Le Lézard
Classified in: Business
Subjects: EARNINGS, Conference Call, Webcast

NGL Energy Partners LP Announces Second Quarter Fiscal 2023 Financial Results


NGL Energy Partners LP (NYSE:NGL) ("NGL," "our," "we," or the "Partnership") today reported its second quarter Fiscal 2023 financial results. Highlights include:

"Our Water Solutions segment continues to see strong disposal volume growth, achieving record water volumes processed in the quarter. Our refined products and biodiesel businesses in our Liquids Logistics segment have outperformed as well, benefiting from higher margins due to tighter supplies, and our Crude Oil Logistics segment is reporting strong physical margins, offsetting headwinds of lower volumes out of the DJ Basin. Our seasonal butane and propane segments are positioned to benefit from the refinery blending season and winter weather with both of these businesses generating the majority of their Adjusted EBITDA(2) and free cash flow(2) in the second half of the fiscal year. We are reaffirming guidance for Adjusted EBITDA(2) in excess of $600 million for the Partnership and over $410 million for our Water Solutions segment for Fiscal 2023, and are adjusting our capital expenditure guidance to a range of $105 million - $115 million," stated Mike Krimbill, NGL's CEO. "Our primary focus remains repaying the 2023 unsecured notes and driving leverage to below 4.75 times," 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) 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) from continuing operations by reportable segment for the periods indicated:

 

 

Quarter Ended

 

 

September 30, 2022

 

September 30, 2021

 

 

Operating
Income (Loss)

 

Adjusted
EBITDA(1)

 

Operating
Income (Loss)

 

Adjusted
EBITDA(1)

 

 

(in thousands)

Water Solutions

 

$

47,128

 

 

$

104,774

 

 

$

32,772

 

 

$

87,424

 

Crude Oil Logistics

 

 

32,927

 

 

 

32,863

 

 

 

28,231

 

 

 

48,776

 

Liquids Logistics

 

 

1,653

 

 

 

16,513

 

 

 

11,461

 

 

 

18,465

 

Corporate and Other

 

 

(12,938

)

 

 

(11,908

)

 

 

(7,646

)

 

 

(8,404

)

Total

 

$

68,770

 

 

$

142,242

 

 

$

64,818

 

 

$

146,261

 

Water Solutions

Operating income for the Water Solutions segment increased $14.4 million for the quarter ended September 30, 2022, compared to the quarter ended September 30, 2021. The Partnership processed approximately 2.27 million barrels of produced water per day during the quarter ended September 30, 2022, a 28.7% increase when compared to approximately 1.76 million barrels of water per day processed during the quarter ended September 30, 2021. This increase was due to higher production volumes (and associated produced water) primarily in the Delaware Basin driven by higher crude oil prices and completion activity. Service fees for produced water processed ($/barrel) benefited from payments made by certain producers for committed volumes not delivered. The Partnership also sold approximately 94,000 barrels per day of produced and recycled water for use in our customers' completion activities.

Revenues from recovered crude oil, including the impact from realized skim oil hedges, totaled $24.2 million for the quarter ended September 30, 2022, an increase of $4.9 million from the prior year period. This increase was due to increased skim oil barrels sold as a result of higher produced water volumes processed and higher realized crude oil prices received from the sale of skim oil barrels. This was offset by lower skim oil volumes per barrel of produced water processed.

Operating expenses in the Water Solutions segment increased to $0.27 per produced barrel processed compared to $0.26 per produced barrel processed in the comparative quarter last year primarily due to higher repairs and maintenance expense due to the timing of repairs and the operation of temporary booster stations. 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 quarter ended September 30, 2022 increased $4.7 million compared to the quarter ended September 30, 2021, primarily due to higher commodity prices compared to the prior year and an increase in net derivative gains of $28.9 million, partially offset by higher costs of sales (excluding the impact of derivatives), which was also due to higher commodity prices. Product margin decreased primarily due to the sale of higher priced inventory into a market in which prices are declining and as crude oil product margin calculations do not include gains and losses from derivatives that may offset the movement in the physical margin. This decrease was offset by higher contracted rates with certain producers as well as increased differentials on certain other sales contracts. During the three months ended September 30, 2022, physical volumes on the Grand Mesa Pipeline averaged approximately 72,000 barrels per day, compared to approximately 80,000 barrels per day for the three months ended September 30, 2021. Both contracted and non-contracted volumes decreased as overall production in the DJ Basin declined in part due to producer permitting issues.

