluding impairments, operating income increased $22.5 million due primarily to increased margins, excluding the impact of derivatives. Our margins continue to benefit from high crude oil prices, which increase the contracted rates with certain producers.

During the three months ended December 31, 2021, financial volumes on the Grand Mesa Pipeline averaged approximately 83,000 barrels per day, compared to approximately 69,000 barrels per day for the three months ended December 31, 2020. This increase was due primarily to the new supply agreement signed with Extraction (now known as Civitas Resources, Inc.) after they exited bankruptcy.

Liquids Logistics

Operating income for the Liquids Logistics segment decreased $9.3 million for the quarter ended December 31, 2021, compared to the quarter ended December 31, 2020. This decrease is mainly related to lower product margins on propane due to reduced demand and falling prices during the last two months of the current quarter, lower service revenues and higher compensation expenses. The decrease was offset by higher product margins for butane and refined products as a result of tighter supply markets for butane, extended refinery downtime in certain refined products markets and favorable supply contracts.

Propane volumes decreased by approximately 87.3 million gallons, or 22.9%, compared to the quarter ended December 31, 2020, as demand decreased due to the unseasonably warm weather. Butane volumes decreased by approximately 32.5 million gallons, or 15.3%, compared to the quarter ended December 31, 2020, due to the tight supply market and an increase in demand for exports.

Corporate and Other

Corporate and Other expenses increased from the comparable prior year period primarily due to increased incentive compensation and outside consulting fees, which were offset by lower legal expenses.

Capitalization and Liquidity

Total liquidity (cash plus available capacity on our asset-based revolving credit facility) was approximately $182.5 million as of December 31, 2021. Borrowings on the Partnership’s revolving credit facility totaled approximately $156.0 million. The balance increase from March 31, 2021 was primarily due to increases in working capital balances driven by increased inventory volumes and higher commodity prices.

The Partnership is in compliance with all of its debt covenants and has no significant debt maturities before November 2023. The Partnership expects to generate operational free cash flow in Fiscal Year 2022, which will be utilized to repay outstanding indebtedness and improve leverage.

Third Quarter Conference Call Information

A conference call to discuss NGL’s results of operations is scheduled for 4:00 pm Central Time on Wednesday, February 9, 2022. Analysts, investors, and other interested parties may join the webcast via the event link: https://www.webcaster4.com/Webcast/Page/2808/44432 or by dialing (888) 506-0062 and providing access code: 294091. 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 44432.

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 TransMontaigne Product Services, LLC (“TPSL”), our refined products business in the mid-continent region of the United States (“Mid-Con”) and our gas blending business in the southeastern and eastern regions of the United States (“Gas Blending”), which are included in discontinued operations, and certain refined products businesses within NGL’s Liquids Logistics segment, as discussed below. EBITDA and Adjusted EBITDA should not be considered as alternatives to net loss, loss from continuing operations 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, adjusted for the impact of seasonal market movements related to our base inventory and the related hedge. 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 NGL is 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.

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 Condensed Consolidated Balance Sheets

(in Thousands, except unit amounts)

 

 

December 31, 2021

 

March 31, 2021

ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

5,456

 

 

$

4,829

 

Accounts receivable-trade, net of allowance for expected credit losses of $2,227 and $2,192, respectively

 

1,042,641

 

 

 

725,943

 

Accounts receivable-affiliates

 

8,824

 

 

 

9,435

 

Inventories

 

333,923

 

 

 

158,467

 

Prepaid expenses and other current assets

 

131,696

 

 

 

109,164

 

Total current assets

 

1,522,540

 

 

 

1,007,838

 

PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $887,840 and $776,279, respectively

 

2,483,876

 

 

 

2,706,853

 

GOODWILL

 

744,439

 

 

 

744,439

 

INTANGIBLE ASSETS, net of accumulated amortization of $546,221 and $517,518, respectively

 

1,152,198

 

 

 

1,262,613

 

INVESTMENTS IN UNCONSOLIDATED ENTITIES

 

21,263

 

 

 

22,719

 

OPERATING LEASE RIGHT-OF-USE ASSETS

 

122,976

 

 

 

