Business Wire | Nov 9, 2021 04:41PM EST

NGL Energy Partners LP Announces Second Quarter Fiscal 2022 Financial Results

Nov. 09, 2021

TULSA, Okla.--(BUSINESS WIRE)--Nov. 09, 2021--NGL Energy Partners LP (NYSE:NGL) ("NGL," "our," "we," or the "Partnership") today reported its second quarter Fiscal 2022 results. Highlights for the quarter include:

* Loss from continuing operations for the second quarter of Fiscal 2022 of $1.2 million, compared to income from continuing operations of $6.0 million for the second quarter of Fiscal 2021. Excluding losses on the disposal or impairment of assets, income from continuing operations for the second quarter of Fiscal 2022 was $12.5 million, compared to $11.9 million for the second quarter of Fiscal 2021 * Adjusted EBITDA1 from continuing operations for the second quarter of Fiscal 2022 of $146.3 million, compared to $138.0 million for the second quarter of Fiscal 2021 * Record quarterly Adjusted EBITDA of $87.4 million in the Water Solutions segment, a 43% increase versus the second quarter of Fiscal 2021 * Produced water volumes processed increased approximately 37% versus the same period in the prior year, with volumes growing approximately 94,000 barrels per day, or 5.6%, versus the preceding quarter * Fiscal 2022 Adjusted EBITDA guidance of $570 million - $600 million and expected full year capital expenditures of approximately $115 million2

"Our Water Solutions segment achieved strong growth due to increased customer activities in the Delaware basin. Produced water volumes have grown meaningfully year-over-year and sequentially quarter-over-quarter. We expect water volumes to continue to grow for the foreseeable future. Operational free cash flow, reduction in working capital requirements and asset sale proceeds will be deployed to the balance sheet to reduce leverage," stated Mike Krimbill, NGL's CEO. "Our top priority is to reduce absolute debt and drive leverage below 4.75 times," 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

September 30, 2021 September 30, 2020

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

(in thousands)

Water Solutions $ 32,772 $ 87,424 $ (13,277 ) $ 61,047

Crude Oil Logistics 28,231 48,776 48,239 65,181

Liquids Logistics 11,461 18,465 14,338 21,257

Corporate and Other (7,646 ) (8,404 ) (12,984 ) (9,514 )

Total $ 64,818 $ 146,261 $ 36,316 $ 137,971

Water Solutions

The Partnership processed approximately 1.8 million barrels of water per day during the quarter ended September 30, 2021, a 37.3% increase when compared to approximately 1.3 million barrels of water per day processed during the quarter ended September 30, 2020, due to higher production volumes primarily in the Delaware Basin driven by the recovery in crude oil prices from the prior year.

Revenues from recovered crude oil, including the impact from realized skim oil hedges, totaled $19.3 million for the quarter ended September 30, 2021, an increase of $6.8 million from the prior year period. This was due to higher crude oil prices, larger amounts of skim oil recovered per barrel of water processed and increasing producer activity.

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

Crude Oil Logistics

Operating income for the second quarter of Fiscal 2022 decreased compared to the second quarter of Fiscal 2021 primarily due to lower revenues related to the Grand Mesa Pipeline, which was primarily the result of the court-approved rejection of the Extraction transportation agreement (as part of its bankruptcy) as well as decreased production in the DJ Basin. During the three months ended September 30, 2021, financial volumes on the Grand Mesa Pipeline averaged approximately 80,000 barrels per day, compared to approximately 123,000 barrels per day for the three months ended September 30, 2020. For the quarter, our margins, excluding the impact of derivatives, benefited from higher crude oil prices which increased contracted rates with some producers.

Liquids Logistics

Operating income for the Liquids Logistics segment totaled $11.5 million, including a loss on the sale of a facility of $11.7 million, for the quarter ended September 30, 2021. Excluding the loss on the sale of the facility, operating income increased by $8.9 million compared to the quarter ended September 30, 2020, due to higher product margins, including the impact of derivatives.

Propane volumes decreased by approximately 72.4 million gallons, or 28.6%, compared to the quarter ended September 30, 2020, due to backwardation in the propane market and deferred purchases from customers. Butane volumes decreased by approximately 18.5 million gallons, or 12.9%, compared to the quarter ended September 30, 2020, due to the tight supply market as a result of decreased refinery runs and an increase in demand for exports.

Corporate and Other

Corporate and Other expenses decreased from the comparable prior year period primarily due to lower legal expenses.

Capitalization and Liquidity

Total liquidity (cash plus available capacity on our asset-based revolving credit facility) was approximately $207 million as of September 30, 2021. Borrowings on the Partnership's revolving credit facility totaled approximately $146.0 million. The balance increase from March 31, 2021 was primarily due to increases in working capital balances driven by increased inventory volumes and higher commodity prices.

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

Second Quarter Conference Call Information

A conference call to discuss NGL's results of operations is scheduled for 4:00 pm Central Time on Tuesday, November 9, 2021. Analysts, investors, and other interested parties may join the webcast via the event link: https://www.webcaster4.com/Webcast/Page/2808/43431 or by dialing (888) 506-0062 and providing access code: 646174. 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 43431.