Liquids Logistics

Operating income for the Liquids Logistics segment decreased $9.8 million for the quarter ended September 30, 2022, compared to the quarter ended September 30, 2021. Product margins (excluding the impact of derivatives) for both propane and butane declined during the current quarter as a result of decreasing market prices as the cost of sales applied to lower priced spot volumes sold were based on inventory purchased in a higher price environment. We expect margin to increase as we replace our current inventory with inventory purchased in a lower price environment and realize margin associated with our forward fixed-priced sales contracts. Additionally, we recorded net derivative losses of $0.9 million during the quarter ended September 30, 2022, compared to net derivative gains of $16.5 million during the quarter ended September 30, 2021.

These decreases in operating income were offset by increased margins for refined products, biodiesel and asphalt due to tighter supply in certain markets.

Corporate and Other

Corporate and Other expenses increased primarily due to increased incentive compensation payments and the timing of those payments compared to the prior year as well as increased equity-based compensation due to a reversal of an incentive compensation accrual during the three months ended September 30, 2021.

Capitalization and Liquidity

Total liquidity (cash plus available capacity on our asset-based revolving credit facility ("ABL Facility")) was approximately $174.7 million as of September 30, 2022. Borrowings on the Partnership's ABL Facility totaled approximately $287.0 million. The increase from March 31, 2022 was primarily due to increases in working capital balances driven by increased inventory volumes and higher net account receivable balances.

The Partnership is in compliance with all of its debt covenants and has no significant debt maturities before November 2023. The Partnership expects to be able to pay off our outstanding 2023 Notes prior to their maturity date on November 1, 2023 using free cash flow(2), and if needed, borrowings under our ABL Facility. Proceeds generated from other cash flow positive initiatives currently being pursued may also be used to repay the outstanding balance of the 2023 Notes prior to their maturity.

Second Quarter Conference Call Information

A conference call to discuss NGL's results of operations is scheduled for 4:00 pm Central Time on Wednesday, November 9, 2022. Analysts, investors, and other interested parties may join the webcast via the event link: https://www.webcaster4.com/Webcast/Page/2808/46952 or by dialing (877) 545-0523 and providing access code: 866911. 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 46952.

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 as alternatives to net income (loss), income (loss) 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 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.

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 Condensed Consolidated Balance Sheets

(in Thousands, except unit amounts)

 

 

September 30, 2022

 

March 31, 2022

ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

4,540

 

 

$

3,822

 

Accounts receivable-trade, net of allowance for expected credit losses of $2,823 and $2,626, respectively

 

1,130,760

 

 

 

1,123,163

 

Accounts receivable-affiliates

 

9,580

 

 

 

8,591

 

Inventories

 

344,719

 

 

 

251,277

 

Prepaid expenses and other current assets

 

153,265

 

 

 

159,486

 

Total current assets

 

1,642,864

 

 

 

1,546,339

 

PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $958,669 and $887,006, respectively

 

2,446,675

 

 

 

2,462,390

 

GOODWILL

 

744,439

 

 

 

744,439

 

INTANGIBLE ASSETS, net of accumulated amortization of $548,627 and $507,285, respectively

 

1,096,144

 

 

 

1,135,354

 

INVESTMENTS IN UNCONSOLIDATED ENTITIES

 

21,557

 

 

 

21,897

 

OPERATING LEASE RIGHT-OF-USE ASSETS

 

97,685

 

 

 

114,124

 

OTHER NONCURRENT ASSETS

 

64,803

 

 

 

45,802

 

Total assets

$

6,114,167

 

 

$

6,070,345

 

LIABILITIES AND EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Accounts payable-trade

$

993,748

 

 