152,146

 

OTHER NONCURRENT ASSETS

 

47,479

 

 

 

50,733

 

Total assets

$

6,094,771

 

 

$

5,947,341

 

LIABILITIES AND EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Accounts payable-trade

$

973,471

 

 

$

679,868

 

Accounts payable-affiliates

 

260

 

 

 

119

 

Accrued expenses and other payables

 

165,031

 

 

 

170,400

 

Advance payments received from customers

 

16,240

 

 

 

11,163

 

Current maturities of long-term debt

 

2,328

 

 

 

2,183

 

Operating lease obligations

 

43,822

 

 

 

47,070

 

Total current liabilities

 

1,201,152

 

 

 

910,803

 

LONG-TERM DEBT, net of debt issuance costs of $46,156 and $55,555, respectively, and current maturities

 

3,411,757

 

 

 

3,319,030

 

OPERATING LEASE OBLIGATIONS

 

78,628

 

 

 

103,637

 

OTHER NONCURRENT LIABILITIES

 

108,422

 

 

 

114,615

 

 

 

 

 

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, 130,114 and 129,724 notional units, respectively

 

(52,422

)

 

 

(52,189

)

Limited partners, representing a 99.9% interest, 129,984,138 and 129,593,939 common units issued and outstanding, respectively

 

430,358

 

 

 

582,784

 

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

 

(314

)

 

 

(266

)

Noncontrolling interests

 

17,734

 

 

 

69,471

 

Total equity

 

743,715

 

 

 

948,159

 

Total liabilities and equity

$

6,094,771

 

 

$

5,947,341

 

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

(in Thousands, except unit and per unit amounts)

 

 

 

Three Months Ended December 31,

 

Nine Months Ended December 31,

 

 

2021

 

2020

 

2021

 

2020

REVENUES:

 

 

 

 

 

 

 

 

Water Solutions

 

$

130,653

 

 

$

98,925

 

 

$

397,089

 

 

$

275,668

 

Crude Oil Logistics

 

 

607,203

 

 

 

485,289

 

 

 

1,715,657

 

 

 

1,228,169

 

Liquids Logistics

 

 

1,434,020

 

 

 

877,491

 

 

 

3,301,922

 

 

 

1,969,813

 

Other

 

 

 

 

 

314

 

 

 

 

 

 

942

 

Total Revenues

 

 

2,171,876

 

 

 

1,462,019

 

 

 

5,414,668

 

 

 

3,474,592

 

COST OF SALES:

 

 

 

 

 

 

 

 

Water Solutions

 

 

5,030

 

 

 

3,280

 

 

 

21,791

 

 

 

8,559

 

Crude Oil Logistics

 

 

556,531

 

 

 

448,933

 

 

 

1,591,877

 

 

 

1,053,261

 

Liquids Logistics

 

 

1,388,760

 

 

 

826,211

 

 

 

3,187,039

 

 

 

1,857,633

 

Other

 

 

 

 

 

455

 

 

 

 

 

 

1,363

 

Total Cost of Sales

 

 

1,950,321

 

 

 

1,278,879

 

 

 

4,800,707

 

 

 

2,920,816

 

OPERATING COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

Operating

 

 

72,807

 

 

 

61,427

 

 

 

207,610

 

 

 

182,468

 

General and administrative

 

 

18,925

 

 

 

16,044

 

 

 

46,149

 

 

 

50,677

 

Depreciation and amortization

 

 

68,480

 

 

 

78,200

 

 

 

222,145

 

 

 

249,655

 

Loss on disposal or impairment of assets, net

 

 

12,233

 

 

 

373,776

 

 

 

93,463

 

 

 

391,752

 

Operating Income (Loss)

 

 

49,110

 

 

 

(346,307

)

 

 

44,594

 

 

 

(320,776

)

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated entities

 

 

119

 

 

 

344

 

 

 

765

 

 

 

1,134

 

Interest expense

 

 

(68,379

)

 

 

(47,252

)

 

 

(204,004

)

 

 

(138,148

)

Gain on early extinguishment of liabilities, net

 

 

9

 

 

 

11,190

 

 

 

1,131

 