Non-GAAP Financial Measures

NGL defines EBITDA as net income (loss) attributable to NGL Energy Partners LP, plus interest expense, income tax expense (benefit), and depreciation and amortization expense. NGL defines Adjusted EBITDA as EBITDA excluding net unrealized gains and losses on derivatives, lower of cost or net realizable value adjustments, gains and losses on disposal or impairment of assets, gains and losses on early extinguishment of liabilities, equity-based compensation expense, acquisition expense, revaluation of liabilities, certain legal settlements and other. NGL also includes in Adjusted EBITDA certain inventory valuation adjustments related to TransMontaigne Product Services, LLC ("TPSL"), our refined products business in the mid-continent region of the United States ("Mid-Con") and our gas blending business in the southeastern and eastern regions of the United States ("Gas Blending"), which are included in discontinued operations, and certain refined products businesses within NGL's Liquids Logistics segment, as discussed below. EBITDA and Adjusted EBITDA should not be considered as alternatives to net (loss) 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 certain businesses within NGL's Liquids Logistics segment, for purposes of the Adjusted EBITDA calculation, NGL makes a distinction between realized and unrealized gains and losses on derivatives. During the period when a derivative contract is open, NGL records changes in the fair value of the derivative as an unrealized gain or loss. When a derivative contract matures or is settled, NGL reverses the previously recorded unrealized gain or loss and records a realized gain or loss. NGL does not draw such a distinction between realized and unrealized gains and losses on derivatives of certain businesses within NGL's Liquids Logistics segment. The primary hedging strategy of these businesses is to hedge against the risk of declines in the value of inventory over the course of the contract cycle, and many of the hedges cover extended periods of time. The "inventory valuation adjustment" row in the reconciliation table reflects the difference between the market value of the inventory of these businesses at the balance sheet date and its cost, adjusted for the impact of seasonal market movements related to our base inventory and the related hedge. NGL includes this in Adjusted EBITDA because the unrealized gains and losses associated with derivative contracts associated with the inventory of this segment, which are intended primarily to hedge inventory holding risk and are included in net income, also affect Adjusted EBITDA. In NGL's Crude Oil Logistics segment, they purchase certain crude oil barrels using the West Texas Intermediate ("WTI") calendar month average ("CMA") price and sell the crude oil barrels using the WTI CMA price plus the Argus CMA Differential Roll Component ("CMA Differential Roll") per NGL's contracts. To eliminate the volatility of the CMA Differential Roll, NGL entered into derivative instrument positions in January 2021 to secure a margin of approximately $0.20 per barrel on 1.5 million barrels per month from May 2021 through December 2023. Due to the nature of these positions, the cash flow and earnings recognized on a GAAP basis will differ from period to period depending on the current crude oil price and future estimated crude oil price which are valued utilizing third-party market quoted prices. NGL is recognizing in Adjusted EBITDA the gains and losses from the derivative instrument positions entered into in January 2021 to properly align with the physical margin NGL is hedging each month through the term of this transaction. This representation aligns with management's evaluation of the transaction.

Distributable Cash Flow is defined as Adjusted EBITDA minus maintenance capital expenditures, income tax expense, cash interest expense, preferred unit distributions and other. Maintenance capital expenditures represent capital expenditures necessary to maintain the Partnership's operating capacity. For the CMA Differential Roll transaction, as discussed above, we have included an adjustment to Distributable Cash Flow to reflect, in the period for which they relate, the actual cash flows for the positions that settled that are not being recognized in Adjusted EBITDA. Distributable Cash Flow is a performance metric used by senior management to compare cash flows generated by the Partnership (excluding growth capital expenditures and prior to the establishment of any retained cash reserves by the Board of Directors) to the cash distributions expected to be paid to unitholders. Using this metric, management can quickly compute the coverage ratio of estimated cash flows to planned cash distributions. This financial measure also is important to investors as an indicator of whether the Partnership is generating cash flow at a level that can sustain, or support an increase in, quarterly distribution rates. Actual distribution amounts are set by the Board of Directors.

Forward-Looking Statements

This press release includes "forward-looking statements." All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Actual results could vary significantly from those expressed or implied in such statements and are subject to a number of risks and uncertainties. While NGL believes such forward-looking statements are reasonable, NGL cannot assure they will prove to be correct. The forward-looking statements involve risks and uncertainties that affect operations, financial performance, and other factors as discussed in filings with the Securities and Exchange Commission. Other factors that could impact any forward-looking statements are those risks described in NGL's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other public filings. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, specifically those under the heading "Risk Factors." NGL undertakes no obligation to publicly update or revise any forward-looking statements except as required by law.

NGL provides Adjusted EBITDA guidance that does not include certain charges and costs, which in future periods are generally expected to be similar to the kinds of charges and costs excluded from Adjusted EBITDA in prior periods, such as income taxes, interest and other non-operating items, depreciation and amortization, net unrealized gains and losses on derivatives, lower of cost or net realizable value adjustments, gains and losses on disposal or impairment of assets, gains and losses on early extinguishment of liabilities, equity-based compensation expense, acquisition expense, revaluation of liabilities and items that are unusual in nature or infrequently occurring. The exclusion of these charges and costs in future periods will have a significant impact on the Partnership's Adjusted EBITDA, and the Partnership is not able to provide a reconciliation of its Adjusted EBITDA guidance to net income (loss) without unreasonable efforts due to the uncertainty and variability of the nature and amount of these future charges and costs and the Partnership believes that such reconciliation, if possible, would imply a degree of precision that would be potentially confusing or misleading to investors.