$

1,084,837

 

Accounts payable-affiliates

 

70

 

 

 

73

 

Accrued expenses and other payables

 

150,529

 

 

 

140,719

 

Advance payments received from customers

 

25,567

 

 

 

7,934

 

Current maturities of long-term debt

 

2,482

 

 

 

2,378

 

Operating lease obligations

 

35,257

 

 

 

41,261

 

Total current liabilities

 

1,207,653

 

 

 

1,277,202

 

LONG-TERM DEBT, net of debt issuance costs of $36,783 and $42,988, respectively, and current maturities

 

3,448,431

 

 

 

3,350,463

 

OPERATING LEASE OBLIGATIONS

 

62,092

 

 

 

72,784

 

OTHER NONCURRENT LIABILITIES

 

104,133

 

 

 

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, 130,827 and 130,827 notional units, respectively

 

(52,510

)

 

 

(52,478

)

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

 

428,865

 

 

 

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

 

(440

)

 

 

(308

)

Noncontrolling interests

 

16,487

 

 

 

17,394

 

Total equity

 

740,761

 

 

 

714,453

 

Total liabilities and equity

$

6,114,167

 

 

$

6,070,345

 

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

(in Thousands, except unit and per unit amounts)

 

 

 

Three Months Ended September 30,

 

Six Months Ended September 30,

 

 

2022

 

2021

 

2022

 

2021

REVENUES:

 

 

 

 

 

 

 

 

Water Solutions

 

$

164,910

 

 

$

136,210

 

 

$

330,989

 

 

$

266,436

 

Crude Oil Logistics

 

 

574,783

 

 

 

554,830

 

 

 

1,440,154

 

 

 

1,108,454

 

Liquids Logistics

 

 

1,269,754

 

 

 

1,063,097

 

 

 

2,735,687

 

 

 

1,867,902

 

Total Revenues

 

 

2,009,447

 

 

 

1,754,137

 

 

 

4,506,830

 

 

 

3,242,792

 

COST OF SALES:

 

 

 

 

 

 

 

 

Water Solutions

 

 

920

 

 

 

6,423

 

 

 

11,145

 

 

 

16,761

 

Crude Oil Logistics

 

 

514,199

 

 

 

498,089

 

 

 

1,336,569

 

 

 

1,035,346

 

Liquids Logistics

 

 

1,249,001

 

 

 

1,021,081

 

 

 

2,671,417

 

 

 

1,798,279

 

Total Cost of Sales

 

 

1,764,120

 

 

 

1,525,593

 

 

 

4,019,131

 

 

 

2,850,386

 

OPERATING COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

Operating

 

 

84,158

 

 

 

69,019

 

 

 

156,018

 

 

 

134,803

 

General and administrative

 

 

16,628

 

 

 

11,450

 

 

 

33,385

 

 

 

27,224

 

Depreciation and amortization

 

 

68,118

 

 

 

69,563

 

 

 

134,778

 

 

 

153,665

 

Loss on disposal or impairment of assets, net

 

 

7,653

 

 

 

13,694

 

 

 

7,485

 

 

 

81,230

 

Operating Income (Loss)

 

 

68,770

 

 

 

64,818

 

 

 

156,033

 

 

 

(4,516

)

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated entities

 

 

1,207

 

 

 

434

 

 

 

1,881

 

 

 

646

 

Interest expense

 

 

(68,297

)

 

 

(68,495

)

 

 

(135,608

)

 

 

(135,625

)

Gain on early extinguishment of liabilities, net

 

 

2,479

 

 

 

1,071

 

 

 

4,141

 

 

 

1,122

 

Other (expense) income, net

 

 

(15

)

 

 

730

 

 

 

631

 

 

 

1,979

 

Income (Loss) Before Income Taxes

 

 

4,144

 

 

 

(1,442

)

 

 

27,078

 

 

 

(136,394

)

INCOME TAX (EXPENSE) BENEFIT

 

 

(537

)

 

 

235

 

 

 

(365

)

 

 

685

 

Net Income (Loss)

 

 

3,607

 