 

 

44,292

 

Other income, net

 

 

24

 

 

 

440

 

 

 

2,003

 

 

 

3,060

 

Loss From Continuing Operations Before Income Taxes

 

 

(19,117

)

 

 

(381,585

)

 

 

(155,511

)

 

 

(410,438

)

INCOME TAX BENEFIT

 

 

135

 

 

 

1,162

 

 

 

820

 

 

 

2,237

 

Loss From Continuing Operations

 

 

(18,982

)

 

 

(380,423

)

 

 

(154,691

)

 

 

(408,201

)

Loss From Discontinued Operations, net of Tax

 

 

 

 

 

(107

)

 

 

 

 

 

(1,746

)

Net Loss

 

 

(18,982

)

 

 

(380,530

)

 

 

(154,691

)

 

 

(409,947

)

LESS: NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS

 

 

63

 

 

 

34

 

 

 

(705

)

 

 

(185

)

NET LOSS ATTRIBUTABLE TO NGL ENERGY PARTNERS LP

 

$

(18,919

)

 

$

(380,496

)

 

$

(155,396

)

 

$

(410,132

)

NET LOSS FROM CONTINUING OPERATIONS ALLOCATED TO COMMON UNITHOLDERS

 

$

(45,233

)

 

$

(403,755

)

 

$

(232,361

)

 

$

(477,503

)

NET LOSS FROM DISCONTINUED OPERATIONS ALLOCATED TO COMMON UNITHOLDERS

 

$

 

 

$

(107

)

 

$

 

 

$

(1,744

)

NET LOSS ALLOCATED TO COMMON UNITHOLDERS

 

$

(45,233

)

 

$

(403,862

)

 

$

(232,361

)

 

$

(479,247

)

BASIC LOSS PER COMMON UNIT

 

 

 

 

 

 

 

 

Loss From Continuing Operations

 

$

(0.35

)

 

$

(3.13

)

 

$

(1.79

)

 

$

(3.71

)

Loss From Discontinued Operations, net of Tax

 

$

 

 

$

 

 

$

 

 

$

(0.01

)

Net Loss

 

$

(0.35

)

 

$

(3.13

)

 

$

(1.79

)

 

$

(3.72

)

DILUTED LOSS PER COMMON UNIT

 

 

 

 

 

 

 

 

Loss From Continuing Operations

 

$

(0.35

)

 

$

(3.13

)

 

$

(1.79

)

 

$

(3.71

)

Loss From Discontinued Operations, net of Tax

 

$

 

 

$

 

 

$

 

 

$

(0.01

)

Net Loss

 

$

(0.35

)

 

$

(3.13

)

 

$

(1.79

)

 

$

(3.72

)

BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING

 

 

129,810,245

 

 

 

128,991,414

 

 

 

129,666,303

 

 

 

128,845,214

 

DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING

 

 

129,810,245

 

 

 

128,991,414

 

 

 

129,666,303

 

 

 

128,845,214

 

EBITDA, ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW RECONCILIATION

(Unaudited)

The following table reconciles NGL’s net loss to NGL’s EBITDA, Adjusted EBITDA and Distributable Cash Flow:

 

 

 

Three Months Ended December 31,

 

Nine Months Ended December 31,

 

 

2021

 

2020

 

2021

 

2020

 

 

(in thousands)

Net loss

 

$

(18,982

)

 

$

(380,530

)

 

$

(154,691

)

 

$

(409,947

)

Less: Net loss (income) attributable to noncontrolling interests

 

 

63

 

 

 

34

 

 

 

(705

)

 

 

(185

)

Net loss attributable to NGL Energy Partners LP

 

 

(18,919

)

 

 

(380,496

)

 

 

(155,396

)

 

 

(410,132

)

Interest expense

 

 

68,395

 

 

 

47,253

 

 

 

204,037

 

 

 

138,159

 

Income tax benefit

 

 

(135

)

 

 

(1,163

)

 

 

(820

)

 

 

(2,291

)

Depreciation and amortization

 

 

68,452

 

 

 

77,531

 

 

 

221,352

 

 

 

247,555

 

EBITDA

 