About NGL Energy Partners LP

NGL Energy Partners LP, a Delaware limited partnership, is a diversified midstream energy company that transports, stores, markets and provides other logistics services for crude oil, natural gas liquids and other products and transports, treats and disposes of produced water generated as part of the oil and natural gas production process.

For further information, visit the Partnership's website at www.nglenergypartners.com.

_______

^1 See the "Non-GAAP Financial Measures" section of this release for thedefinition of Adjusted EBITDA and a discussion of this non-GAAP financialmeasure.

^2 See the "Forward-Looking Statements" section of this release for moreinformation.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

(in Thousands, except unit amounts)

September 30, 2021

March 31, 2021

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

5,531

$

4,829

Accounts receivable-trade, net of allowance for expected credit losses of $2,257 and $2,192, respectively

863,228

725,943

Accounts receivable-affiliates

8,979

9,435

Inventories

319,895

158,467

Prepaid expenses and other current assets

140,434

109,164

Total current assets

1,338,067

1,007,838

PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $844,605 and $776,279, respectively

2,524,287

2,706,853

GOODWILL

744,439

744,439

INTANGIBLE ASSETS, net of accumulated amortization of $532,901 and $517,518, respectively

1,170,468

1,262,613

INVESTMENTS IN UNCONSOLIDATED ENTITIES

21,029

22,719

OPERATING LEASE RIGHT-OF-USE ASSETS

133,868

152,146

OTHER NONCURRENT ASSETS

49,634

50,733

Total assets

$

5,981,792

$

5,947,341

LIABILITIES AND EQUITY

CURRENT LIABILITIES:

Accounts payable-trade

$

819,094

$

679,868

Accounts payable-affiliates

97

119

Accrued expenses and other payables

165,110

170,400

Advance payments received from customers

18,651

11,163

Current maturities of long-term debt

2,278

2,183

Operating lease obligations

45,456

47,070

Total current liabilities

1,050,686

910,803

LONG-TERM DEBT, net of debt issuance costs of $49,214 and $55,555, respectively, and current maturities

3,419,352

3,319,030

OPERATING LEASE OBLIGATIONS

87,388

103,637

OTHER NONCURRENT LIABILITIES

110,909

114,615

CLASS D 9.00% PREFERRED UNITS, 600,000 and 600,000 preferred units issued and outstanding, respectively

551,097

551,097

EQUITY:

General partner, representing a 0.1% interest, 129,724 and 129,724 notional units, respectively

(52,375

)

(52,189

)

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

448,501

582,784

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

305,468

305,468

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

42,891

42,891

Accumulated other comprehensive loss

(310

)

(266

)

Noncontrolling interests

18,185

69,471

Total equity

762,360

948,159

Total liabilities and equity

$

5,981,792

$

5,947,341

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

(in Thousands, except unit amounts)

September 30, March 31, 2021 2021

ASSETS

CURRENT ASSETS:

Cash and cash equivalents $ 5,531 $ 4,829

Accounts receivable-trade, net of allowance forexpected credit losses of $2,257 and $2,192, 863,228 725,943 respectively

Accounts receivable-affiliates 8,979 9,435

Inventories 319,895 158,467

Prepaid expenses and other current assets 140,434 109,164

Total current assets 1,338,067 1,007,838

PROPERTY, PLANT AND EQUIPMENT, net of accumulateddepreciation of $844,605 and $776,279, 2,524,287 2,706,853 respectively

GOODWILL 744,439 744,439

INTANGIBLE ASSETS, net of accumulatedamortization of $532,901 and $517,518, 1,170,468 1,262,613 respectively

INVESTMENTS IN UNCONSOLIDATED ENTITIES 21,029 22,719

OPERATING LEASE RIGHT-OF-USE ASSETS 133,868 152,146

OTHER NONCURRENT ASSETS 49,634 50,733

Total assets $ 5,981,792 $ 5,947,341

LIABILITIES AND EQUITY

CURRENT LIABILITIES:

Accounts payable-trade $ 819,094 $ 679,868

Accounts payable-affiliates 97 119

Accrued expenses and other payables 165,110 170,400

Advance payments received from customers 18,651 11,163

Current maturities of long-term debt 2,278 2,183

Operating lease obligations 45,456 47,070

Total current liabilities 1,050,686 910,803

LONG-TERM DEBT, net of debt issuance costs of$49,214 and $55,555, respectively, and current 3,419,352 3,319,030 maturities

OPERATING LEASE OBLIGATIONS 87,388 103,637

OTHER NONCURRENT LIABILITIES 110,909 114,615



CLASS D 9.00% PREFERRED UNITS, 600,000 and600,000 preferred units issued and outstanding, 551,097 551,097 respectively



EQUITY:

General partner, representing a 0.1% interest, (52,375 ) (52,189 )129,724 and 129,724 notional units, respectively

Limited partners, representing a 99.9% interest,129,593,939 and 129,593,939 common units issued 448,501 582,784 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, 1,800,000 and1,800,000 preferred units issued and outstanding, 42,891 42,891 respectively