 

 

(1,207

)

 

 

26,713

 

 

 

(135,709

)

LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS

 

 

(97

)

 

 

(330

)

 

 

(342

)

 

 

(768

)

NET INCOME (LOSS) ATTRIBUTABLE TO NGL ENERGY PARTNERS LP

 

$

3,510

 

 

$

(1,537

)

 

$

26,371

 

 

$

(136,477

)

NET LOSS ALLOCATED TO COMMON UNITHOLDERS

 

$

(26,899

)

 

$

(27,236

)

 

$

(31,578

)

 

$

(187,128

)

BASIC LOSS PER COMMON UNIT

 

$

(0.21

)

 

$

(0.21

)

 

$

(0.24

)

 

$

(1.44

)

DILUTED LOSS PER COMMON UNIT

 

$

(0.21

)

 

$

(0.21

)

 

$

(0.24

)

 

$

(1.44

)

BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING

 

 

130,695,970

 

 

 

129,593,939

 

 

 

130,695,970

 

 

 

129,593,939

 

DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING

 

 

130,695,970

 

 

 

129,593,939

 

 

 

130,695,970

 

 

 

129,593,939

 

EBITDA, ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW RECONCILIATION

(Unaudited)

 

The following table reconciles NGL's net income (loss) to NGL's EBITDA, Adjusted EBITDA and Distributable Cash Flow:

 

 

 

Three Months Ended September 30,

 

Six Months Ended September 30,

 

 

2022

 

2021

 

2022

 

2021

 

 

(in thousands)

Net income (loss)

 

$

3,607

 

 

$

(1,207

)

 

$

26,713

 

 

$

(135,709

)

Less: Net income attributable to noncontrolling interests

 

 

(97

)

 

 

(330

)

 

 

(342

)

 

 

(768

)

Net income (loss) attributable to NGL Energy Partners LP

 

 

3,510

 

 

 

(1,537

)

 

 

26,371

 

 

 

(136,477

)

Interest expense

 

 

68,313

 

 

 

68,512

 

 

 

135,639

 

 

 

135,642

 

Income tax expense (benefit)

 

 

537

 

 

 

(235

)

 

 

365

 

 

 

(685

)

Depreciation and amortization

 

 

68,103

 

 

 

69,543

 

 

 

134,717

 

 

 

152,900

 

EBITDA

 

 

140,463

 

 

 

136,283

 

 

 

297,092

 

 

 

151,380

 

Net unrealized gains on derivatives

 

 

(4,828

)

 

 

(18,490

)

 

 

(61,730

)

 

 

(34,754

)

CMA Differential Roll net losses (gains) (1)

 

 

(6,518

)

 

 

12,805

 

 

 

28,102

 

 

 

37,115

 

Inventory valuation adjustment (2)

 

 

(3,560

)

 

 

(451

)

 

 

(4,115

)

 

 

767

 

Lower of cost or net realizable value adjustments

 

 

10,143

 

 

 

3,521

 

 

 

857

 

 

 

(285

)

Loss on disposal or impairment of assets, net

 

 

7,653

 

 

 

13,695

 

 

 

7,485

 

 

 

81,233

 

Gain on early extinguishment of liabilities, net

 

 

(2,479

)

 

 

(1,072

)

 

 

(4,141

)

 

 

(1,159

)

Equity-based compensation expense

 

 

479

 

 

 

(2,753

)

 

 

976

 

 

 

(1,793

)

Acquisition expense (3)

 

 

?

 

 

 

36

 

 

 

?

 

 

 

103

 

Other (4)

 

 

889

 

 

 

2,687

 

 

 

1,592

 

 

 

4,755

 

Adjusted EBITDA

 

$

142,242

 

 

$

146,261

 

 

$

266,118

 

 

$

237,362

 

Less: Cash interest expense (5)

 

 

64,096

 

 

 

63,729

 

 

 

127,221

 

 

 

127,088

 

Less: Income tax expense (benefit)

 

 

537

 

 

 

(235

)

 

 

365

 

 

 

(685

)

Less: Maintenance capital expenditures

 

 

14,219

 

 

 

16,979

 

 

 

29,586

 

 

 

24,724

 

Less: CMA Differential Roll (6)

 

 

(16,274

)

 

 

9,968

 

 

 

1,934

 

 

 

33,900

 

Less: Other (7)

 

 

77

 

 

 

?

