NGL Energy Partners LP Announces Second Quarter Fiscal 2021 Financial Results
NGL Energy Partners LP (NYSE:NGL) (“NGL,” “our,” “we,” or the “Partnership”) today reported its second quarter fiscal 2021 results. Highlights for the quarter include:
Income from continuing operations for the second quarter of Fiscal 2021 of $6.0 million, compared to a loss from continuing operations of $15.6 million for the second quarter of Fiscal 2020 Adjusted EBITDA from continuing operations for the second quarter of Fiscal 2021 of $138.0 million, compared to $123.5 million for the second quarter of Fiscal 2020 Successful completion of our Poker Lake pipeline, which has an initial capacity of over 350,000 barrels per day and connects into our integrated Delaware Basin produced water pipeline infrastructure network New, long-term acreage dedications for water disposal services and a long-term extension and expansion to an existing acreage dedication with leading independent and super major producers in the Delaware Basin“Our second quarter results reflect the expected increase in Adjusted EBITDA related to the sale of crude oil stored for contango, as well as the sale of skim oil barrels we held during our first fiscal quarter. Our second quarter earnings also reflect the full benefit of reduced operating expenses in the Water Solutions segment, with operating expense averaging $0.27 per barrel, compared to $0.32 per barrel during the first quarter of this fiscal year and $0.40 per barrel during Fiscal 2020. This decrease in expenses is significant as it represents approximately $50 - $60 million in annual cost savings based on average volumes for the quarter,” stated Mike Krimbill, NGL’s CEO. “Additionally during the quarter, we were able to enter into several new, long-term water disposal contracts, as well as extend and expand certain other water disposal contracts, in the Delaware Basin with both high quality, independent and super major producers. Our Crude Logistics segment continued to perform despite the noise around the Extraction bankruptcy process and averaged approximately 123,000 barrels per day on Grand Mesa Pipeline. As previously stated, NGL will continue to vigorously defend the value of its contracts with Extraction and remains amenable to resolving the dispute through commercial considerations. Finally, the Liquids and Refined Products segment is heading into its peak earning season with strong inventory positions and we are looking forward to a successful year in this segment. In addition to maximizing results from operations, we are focused on reducing indebtedness and our bank commitments. We are reducing capital expenditures, further cutting costs and have decreased the common unit distribution, all of which increase our free cash flow. We are also evaluating assets sales and joint venture opportunities. These remain challenging times; however, we continue to manage the things we can control and focus on the future to create value for our stakeholders,” 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, 2020
September 30, 2019
Operating
Income (Loss)
Adjusted
EBITDA
Operating
Income (Loss)
Adjusted
EBITDA
(in thousands)
Crude Oil Logistics
$
48,239
$
65,181
$
38,520
$
54,632
Liquids and Refined Products
14,338
21,257
8,798
23,273
Water Solutions
(13,277
)
61,047
21,274
56,879
Corporate and Other
(12,984
)
(9,514
)
(38,477
)
(11,318
)
Total
$
36,316
$
137,971
$
30,115
$
123,466
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
Operating income for the second quarter of Fiscal 2021 increased compared to the second quarter of Fiscal 2020 primarily due to increased margins. The increased margin realized during the current quarter was due primarily to the sale of inventory that was purchased at lower prices and held during the three months ended June 30, 2020. During the three months ended September 30, 2020, financial volumes on the Grand Mesa Pipeline averaged approximately 123,000 barrels per day.
In June 2020, Extraction Oil & Gas, Inc. (“Extraction”), a significant shipper on the Grand Mesa Pipeline, filed a petition for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code. Extraction has transportation contracts pursuant to which it has committed to ship crude oil on the pipeline through October 2026. As part of the bankruptcy filing, Extraction filed a motion requesting that the court authorize it to reject these transportation contracts, to which the Partnership filed an objection and took various other legal steps within the bankruptcy to protect the value of the contracts. On November 2, 2020, the bankruptcy court issued a bench ruling granting the motion to reject the transportation contracts effective as of June 14, 2020. As a result, we intend to appeal the bankruptcy court’s ruling and raise what we respectfully believe are numerous infirmities with the ruling.
