Core Insights - NGL Energy Partners LP (NGL) is expected to see significant increases in capacity due to the LEX II expansion, which is likely to enhance future free cash flow growth [1] - Recent debt refinancing is also a factor that may positively impact the company's financial outlook [1] Financial Analysis - The analysis focuses on cash flow statements and unlevered free cash flow figures, with assumptions based on historical financial data and forecasts regarding the business model [1] - Financial models may include various metrics such as cost of capital, cost of debt, WACC, share count, and net debt [1] - The study typically emphasizes trading multiples like EV/FCF, net income, and EV/EBITDA [1]

Group 1 - NGL's third-quarter earnings report fell short of expectations, with revenue reported at $1.55 billion compared to the anticipated $1.72 billion, and EBITDA at $147.5 million [1] - The article highlights the investment group's focus on asymmetric risk/reward opportunities and clear catalysts for investment [1] Group 2 - The article does not provide additional relevant information regarding the industry or company beyond the earnings report and investment strategy [2][3][4]

Financial Data and Key Metrics Changes - Consolidated adjusted EBITDA for Q3 2025 was $147.7 million, down from $151.7 million in Q3 2024, primarily due to the winding down of the biodiesel business which negatively impacted adjusted EBITDA by $12.1 million [14][15] - Excluding the impact of biodiesel, adjusted EBITDA was approximately $160 million for the quarter, representing a 5% increase compared to the prior year [14][15] - The company anticipates total proceeds of approximately $95 million from the sale of natural gas liquids terminals, expected to close by March 31, 2025 [6][13] Business Line Data and Key Metrics Changes - Water Solutions adjusted EBITDA increased to $132.7 million in Q3 2025 from $121.3 million in Q3 2024, with physical water disposal volumes rising to 2.62 million barrels per day from 2.38 million barrels per day [15][16] - Crude Oil Logistics adjusted EBITDA was $17.4 million in Q3 2025, slightly up from $17 million in the prior year, with average fiscal volumes on Grand Mesa at approximately 61,000 barrels per day compared to 70,000 barrels per day in Q3 2024 [17][18] - Liquids Logistics adjusted EBITDA decreased to $8.2 million from $26.3 million in the prior year, with the winding down of biodiesel significantly impacting results [18][19] Market Data and Key Metrics Changes - Total volumes paid for disposal in Water Solutions increased by 12% in Q3 2025 compared to Q3 2024, reaching 2.91 million barrels per day [15] - The company is experiencing a shift towards becoming a Water Solutions partnership with a focus on Crude Oil Logistics, aiming to improve cash flow repeatability and reduce seasonality [22][24] Company Strategy and Development Direction - The company is simplifying its asset base and reducing working capital needs by winding down non-core businesses, including biodiesel and wholesale propane, which is expected to reduce working capital by $60 million to $70 million annually [8][9] - The LEX II project commenced operations in October 2024 and is performing as expected, contributing to the company's strategic focus on enhancing profitability [10][24] - Future plans include further non-core asset sales to reduce debt and potentially redeem Class D preferred shares once leverage is reduced [24] Management's Comments on Operating Environment and Future Outlook - Management acknowledged performance volatility in Liquids Logistics and declining volumes on the Grand Mesa crude oil pipeline, but expressed optimism about new customer additions enhancing future volumes and profitability [22][24] - The company is adjusting its full-year EBITDA guidance to $620 million, reflecting additional weakness in the liquids segment [20] Other Important Information - The company expects to liquidate all biodiesel inventory by the end of February 2025 and sublease remaining railcars by March 31, 2025 [12] - Year-to-date, the biodiesel segment generated negative adjusted EBITDA of $10.3 million [12] Q&A Session Summary Question: Annual run rate EBITDA of remaining assets and Liquids Logistics post transactions - Management indicated it is too early to provide specific numbers as they are still exploring additional opportunities [30][31] Question: Growth trajectory for Crude Oil Logistics to achieve 100,000 barrel mark - Management suggested waiting for fiscal 2026 guidance to quantify growth, indicating a potential 50% volume increase [32][33] Question: Use of asset sale proceeds and addressing Series D preferreds - Management confirmed that proceeds would primarily go towards paying down the ABL balance, with no specific metrics set for addressing preferred shares [36][37] Question: Remaining assets in Liquids Logistics post divestitures - Remaining assets include Ambassador, Chesapeake, Port Hudson, and West Point terminals, with wholesale propane being the only unit with hard assets [39][40] Question: Updated guidance for Water Solutions EBITDA - Management indicated that Water Solutions EBITDA would be below previously guided ranges but did not provide specific numbers [41][42] Question: Profitability of LEX II compared to existing assets - Management stated that LEX II is performing as expected, with no additional contracts signed yet [46][51] Question: Seasonal factors affecting logistics volumes - Management noted a slowdown in logistics volumes during the holiday season but observed a quick recovery in the first quarter of the year [60]