Accumulated other comprehensive loss (310 ) (266 )

Noncontrolling interests 18,185 69,471

Total equity 762,360 948,159

Total liabilities and equity $ 5,981,792 $ 5,947,341

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

(in Thousands, except unit and per unit amounts)

Three Months Ended September 30,

Six Months Ended September 30,

2021

2020

2021

2020

REVENUES:

Water Solutions

$

136,210

$

88,678

$

266,436

$

176,743

Crude Oil Logistics

554,830

466,841

1,108,454

742,880

Liquids Logistics

1,063,097

612,324

1,867,902

1,092,322

Other

-

315

-

628

Total Revenues

1,754,137

1,168,158

3,242,792

2,012,573

COST OF SALES:

Water Solutions

6,423

579

16,761

5,279

Crude Oil Logistics

498,089

386,771

1,035,346

604,328

Liquids Logistics

1,021,081

577,086

1,798,279

1,031,422

Other

-

454

-

908

Total Cost of Sales

1,525,593

964,890

2,850,386

1,641,937

OPERATING COSTS AND EXPENSES:

Operating

69,019

56,054

134,803

121,041

General and administrative

11,450

17,475

27,224

34,633

Depreciation and amortization

69,563

87,469

153,665

171,455

Loss on disposal or impairment of assets, net

13,694

5,954

81,230

17,976

Operating Income (Loss)

64,818

36,316

(4,516

)

25,531

OTHER INCOME (EXPENSE):

Equity in earnings of unconsolidated entities

434

501

646

790

Interest expense

(68,495

)

(46,935

)

(135,625

)

(90,896

)

Gain on early extinguishment of liabilities, net

1,071

13,747

1,122

33,102

Other income, net

730

1,585

1,979

2,620

(Loss) Income From Continuing Operations Before Income Taxes

(1,442

)

5,214

(136,394

)

(28,853

)

INCOME TAX BENEFIT

235

774

685

1,075

(Loss) Income From Continuing Operations

(1,207

)

5,988

(135,709

)

(27,778

)

Loss From Discontinued Operations, net of Tax

-

(153

)

-

(1,639

)

Net (Loss) Income

(1,207

)

5,835

(135,709

)

(29,417

)

LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS

(330

)

(168

)

(768

)

(219

)

NET (LOSS) INCOME ATTRIBUTABLE TO NGL ENERGY PARTNERS LP

$

(1,537

)

$

5,667

$

(136,477

)

$

(29,636

)

NET LOSS FROM CONTINUING OPERATIONS ALLOCATED TO COMMON UNITHOLDERS

$

(27,236

)

$

(17,933

)

$

(187,128

)

$

(73,748

)

NET LOSS FROM DISCONTINUED OPERATIONS ALLOCATED TO COMMON UNITHOLDERS

$

-

$

(152

)

$

-

$

(1,637

)

NET LOSS ALLOCATED TO COMMON UNITHOLDERS

$

(27,236

)

$

(18,085

)

$

(187,128

)

$

(75,385

)

BASIC LOSS PER COMMON UNIT

Loss From Continuing Operations

$

(0.21

)

$

(0.14

)

$

(1.44

)

$

(0.57

)

Loss From Discontinued Operations, net of Tax

$

-

$

-

$

-

$

(0.01

)

Net Loss

$

(0.21

)

$

(0.14

)

$

(1.44

)

$

(0.58

)

DILUTED LOSS PER COMMON UNIT

Loss From Continuing Operations

$

(0.21

)

$

(0.14

)

$

(1.44

)

$

(0.57

)

Loss From Discontinued Operations, net of Tax

$

-

$

-

$

-

$

(0.01

)

Net Loss

$

(0.21

)

$

(0.14

)

$

(1.44

)

$

(0.58

)

BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING

129,593,939

128,771,715

129,593,939

128,771,715

DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING

129,593,939

128,771,715

129,593,939

128,771,715

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

(in Thousands, except unit and per unit amounts)

Three Months Ended September Six Months Ended September 30, 30,

2021 2020 2021 2020

REVENUES:

Water Solutions $ 136,210 $ 88,678 $ 266,436 $ 176,743

Crude Oil 554,830 466,841 1,108,454 742,880 Logistics

Liquids 1,063,097 612,324 1,867,902 1,092,322 Logistics

Other - 315 - 628

Total Revenues 1,754,137 1,168,158 3,242,792 2,012,573

COST OF SALES:

Water Solutions 6,423 579 16,761 5,279

Crude Oil 498,089 386,771 1,035,346 604,328 Logistics

Liquids 1,021,081 577,086 1,798,279 1,031,422 Logistics

Other - 454 - 908

Total Cost of 1,525,593 964,890 2,850,386 1,641,937 Sales

OPERATING COSTS AND EXPENSES:

Operating 69,019 56,054 134,803 121,041

General and 11,450 17,475 27,224 34,633 administrative

Depreciationand 69,563 87,469 153,665 171,455 amortization

Loss ondisposal or 13,694 5,954 81,230 17,976 impairment ofassets, net

Operating 64,818 36,316 (4,516 ) 25,531 Income (Loss)

OTHER INCOME (EXPENSE):

