NGL Energy Partners takes steps to survive pandemic

NGL Energy Partners LP in Tulsa says it not only is exploring the sale of some of its assets and reducing dividends by $100 million a year, but adjusting the remainder of its 2020 financial guidance.

The company announced this week it was re-confirming its Fiscal Year 2020 Guidance for adjusted earnings and expects them to be at the higher end of the partnership’s previously issued guidance range of $565 million to $595 million.

The board approved a Fiscal Year 2021 forecast which estimated adjusted earnings at nearly $600 million and growth and maintenance capex of nearly $50 million each. Members also approved a nearly 50% cut in the quarterly distribution making it 20 cents a share.

The board explained the nearly $100 million reduction on an annualized basis will be used to increase liquidity and de-lever the balance sheet. It should also improve the partnership’s common unit coverage ratio.

“Our decision to reduce the common unit distribution by 48.7% was made based on NGL’s and the Board’s priorities of maintaining a strong balance sheet and liquidity as we manage through these uncertain times,” stated Mike Krimbill, NGL’s CEO. “This reduction was made despite NGL’s strong distribution coverage for the quarter and expectations for improved coverage going forward. We believe it is in the best interest of all our stakeholders that during this period we enhance our financial flexibility and preserve liquidity.

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Source: Business Wire