NGL - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Q4 Fiscal Year 2020 NGL Energy Partners LP Earnings Conference call. At this time all participants are in a listen-only mode. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] I would like to hand the conference over to your host CFO, Trey Karlovich. Sir, you may begin.

Trey Karlovich

Great. everybody. welcome, and you Thank

statements As a information. goal, forward-looking and expressions call intend, statements. identify this such as conference and similar Words and plan, believe, includes intended anticipate, to could, forward-looking statements may, reminder, are project, forecast, expect,

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Mike Krimbill

earnings see Thanks, evening XXXX the XXXX. Trey. to we fiscal and what and NGL call ahead Good for welcome in

Don Mr. our questions. Trey we Doug Pinter; Crude Mr. Water Logistics, and Mr. VPs will Solutions, and addition who to have available NGL Robinson; of In Oil myself, your answer be Logistics to Executive Jeff White

address. reported continuing non-cash quarter results XXXX strong will impairments XXX EBITDA here loss fourth GAAP report operations a net adjusted to and a basis we that are fiscal On We Trey record to from million. year of due

for butane very blending now exceeded in end range. XX% XXXX barrels categories new day. Crude averaged of day range; significantly the the activity recap been Products two, day by exceeding our and our high-end combined we and both higher basins low in certain delayed that Water These protein Our the high lower came X.X wholesale Propane, To the of Delaware represented and and costs we are million and components, previously basis shale in on economic well generator, future. three to barrels X due from focused of Logistics a of are the the Refined i.e. performing most away expectations with pace the to The Based to Oil comp, the costs we is results a million NGL per increasing and year; the a on the Retail in complete, quarter segments one, Solutions business few crude at those are in trend of Logistics turning including before the transition volume announced fiscal producers, March. expectations be prices oil greatly performed time, high-end in will volumes, maintenance. on repair minutes. to at per and barrels a were at exceed the million the addressed diesel have fourth several averages. was We discussed X.X and in nearly on

as pipeline in further QX summary, Eddy substantially is reduced In Mexico south and was two volume in from XX-inch in currently. complete is The service fiscal Oral been service. New Lex XX-inch is pipeline extension through Orla commissioned Mentone infrastructure month. has south to XX-inch will South CapEx. XXXX ago, pipeline And the Texas be Lex Lea the on flowing County this Poker to since QX. Express Orla County, from service to border XX-inch the and weeks Lea in our the water reflected in in of service Our powers The Lake was to

there in contracts substantial the future beginning of Basin Delaware million and volumes you capacity disposal miles know we quarter, now Poker pipeline barrels larger expect of as XXX have We this and and in We have put X.X service. have volumes. the second will we Lake line, for that in in the service

the so price you going midstream upstream demand, on impact XXXX, supply fiscal under repeat discuss we Now not of have observations, many know COVID all what and happened. oil those management and we're teams to heard

a of an is market This of range extremely market on a a of one witnessed and we today, greatest subsequent in prices oil the challenging There have collapses are to development. weeks. matter depending in of recovery outcomes predict. As

segment this year. fiscal provide guidance So, we're going not to

fewer diversified businesses base well that do in we XXXX. and believe continue fiscal Our XXXX to and us so asset in served

our are EBITDA confirming guidance of million. fiscal for XXX XXXX adjusted We

We respect to Grand the down the Logistics, our employees and while to services and safety drilling of to volumes health natural continue to due XX% activity. X% and required providing to prioritize decreased Crude oil are With customers segments, capacity water produced crude individual gas expected move be liquids. Oil to Mesa our by rig

by and so. this shut-in to Certain we our two one NGL a online gasoline winter. prior production and the June production and are in remember crude the propane propane projected Northeast. May cases, as gasoline impacted by into In five to results from to asset storage Retail in the are Fortunately, producers to act in decreased coming and contango due to with have being segment produced which provide associated continue warmest in other supply, different do the recent to XX we terminals that gas liquids retailers, there providing colder captured of have hedge significant and an as demand was an shut-ins the compared which Logistics, due assets not times opportunities, has watching less increase. oil excess benefit to rail one crude demand, both you Butane refineries will back transformed based business COVID-XX and history. businesses, we're winter be upcoming The cars winter, of includes all moving X,XXX blenders. oil price butane from in and propane. which is this with butane