Equity inearnings of 434 501 646 790 unconsolidatedentities

Interest (68,495 ) (46,935 ) (135,625 ) (90,896 )expense

Gain on earlyextinguishment 1,071 13,747 1,122 33,102 of liabilities,net

Other income, 730 1,585 1,979 2,620 net

(Loss) IncomeFrom ContinuingOperations (1,442 ) 5,214 (136,394 ) (28,853 )Before IncomeTaxes

INCOME TAX 235 774 685 1,075 BENEFIT

(Loss) IncomeFrom Continuing (1,207 ) 5,988 (135,709 ) (27,778 )Operations

Loss FromDiscontinued - (153 ) - (1,639 )Operations, netof Tax

Net (Loss) (1,207 ) 5,835 (135,709 ) (29,417 )Income

LESS: NETINCOMEATTRIBUTABLE TO (330 ) (168 ) (768 ) (219 )NONCONTROLLINGINTERESTS

NET (LOSS)INCOMEATTRIBUTABLE TO $ (1,537 ) $ 5,667 $ (136,477 ) $ (29,636 )NGL ENERGYPARTNERS LP

NET LOSS FROMCONTINUINGOPERATIONS $ (27,236 ) $ (17,933 ) $ (187,128 ) $ (73,748 )ALLOCATED TOCOMMONUNITHOLDERS

NET LOSS FROMDISCONTINUEDOPERATIONS $ - $ (152 ) $ - $ (1,637 )ALLOCATED TOCOMMONUNITHOLDERS

NET LOSSALLOCATED TO $ (27,236 ) $ (18,085 ) $ (187,128 ) $ (75,385 )COMMONUNITHOLDERS

BASIC LOSS PER COMMON UNIT

Loss FromContinuing $ (0.21 ) $ (0.14 ) $ (1.44 ) $ (0.57 )Operations

Loss FromDiscontinued $ - $ - $ - $ (0.01 )Operations, netof Tax

Net Loss $ (0.21 ) $ (0.14 ) $ (1.44 ) $ (0.58 )

DILUTED LOSS PER COMMON UNIT

Loss FromContinuing $ (0.21 ) $ (0.14 ) $ (1.44 ) $ (0.57 )Operations

Loss FromDiscontinued $ - $ - $ - $ (0.01 )Operations, netof Tax

Net Loss $ (0.21 ) $ (0.14 ) $ (1.44 ) $ (0.58 )

BASIC WEIGHTEDAVERAGE COMMON 129,593,939 128,771,715 129,593,939 128,771,715 UNITSOUTSTANDING

DILUTEDWEIGHTEDAVERAGE COMMON 129,593,939 128,771,715 129,593,939 128,771,715UNITSOUTSTANDING

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 September 30,

Six Months Ended September 30,

2021

2020

2021

2020

(in thousands)

Net (loss) income

$

(1,207

)

$

5,835

$

(135,709

)

$

(29,417

)

Less: Net income attributable to noncontrolling interests

(330

)

(168

)

(768

)

(219

)

Net (loss) income attributable to NGL Energy Partners LP

(1,537

)

5,667

(136,477

)

(29,636

)

Interest expense

68,512

46,840

135,642

90,906

Income tax benefit

(235

)

(827

)

(685

)

(1,128

)

Depreciation and amortization

69,543

86,822

152,900

170,024

EBITDA

136,283

138,502

151,380

230,166

Net unrealized (gains) losses on derivatives

(18,490

)

4,457

(34,754

)

31,128

CMA Differential Roll net losses (gains) (1)

12,805

-

37,115

-

Inventory valuation adjustment (2)

(451

)

(1,641

)

767

2,179

Lower of cost or net realizable value adjustments

3,521

(1,531

)

(285

)

(33,534

)

Loss on disposal or impairment of assets, net

13,695

6,063

81,233

19,147

Gain on early extinguishment of liabilities, net

(1,072

)

(13,747

)

(1,159

)

(33,102

)

Equity-based compensation expense (3)

(2,753

)

2,256

(1,793

)

4,558

Acquisition expense (4)

36

169

103

326

Other (5)

2,687

3,253

4,755

7,601

Adjusted EBITDA

$

146,261

$

137,781

$

237,362

$

228,469

Adjusted EBITDA - Discontinued Operations (6)

$

-

$

(190

)

$

-

$

(484

)

Adjusted EBITDA - Continuing Operations

$

146,261

$

137,971

$

237,362

$

228,953

Less: Cash interest expense (7)

63,729

43,568

127,088

83,967

Less: Income tax benefit

(235

)

(774

)

(685

)

(1,075

)

Less: Maintenance capital expenditures

16,979

6,830

24,724

15,998

Less: CMA Differential Roll (8)

9,968

-

33,900

-

Less: Preferred unit distributions paid

-

15,108

-

30,138

Distributable Cash Flow - Continuing Operations

$

55,820

$

73,239

$

52,335

$

99,925

_______

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 Six Months Ended September September 30, 30,

2021 2020 2021 2020

(in thousands)

Net (loss) income $ (1,207 ) $ 5,835 $ (135,709 ) $ (29,417 )

Less: Net incomeattributable to (330 ) (168 ) (768 ) (219 )noncontrollinginterests

Net (loss) incomeattributable to NGL (1,537 ) 5,667 (136,477 ) (29,636 )Energy Partners LP