 

117,793

 

 

 

(256,875

)

 

 

269,173

 

 

 

(26,709

)

Net unrealized (gains) losses on derivatives

 

 

(13,500

)

 

 

16,529

 

 

 

(48,254

)

 

 

47,657

 

CMA Differential Roll net losses (gains) (1)

 

 

23,872

 

 

 

 

 

 

60,987

 

 

 

 

Inventory valuation adjustment (2)

 

 

1,145

 

 

 

(786

)

 

 

1,912

 

 

 

1,393

 

Lower of cost or net realizable value adjustments

 

 

2,921

 

 

 

321

 

 

 

2,636

 

 

 

(33,213

)

Loss on disposal or impairment of assets, net

 

 

12,035

 

 

 

373,777

 

 

 

93,268

 

 

 

392,924

 

Gain on early extinguishment of liabilities, net

 

 

(9

)

 

 

(11,190

)

 

 

(1,168

)

 

 

(44,292

)

Equity-based compensation expense (3)

 

 

749

 

 

 

1,120

 

 

 

(1,044

)

 

 

5,678

 

Acquisition expense (4)

 

 

(36

)

 

 

589

 

 

 

67

 

 

 

915

 

Other (5)

 

 

2,770

 

 

 

1,448

 

 

 

7,525

 

 

 

9,049

 

Adjusted EBITDA

 

$

147,740

 

 

$

124,933

 

 

$

385,102

 

 

$

353,402

 

Adjusted EBITDA - Discontinued Operations (6)

 

$

 

 

$

(107

)

 

$

 

 

$

(591

)

Adjusted EBITDA - Continuing Operations

 

$

147,740

 

 

$

125,040

 

 

$

385,102

 

 

$

353,993

 

Less: Cash interest expense (7)

 

 

64,049

 

 

 

43,993

 

 

 

191,137

 

 

 

127,960

 

Less: Income tax benefit

 

 

(135

)

 

 

(1,162

)

 

 

(820

)

 

 

(2,237

)

Less: Maintenance capital expenditures

 

 

13,330

 

 

 

6,269

 

 

 

38,054

 

 

 

22,267

 

Less: CMA Differential Roll (8)

 

 

15,354

 

 

 

 

 

 

49,254

 

 

 

 

Less: Preferred unit distributions paid

 

 

 

 

 

23,770

 

 

 

 

 

 

53,908

 

Less: Other (9)

 

 

 

 

 

9

 

 

 

 

 

 

9

 

Distributable Cash Flow - Continuing Operations

 

$

55,142

 

 

$

52,161

 

 

$

107,477

 

 

$

152,086

 

_____________________

(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)

Amount reflects the difference between the market value of the inventory at the balance sheet date and its cost, adjusted for the impact of seasonal market movements related to our base inventory and the related hedge. See “Non-GAAP Financial Measures” section above for a further discussion.

(3)

Equity-based compensation expense in the table above may differ from equity-based compensation expense reported in the footnotes to our unaudited condensed consolidated financial statements included in the Partnership’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2021. Amounts reported in the table above include expense accruals for bonuses expected to be paid in common units, whereas the amounts reported in the footnotes to our unaudited condensed consolidated financial statements only include expenses associated with equity-based awards that have been formally granted.

(4)

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

(5)

Amounts for the three months and nine months ended December 31, 2021 and 2020 represent non-cash operating expenses related to our Grand Mesa Pipeline, unrealized losses on marketable securities and accretion expense for asset retirement obligations.

(6)

Amounts include the operations of TPSL, Gas Blending and Mid-Con.

(7)

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

(8)

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

(9)

Amounts represents cash paid to settle asset retirement obligations.