▪ Provides water transportation, treating, recycling, and handling services for upstream customers ▪ Largest integrated water solutions network of injection wells and large diameter pipe in the Delaware Basin ▪ Predictable cash flows supported by long-term fixed fee contracts, acreage dedications and minimum volume commitments Investor Presentation February 2025 NYSE: NGL Company Overview Water Solutions Crude Oil Logistics ▪ Purchases crude oil from producers and marketers for sale at multiple refineries a ...

Company Overview - Energy Transfer LP (NYSE: ET) is one of the largest midstream master limited partnerships in the United States, with operations spanning much of the Central and Eastern regions of the country [1] Investment Strategy - The company aims to generate a 7%+ income yield by investing in a portfolio of energy stocks while minimizing the risk of principal loss [1] - Subscribers gain access to exclusive investment ideas and in-depth research before they are released to the general public [1] Subscription Offer - A two-week free trial is currently available for the service [1]

Company Overview - Phillips 66 (NYSE: PSX) is a multinational energy company with a market value of nearly $50 billion [3] - The company recently announced a more than $2 billion acquisition to expand its midstream portfolio [3] Investment Strategy - The Value Portfolio specializes in building retirement portfolios using a fact-based research strategy [3] - The strategy includes extensive readings of 10Ks, analyst commentary, market reports, and investor presentations [3] - The portfolio manager invests real money in the stocks he recommends [3] Retirement Planning - The Retirement Forum provides actionable ideas, a high-yield safe retirement portfolio, and macroeconomic outlooks [1] - The forum aims to help individuals maximize their capital and income by searching the entire market for opportunities [1]

Acquisition Overview - Phillips 66 (PSX) has announced a $2.2 billion all-cash acquisition of EPIC Y-Grade GP, LLC and EPIC Y-Grade, LP, which is expected to be immediately accretive to its EPS and strengthen its presence in the NGL market [1] Strategic Benefits - The acquisition will expand Phillips 66's Permian Basin NGL value chain and provide extensive flow assurance to producers, connecting key fractionation sites near Corpus Christi, Sweeny, and Mont Belvieu, TX [3] - The deal is expected to generate returns exceeding the company's hurdle rates, indicating strong financial confidence [4] EPIC NGL's Assets - EPIC NGL owns two fractionators with a capacity of 170,000 bpd near Corpus Christi, 350 miles of purity distribution pipelines, and an 885-mile NGL pipeline with a capacity of 175,000 bpd [5] - The pipeline assets connect production from the Delaware, Midland, and Eagle Ford basins to fractionation facilities and PSX's Sweeny Hub [5] Future Expansion Plans - EPIC NGL is expanding its pipeline capacity to 225,000 bpd, with a second expansion approved to reach 350,000 bpd, though this will not impact Phillips 66's 2025 capital program [6] - A third fractionation facility is planned, which could increase fractionation capacity to 280,000 bpd, enhancing connectivity to Gulf Coast refiners, petrochemical firms, and global export markets [7] Industry Context - TechnipFMC plc (FTI) has a growing backlog of $14.7 million in Q3 2024, up 11.1% YoY, indicating strong revenue growth potential [9] - Sunoco LP (SUN) is a major motor fuel distributor in the U.S., offering a distribution yield higher than the industry average, ensuring consistent returns for unitholders [10] - Oceaneering International (OII) provides integrated offshore oilfield technology solutions, supporting client retention and new business opportunities for steady revenue growth [11]