Interest expense 68,512 46,840 135,642 90,906

Income tax benefit (235 ) (827 ) (685 ) (1,128 )

Depreciation and 69,543 86,822 152,900 170,024 amortization

EBITDA 136,283 138,502 151,380 230,166

Net unrealized (gains) (18,490 ) 4,457 (34,754 ) 31,128 losses on derivatives

CMA Differential Roll 12,805 - 37,115 - net losses (gains) (1)

Inventory valuation (451 ) (1,641 ) 767 2,179 adjustment (2)

Lower of cost or netrealizable value 3,521 (1,531 ) (285 ) (33,534 )adjustments

Loss on disposal orimpairment of assets, 13,695 6,063 81,233 19,147 net

Gain on earlyextinguishment of (1,072 ) (13,747 ) (1,159 ) (33,102 )liabilities, net

Equity-basedcompensation expense (2,753 ) 2,256 (1,793 ) 4,558 (3)

Acquisition expense 36 169 103 326 (4)

Other (5) 2,687 3,253 4,755 7,601

Adjusted EBITDA $ 146,261 $ 137,781 $ 237,362 $ 228,469

Adjusted EBITDA -Discontinued $ - $ (190 ) $ - $ (484 )Operations (6)

Adjusted EBITDA - $ 146,261 $ 137,971 $ 237,362 $ 228,953 Continuing Operations

Less: Cash interest 63,729 43,568 127,088 83,967 expense (7)

Less: Income tax (235 ) (774 ) (685 ) (1,075 )benefit

Less: Maintenance 16,979 6,830 24,724 15,998 capital expenditures

Less: CMA Differential 9,968 - 33,900 - Roll (8)

Less: Preferred unit - 15,108 - 30,138 distributions paid

Distributable CashFlow - Continuing $ 55,820 $ 73,239 $ 52,335 $ 99,925 Operations

_______

Adjustment to align, within Adjusted EBITDA, the net gains and losses of(1) 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.

Amount reflects the difference between the market value of the inventory at(2) the balance sheet date and its cost, adjusted for the impact of seasonal market movements related to our base inventory and the related hedge. See "Non-GAAP Financial Measures" section above for a further discussion.

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 September(3) 30, 2021. Amounts reported in the table above include expense accruals for bonuses expected to be paid in common units, whereas the amounts reported in the footnotes to our unaudited condensed consolidated financial statements only include expenses associated with equity-based awards that have been formally granted.

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

Amounts for the three months and six months ended September 30, 2021 and(5) 2020 represent non-cash operating expenses related to our Grand Mesa Pipeline, unrealized losses on marketable securities and accretion expense for asset retirement obligations.

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

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

Amount represents the cash portion of the adjustments of the Partnership's(8) CMA Differential Roll derivative instrument positions, as discussed above, that settled during the period.

ADJUSTED EBITDA RECONCILIATION BY SEGMENT

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

ADJUSTED EBITDA RECONCILIATION BY SEGMENT

Three Months Ended September 30, 2021

Water Crude Oil Liquids Corporate Consolidated Solutions Logistics Logistics and Other

(in thousands)

Operating $ 32,772 $ 28,231 $ 11,461 $ (7,646 ) $ 64,818 income (loss)

Depreciationand 50,670 12,454 4,686 1,753 69,563 amortization

Amortizationrecorded to - - 71 - 71 cost of sales

Net unrealizedlosses (gains) 1,521 (7,153 ) (12,858 ) - (18,490 )on derivatives

CMADifferential - 12,805 - - 12,805 Roll netlosses (gains)

Inventoryvaluation - - (451 ) - (451 )adjustment

Lower of costor netrealizable - - 3,521 - 3,521 valueadjustments

Loss (gain) ondisposal or 1,962 (14 ) 11,746 - 13,694 impairment ofassets, net

Equity-basedcompensation - - - (2,753 ) (2,753 )expense

Acquisition - - - 36 36 expense

Other income, 10 154 295 271 730 net

AdjustedEBITDAattributable 716 - (9 ) (65 ) 642 tounconsolidatedentities

AdjustedEBITDAattributable (614 ) - 3 - (611 )tononcontrollinginterest

Other 387 2,299 - - 2,686

Adjusted $ 87,424 $ 48,776 $ 18,465 $ (8,404 ) $ 146,261 EBITDA

Three Months Ended September 30, 2020

Water

Solutions

Crude Oil

Logistics

Liquids

Logistics

Corporate

and Other

Continuing

Operations

Discontinued Operations

(TPSL, Mid-Con, Gas Blending)

Consolidated

(in thousands)

Operating (loss) income

$

(13,277

)

$

48,239

$

14,338

$

(12,984

)

$

36,316

$

-

$

36,316

Depreciation and amortization

62,220

17,232

7,026

991

87,469

-

87,469

Amortization recorded to cost of sales

-

-

76

-

76

-

76

Net unrealized losses (gains) on derivatives

4,413

(3,317

)

3,361

-

4,457

-

4,457

Inventory valuation adjustment

-

-

(1,639

)

-

(1,639

)

-

(1,639

)

Lower of cost or net realizable value adjustments

-

(19

)

(1,513

)

-

(1,532

)

-

(1,532

)