Liquids and Refined Products
Total product margin per gallon, excluding the impact of derivatives, was $0.036 for the quarter ended September 30, 2020, compared to $0.031 for the quarter ended September 30, 2019. This increase was primarily due to propane inventory values aligning with increased commodity prices. This increase was partially offset by lower margins for butane and refined products due to lower demand resulting from the COVID-19 pandemic.
Refined products volumes decreased by approximately 111.7 million gallons, or 33.6%, during the quarter ended September 30, 2020 compared to the quarter ended September 30, 2019. Propane volumes decreased by approximately 9.5 million gallons, or 3.6%, and butane volumes decreased by approximately 26.8 million gallons, or 15.7%, when compared to the quarter ended September 30, 2019. Other product volumes decreased by approximately 37.1 million gallons, or 24.5%, during the quarter ended September 30, 2020 compared to the same period in the prior year. The decrease in refined products, propane, butane and other product volumes was also primarily due to the continued lower demand as a result of the COVID-19 pandemic.
Water Solutions
The Partnership processed approximately 1.28 million barrels of water per day during the quarter ended September 30, 2020, a 1.9% increase when compared to produced water processed per day during the quarter ended September 30, 2019. This increase was primarily driven by our acquisition of Hillstone Environmental Partners, LLC in November 2019 in the Delaware Basin and was 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 $12.5 million for the quarter ended September 30, 2020, a decrease of $3.9 million from the prior year period. This decrease was the result of lower volumes and lower crude oil prices. The percentage of recovered crude oil per barrel of produced water processed has declined over the past several periods due to an increase in produced water transported through pipelines (which contains less oil per barrel of produced water) and the addition of contract structures that allow producers to keep the skim oil recovered from produced water. This decrease was partially offset by the sale of crude oil during the three months ended September 30, 2020, that we stored as of June 30, 2020 due to the lower crude oil prices.
Operating expenses in the Water Solutions segment decreased to $0.27 per barrel compared to $0.38 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.
In October 2020, the Partnership successfully completed its Poker Lake pipeline and tie-ins, which has an initial capacity of over 350,000 barrels per day and connects into its integrated Delaware Basin produced water pipeline infrastructure network. NGL began receiving produced water volumes from Exxon’s Poker Lake Development. Additionally, the Partnership recently announced new agreements, including acreage dedications, water transportation and disposal agreements, and water supply agreements, with leading super major producers and other key producers in the Delaware Basin. The Partnership expects to service these customers’ produced water needs with its existing infrastructure with minimal capital expenditure requirements in the foreseeable future.
Corporate and Other
Corporate and Other expenses decreased from the comparable prior year period primarily due to lower compensation expense, in particular cash and non-cash incentive compensation, and a reduction in acquisition related expenses. These decreases were partially offset by legal costs incurred for defending the rejection of our transportation contracts in Extraction bankruptcy proceedings.
Capitalization and Liquidity
Total debt outstanding was $3.29 billion at September 30, 2020 compared to $3.15 billion at March 31, 2020, an increase of $139 million due primarily to the funding of certain capital expenditures incurred prior to and accrued on March 31, 2020 and $83.1 million of the remaining $100.0 million deferred purchase price of Mesquite Disposals Unlimited, LLC (“Mesquite”). Capital expenditures incurred totaled $24.4 million during the second quarter (including $6.8 million in maintenance expenditures) and $54.4 million year-to-date. These expenditures are expected to continue to decrease throughout Fiscal 2021 with full year expectations totaling $100 million or less for both growth and maintenance capital expenditures combined. Total liquidity (cash plus available capacity on our revolving credit facility) was approximately $122.1 million as of September 30, 2020 and the Partnership is in compliance with all of its debt covenants.
The Partnership is currently working with the syndicate of lenders that are a party to its revolving credit facility to extend the maturity of the facility by at least one year. The Partnership’s proposal was submitted to all of the syndicate lenders in October 2020, and remains subject to approval by each lender.