 

 

 

170

 

 

 

?

 

Distributable Cash Flow

 

$

79,587

 

 

$

55,820

 

 

$

106,842

 

 

$

52,335

 

__________________________

(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. 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 non-cash operating expenses related to our Grand Mesa Pipeline, unrealized gains/losses on marketable securities and accretion expense for asset retirement obligations.

(5)

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

(6)

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.

(7)

Amounts represents cash paid to settle asset retirement obligations.

ADJUSTED EBITDA RECONCILIATION BY SEGMENT

 

 

Three Months Ended September 30, 2022

 

Water
Solutions

 

Crude Oil
Logistics

 

Liquids
Logistics

 

Corporate
and Other

 

Consolidated

 

(in thousands)

Operating income (loss)

$

47,128

 

 

$

32,927

 

 

$

1,653

 

 

$

(12,938

)

 

$

68,770

 

Depreciation and amortization

 

51,327

 

 

 

11,775

 

 

 

3,396

 

 

 

1,620

 

 

 

68,118

 

Amortization recorded to cost of sales

 

?

 

 

 

?

 

 

 

69

 

 

 

?

 

 

 

69

 

Net unrealized (gains) losses on derivatives

 

(4,340

)

 

 

(4,575

)

 

 

4,087

 

 

 

?

 

 

 

(4,828

)

CMA Differential Roll net losses (gains)

 

?

 

 

 

(6,518

)

 

 

?

 

 

 

?

 

 

 

(6,518

)

Inventory valuation adjustment

 

?

 

 

 

?

 

 

 

(3,560

)

 

 

?

 

 

 

(3,560

)

Lower of cost or net realizable value adjustments

 

?

 

 

 

(493

)

 

 

10,636

 

 

 

?

 

 

 

10,143

 

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

 

9,035

 

 

 

(296

)

 

 

52

 

 

 

(1,138

)

 

 

7,653

 

Equity-based compensation expense

 

?

 

 

 

?

 

 

 

?

 

 

 

479

 

 

 

479

 

Other (expense) income, net

 

(251

)

 

 

303

 

 

 

(91

)

 

 

24

 

 

 

(15

)

Adjusted EBITDA attributable to unconsolidated entities

 

1,387

 

 

 

?

 

 

 

(17

)

 

 

45

 

 

 

1,415

 

Adjusted EBITDA attributable to noncontrolling interest

 

(373

)

 

 

?

 

 

 

?

 

 

 

?

 

 

 

(373

)

Other

 

861

 

 

 

(260

)

 

 

288

 

 

 

?

 

 

 

889

 

Adjusted EBITDA

$

104,774

 

 

$

32,863

 

 

$

16,513

 

 

$

(11,908

)

 

$

142,242

 

 

Three Months Ended September 30, 2021

 

Water
Solutions

 

Crude Oil
Logistics

 

Liquids
Logistics

 

Corporate
and Other

 

Consolidated

 

(in thousands)

Operating income (loss)

$

32,772

 

 

$

28,231

 

 

$

11,461

 

 

$

(7,646

)

 

$

64,818

 

Depreciation and amortization

 

50,670

 

 

 

12,454

 

 

 

4,686

 

 

 

1,753

 

 

 

69,563

 

Amortization recorded to cost of sales

 

?

 

 

 

?

 

 

 

71

 

 

 

?

 

 

 

71

 

Net unrealized losses (gains) on derivatives

 

1,521

 

 

 

(7,153

)

 

 

(12,858

)

 

 

?

 

 

 

(18,490

)

CMA Differential Roll net losses (gains)

 

?

 

 

 

12,805

 

 

 

?

 

 

 

?

 

 

 

12,805

 

Inventory valuation adjustment

 

?

 

 

 

?