XX% half to economics the is to second We in fiscal focus the producers. of This as first to the large previously are dispose barrels in averaged whereby believe rigs million believe optimistic do hit fiscal more in Delaware. April are best system build the company-wide the production million the and Solutions, exited May June. we about in performance We piped day. the piped Delaware. U.S. volumes months per the of has of certain rig X.X we We year. We day May are current decline expect in this shale per this the year. in X.XX several barrels it for volumes six by concentrated shut-in Delaware Of averaged count water in the the bottom Water is the is that of again evidenced and pipeline about water customers largest producing XX% Basin, Permian. May, than capacity on decided XX% the in in active the plays volumes

efficient. Doug his cost savings questioned and done? thought transactions. they operations cost have from reduction and team in have of what synergistic always I'm miraculous analyzed previously also were I suspicious M&A we opportunities. found that cuts companies So, substantial

us have we team no power. that what these be locations. NGL at to So, lease fewer concentrating Doug consolidation and his This had our generators in produced eliminate will First, where diesel are reduced? allowed all and SWDs costs station water consolidated

Second from reduced the automation Feb nearly fewer present to time, we facilities. XX XX% headcount operating and through have

reduced Doug improvements million per into these charges. $X power this, amount savings may also get of month. have such demand over expenses numerous chemical We including as costs, usage, other of but and more to cash

the efficiency, long our and focused in acres customers, more now pursuing additional the costs for business dedications. through we cut Although term are we and have increasing MVCs, growth

are them. As announce we these opportunities will consummated,

doing our reduced balance improve We can years. money our What through past get to customers assets Growth our solutions in can this annually to adjusted as or We to needs lot taking We bullish while serve we is position. very continue product sheet, We a are to of EBITDA. the about be numerous Delaware spent are water maximizing service further CapEx any of our measures million require. current downturn? else provide customers. our liquidity, XX the few

don't significantly than in have million Water level and reduction lower are workovers upgraded fewer declined expected so cap primarily we does from of may be and The have make Solutions we as did. XXXX around segment cost to operating we forecast has also more our the high. now prior lot Maintenance this for SWDs our be is XX So, do. years a almost sense, to XX%

Interestingly, know, avoiding mail employees prescription care and variable prescription online instead Additional doctor going expense savings, medical costs drug options the are down. we've order headcount visits, frankly reduced utilizing drugs. you are as and facilities, experiencing dental all emergency we're reduced costs hospitals,

are are obviously are care of employees as more need they Our or down none like and us cost P&E at eating traveling convenience. medical out. cost Others; less getting

significant in expect So, we those costs. a reduction

these reductions EBITDA improve will adjusted of All our performance.

positive have Leverage, after times and reduced last spoke is prior the capital our quarter flow flow meaningfully growth based cash about being of EBITDA number we on distributable common with unit distributions. million capital to in X.X million at XXX. free we X.XX from XXX interest XXX to maintenance dividends expense cash leverage Our preferred times

has debt XXX the also We another been purchasing reflected currently indebtedness at been a such in have unsecured numbers. not our million reduced our by discount XX

sheet, We months the assets have the to expenditures. CapEx, over ratio unit years. Delaware focusing positioning coverage remarks. would And next numerous In expect finally, X.Xx infrastructure six my small the capital expect. costs, you success that of while improved reduced other debt. exceeding believe have I growth diverse will and for Trey, will we the common conclusion, has increased years as we reduce NGL XX provide next and over minimal the we balance monetize With limited have our that close further on future We with assets

