Business Wire | Aug 10, 2020 04:45PM EDT

NGL Energy Partners LP Announces First Quarter Fiscal 2021 Financial Results

Aug. 10, 2020

TULSA, Okla.--(BUSINESS WIRE)--Aug. 10, 2020--NGL Energy Partners LP (NYSE:NGL) ("NGL," "our," "we," or the "Partnership") today reported its first quarter fiscal 2021 results. Highlights for the quarter include:

* Loss from continuing operations for the first quarter of Fiscal 2021 of $33.8 million, compared to income from continuing operations of $9.0 million for the first quarter of Fiscal 2020 * Adjusted EBITDA from continuing operations for the first quarter of Fiscal 2021 of $91.0 million, compared to $103.7 million for the first quarter of Fiscal 2020 * Results impacted by the COVID-19 pandemic and significant commodity price volatility, which resulted in lower demand for crude oil, liquids and refined products as well as lower crude oil prices, production volumes and drilling activity * Fiscal Year 2021 Adjusted EBITDA expected to range between $560 million and $600 million

Subsequent to June 30, 2020, the Partnership announced the following:

* New, long-term extension of a current produced water transportation and disposal agreement with an existing customer, which is a leading, independent producer customer in the DJ Basin. The agreement continues our acreage dedication totaling approximately 180,000 acres in Weld County through December 2027 * Multiple agreements and extensions, including incremental acreage dedications, with key producers in the Delaware Basin * New and extended contracts are expected to be serviced with the Partnership's existing infrastructure

"Our first quarter results do not fully reflect the actions the Partnership has taken to maximize earnings through this unique environment," stated Mike Krimbill, NGL's CEO. "We benefited significantly from our crude oil storage assets during the period; however, these benefits are not immediately evident as we have recognized hedge losses on inventory this quarter on product that will be sold with profits recognized in the second quarter. We also held most of the skim oil barrels recovered in inventory during the quarter due to the low crude prices and have been selling those barrels in the second quarter at much higher price levels. We believe May and June to be the low point in our water volumes as we have seen producers bring production back online and increase activity with crude prices now exceeding $40.00 per barrel. We accomplished the following during the quarter in our Water Solutions segment:

- Reduced operating expenses by approximately $2.0 million per month beginning in June;

- Increased our market share in the Delaware Basin and DJ Basin through long-term contract extensions and incremental acreage dedications; and

- Lowered both growth and maintenance capital expenditures by leveraging the scale of our newly installed, fully integrated system to capture, process and dispose of produced water."

"We continue to focus on the future to create value for our unitholders," Krimbill concluded.

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

June 30, 2020 June 30, 2019

Operating Adjusted Operating Adjusted Income EBITDA Income EBITDA (Loss) (Loss)

(in thousands)

Crude Oil Logistics $ 23,320 $ 30,854 $ 33,802 $ 52,074

Liquids and Refined 4,562 12,232 15,371 18,136 Products

Water Solutions (16,047 ) 56,926 13,689 41,089

Corporate and Other (22,620 ) (9,030 ) (15,342 ) (7,581 )

Total $ (10,785 ) $ 90,982 $ 47,520 $ 103,718

The tables included in this release reconcile operating income (loss) to Adjusted EBITDA from continuing operations, a non-GAAP financial measure, on a consolidated basis and for each of the Partnership's reportable segments.

Crude Oil Logistics

Results for the first quarter of Fiscal 2021 declined compared to the first quarter of Fiscal 2020 primarily due to commodity prices and lower crude oil demand as a result of the COVID-19 pandemic. In addition, we incurred losses of $9.8 million on the settlement of derivatives during the current quarter compared to gains of $1.4 million on the settlement of derivatives in the prior year quarter. These losses were on derivative positions that were rolled from June to future months to protect inventory from significant changes in market value. The inventory, which is valued at cost as of June 30, 2020, is sold forward at market prices and the Partnership expects to realize an offsetting gain on this inventory when it is sold in subsequent periods.

During the three months ended June 30, 2020, financial volumes on the Grand Mesa Pipeline averaged approximately 119,000 barrels per day; however, net realized margins on certain volumes purchased and shipped on the pipeline were negatively impacted by the extreme crude oil price volatility during the period. The Partnership estimates a negative impact from these barrels of approximately $11 million during the quarter compared to historical results.