Group 1 - NGL reported a second fiscal year quarter with EBITDA of approximately $147 million, which was below expectations due to weakness in the liquids business [1] - The performance of NGL's liquids business was a significant factor contributing to the underwhelming financial results [1] Group 2 - Catalyst Hedge Investing provides its members with early access to articles and a best ideas portfolio, focusing on asymmetric risk/reward investment opportunities [2] - The leader of Catalyst Hedge Investing has extensive experience in the markets, including a successful prediction of the Silicon Valley Bank's implosion [2]

Financial Data and Key Metrics Changes - Consolidated Adjusted EBITDA for Q2 2025 was $147.3 million, primarily driven by Water Solutions and Crude Logistics segments [4] - The company reduced its full fiscal year EBITDA guidance to a range of $640 million to $650 million, reflecting a 2% to 4% reduction [14] Business Line Data and Key Metrics Changes - Water Solutions adjusted EBITDA was $182.9 million in Q2, with physical water disposal volumes increasing to 2.68 million barrels per day, a 9% increase quarter-over-quarter [9] - Crude Oil Logistics adjusted EBITDA decreased to $17.3 million in Q2 from $18.6 million in Q1, with crude oil sales averaging 63,000 barrels per day [12] - Liquids Logistics adjusted EBITDA was $9.4 million in Q2, down from $17.1 million in the prior second quarter, with butane blending performing above expectations [13] Market Data and Key Metrics Changes - The butane blending season began after the quarter ended, and wholesale propane demand is expected to be influenced by winter weather [5] - The company is actively contracting new volumes in the Delaware Basin, DJ Basin, and Eagle Ford, indicating growth opportunities across these markets [19] Company Strategy and Development Direction - The company is pursuing asset sales in the liquids logistics segment and aims to reduce leverage while buying back equity [15][17] - The LEX II expansion project, with an initial capacity of 200,000 barrels per day, was completed on time and is expected to enhance long-term growth [6][7] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the Delaware Basin's growth potential, with multiple new projects expected over the next 18 months [16] - The company is managing for long-term value creation rather than focusing solely on quarterly results [18] Other Important Information - The company entered into agreements to purchase 92% of the outstanding warrants from Class D unitholders, eliminating a potential 18% dilution event [8] - Total capital expenditures for fiscal 2025 remain unchanged at $210 million [21] Q&A Session Summary Question: Outlook for calendar 2025 - Management indicated ongoing opportunities in the Delaware Basin and efforts to maximize capacity on the LEX II pipeline, with new contracted volumes being added in the DJ and Eagle Ford basins [19] Question: Expectations for water EBITDA and total CapEx for fiscal 2025 - Water EBITDA guidance remains at $550 to $560 million, with total capital expenditures unchanged at $210 million [21] Question: Details on the warrant purchase agreement - The transaction was triggered by the opportunity to eliminate warrants that could become more expensive over time, with plans to repurchase the remaining 2 million warrants [22][24]