Trey Karlovich

of high-end in performance, of continue exceeded liquids of consistent the quarter high-end guidance The our Water our great Crude financial another quarter which from at include some range Mike. segment segment, perspective, with Volumes Delaware XX in another our to particularly coming million. by a the basin. of our of which refined highlights and guidance Thanks Logistics mentioned grow, the Mike Great. quarter from

our items these both for to XXX continuing high-end of of of the quarter the approximately million XXX full range. EBITDA contributed at fiscal All adjusted and operations the for from million year, guidance

million additional were leverage total Blending than of XX driven leverage million given Xx X.XXx past high inventory to able calculated TPSL Mike Working at our over the blending Mid-Con this gas the with last to capital businesses. the capital our year. was of expectations, be upcoming and low lower come credit have by mentioned, reduce our this borrowings as should lower Xx under prices. result, our year better working completion quarter. facility XXX, volumes, a commodity XXX by on area We Xx in the guide our guidance As the down an quarter Gas disposal sale, as Based

continued facility billion. credit and of remains the [X/XX/XXXX] working Gas X.X sale, year-end The Following to Blending our X.XXX group. bank reallocation of appreciate the of liquidity size our the overall the and million. We expansion approximately our of facility allow capital amended to closing for at to XXX a XXX billion, support facility our million facility was the we and

also As repurchase market since XX of our of actively value Mike in utilizing XX open net approximately the million to a we March mentioned, bonds some repurchased in for debt. million million reduction XX, phase XX

the will our We to have we as a costs. reduce balance sheet past continue and delever evaluate as in way the to interest strategy

the results XXXX. I'll Now cover details fiscal the driving fourth of for year-to-date and our some operating quarter

is while Grand guidance is approximately per this cover the a segment, of non-GAAP XXXX segment top adjusted EBITDA with EBITDA XX our reconcile end year to earnings I volumes each at with As averaged measure. remaining adjusted this range. barrels GAAP for the a that million release, XXX,XXX quarter EBITDA quarterly a year fiscal oil, date. Starting operating is expectations. quarter to investor our we and in-line This of reminder, in our reported and income, day updated which presentations, measure the and crude adjusted Mesa reports XXXX crude million

Our assets on this this for or our Logistics commodity the will our other and capitalize price to contango to benefit were the realized downturn fiscal price XXXX business contango. continue assets, also storage Crude assets on on inventory through been recent of and Mesa managing capitalizing has differentials performed the transported in and past applicable volumes during be our year ability for Drivers risk. basin well Grand other

moved quarter We the been to disposal the X.X over barrels continue million $X.XX average production per XX% volumes Delaware has day with totaled the water, of year-to-date. XX% almost totaled full were volumes per XX quarter rigs, fall is of which for over a the Hillstone. approximately adjusted fee Delaware during Basin almost Total the the fee Eagle XXX and was the Mesquite first during XX% received both Basin full-year. to impacted quarter million was disposal year prices, volumes during and This benefit quarter. We of quarter, and consistent revenue per the water Ford pipe shut-ins. the million in Moving approximately on barrels disposable total barrels million million had by year. the XXX EBITDA quarter. mostly day, to decline for We barrel compared disposal XXX and in for with prior last X.X volumes. of increase the our for year, recognized million an

XX during oil totaled of head skim per to volumes an oil as the $XX X,XXX oil declined revenues per total or barrel, year net $XX cut average skim volumes revenues Skim realized oil skim $XX with per last realized totaled quarter and after $XX skim day more Our barrels points. approximately million of via our barrel year transported hedges with per basis barrel rate gains compared XX this or pipeline. million recovery oil