In June 2020, a significant shipper on the Grand Mesa Pipeline filed a petition for bankruptcy under Chapter 11 of the bankruptcy code. This third-party has transportation contracts pursuant to which it has committed to ship crude oil on the Partnership's pipeline through October 2026. As part of the bankruptcy filing, the third-party has requested that the court authorize it to reject these transportation contracts. The Partnership has filed an objection and a hearing on this matter is set to take place on September 3, 2020. To date, both parties have continued to operate under existing agreements.

Liquids and Refined Products

Total product margin per gallon was $0.027 for the quarter ended June 30, 2020, compared to $0.039 for the quarter ended June 30, 2019. This decrease was primarily the result of lower refined products, butane and other product margins, driven primarily by lower demand for these products as a result of the COVID-19 pandemic and lower commodity prices.

Refined products volumes decreased by approximately 109.7 million gallons, or 34.1%, during the quarter ended June 30, 2020 compared to the quarter ended June 30, 2019. Propane volumes increased by approximately 7.0 million gallons, or 2.9%, and butane volumes decreased by approximately 22.9 million gallons, or 16.1%, when compared to the quarter ended June 30, 2019. Other product volumes decreased by approximately 40.4 million gallons, or 26.1%, during the quarter ended June 30, 2020 compared to the same period in the prior year. The decrease in refined products, butane and other product volumes was also primarily due to lower demand as a result of the COVID-19 pandemic.

Water Solutions

The Partnership processed approximately 1.4 million barrels of water per day during the quarter ended June 30, 2020, a 61.0% increase when compared to approximately 849,000 barrels of produced water processed per day during the quarter ended June 30, 2019. This increase was primarily driven by our acquisition of Mesquite Disposals Unlimited, LLC ("Mesquite") and Hillstone Environmental Partners, LLC in the Delaware Basin and was partially offset by lower disposal volumes in all other basins during the period resulting from lower crude oil prices, drilling activity and production volumes.

Revenues from recovered crude oil, including the impact from realized skim oil hedges, totaled $10.1 million for the quarter ended June 30, 2020, a decrease of $7.1 million from the prior year period. The Partnership made the strategic decision to store the majority of its recovered crude oil at its various facilities through the quarter, resulting in significantly lower physical skim oil sales. The Partnership expects to sell the stored skim oil during the three months ended September 30, 2020, along with the barrels recovered during that period.

Operating expenses in the Water Solutions segment decreased on a per barrel basis to $0.32 compared to $0.42 per barrel in the comparative quarter last year. The Partnership has taken significant steps to reduce operating costs and continues to evaluate cost saving initiatives in the current environment.

Additionally, the Partnership recently announced new agreements, including acreage dedications, with key producers in the Delaware Basin and expects to service these customers' produced water needs with its existing infrastructure. The Partnership also announced today that it has executed a new, long-term extension of a current produced water transportation and disposal agreement in the DJ Basin through December 2027.

Corporate and Other

Corporate and Other expenses increased from the comparable prior year period primarily due to the loss recorded for the uncollectible portion of our loan receivable with a third party and increased legal costs.

Capitalization and Liquidity

Total debt outstanding was $3.29 billion at June 30, 2020 compared to $3.15 billion at March 31, 2020, an increase of $136 million due primarily to the funding of certain capital expenditures incurred prior to and accrued on March 31, 2020 and $66.3 million of the remaining $100.0 million deferred purchase price of Mesquite. Capital expenditures incurred totaled $29.9 million during the first quarter and are expected to continue to decrease throughout Fiscal 2021, with full year expectations of $100 million for both growth and maintenance capital expenditures combined. Total liquidity (cash plus available capacity on our revolving credit facility) was approximately $198.2 million as of June 30, 2020 and the Partnership is in compliance with all of its debt covenants.

First Quarter Conference Call Information

A conference call to discuss NGL's results of operations is scheduled for 4:00 pm Central Time on Monday, August 10, 2020. Analysts, investors, and other interested parties may access the conference call by dialing (800) 291-4083 and providing access code 1189407. An archived audio replay of the conference call will be available for 7 days beginning at 1:00 pm Central Time on August 11, 2020, which can be accessed by dialing (855) 859-2056 and providing access code 1189407.

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 and Refined Products segment, as discussed below. EBITDA and Adjusted EBITDA should not be considered as alternatives to net (loss) income, (loss) income 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 the TPSL, Mid-Con, and Gas Blending businesses, which are included in discontinued operations, and certain businesses within NGL's Liquids and Refined Products 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 record a realized gain or loss. NGL does not draw such a distinction between realized and unrealized gains and losses on derivatives of the TPSL, Mid-Con, and Gas Blending businesses, which are included in discontinued operations, and certain businesses within NGL's Liquids and Refined Products 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.

