NGL Energy Partners LP(NGL) - 2024 Q4 - Annual Report

Water Solutions Segment - The Water Solutions segment handled approximately 884.6 million barrels of produced water during the year ended March 31, 2024, making the company the largest independent produced water transportation and disposal company in the U.S.[34] - The company has approximately 664,000 acres dedicated to its system under long-term agreements in the Northern Delaware Basin, with several minimum volume commitments and commercial agreements in place[34] - The Lea County Express Pipeline System is set to expand from a capacity of 140,000 barrels of water per day to 340,000 barrels per day, with completion expected in the second half of fiscal year 2025[36] - The company owns 89 water treatment and disposal facilities, with a total permitted processing capacity of 6,412,800 barrels per day across various basins[39] - During the year ended March 31, 2024, the company sold approximately 30.8 million barrels of recycled water[38] - 69% of the revenues from the Water Solutions segment were generated from the ten largest customers, indicating a significant reliance on key clients[45] - The company holds multiple patents for processing technologies, enhancing its operational capabilities in the Water Solutions segment[49] - Segment operating income for the water disposal segment increased to $231,256,000, up$32,332,000 or 16.3% from $198,924,000 in 2023[359] - Water disposal service fees rose to$572,972,000, an increase of $48,283,000 or 9.2$524,689,000 in 2023, driven by higher produced water volumes processed and increased fees[361] - Total revenues for the Water Solutions segment increased by $152.2 million to$697.0 million, driven by higher water disposal service fees and recovered crude oil sales[418] - Operating expenses in the Water Solutions segment increased by $37.1 million to$212.1 million, influenced by higher utility, royalty, and chemical expenses[427] Crude Oil Logistics Segment - The Grand Mesa Pipeline transported approximately 25.6 million barrels of crude oil during the year ended March 31, 2024, with a capacity of 150,000 barrels per day[51] - The Crude Oil Logistics segment generated 86% of its revenues from its ten largest customers during the year ended March 31, 2024[60] - The company has a network of crude oil transportation and storage assets that allows it to serve customers over a wide geographic area, optimizing sales through long-term contracts[32] - Crude oil sales for the year ended March 31, 2024, decreased to $1,597,238,000, down$779,196,000 or 32.8% from $2,376,434,000 in 2023, attributed to lower sales volumes and crude oil prices[373] - Crude oil product margin per barrel increased to$4.129 in 2024 from $4.014 in 2023, reflecting a positive change of$0.115 per barrel[376] Liquids Logistics Segment - The Liquids Logistics segment sold approximately 2.5 billion gallons of natural gas liquids, refined products, and renewables products, averaging about 166,000 barrels per day during the year ended March 31, 2024[67] - The company owns and operates 23 terminals for Liquids Logistics, with a total storage capacity of 34,710,400 gallons[75] - The Liquids Logistics segment serves approximately 1,200 customers across 48 states, Mexico, and Canada, with 23% of revenues generated from the ten largest customers[82] - For the year ended March 31, 2024, the Liquids Logistics segment reported sales of $2,192.8 million, a decrease of 14.1$2,554.1 million in 2023[387] - The segment's operating income fell significantly to $2.5 million in 2024 from$66.6 million in 2023, a decline of 96.3%[387] - The total expenses for the Liquids Logistics segment increased to $132.0 million in 2024, up 59.8$82.6 million in 2023[387] - Propane sales decreased by 36.3% to $739.6 million in 2024 from$1,161.1 million in 2023, primarily due to lower volumes and prices[387] - The refined products product margin per gallon decreased to $0.030 in 2024 from$0.054 in 2023, reflecting lower demand and restored supply balance[388][390] Financial Performance - Consolidated revenues for the year ended March 31, 2024, were $6,956,571, a decrease of 20$8,694,904 in 2023[349] - The cost of sales for the same period was $5,966,794, down from$7,650,024 in 2023, reflecting a 22% reduction[349] - Operating income decreased to $177,572 in 2024 from$289,163 in 2023, representing a decline of approximately 39%[349] - The net loss attributable to NGL Energy Partners LP for the year ended March 31, 2024, was $143,755 compared to a net income of$51,386 in 2023[349] - A debt refinancing transaction of $2.9 billion was completed on February 2, 2024, including$2.2 billion in senior secured notes and a $700 million senior secured term loan[352] - The company repurchased and/or redeemed$2.1 billion of its outstanding 2026 Senior Secured Notes and $280.7 million of the 2025 Notes during the three months ended March 31, 2024[353] - The company anticipates increased compliance costs due to more stringent environmental regulations, which could adversely affect profitability[126] - General and Administrative Expenses increased from$2.5 million to $36.0 million due to legal matters and write-offs related to LCT Capital, LLC[406] - Total interest expense decreased by$5.5 million to $269.9 million, primarily due to the repurchase of senior unsecured notes and a reduction in debt interest expense[411] - Loss on early extinguishment of liabilities was$55.3 million, compared to a gain of $6.2 million in the previous year, mainly due to call premiums and write-offs related to debt[412] Environmental and Regulatory Compliance - The company is subject to various environmental regulations that may impact operations and future expenditures for compliance[102] - The company has implemented safety protocols and training to ensure compliance with health and safety regulations[100] - The company is subject to various environmental regulations, including the Clean Water Act and the Safe Drinking Water Act, which impose strict controls on pollutant discharges and require permits for construction activities[106] - The company may incur significant costs related to compliance with the Resource Conservation and Recovery Act (RCRA) and similar state laws, particularly if certain non-hazardous wastes are reclassified as hazardous in the future[108] - The company is required to prepare and implement Spill Prevention Control and Countermeasure (SPCC) plans for facilities that could discharge oil into navigable waters, with violations potentially leading to monetary penalties[111][112] - The company faces regulatory scrutiny regarding air emissions under the Clean Air Act, which may necessitate capital expenditures for pollution control equipment[113] - The company must comply with the Underground Injection Control (UIC) Program, which regulates the injection of crude oil and natural gas wastes to protect underground sources of drinking water[115] - The company does not conduct hydraulic fracturing but is affected by legislative proposals that could impose additional regulations on hydraulic fracturing activities conducted by its customers[117][118] - The Endangered Species Act restricts operations in areas where endangered species are present, potentially leading to additional costs and operational restrictions[119] - The company is impacted by growing concerns over greenhouse gas emissions, with new regulations requiring disclosures of Scope 1 and Scope 2 emissions starting in 2026[120][122] - The EPA's final rule effective May 7, 2024, targets reductions in methane emissions from oil and gas operations, requiring monitoring and repair of leaks[121]