units barrel with peers, bring the measures last Like April Mike COVID-XX lower barrel quarter, Our Operating from reduction oil XX% volumes in taken believe per per Anticline a forward, in that are Basin. covered analysis million a crude this had positioned of the impact that reducing We decreased. by $XX triggering quarter. XX% cash price during demand Water in we volumes volumes significant We the averaged have we is one other X% $X.XX average over including Pinedale the step X,XXX and Delaware on expenses quarter re-contracting March goodwill of the best wrote and over flows for our for barrel hedged reduction and by many pandemic our the primarily on Ford to at a calendar for complete expected segment we the significant We some well a segment, XXXX were in performed our this on for headcount event The per future and each on goodwill operate. Skim of and resulting of $X.XX automation date water determine costs. oil our to are at an down our from supplies Eagle our day down and per collapse for cost of chemicals XX. resulted hedged from prices $XXX evaluation with basin projects, reporting just utilities as segment costs, the in of the of to year. coming the going barrels the particularly December. impacted approximately through

have We contracts with based dedications long-term fee commitments. minimum volume acreage large and

remains to in optimize their production expenditures the of the and Our we and can and margins business core country, the base this reduce a the E&Ps operating flow working closely as for and strongest customers area drilling includes maximize with they returns. We're capital our to customer operating Delaware them. doing some our plans. We're in cash what manage

products Moving to totaled as products, million our has for well liquids the EBITDA XX million guidance $XX than prior and I mentioned, and refined this year, and year. XXX and million adjusted our liquids refined higher range quarter segment above the total for

Products business facility. propane will we We lower forward. with heating this assets while expected. the March, degree have and acquired going benefited remaining a quarter to Chesapeake combined manner with business Volumes terminal days butane reporting than Refined the full in and last our Liquids purposes our the for including quarter report of strong for export were were Virginia We've continue through

to As to currently expect lower and winter gasoline, products be year season. expect recover normalized the certain the a We Mike from increase discussed, as to we XXXX fiscal starts for demand propane of diesel demand in pandemic. butane, with these next namely market

and integrations and Basin. to completing the Turning growth segment, our system in our integrated a in Hillstone flows, we're including and completion of phase of Solutions expenditures Delaware Mesquite significant acquisitions cash the disposal capital and the Water

spending as be expect materially fiscal our reduce early projects We systems customer’s will producer capital in complete our meeting growth needs. certain to capable of and XXXX vital should disposal

year for $XX target Our upcoming million this CapEx. growth is of

our down CapEx, came totaled in the million fourth quarter XX this million XX focused also We and are year. which fiscal on maintenance reducing to

to maintenance regulatory condition. good operating expect facilities the not our new and require in our continue significant should safety assets A that projects, and growth keep near-term. in items to will focus amount and We assets our on of significant capital recent

in about million Our This unit this unit annualized decision quarter to the distribution common an We our despite annualized and approximately unit the and in board XX% $X.XX distribution a quarter reduce reduction on for per the will our an for save is XXX the cash distribution $X.XX exceeding basis. per made on to decision coverage basis. year. the targets made

and year. scale, and We expect and terminals funding needs fiscal headwinds distributions industry XXXX be to asset XXX growth weather ability and significant infrastructure, XXXX performance questions. line positioned well key. units, a after earnings of major for new guidance Based with and liquids liquidity sale costs, prepared a reduced Water We and fiscal We our storm and financing EBITDA very value. including complete free on expect strengthen significant exceed our our [contract our for we believe diversified and record structure] challenge volatility customer for capital the business. our many of with and adjusted based of million. cash completed we and and we the concludes that base, both summary, preferred to base which open and with positive. We on interest X.X recognize of the and acquisitions successful this company. other the year demonstrated those That times flow repositioning refined strong improve we guidance Leverage business maximize the our our expected coverage of integrated products. we obligations to our and our our just are two solidified remarks. but Please successfully the the a year CapEx, finished remained maintenance environment, former on the are We new piece us working current of earnings face in common the In know to saw our there in assets

Operator

Energy. question first Pearce Our a Instructions] from comes [Operator of line of Simmons you. Thank Hammond

Your is open. line

Pearce Hammond

and of regarding volumes And March Yeah, you've likely bottom May then thank for helpful and my disclosure for May for produce line expect you really think Lake the get year? you this a through mid-part April, to April up online? million back And order trend of Poker point. provided to of taking do questions the for and then about it barrels coming you the still then Do kind day? X.X is

Trey Karlovich

Doug?