ADJUSTED EBITDA RECONCILIATION BY SEGMENT

 

 

Three Months Ended December 31, 2021

 

Water

Solutions

 

Crude Oil

Logistics

 

Liquids

Logistics

 

Corporate

and Other

 

Consolidated

 

(in thousands)

Operating income (loss)

$

19,851

 

 

$

21,291

 

 

$

23,158

 

 

$

(15,190

)

 

$

49,110

 

Depreciation and amortization

 

50,815

 

 

 

12,166

 

 

 

3,756

 

 

 

1,743

 

 

 

68,480

 

Amortization recorded to cost of sales

 

 

 

 

 

 

 

69

 

 

 

 

 

 

69

 

Net unrealized losses (gains) on derivatives

 

1,758

 

 

 

(32,201

)

 

 

16,943

 

 

 

 

 

 

(13,500

)

CMA Differential Roll net losses (gains)

 

 

 

 

23,872

 

 

 

 

 

 

 

 

 

23,872

 

Inventory valuation adjustment

 

 

 

 

 

 

 

1,145

 

 

 

 

 

 

1,145

 

Lower of cost or net realizable value adjustments

 

 

 

 

 

 

 

2,921

 

 

 

 

 

 

2,921

 

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

 

9,997

 

 

 

2,262

 

 

 

(26

)

 

 

 

 

 

12,233

 

Equity-based compensation expense

 

 

 

 

 

 

 

 

 

 

749

 

 

 

749

 

Acquisition expense

 

4

 

 

 

 

 

 

 

 

 

(40

)

 

 

(36

)

Other (expense) income, net

 

(6

)

 

 

 

 

 

(31

)

 

 

61

 

 

 

24

 

Adjusted EBITDA attributable to unconsolidated entities

 

384

 

 

 

 

 

 

10

 

 

 

(70

)

 

 

324

 

Adjusted EBITDA attributable to noncontrolling interest

 

(419

)

 

 

 

 

 

(3

)

 

 

 

 

 

(422

)

Other

 

360

 

 

 

2,374

 

 

 

37

 

 

 

 

 

 

2,771

 

Adjusted EBITDA

$

82,744

 

 

$

29,764

 

 

$

47,979

 

 

$

(12,747

)

 

$

147,740

 

 

Three Months Ended December 31, 2020

 

Water

Solutions

 

Crude Oil

Logistics

 

Liquids

Logistics

 

Corporate

and Other

 

Continuing

Operations

 

Discontinued

Operations

(TPSL, Mid-Con,

Gas Blending)

 

Consolidated

 

(in thousands)

Operating income (loss)

$

15,821

 

 

$

(382,192

)

 

$

32,438

 

 

$

(12,374

)

 

$

(346,307

)

 

$

 

 

$

(346,307

)

Depreciation and amortization

 

53,327

 

 

 

16,513

 

 

 

6,976

 

 

 

1,384

 

 

 

78,200

 

 

 

 

 

 

78,200

 

Amortization recorded to cost of sales

 

 

 

 

 

 

 

77

 

 

 

 

 

 

77

 

 

 

 

 

 

77

 

Net unrealized losses on derivatives

 

5,800

 

 

 

7,878

 

 

 

2,851

 

 

 

 

 

 

16,529

 

 

 

 

 

 

16,529

 

Inventory valuation adjustment

 

 

 

 

 

 

 

(802

)

 

 

 

 

 

(802

)

 

 

 

 

 

(802

)

Lower of cost or net realizable value adjustments

 

 

 

 

(166

)

 

 

502

 

 

 

 

 

 

336

 

 

 

 

 

 

336

 

(Gain) loss on disposal or impairment of assets, net

 

(9,967

)

 

 

383,251

 

 

 

(43

)

 

 

535

 

 

 

373,776

 

 

 

 

 

 

373,776

 

Equity-based compensation expense

 

 

 

 

 

 

 

 

 

 

1,120

 

 

 

1,120

 

 

 

 

 

 

1,120

 

Acquisition expense

 

4

 

 

 

 

 

 

 

 

 

585

 

 

 

589

 

 

 

 

 

 

589

 

Other income, net

 

1

 

 

 

2

 

 

 

341

 

 

 

96

 

 

 

440

 

 

 

 

 

 

440

 

Adjusted EBITDA attributable to unconsolidated entities

 

573

 

 

 

 

 

 

3

 

 

 

(16

)

 

 

560

 

 

 

 

 

 

560

 

Adjusted EBITDA attributable to noncontrolling interest

 

(389

)

 

 

 

 

 

(544

)

 

 

 

 