 

 

 

(451

)

 

 

?

 

 

 

(451

)

Lower of cost or net realizable value adjustments

 

?

 

 

 

?

 

 

 

3,521

 

 

 

?

 

 

 

3,521

 

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

 

1,962

 

 

 

(14

)

 

 

11,746

 

 

 

?

 

 

 

13,694

 

Equity-based compensation expense

 

?

 

 

 

?

 

 

 

?

 

 

 

(2,753

)

 

 

(2,753

)

Acquisition expense

 

?

 

 

 

?

 

 

 

?

 

 

 

36

 

 

 

36

 

Other income, net

 

10

 

 

 

154

 

 

 

295

 

 

 

271

 

 

 

730

 

Adjusted EBITDA attributable to unconsolidated entities

 

716

 

 

 

?

 

 

 

(9

)

 

 

(65

)

 

 

642

 

Adjusted EBITDA attributable to noncontrolling interest

 

(614

)

 

 

?

 

 

 

3

 

 

 

?

 

 

 

(611

)

Other

 

387

 

 

 

2,299

 

 

 

?

 

 

 

?

 

 

 

2,686

 

Adjusted EBITDA

$

87,424

 

 

$

48,776

 

 

$

18,465

 

 

$

(8,404

)

 

$

146,261

 

 

Six Months Ended September 30, 2022

 

Water
Solutions

 

Crude Oil
Logistics

 

Liquids
Logistics

 

Corporate
and Other

 

Consolidated

 

(in thousands)

Operating income (loss)

$

100,733

 

 

$

51,916

 

 

$

28,293

 

 

$

(24,909

)

 

$

156,033

 

Depreciation and amortization

 

101,175

 

 

 

23,529

 

 

 

6,777

 

 

 

3,297

 

 

 

134,778

 

Amortization recorded to cost of sales

 

?

 

 

 

?

 

 

 

137

 

 

 

?

 

 

 

137

 

Net unrealized gains on derivatives

 

(4,464

)

 

 

(55,580

)

 

 

(1,686

)

 

 

?

 

 

 

(61,730

)

CMA Differential Roll net losses (gains)

 

?

 

 

 

28,102

 

 

 

?

 

 

 

?

 

 

 

28,102

 

Inventory valuation adjustment

 

?

 

 

 

?

 

 

 

(4,115

)

 

 

?

 

 

 

(4,115

)

Lower of cost or net realizable value adjustments

 

?

 

 

 

1,074

 

 

 

(217

)

 

 

?

 

 

 

857

 

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

 

9,976

 

 

 

(1,556

)

 

 

52

 

 

 

(987

)

 

 

7,485

 

Equity-based compensation expense

 

?

 

 

 

?

 

 

 

?

 

 

 

976

 

 

 

976

 

Other income (expense), net

 

8

 

 

 

331

 

 

 

(184

)

 

 

476

 

 

 

631

 

Adjusted EBITDA attributable to unconsolidated entities

 

2,212

 

 

 

?

 

 

 

(24

)

 

 

89

 

 

 

2,277

 

Adjusted EBITDA attributable to noncontrolling interest

 

(905

)

 

 

?

 

 

 

?

 

 

 

?

 

 

 

(905

)

Other

 

1,086

 

 

 

125

 

 

 

381

 

 

 

?

 

 

 

1,592

 

Adjusted EBITDA

$

209,821

 

 

$

47,941

 

 

$

29,414

 

 

$

(21,058

)

 

$

266,118

 

 

Six Months Ended September 30, 2021

 

Water
Solutions

 

Crude Oil
Logistics

 

Liquids
Logistics

 

Corporate
and Other

 

Consolidated

 

(in thousands)

Operating income (loss)

$

40,355

 

 

$

16,650

 

 

$

(41,948

)

 

$

(19,573

)

 

$

(4,516

)

Depreciation and amortization

 

113,651

 

 

 

24,863

 

 

 

11,653

 

 

 

3,498

 

 

 

153,665

 

Amortization recorded to cost of sales

 

?

 

 

 

?

 

 

 

144

 

 

 

?