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. 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)



June 30, 2020 March 31, 2020

ASSETS

CURRENT ASSETS:

Cash and cash equivalents $ 26,400 $ 22,704

Accounts receivable-trade, net of allowance forexpected credit losses of $3,674 and $4,540, 424,814 566,834 respectively

Accounts receivable-affiliates 14,814 12,934

Inventories 135,918 69,634

Prepaid expenses and other current assets 75,433 101,981

Total current assets 677,379 774,087

PROPERTY, PLANT AND EQUIPMENT, net ofaccumulated depreciation of $570,806 and 2,833,002 2,851,555 $529,068, respectively

GOODWILL 993,114 993,587

INTANGIBLE ASSETS, net of accumulatedamortization of $670,382 and $631,449, 1,574,216 1,612,480 respectively

INVESTMENTS IN UNCONSOLIDATED ENTITIES 22,626 23,182

OPERATING LEASE RIGHT-OF-USE ASSETS 177,010 180,708

OTHER NONCURRENT ASSETS 48,739 63,137

Total assets $ 6,326,086 $ 6,498,736

LIABILITIES AND EQUITY

CURRENT LIABILITIES:

Accounts payable-trade $ 367,463 $ 515,049

Accounts payable-affiliates 22,864 17,717

Accrued expenses and other payables 142,836 232,062

Advance payments received from customers 25,326 19,536

Current maturities of long-term debt 4,521 4,683

Operating lease obligations 53,720 56,776

Total current liabilities 616,730 845,823

LONG-TERM DEBT, net of debt issuance costs of$24,022 and $19,795, respectively, and current 3,281,402 3,144,848 maturities

OPERATING LEASE OBLIGATIONS 120,986 121,013

OTHER NONCURRENT LIABILITIES 112,034 114,079



CLASS D 9.00% PREFERRED UNITS, 600,000 and600,000 preferred units issued and outstanding, 544,151 537,283 respectively



EQUITY:

General partner, representing a 0.1% interest, (51,474 ) (51,390 )128,901 and 128,901 notional units, respectively

Limited partners, representing a 99.9% interest,128,771,715 and 128,771,715 common units issued 1,283,491 1,366,152 and outstanding, respectively

Class B preferred limited partners, 12,585,642and 12,585,642 preferred units issued and 305,468 305,468 outstanding, respectively

Class C preferred limited partners, 1,800,000and 1,800,000 preferred units issued and 42,891 42,891 outstanding, respectively

Accumulated other comprehensive loss (341 ) (385 )

Noncontrolling interests 70,748 72,954

Total equity 1,650,783 1,735,690

Total liabilities and equity $ 6,326,086 $ 6,498,736

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

(in Thousands, except unit and per unit amounts)



Three Months Ended June 30,

2020 2019

REVENUES:

Crude Oil Logistics $ 276,039 $ 716,160

Water Solutions 88,065 71,783

Liquids and Refined Products 479,998 1,083,693

Other 313 255

Total Revenues 844,415 1,871,891

COST OF SALES:

Crude Oil Logistics 217,557 649,240

Water Solutions 4,700 (2,807 )

Liquids and Refined Products 454,336 1,043,032

Other 454 465

Total Cost of Sales 677,047 1,689,930

OPERATING COSTS AND EXPENSES:

Operating 64,987 61,312

General and administrative 17,158 20,342

Depreciation and amortization 83,986 53,754

Loss (gain) on disposal or impairment of 12,022 (967 )assets, net

Operating (Loss) Income (10,785 ) 47,520

OTHER INCOME (EXPENSE):

Equity in earnings of unconsolidated entities 289 8

Interest expense (43,961 ) (39,877 )

Gain on early extinguishment of liabilities, 19,355 - net

Other income, net 1,035 1,010

(Loss) Income From Continuing Operations Before (34,067 ) 8,661 Income Taxes

INCOME TAX BENEFIT 301 321

(Loss) Income From Continuing Operations (33,766 ) 8,982

Loss From Discontinued Operations, net of Tax (1,486 ) (943 )