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

6,223

(310

)

43

(2

)

5,954

-

5,954

Equity-based compensation expense

-

-

-

2,256

2,256

-

2,256

Acquisition expense

1

-

-

168

169

-

169

Other income, net

2

1,175

286

122

1,585

-

1,585

Adjusted EBITDA attributable to unconsolidated entities

845

-

(13

)

(65

)

767

-

767

Adjusted EBITDA attributable to noncontrolling interest

(441

)

-

(736

)

-

(1,177

)

-

(1,177

)

Other

1,061

2,181

28

-

3,270

-

3,270

Discontinued operations

-

-

-

-

-

(190

)

(190

)

Adjusted EBITDA

$

61,047

$

65,181

$

21,257

$

(9,514

)

$

137,971

$

(190

)

$

137,781

Three Months Ended September 30, 2020

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

(in thousands)

Operating $ (13,277 ) $ 48,239 $ 14,338 $ (12,984 ) $ 36,316 $ - $ 36,316 (loss) income

Depreciationand 62,220 17,232 7,026 991 87,469 - 87,469 amortization

Amortizationrecorded to - - 76 - 76 - 76 cost of sales

Net unrealizedlosses (gains) 4,413 (3,317 ) 3,361 - 4,457 - 4,457 on derivatives

Inventoryvaluation - - (1,639 ) - (1,639 ) - (1,639 )adjustment

Lower of costor netrealizable - (19 ) (1,513 ) - (1,532 ) - (1,532 )valueadjustments

Loss (gain) ondisposal or 6,223 (310 ) 43 (2 ) 5,954 - 5,954 impairment ofassets, net

Equity-basedcompensation - - - 2,256 2,256 - 2,256 expense

Acquisition 1 - - 168 169 - 169 expense

Other income, 2 1,175 286 122 1,585 - 1,585 net

AdjustedEBITDAattributable 845 - (13 ) (65 ) 767 - 767 tounconsolidatedentities

AdjustedEBITDAattributable (441 ) - (736 ) - (1,177 ) - (1,177 )tononcontrollinginterest

Other 1,061 2,181 28 - 3,270 - 3,270

Discontinued - - - - - (190 ) (190 )operations

Adjusted $ 61,047 $ 65,181 $ 21,257 $ (9,514 ) $ 137,971 $ (190 ) $ 137,781 EBITDA

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

Six Months Ended September 30, 2021

Water Crude Oil Liquids Corporate Consolidated Solutions Logistics Logistics and Other

(in thousands)

Operating $ 40,355 $ 16,650 $ (41,948 ) $ (19,573 ) $ (4,516 )income (loss)

Depreciationand 113,651 24,863 11,653 3,498 153,665 amortization

Amortizationrecorded to - - 144 - 144 cost of sales

Net unrealizedlosses (gains) 5,087 (21,607 ) (18,234 ) - (34,754 )on derivatives

CMADifferential - 37,115 - - 37,115 Roll netlosses (gains)

Inventoryvaluation - - 767 - 767 adjustment

Lower of costor netrealizable - (11 ) (274 ) - (285 )valueadjustments

Loss (gain) ondisposal or 9,453 (56 ) 71,833 - 81,230 impairment ofassets, net

Equity-basedcompensation - - - (1,793 ) (1,793 )expense

Acquisition - - - 103 103 expense

Other income, 622 350 658 349 1,979 net

AdjustedEBITDAattributable 1,175 - (19 ) (120 ) 1,036 tounconsolidatedentities

AdjustedEBITDAattributable (1,568 ) - (526 ) - (2,094 )tononcontrollinginterest

Other 160 4,620 (15 ) - 4,765

Adjusted $ 168,935 $ 61,924 $ 24,039 $ (17,536 ) $ 237,362 EBITDA

Six Months Ended September 30, 2020

Water

Solutions

Crude Oil

Logistics

Liquids

Logistics

Corporate

and Other

Continuing

Operations

Discontinued Operations

(TPSL, Mid-Con, Gas Blending)

Consolidated

(in thousands)

Operating (loss) income

$

(29,324

)

$

71,559

$

18,900

$

(35,604

)

$

25,531

$

-

$

25,531

Depreciation and amortization

120,353

34,027

15,182

1,893

171,455

-

171,455

Amortization recorded to cost of sales

-

-

153

-

153

-

153

Net unrealized losses on derivatives

17,725

11,321

2,082

-

31,128

-

31,128

Inventory valuation adjustment

-

-

2,201

-

2,201

-

2,201

Lower of cost or net realizable value adjustments

-

(29,079

)

(4,476

)

-

(33,555

)

-

(33,555

)

Loss on disposal or impairment of assets, net

6,552

1,140

47

10,237

17,976

-

17,976

Equity-based compensation expense

-

-

-

4,558

4,558

-

4,558

Acquisition expense

13

-

-

313

326

-

326

Other income, net

258

1,513

663

186

2,620

-

2,620

Adjusted EBITDA attributable to unconsolidated entities

1,310

-

(14

)

(127

)

1,169

-

1,169

Adjusted EBITDA attributable to noncontrolling interest

(928

)

-

(1,272

)

-

(2,200

)

-

(2,200

)

Intersegment transactions (1)

-

-

(27

)

-

(27

)

