NGL Energy Partners LP reported its first quarter Fiscal 2022 results on Monday. Highlights for the quarter include:
- Loss from continuing operations for the first quarter of Fiscal 2022 of $134.5 million, compared to a loss from continuing operations of $33.8 million for the first quarter of Fiscal 2021
- Adjusted EBITDA1 from continuing operations for the first quarter of Fiscal 2022 of $91.1 million, compared to $91.0 million for the first quarter of Fiscal 2021; Record quarterly Adjusted EBITDA of $81.5 million in the Water Solutions segment as produced water volumes approach pre-pandemic levels
- Sale of the Partnership’s approximately 71.5% interest in Sawtooth Caverns, LLC for gross consideration of $70.0 million
- Publication of the Partnership’s inaugural Sustainability Report, which can be found on the Partnership’s website
- Reaffirms Fiscal 2022 Adjusted EBITDA guidance of $570 million – $600 million and capital expenditure guidance of $100 million – $125 million
“Our Water Solutions segment continues to drive the growth of the Partnership and performed very well during the first quarter,” said Mike Krimbill, NGL’s CEO.
The Partnership processed approximately 1.7 million barrels of water per day during the quarter ended June 30, 2021, a 22.0% increase when compared to approximately 1.4 million barrels of water per day processed during the quarter ended June 30, 2020, due to higher production volumes in the Delaware Basin driven by the recovery in crude oil prices from the prior year. Additionally, brackish non-potable water, resale of raw produced water and recycled water revenue all increased driven by the demand for these services.
Revenues from recovered crude oil, including the impact from realized skim oil hedges, totaled $16.0 million for the quarter ended June 30, 2021, an increase of $5.9 million from the prior year period. This increase was due to an increase in the number of wells completed in our area of operations during the current period and higher crude oil prices, as well as a strategic decision made by the Partnership to store the majority of its recovered barrels due to low prices during the quarter ended June 30, 2020.
Operating expenses in the Water Solutions segment decreased to $0.26 per barrel compared to $0.32 per barrel in the comparative quarter last year primarily due to significant steps taken to reduce operating costs per barrel along with higher produced water volumes processed. The Water Solutions segment continues to evaluate additional cost saving initiatives.
Operating income for the first quarter of Fiscal 2022 decreased compared to the first quarter of Fiscal 2021 primarily due to an increase in net derivative losses on our inventory position as a result of increasing crude oil prices as well as lower activity and the reduction of minimum volume commitments on our Grand Mesa Pipeline. Revenues from third parties for Grand Mesa Pipeline decreased by $27.3 million, compared to the quarter ended June 30, 2020 due to lower third-party volumes transported on the pipeline. During the three months ended June 30, 2021, financial volumes on the Grand Mesa Pipeline averaged approximately 77,000 barrels per day, compared to approximately 119,000 barrels per day for the three months ended June 30, 2020.
Operating loss for the Liquids Logistics segment totaled $53.4 million for the quarter ended June 30, 2021, including the $60.1 million loss on the sale of the Partnership’s membership interest in Sawtooth Caverns, LLC, which impacts comparability to the prior year period.
Total product margin per gallon, excluding the impact of derivatives, was $0.066 for the quarter ended June 30, 2021, compared to $0.024 for the quarter ended June 30, 2020. This increase in margin was primarily due to increased biodiesel and RIN prices and was offset by lower demand for other products. Refined products volumes decreased by approximately 26.7 million gallons, or 12.6%, during the quarter ended June 30, 2021 compared to the quarter ended June 30, 2020 due to tighter supply and continued weakness in demand in certain parts of the country due to the COVID-19 pandemic. Propane volumes decreased by approximately 82.0 million gallons, or 32.5%, as warmer weather during the quarter and higher prices led to weaker demand. Butane volumes increased by approximately 3.0 million gallons, or 2.5%, when compared to the quarter ended June 30, 2020.
Corporate and Other expenses decreased from the comparable prior year period primarily due the $10.2 million net loss recorded for the uncollectible portion of a loan receivable with a third party in the prior year.
Total liquidity (cash plus available capacity on our asset-based revolving credit facility) was approximately $303 million as of June 30, 2021. Borrowings on the Partnership’s revolving credit facility totaled $77 million, a $73 million increase to the March 31, 2021 balance. This increase was primarily due to increases in working capital balances as both inventory volumes and commodity prices increased.
The Partnership is in compliance with all of its debt covenants and has no significant debt maturities before November 2023. The Partnership still expects to generate excess cash flow in Fiscal Year 2022, which will be utilized to repay outstanding indebtedness and improve leverage.