 

 

 

144

 

Net unrealized losses (gains) on derivatives

 

5,087

 

 

 

(21,607

)

 

 

(18,234

)

 

 

?

 

 

 

(34,754

)

CMA Differential Roll net losses (gains)

 

?

 

 

 

37,115

 

 

 

?

 

 

 

?

 

 

 

37,115

 

Inventory valuation adjustment

 

?

 

 

 

?

 

 

 

767

 

 

 

?

 

 

 

767

 

Lower of cost or net realizable value adjustments

 

?

 

 

 

(11

)

 

 

(274

)

 

 

?

 

 

 

(285

)

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

 

9,453

 

 

 

(56

)

 

 

71,833

 

 

 

?

 

 

 

81,230

 

Equity-based compensation expense

 

?

 

 

 

?

 

 

 

?

 

 

 

(1,793

)

 

 

(1,793

)

Acquisition expense

 

?

 

 

 

?

 

 

 

?

 

 

 

103

 

 

 

103

 

Other income, net

 

622

 

 

 

350

 

 

 

658

 

 

 

349

 

 

 

1,979

 

Adjusted EBITDA attributable to unconsolidated entities

 

1,175

 

 

 

?

 

 

 

(19

)

 

 

(120

)

 

 

1,036

 

Adjusted EBITDA attributable to noncontrolling interest

 

(1,568

)

 

 

?

 

 

 

(526

)

 

 

?

 

 

 

(2,094

)

Other

 

160

 

 

 

4,620

 

 

 

(15

)

 

 

?

 

 

 

4,765

 

Adjusted EBITDA

$

168,935

 

 

$

61,924

 

 

$

24,039

 

 

$

(17,536

)

 

$

237,362

 

OPERATIONAL DATA

(Unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

September 30,

 

September 30,

 

2022

 

2021

 

2022

 

2021

 

(in thousands, except per day amounts)

Water Solutions:

 

 

 

 

 

 

 

Produced water processed (barrels per day)

 

 

 

 

 

 

 

Delaware Basin

1,986,585

 

1,485,087

 

1,937,179

 

1,456,810

Eagle Ford Basin

112,337

 

95,728

 

105,463

 

93,796

DJ Basin

153,766

 

149,426

 

152,057

 

134,197

Other Basins

13,150

 

30,142

 

15,505

 

29,118

Total

2,265,838

 

1,760,383

 

2,210,204

 

1,713,921

Recycled water (barrels per day)

93,898

 

67,027

 

115,294

 

88,116

Total (barrels per day)

2,359,736

 

1,827,410

 

2,325,498

 

1,802,037

Skim oil sold (barrels per day)

3,216

 

2,821

 

3,584

 

2,662

 

 

 

 

 

 

 

 

Crude Oil Logistics:

 

 

 

 

 

 

 

Crude oil sold (barrels)

5,839

 

7,518

 

13,473

 

15,512

Crude oil transported on owned pipelines (barrels)

6,600

 

7,337

 

13,770

 

14,371

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

 

 

 

 

5,232

 

5,232

Crude oil inventory (barrels) (1)

 

 

 

 

660

 

1,249

 

 

 

 

 

 

 

 

Liquids Logistics:

 

 

 

 

 

 

 

Refined products sold (gallons)

186,031

 

196,932

 

374,657

 

382,238

Propane sold (gallons)

169,775

 

180,322

 

334,619

 

350,601

Butane sold (gallons)

111,551

 

124,881

 

232,076

 

247,455

Other products sold (gallons)

104,979

 

97,310

 

198,616

 

190,163

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

 

 

 

 

167,559

 

169,087

Refined products inventory (gallons) (1)

 

 

 

 

1,990

 

2,576

Propane inventory (gallons) (1)

 

 

 

 

101,880

 

98,429

Butane inventory (gallons) (1)

 

 

 

 

84,928

 

75,500

Other products inventory (gallons) (1)

 

 

 

 

33,653

 

17,465

__________________________

(1)

Information is presented as of September 30, 2022 and September 30, 2021, respectively.

 


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