Second Quarter Conference Call Information
A conference call to discuss NGL’s results of operations is scheduled for 4:00 pm Central Time on Monday, November 9, 2020. Analysts, investors, and other interested parties may access the conference call by dialing (800) 291-4083 and providing access code 8880357. An archived audio replay of the conference call will be available for 7 days beginning at 1:00 pm Central Time on November 10, 2020, which can be accessed by dialing (855) 859-2056 and providing access code 8880357.
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 income (loss), income (loss) 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)
September 30, 2020
March 31, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
16,912
$
22,704
Accounts receivable-trade, net of allowance for expected credit losses of $3,399 and $4,540, respectively
439,889
566,834
Accounts receivable-affiliates
14,904
12,934
Inventories
182,859
69,634
Prepaid expenses and other current assets
74,150
101,981
Total current assets
728,714
774,087
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $619,820 and $529,068, respectively
2,799,725
2,851,555
GOODWILL
982,239
993,587
INTANGIBLE ASSETS, net of accumulated amortization of $706,259 and $631,449, respectively
1,538,417
1,612,480
INVESTMENTS IN UNCONSOLIDATED ENTITIES
21,215
23,182
OPERATING LEASE RIGHT-OF-USE ASSETS
168,349
180,708
OTHER NONCURRENT ASSETS
47,752
63,137
Total assets
$
6,286,411
$
6,498,736
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable-trade
$
379,420
$
515,049
Accounts payable-affiliates
23,985
17,717
Accrued expenses and other payables
138,572
232,062
Advance payments received from customers
24,143
19,536
Current maturities of long-term debt
13,123
4,683
Operating lease obligations
50,709
56,776
Total current liabilities
629,952
845,823
LONG-TERM DEBT, net of debt issuance costs of $22,267 and $19,795, respectively, and current maturities
3,275,166
3,144,848
OPERATING LEASE OBLIGATIONS
114,833
121,013
OTHER NONCURRENT LIABILITIES
105,835
114,079
CLASS D 9.00% PREFERRED UNITS, 600,000 and 600,000 preferred units issued and outstanding, respectively
551,097
537,283
EQUITY:
General partner, representing a 0.1% interest, 128,901 and 128,901 notional units, respectively
(51,518
)
(51,390
)
Limited partners, representing a 99.9% interest, 128,771,715 and 128,771,715 common units issued and outstanding, respectively
1,242,676
1,366,152
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
(307
)
(385
)
Noncontrolling interests
70,318
72,954
Total equity
1,609,528
1,735,690
Total liabilities and equity
$
6,286,411
$
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 September 30,
Six Months Ended September 30,
2020
2019
2020
2019
REVENUES:
Crude Oil Logistics
$
466,841
$
641,152
$
742,880
$
1,357,312
Water Solutions
88,678
101,249
176,743
173,032
Liquids and Refined Products
612,324
1,061,671
1,092,322
2,145,364
Other
315
264
628
519
Total Revenues
1,168,158
1,804,336
2,012,573
3,676,227
COST OF SALES:
Crude Oil Logistics
386,771
569,699
604,328
1,218,939
Water Solutions
579
(6,496
)
5,279
(9,303
)
Liquids and Refined Products
577,086
1,025,565
1,031,422
2,068,597
Other
454
435
908
900
Total Cost of Sales
964,890
1,589,203
1,641,937
3,279,133
OPERATING COSTS AND EXPENSES:
Operating
56,054
74,886
121,041
136,198
General and administrative
17,475
43,908
34,633
64,250
Depreciation and amortization
87,469
63,113
171,455
116,867
Loss on disposal or impairment of assets, net
5,954
3,111
17,976
2,144
Operating Income
36,316
30,115
25,531
77,635
OTHER INCOME (EXPENSE):
Equity in earnings (loss) of unconsolidated entities
501
(265
)
790
(257
)
Interest expense
(46,935
)
(45,017
)
(90,896
)
(84,894