-

(27

)

Other

2,014

5,554

50

-

7,618

-

7,618

Discontinued operations

-

-

-

-

-

(484

)

(484

)

Adjusted EBITDA

$

117,973

$

96,035

$

33,489

$

(18,544

)

$

228,953

$

(484

)

$

228,469

_______

Six Months Ended September 30, 2020

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

(in thousands)

Operating $ (29,324 ) $ 71,559 $ 18,900 $ (35,604 ) $ 25,531 $ - $ 25,531 (loss) income

Depreciationand 120,353 34,027 15,182 1,893 171,455 - 171,455 amortization

Amortizationrecorded to - - 153 - 153 - 153 cost of sales

Net unrealizedlosses on 17,725 11,321 2,082 - 31,128 - 31,128 derivatives

Inventoryvaluation - - 2,201 - 2,201 - 2,201 adjustment

Lower of costor netrealizable - (29,079 ) (4,476 ) - (33,555 ) - (33,555 )valueadjustments

Loss ondisposal or 6,552 1,140 47 10,237 17,976 - 17,976 impairment ofassets, net

Equity-basedcompensation - - - 4,558 4,558 - 4,558 expense

Acquisition 13 - - 313 326 - 326 expense

Other income, 258 1,513 663 186 2,620 - 2,620 net

AdjustedEBITDAattributable 1,310 - (14 ) (127 ) 1,169 - 1,169 tounconsolidatedentities

AdjustedEBITDAattributable (928 ) - (1,272 ) - (2,200 ) - (2,200 )tononcontrollinginterest

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

Other 2,014 5,554 50 - 7,618 - 7,618

Discontinued - - - - - (484 ) (484 )operations

Adjusted $ 117,973 $ 96,035 $ 33,489 $ (18,544 ) $ 228,953 $ (484 ) $ 228,469 EBITDA

_______

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

OPERATIONAL DATA

(Unaudited)

Three Months Ended

Six Months Ended

September 30,

September 30,

2021

2020

2021

2020

(in thousands, except per day amounts)

Water Solutions:

Produced water processed (barrels per day)

Delaware Basin

1,485,087

1,060,353

1,456,810

1,083,229

Eagle Ford Basin

95,728

81,260

93,796

88,279

DJ Basin

149,426

114,219

134,197

123,242

Other Basins

30,142

26,264

29,118

29,277

Total

1,760,383

1,282,096

1,713,921

1,324,027

Solids processed (barrels per day)

927

863

1,120

1,378

Skim oil sold (barrels per day)

2,821

2,611

2,662

1,654

Crude Oil Logistics:

Crude oil sold (barrels)

7,518

10,178

15,512

19,470

Crude oil transported on owned pipelines (barrels)

7,337

9,992

14,371

20,468

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

5,232

5,239

Crude oil inventory (barrels) (1)

1,249

1,507

Liquids Logistics:

Refined products sold (gallons)

196,932

220,243

382,238

432,217

Propane sold (gallons)

180,322

252,693

350,601

504,982

Butane sold (gallons)

124,881

143,392

247,455

262,958

Other products sold (gallons)

97,310

114,734

190,163

228,956

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

169,087

427,004

Refined products inventory (gallons) (1)

2,576

1,209

Propane inventory (gallons) (1)

98,429

116,462

Butane inventory (gallons) (1)

75,500

92,672

Other products inventory (gallons) (1)

17,465

18,671

_______

OPERATIONAL DATA

(Unaudited)

Three Months Ended Six Months Ended

September 30, September 30,

2021 2020 2021 2020

(in thousands, except per day amounts)

Water Solutions:

Produced water processed (barrels per day)

Delaware Basin 1,485,087 1,060,353 1,456,810 1,083,229

Eagle Ford Basin 95,728 81,260 93,796 88,279

DJ Basin 149,426 114,219 134,197 123,242

Other Basins 30,142 26,264 29,118 29,277

Total 1,760,383 1,282,096 1,713,921 1,324,027

Solids processed (barrels 927 863 1,120 1,378 per day)

Skim oil sold (barrels 2,821 2,611 2,662 1,654 per day)



Crude Oil Logistics:

Crude oil sold (barrels) 7,518 10,178 15,512 19,470

Crude oil transported on 7,337 9,992 14,371 20,468 owned pipelines (barrels)

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

Crude oil inventory 1,249 1,507 (barrels) (1)



Liquids Logistics:

Refined products sold 196,932 220,243 382,238 432,217 (gallons)

Propane sold (gallons) 180,322 252,693 350,601 504,982

Butane sold (gallons) 124,881 143,392 247,455 262,958

Other products sold 97,310 114,734 190,163 228,956 (gallons)

Natural gas liquids andrefined products storage 169,087 427,004 capacity - owned andleased (gallons) (1)

Refined products 2,576 1,209 inventory (gallons) (1)

Propane inventory 98,429 116,462 (gallons) (1)

Butane inventory 75,500 92,672 (gallons) (1)

Other products inventory 17,465 18,671 (gallons) (1)

_______

Information is presented as of September 30, 2021 and September 30, 2020,(1) respectively.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211109006577/en/

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

CONTACT: or

CONTACT: David Sullivan, 918-481-1119 Vice President - Finance David.Sullivan@nglep.com