Net (Loss) Income (35,252 ) 8,039

LESS: NET (INCOME) LOSS ATTRIBUTABLE TO (51 ) 268 NONCONTROLLING INTERESTS

NET (LOSS) INCOME ATTRIBUTABLE TO NGL ENERGY $ (35,303 ) $ 8,307 PARTNERS LP

NET LOSS FROM CONTINUING OPERATIONS ALLOCATED $ (55,815 ) $ (120,126 )TO COMMON UNITHOLDERS

NET LOSS FROM DISCONTINUED OPERATIONS ALLOCATED $ (1,485 ) $ (942 )TO COMMON UNITHOLDERS

NET LOSS ALLOCATED TO COMMON UNITHOLDERS $ (57,300 ) $ (121,068 )

BASIC LOSS PER COMMON UNIT

Loss From Continuing Operations $ (0.43 ) $ (0.95 )

Loss From Discontinued Operations, net of Tax $ (0.01 ) $ (0.01 )

Net Loss $ (0.44 ) $ (0.96 )

DILUTED LOSS PER COMMON UNIT

Loss From Continuing Operations $ (0.43 ) $ (0.95 )

Loss From Discontinued Operations, net of Tax $ (0.01 ) $ (0.01 )

Net Loss $ (0.44 ) $ (0.96 )

BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING 128,771,715 125,886,738

DILUTED WEIGHTED AVERAGE COMMON UNITS 128,771,715 125,886,738OUTSTANDING

EBITDA, ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW RECONCILIATION

(Unaudited)



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



Three Months Ended June 30,

2020 2019

(in thousands)

Net (loss) income $ (35,252 ) $ 8,039

Less: Net (income) loss attributable to (51 ) 268 noncontrolling interests

Net (loss) income attributable to NGL Energy (35,303 ) 8,307 Partners LP

Interest expense 44,066 39,910

Income tax benefit (301 ) (311 )

Depreciation and amortization 83,202 54,844

EBITDA 91,664 102,750

Net unrealized losses (gains) on derivatives 26,671 (3,474 )

Inventory valuation adjustment (1) 3,820 (19,746 )

Lower of cost or net realizable value adjustments (32,003 ) (918 )

Loss (gain) on disposal or impairment of assets, 13,084 (967 )net

Gain on early extinguishment of liabilities, net (19,355 ) -

Equity-based compensation expense (2) 2,302 3,701

Acquisition expense (3) 157 2,091

Other (4) 4,348 3,323

Adjusted EBITDA $ 90,688 $ 86,760

Adjusted EBITDA - Discontinued Operations (5) $ (294 ) $ (16,958 )

Adjusted EBITDA - Continuing Operations $ 90,982 $ 103,718

Less: Cash interest expense (6) 40,399 37,775

Less: Income tax benefit (301 ) (321 )

Less: Maintenance capital expenditures 9,168 16,929

Less: Preferred unit distributions 15,030 13,076

Distributable Cash Flow - Continuing Operations $ 26,686 $ 36,259

___________ 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(1) market movements related to our base inventory and the related hedge position. See "Non-GAAP Financial Measures" section above for a further discussion.

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 June 30,(2) 2020. 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.

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

Amounts for the three months ended June 30, 2020 and 2019 represent(4) non-cash operating expenses related to our Grand Mesa Pipeline, unrealized losses on marketable securities and accretion expense for asset retirement obligations.

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

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

ADJUSTED EBITDA RECONCILIATION BY SEGMENT



Three Months Ended June 30, 2020

Discontinued Crude Liquids Operations Oil Water and Corporate Continuing (TPSL, Consolidated Logistics Solutions Refined and Other Operations Mid-Con, Products Gas Blending)

(in thousands)

Operating $ 23,320 $ (16,047 ) $ 4,562 $ (22,620 ) $ (10,785 ) $ - $ (10,785 )income (loss)

Depreciationand 16,795 58,133 8,156 902 83,986 - 83,986 amortization

Amortizationrecorded to - - 77 - 77 - 77 cost of sales

Net unrealizedlosses (gains) 14,638 13,312 (1,279 ) - 26,671 - 26,671 on derivatives

Inventoryvaluation - - 3,840 - 3,840 - 3,840 adjustment

Lower of costor netrealizable (29,060 ) - (2,963 ) - (32,023 ) - (32,023 )valueadjustments