)
Gain on early extinguishment of liabilities, net
13,747
—
33,102
—
Other income, net
1,585
183
2,620
1,193
Income (Loss) From Continuing Operations Before Income Taxes
5,214
(14,984
)
(28,853
)
(6,323
)
INCOME TAX BENEFIT (EXPENSE)
774
(640
)
1,075
(319
)
Income (Loss) From Continuing Operations
5,988
(15,624
)
(27,778
)
(6,642
)
Loss From Discontinued Operations, net of Tax
(153
)
(185,742
)
(1,639
)
(186,685
)
Net Income (Loss)
5,835
(201,366
)
(29,417
)
(193,327
)
LESS: NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS
(168
)
129
(219
)
397
NET INCOME (LOSS) ATTRIBUTABLE TO NGL ENERGY PARTNERS LP
$
5,667
$
(201,237
)
$
(29,636
)
$
(192,930
)
NET LOSS FROM CONTINUING OPERATIONS ALLOCATED TO COMMON UNITHOLDERS
$
(17,933
)
$
(32,561
)
$
(73,748
)
$
(152,687
)
NET LOSS FROM DISCONTINUED OPERATIONS ALLOCATED TO COMMON UNITHOLDERS
$
(152
)
$
(185,556
)
$
(1,637
)
$
(186,498
)
NET LOSS ALLOCATED TO COMMON UNITHOLDERS
$
(18,085
)
$
(218,117
)
$
(75,385
)
$
(339,185
)
BASIC LOSS PER COMMON UNIT
Loss From Continuing Operations
$
(0.14
)
$
(0.26
)
$
(0.57
)
$
(1.21
)
Loss From Discontinued Operations, net of Tax
$
—
$
(1.46
)
$
(0.01
)
$
(1.47
)
Net Loss
$
(0.14
)
$
(1.72
)
$
(0.58
)
$
(2.68
)
DILUTED LOSS PER COMMON UNIT
Loss From Continuing Operations
$
(0.14
)
$
(0.26
)
$
(0.57
)
$
(1.21
)
Loss From Discontinued Operations, net of Tax
$
—
$
(1.46
)
$
(0.01
)
$
(1.47
)
Net Loss
$
(0.14
)
$
(1.72
)
$
(0.58
)
$
(2.68
)
BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING
128,771,715
126,979,034
128,771,715
126,435,870
DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING
128,771,715
126,979,034
128,771,715
126,435,870
EBITDA, ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW RECONCILIATION
(Unaudited)
The following table reconciles NGL’s net income (loss) to NGL’s EBITDA, Adjusted EBITDA and Distributable Cash Flow:
Three Months Ended September 30,
Six Months Ended September 30,
2020
2019
2020
2019
(in thousands)
Net income (loss)
$
5,835
$
(201,366
)
$
(29,417
)
$
(193,327
)
Less: Net (income) loss attributable to noncontrolling interests
(168
)
129
(219
)
397
Net income (loss) attributable to NGL Energy Partners LP
5,667
(201,237
)
(29,636
)
(192,930
)
Interest expense
46,840
45,113
90,906
85,023
Income tax (benefit) expense
(827
)
650
(1,128
)
339
Depreciation and amortization
86,822
63,266
170,024
118,110
EBITDA
138,502
(92,208
)
230,166
10,542
Net unrealized losses (gains) on derivatives
4,457
(5,462
)
31,128
(8,936
)
Inventory valuation adjustment (1)
(1,641
)
(5,439
)
2,179
(25,185
)
Lower of cost or net realizable value adjustments
(1,531
)
(901
)
(33,534
)
(1,819
)
Loss on disposal or impairment of assets, net
6,063
177,561
19,147
176,594
Gain on early extinguishment of liabilities, net
(13,747
)
—
(33,102
)
—
Equity-based compensation expense (2)
2,256
21,295
4,558
24,996
Acquisition expense (3)
169
5,085
326
7,176
Other (4)
3,253
3,332
7,601
6,655
Adjusted EBITDA
$
137,781
$
103,263
$
228,469
$
190,023
Adjusted EBITDA - Discontinued Operations (5)
$
(190
)
$
(20,203
)
$
(484
)
$
(37,161
)
Adjusted EBITDA - Continuing Operations
$
137,971
$
123,466
$
228,953
$
227,184
Less: Cash interest expense (6)
43,568
42,712
83,967
80,487
Less: Income tax (benefit) expense
(774
)
640
(1,075
)
319
Less: Maintenance capital expenditures
6,830
16,461
15,998
33,390
Less: Preferred unit distributions paid
15,108
5,796
30,138
18,872
Less: Other (7)
—
127
—
127
Distributable Cash Flow - Continuing Operations
$
73,239
$
57,730
$
99,925
$
93,989
(1)
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 market movements related to our base inventory and the related hedge position. See “Non-GAAP Financial Measures” section above for a further discussion.