 

(933

)

 

 

 

 

 

(933

)

Other

 

384

 

 

 

1,046

 

 

 

25

 

 

 

 

 

 

1,455

 

 

 

 

 

 

1,455

 

Discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(107

)

 

 

(107

)

Adjusted EBITDA

$

65,554

 

 

$

26,332

 

 

$

41,824

 

 

$

(8,670

)

 

$

125,040

 

 

$

(107

)

 

$

124,933

 

 

Nine Months Ended December 31, 2021

 

Water

Solutions

 

Crude Oil

Logistics

 

Liquids

Logistics

 

Corporate

and Other

 

Consolidated

 

(in thousands)

Operating income (loss)

$

60,206

 

 

$

37,941

 

 

$

(18,790

)

 

$

(34,763

)

 

$

44,594

 

Depreciation and amortization

 

164,466

 

 

 

37,029

 

 

 

15,409

 

 

 

5,241

 

 

 

222,145

 

Amortization recorded to cost of sales

 

 

 

 

 

 

 

213

 

 

 

 

 

 

213

 

Net unrealized losses (gains) on derivatives

 

6,845

 

 

 

(53,808

)

 

 

(1,291

)

 

 

 

 

 

(48,254

)

CMA Differential Roll net losses (gains)

 

 

 

 

60,987

 

 

 

 

 

 

 

 

 

60,987

 

Inventory valuation adjustment

 

 

 

 

 

 

 

1,912

 

 

 

 

 

 

1,912

 

Lower of cost or net realizable value adjustments

 

 

 

 

(11

)

 

 

2,647

 

 

 

 

 

 

2,636

 

Loss on disposal or impairment of assets, net

 

19,450

 

 

 

2,206

 

 

 

71,807

 

 

 

 

 

 

93,463

 

Equity-based compensation expense

 

 

 

 

 

 

 

 

 

 

(1,044

)

 

 

(1,044

)

Acquisition expense

 

4

 

 

 

 

 

 

 

 

 

63

 

 

 

67

 

Other income, net

 

616

 

 

 

350

 

 

 

627

 

 

 

410

 

 

 

2,003

 

Adjusted EBITDA attributable to unconsolidated entities

 

1,559

 

 

 

 

 

 

(9

)

 

 

(190

)

 

 

1,360

 

Adjusted EBITDA attributable to noncontrolling interest

 

(1,987

)

 

 

 

 

 

(529

)

 

 

 

 

 

(2,516

)

Other

 

520

 

 

 

6,994

 

 

 

22

 

 

 

 

 

 

7,536

 

Adjusted EBITDA

$

251,679

 

 

$

91,688

 

 

$

72,018

 

 

$

(30,283

)

 

$

385,102

 

 

Nine Months Ended December 31, 2020

 

Water

Solutions

 

Crude Oil

Logistics

 

Liquids

Logistics

 

Corporate

and Other

 

Continuing

Operations

 

Discontinued

Operations

(TPSL, Mid-Con,

Gas Blending)

 

Consolidated

 

(in thousands)

Operating (loss) income

$

(13,503

)

 

$

(310,633

)

 

$

51,338

 

 

$

(47,978

)

 

$

(320,776

)

 

$

 

 

$

(320,776

)

Depreciation and amortization

 

173,680

 

 

 

50,540

 

 

 

22,158

 

 

 

3,277

 

 

 

249,655

 

 

 

 

 

 

249,655

 

Amortization recorded to cost of sales

 

 

 

 

 

 

 

230

 

 

 

 

 

 

230

 

 

 

 

 

 

230

 

Net unrealized losses on derivatives

 

23,525

 

 

 

19,199

 

 

 

4,933

 

 

 

 

 

 

47,657

 

 

 

 

 

 

47,657

 

Inventory valuation adjustment

 

 

 

 

 

 

 

1,399

 

 

 

 

 

 

1,399

 

 

 

 

 

 

1,399

 

Lower of cost or net realizable value adjustments

 

 

 

 

(29,245

)

 

 

(3,974

)

 

 

 

 

 

(33,219

)

 

 

 

 

 

(33,219

)