Loss ondisposal or 1,450 329 4 10,239 12,022 - 12,022 impairment ofassets, net

Equity-basedcompensation - - - 2,302 2,302 - 2,302 expense

Acquisition - 12 - 145 157 - 157 expense

Other income, 338 256 377 64 1,035 - 1,035 net

AdjustedEBITDAattributable - 465 (1 ) (62 ) 402 - 402 tounconsolidatedentities

AdjustedEBITDAattributable - (487 ) (536 ) - (1,023 ) - (1,023 )tononcontrollinginterest

Intersegmenttransactions - - (27 ) - (27 ) - (27 )(1)

Other 3,373 953 22 - 4,348 - 4,348

Discontinued - - - - - (294 ) (294 )operations

Adjusted $ 30,854 $ 56,926 $ 12,232 $ (9,030 ) $ 90,982 $ (294 ) $ 90,688 EBITDA

Three Months Ended June 30, 2019

Discontinued Crude Liquids Operations Oil Water and Corporate Continuing (TPSL, Consolidated Logistics Solutions Refined and Other Operations Mid-Con, Products Gas Blending)

(in thousands)

Operating $ 33,802 $ 13,689 $ 15,371 $ (15,342 ) $ 47,520 $ - $ 47,520 income (loss)

Depreciationand 17,585 28,071 7,355 743 53,754 - 53,754 amortization

Amortizationrecorded to - - 87 - 87 - 87 cost of sales

Net unrealizedgains on (1,858 ) (167 ) (1,449 ) - (3,474 ) - (3,474 )derivatives

Inventoryvaluation - - 34 - 34 - 34 adjustment

Lower of costor netrealizable - - (1,623 ) - (1,623 ) - (1,623 )valueadjustments

(Gain) loss ondisposal or (616 ) (589 ) (3 ) 241 (967 ) - (967 )impairment ofassets, net

Equity-basedcompensation - - - 3,701 3,701 - 3,701 expense

Acquisition - 20 - 2,071 2,091 - 2,091 expense

Other(expense) (4 ) - 20 994 1,010 - 1,010 income, net

AdjustedEBITDAattributable - - 4 11 15 - 15 tounconsolidatedentities

AdjustedEBITDAattributable - (75 ) (397 ) - (472 ) - (472 )tononcontrollinginterest

Intersegmenttransactions - - (1,281 ) - (1,281 ) - (1,281 )(1)

Other 3,165 140 18 - 3,323 - 3,323

Discontinued - - - - - (16,958 ) (16,958 )operations

Adjusted $ 52,074 $ 41,089 $ 18,136 $ (7,581 ) $ 103,718 $ (16,958 ) $ 86,760 EBITDA

___________(1) Amount reflects the transactions with TPSL, Mid-Con and Gas Blending that are eliminated in consolidation.

OPERATIONAL DATA

(Unaudited)



Three Months Ended

June 30,

2020 2019

(in thousands, except per day amounts)

Crude Oil Logistics:

Crude oil sold (barrels) 9,292 11,291

Crude oil transported on owned pipelines (barrels) 10,476 11,789

Crude oil storage capacity - owned and leased 5,239 5,232 (barrels) (1)

Crude oil inventory (barrels) (1) 1,622 1,125



Water Solutions:

Produced water processed (barrels per day)

Northern Delaware Basin 915,188 88,089

Permian Basin 214,340 311,540

Eagle Ford Basin 95,375 267,244

DJ Basin 132,365 169,620

Other Basins 9,151 12,394

Total 1,366,419 848,887

Solids processed (barrels per day) 1,899 5,442

Skim oil sold (barrels per day) 687 2,860



Liquids and Refined Products:

Refined products sold (gallons) 211,974 321,634

Propane sold (gallons) 252,289 245,267

Butane sold (gallons) 119,566 142,479

Other products sold (gallons) 114,222 154,592

Liquids and Refined Products storage capacity - 399,251 400,409 owned and leased (gallons) (1)

Refined products inventory (gallons) (1) 2,656 4,420

Propane inventory (gallons) (1) 77,968 76,012

Butane inventory (gallons) (1) 73,291 53,219

Other products inventory (gallons) (1) 31,583 52,071

___________(1) Information is presented as of June 30, 2020 and June 30, 2019, respectively.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200810005749/en/

CONTACT: NGL Energy Partners LP Trey Karlovich, 918-481-1119 Chief Financial Officer and Executive Vice President Trey.Karlovich@nglep.com or Linda Bridges, 918-481-1119 Senior Vice President - Finance and Treasurer Linda.Bridges@nglep.com