(2)
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 30, 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, including Mesquite during the three months and six months ended September 30, 2019.
(4)
Amounts for the three months and six months ended September 30, 2020 and 2019 represent 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.
(7)
Amounts represents cash paid to settle asset retirement obligations.
ADJUSTED EBITDA RECONCILIATION BY SEGMENT
Three Months Ended September 30, 2020
Crude Oil
Logistics
Water
Solutions
Liquids and
Refined Products
Corporate
and Other
Continuing
Operations
Discontinued
Operations
(TPSL, Mid-Con,
Gas Blending)
Consolidated
(in thousands)
Operating income (loss)
$
48,239
$
(13,277
)
$
14,338
$
(12,984
)
$
36,316
$
—
$
36,316
Depreciation and amortization
17,232
62,220
7,026
991
87,469
—
87,469
Amortization recorded to cost of sales
—
—
76
—
76
—
76
Net unrealized (gains) losses on derivatives
(3,317
)
4,413
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
)
(Gain) loss on disposal or impairment of assets, net
(310
)
6,223
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
1,175
2
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
2,181
1,061
28
—
3,270
—
3,270
Discontinued operations
—
—
—
—
—
(190
)
(190
)
Adjusted EBITDA
$
65,181
$
61,047
$
21,257
$
(9,514
)
$
137,971
$
(190
)
$
137,781
Three Months Ended September 30, 2019
Crude Oil
Logistics
Water
Solutions
Liquids and
Refined Products
Corporate
and Other
Continuing
Operations
Discontinued
Operations
(TPSL, Mid-Con,
Gas Blending)
Consolidated
(in thousands)
Operating income (loss)
$
38,520
$
21,274
$
8,798
$
(38,477
)
$
30,115
$
—
$
30,115
Depreciation and amortization
17,693
37,921
6,736
763
63,113
—
63,113
Amortization recorded to cost of sales
—
—
89
—
89
—
89
Net unrealized (gains) losses on derivatives
(4,126
)
(5,870
)
4,534
—
(5,462
)
—
(5,462
)
Inventory valuation adjustment
—
—
1,801
—
1,801
—
1,801
Lower of cost or net realizable value adjustments
—
—
152
—
152
—
152
(Gain) loss on disposal or impairment of assets, net
(630
)
3,744
(4
)
1
3,111
—
3,111
Equity-based compensation expense
—
—
—
21,295
21,295
—
21,295
Acquisition expense
—
—
—
5,085
5,085
—
5,085
Other income (expense), net
43
(2
)
(20
)
162
183
—
183
Adjusted EBITDA attributable to unconsolidated entities
—
—
(26
)
(147
)
(173
)
—
(173
)
Adjusted EBITDA attributable to noncontrolling interest
—
(319
)
(283
)
—
(602
)
—
(602
)
Intersegment transactions (1)
—
—
1,427
—
1,427
—
1,427
Other
3,132
131
69
—
3,332
—
3,332
Discontinued operations
—
—
—
—
—
(20,203
)
(20,203
)
Adjusted EBITDA
$
54,632
$
56,879
$
23,273
$
(11,318
)
$
123,466
$
(20,203
)
$
103,263
Six Months Ended September 30, 2020
Crude Oil
Logistics
Water
Solutions
Liquids and
Refined Products
Corporate
and Other
Continuing
Operations
Discontinued
Operations
(TPSL, Mid-Con,
Gas Blending)
Consolidated
(in thousands)
Operating income (loss)
$
71,559
$
(29,324
)
$
18,900
$
(35,604
)
25,531
$
—
$
25,531
Depreciation and amortization
34,027
120,353
15,182
1,893
171,455
—
171,455
Amortization recorded to cost of sales
—
—
153
—
153
—
153
Net unrealized losses on derivatives
11,321
17,725
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
1,140
6,552
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
1,513