Financial Performance - Revenues for the three months ended September 30, 2024, were $1,352,675,000, a decrease of 26.5% compared to $1,841,096,000 for the same period in 2023[171]. - Net income attributable to NGL Energy Partners LP for the three months ended September 30, 2024, was $2,454,000, down 91.3% from $28,028,000 in the prior year[171]. - For the three months ended September 30, 2024, the company reported total revenues of $243.841 million, a decrease of $246.009 million compared to $489.850 million in the same period of 2023[193]. - Net income for the three months ended September 30, 2024, was $3,391,000, compared to $28,285,000 for the same period in 2023, representing a decrease of approximately 88%[294]. - Adjusted EBITDA for the three months ended September 30, 2024, was $147,270,000, down from $176,214,000 in the same period of 2023, reflecting a decline of about 16.5%[294]. - The company reported a net cash used in operating activities of $(11,341) thousand for the six months ended September 30, 2024, compared to $131,100 thousand in the same period of 2023[324]. Segment Performance - The Water Solutions segment reported total revenues of $181,867,000 for the three months ended September 30, 2024, a decrease of 7.8% from $197,244,000 in the same period of 2023[179]. - Operating income for the Water Solutions segment rose to $72,829,000, an increase of 23.2% compared to $59,118,000 in the prior year[179]. - The Crude Oil Logistics segment reported an operating income of $14,840,000 for the three months ended September 30, 2024, compared to $14,778,000 in the same period of 2023, a slight increase of approximately 0.4%[301]. - Total revenues for the Water Solutions segment decreased by $15.4 million, from $197.2 million in Q3 2023 to $181.9 million in Q3 2024, representing a decline of approximately 7.8%[179]. - Segment operating income for Water Solutions increased by $28.7 million, from $128.4 million in the six months ended September 30, 2023 to $157.2 million in the same period of 2024, an increase of approximately 22.4%[233]. Sales and Pricing - Crude oil sales decreased to $225.013 million from $475.103 million, reflecting a decline of $250.090 million year-over-year[193]. - The average service fees for produced water processed decreased to $0.60 per barrel in Q3 2024, down from $0.69 per barrel in Q3 2023[179]. - The crude oil product margin per barrel decreased to $2.935 from $6.282, a decline of $3.347 year-over-year[193]. - Refined products sold decreased by 3,004 gallons, from 209,919 gallons in September 30, 2023 to 206,915 gallons in September 30, 2024[204]. - Propane sold decreased by 21,399 gallons, from 129,988 gallons in September 30, 2023 to 108,589 gallons in September 30, 2024[204]. - The company’s refined products product margin per gallon decreased to $0.012 for the six months ended September 30, 2024, down from $0.043 in the same period of 2023[259]. Expenses and Costs - Operating expenses for the Crude Oil Logistics segment were $10.249 million, slightly up from $9.946 million in the prior year, an increase of $303,000[193]. - General and administrative expenses decreased by $5.1 million, from $13.3 million in September 30, 2023 to $8.2 million in September 30, 2024[222]. - Total debt interest expense increased by $18.8 million, from $58.6 million in September 30, 2023 to $77.4 million in September 30, 2024[228]. - The cost of sales excluding the impact of derivatives for the Crude Oil Logistics segment decreased by $405.3 million, from $872.4 million in the six months ended September 30, 2023 to $467.0 million in the same period of 2024, a decline of approximately 46.4%[246]. - The company’s total expenses for the six months ended September 30, 2024 were $33,081, an increase of $6,663 from $26,418 in the same period of 2023[257]. Asset Management - The company experienced a loss on disposal or impairment of assets of $1,951,000 in Q3 2024, significantly lower than the $23,599,000 loss in the same quarter of 2023[179]. - The company recorded a net gain of $0.4 million from asset disposals during the three months ended September 30, 2024, compared to a net gain of $0.5 million in the same period of 2023[200]. - The company recorded a net gain of $10.5 million related to the sale of certain assets during the six months ended September 30, 2024, compared to a net loss of $16.2 million in the same period of 2023[243]. - The company experienced a loss on disposal or impairment of assets of $1,509,000 for the three months ended September 30, 2024, compared to a gain of $16,207,000 in the same period of 2023, indicating a significant shift in asset performance[299]. Market Conditions and Outlook - The company anticipates continued volatility in commodity prices due to global conflicts and inflationary pressures, which may impact future financial performance[174][175]. - The SEC has adopted new climate-related disclosure rules, which may affect the company's reporting and compliance requirements moving forward[177]. - The company is engaged in collaborative efforts to mitigate induced seismic events associated with water disposal, which may impact operational strategies[176]. - The company expects capital expenditures for the fiscal year ending March 31, 2025, to be approximately $210 million[316]. - The company anticipates that cash flows from operations and borrowing capacity will be sufficient to meet liquidity needs, particularly during the seasonal demand period from June to December[305].