(Gain) loss on disposal or impairment of assets, net

 

(3,415

)

 

 

384,391

 

 

 

4

 

 

 

10,772

 

 

 

391,752

 

 

 

 

 

 

391,752

 

Equity-based compensation expense

 

 

 

 

 

 

 

 

 

 

5,678

 

 

 

5,678

 

 

 

 

 

 

5,678

 

Acquisition expense

 

17

 

 

 

 

 

 

 

 

 

898

 

 

 

915

 

 

 

 

 

 

915

 

Other income, net

 

259

 

 

 

1,515

 

 

 

1,004

 

 

 

282

 

 

 

3,060

 

 

 

 

 

 

3,060

 

Adjusted EBITDA attributable to unconsolidated entities

 

1,883

 

 

 

 

 

 

(11

)

 

 

(143

)

 

 

1,729

 

 

 

 

 

 

1,729

 

Adjusted EBITDA attributable to noncontrolling interest

 

(1,317

)

 

 

 

 

 

(1,816

)

 

 

 

 

 

(3,133

)

 

 

 

 

 

(3,133

)

Intersegment transactions (1)

 

 

 

 

 

 

 

(27

)

 

 

 

 

 

(27

)

 

 

 

 

 

(27

)

Other

 

2,398

 

 

 

6,600

 

 

 

75

 

 

 

 

 

 

9,073

 

 

 

 

 

 

9,073

 

Discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(591

)

 

 

(591

)

Adjusted EBITDA

$

183,527

 

 

$

122,367

 

 

$

75,313

 

 

$

(27,214

)

 

$

353,993

 

 

$

(591

)

 

$

353,402

 

_____________________

(1)

Amount reflects the transactions with TPSL, Mid-Con and Gas Blending that are eliminated in consolidation.

OPERATIONAL DATA

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

December 31,

 

December 31,

 

2021

 

2020

 

2021

 

2020

 

(in thousands, except per day amounts)

Water Solutions:

 

 

 

 

 

 

 

Produced water processed (barrels per day)

 

 

 

 

 

 

 

Delaware Basin

1,551,621

 

1,216,096

 

1,488,529

 

1,127,679

Eagle Ford Basin

110,243

 

72,951

 

99,298

 

83,151

DJ Basin

159,332

 

96,383

 

142,606

 

114,256

Other Basins

18,351

 

26,532

 

25,516

 

28,359

Total

1,839,547

 

1,411,962

 

1,755,949

 

1,353,445

Recycled water (barrels per day)

52,854

 

95,903

 

76,319

 

43,008

Total Produced Water Processed and/or Sold (barrels per day)

1,892,401

 

1,507,865

 

1,832,268

 

1,396,453

Skim oil sold (barrels per day)

2,678

 

2,004

 

2,667

 

1,771

 

 

 

 

 

 

 

 

Crude Oil Logistics:

 

 

 

 

 

 

 

Crude oil sold (barrels)

7,515

 

10,733

 

23,027

 

30,203

Crude oil transported on owned pipelines (barrels)

7,590

 

6,368

 

21,961

 

26,836

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

 

 

 

 

5,232

 

5,239

Crude oil inventory (barrels) (1)

 

 

 

 

1,295

 

1,019

 

 

 

 

 

 

 

 

Liquids Logistics:

 

 

 

 

 

 

 

Refined products sold (gallons)

203,898

 

214,132

 

586,136

 

646,349

Propane sold (gallons)

294,282

 

381,590

 

644,883

 

886,572

Butane sold (gallons)

180,191

 

212,697

 

427,646

 

475,655

Other products sold (gallons)

99,915

 

122,645

 

290,078

 

351,591

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

 

 

 

 

168,189

 

426,962

Refined products inventory (gallons) (1)

 

 

 

 

1,314

 

1,190

Propane inventory (gallons) (1)

 

 

 

 

125,235

 

128,568

Butane inventory (gallons) (1)

 

 

 

 

45,129

 

31,847

Other products inventory (gallons) (1)

 

 

 

 

23,491

 

21,326

_____________________

(1)

Information is presented as of December 31, 2021 and December 31, 2020, respectively.

 

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