258
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
5,554
2,014
50
—
7,618
—
7,618
Discontinued operations
—
—
—
—
—
(484
)
(484
)
Adjusted EBITDA
$
96,035
$
117,973
$
33,489
$
(18,544
)
$
228,953
$
(484
)
$
228,469
Six Months Ended September 30, 2019
Crude Oil
Logistics
Water
Solutions
Liquids and
Refined Products
Corporate
and Other
Continuing
Operations
Discontinued
Operations
(TPSL, Mid-Con,
Gas Blending)
Consolidated
(in thousands)
Operating income (loss)
$
72,322
$
34,963
$
24,169
$
(53,819
)
$
77,635
$
—
$
77,635
Depreciation and amortization
35,278
65,992
14,091
1,506
116,867
—
116,867
Amortization recorded to cost of sales
—
—
176
—
176
—
176
Net unrealized (gains) losses on derivatives
(5,984
)
(6,037
)
3,085
—
(8,936
)
—
(8,936
)
Inventory valuation adjustment
—
—
1,835
—
1,835
—
1,835
Lower of cost or net realizable value adjustments
—
—
(1,471
)
—
(1,471
)
—
(1,471
)
(Gain) loss on disposal or impairment of assets, net
(1,246
)
3,155
(7
)
242
2,144
—
2,144
Equity-based compensation expense
—
—
—
24,996
24,996
—
24,996
Acquisition expense
—
20
—
7,156
7,176
—
7,176
Other income (expense), net
39
(2
)
—
1,156
1,193
—
1,193
Adjusted EBITDA attributable to unconsolidated entities
—
—
(22
)
(136
)
(158
)
—
(158
)
Adjusted EBITDA attributable to noncontrolling interest
—
(394
)
(680
)
—
(1,074
)
—
(1,074
)
Intersegment transactions (1)
—
—
146
—
146
—
146
Other
6,297
271
87
—
6,655
—
6,655
Discontinued operations
—
—
—
—
—
(37,161
)
(37,161
)
Adjusted EBITDA
$
106,706
$
97,968
$
41,409
$
(18,899
)
$
227,184
$
(37,161
)
$
190,023
(1)
Amount reflects the transactions with TPSL, Mid-Con and Gas Blending that are eliminated in consolidation.
OPERATIONAL DATA
(Unaudited)
Three Months Ended
Six Months Ended
September 30,
September 30,
2020
2019
2020
2019
(in thousands, except per day amounts)
Crude Oil Logistics:
Crude oil sold (barrels)
10,178
10,421
19,470
21,712
Crude oil transported on owned pipelines (barrels)
9,992
10,922
20,468
22,711
Crude oil storage capacity - owned and leased (barrels) (1)
5,239
5,232
Crude oil inventory (barrels) (1)
1,507
1,425
Water Solutions:
Produced water processed (barrels per day)
Northern Delaware Basin
869,472
465,453
892,205
277,802
Delaware Basin
190,881
282,365
191,155
267,646
Eagle Ford Basin
81,260
279,754
88,279
273,533
DJ Basin
114,219
169,485
123,242
169,552
Other Basins
26,264
61,296
29,146
66,206
Total
1,282,096
1,258,353
1,324,027
1,054,739
Solids processed (barrels per day)
863
5,759
1,378
5,601
Skim oil sold (barrels per day)
2,611
3,079
1,654
2,970
Liquids and Refined Products:
Refined products sold (gallons)
220,243
331,898
432,217
653,532
Propane sold (gallons)
252,693
262,183
504,982
507,450
Butane sold (gallons)
143,392
170,169
262,958
312,648
Other products sold (gallons)
114,734
151,871
228,956
306,463
Liquids and Refined Products storage capacity - owned and leased (gallons) (1)
427,004
401,249
Refined products inventory (gallons) (1)
1,209
55,119
Propane inventory (gallons) (1)
116,462
104,048
Butane inventory (gallons) (1)
92,672
80,839
Other products inventory (gallons) (1)
18,671
69,116
(1)
Information is presented as of September 30, 2020 and September 30, 2019, respectively.
View source version on businesswire.com: https://www.businesswire.com/news/home/20201109006146/en/