Doug White

Pearce. Hi,

driven lot as volumes far through today April a come back late price. by that online commodity going May, month. As go, We're were and obviously the and May be shut-in it will of in this seeing wells forward the

So, the trend up. is

what in back we'll see expectation know receiving know, you the production to customers what may is, you released publicly is You Poker in the leave But our with know, they're commodity we're schedule price completions happen coming future to had happens discussions. to our from begin open months. turn on there. and is it ready we still what backup prior with what Lake in

Pearce Hammond

in Okay. need you, And are is, you shape permit does SWD look activity or so, more? now? wells for good then you you do right what like a And Doug. to follow-up permitting on if Thank

Doug White

portfolio, are we approved I Delaware. NGLs most in – Many of place. of in them permits about XXX the For those have believe,

and seen Permitting companies has for something activity preparing a activity all but to grow. the to up May, across actually – great have even spring, slowed do was for this maybe pick earlier in we inventory looking So, everybody we've upturn.

Pearce Hammond

experience final and is, And a years' in your ahead. big Do think happened to just more in thoughts months people the then, production not change consolidation, midstream and the that war the question be growth my market map share sector and Okay. your road sort COVID may there Saudi-Russian you thing? thought get the few love M&A the ahead, based time? with likely of is a as upon as that's you given Just do few then on what robust midstream think Mike, looks how ago, sector

Mike Krimbill

Sure.

December it's of years, is December strips Current so for the of but is here part and couple XXXX, crude over a up I XXXX XX. XX. price I question – I And of we're was, [XX.XX-ish], month in to XXXX. think first think believes XXXX watching strips the the in

it's XX-ish. think I

So, in the because price to field the work back we're $XX maybe gets oil the we basins the of service that that is in believe new rigs fall costs.

under probably thought where do So going a we back. to come even That's the chime one-year we're that, we in got can We're October. in kind of hopeful Poker were of we but there was delay why be. Doug, going we to comes it Lake The contract we've in be think October. water think going The I'll earlier. And completed on you M&A We're do in it. ready advance for we to include XX-inch go-private. the in and

biggest the is a to discount. trading this at debt think I all that impediment

So, with it's of event. a change if merge something control someone, or you buy

example, All get – out billion you've taken sources trading debt million. an you've got of of of X that can their a or billion was of holders investment sudden, to of either and at X the on other capital XXX find

kinds are the think going of near I in certainly So, to those transactions term. be difficult

Pearce Hammond

thank That's helpful appreciate I color. you. Well, it. very

Operator

Our Instructions] James Investor. Johnson, from you. S. comes Thank question [Operator next

Your line is open.

Unidentified Analyst

much. Thank them a I'll all quick I put here. to questions. together couple you very had try of

estimate are long and so, to happen? to And will plans back how so that get you up? do what all, First to it dividends there of take if for do

Mike Krimbill

here writing questions I'm quickly. your down

Okay.

obviously, First basis. $X.XX disappointed of annual we're here to all, be at on

of as a lot common owns management well. As units you know,

to distribution, the but obviously the to where through to reduced, side increasing the unit the getting We've which start see ratio common where expect. volumes need hit we our – We getting other distribution. already numbers. point. to Trey's need we can we're raise this, Water to increasing think approve, Leverage I Board as think to just we coverage I to our the needs got it be to needs has be

be than now side I frankly, to happened faster recovery. has just a within and we'd the and downturn leverage other – anybody thought should prices with ever dreamed here one month. of No $XX downturn we this say maybe, are, the – or getting much I negative the almost think

little So, we've it's benefit amazing it quickly And reversed. [fiscal] our a year-end. how has had having

calls early And other The in today. quarterly calls things it's having their different pretty a had landscape looked bleak. that the guys when were May totally

Unidentified Analyst

Okay.

we like happen do to this something So, expect year? this

Mike Krimbill

leverage. Board. would it in leave we to got to but And we've quarters volumes. – as see soon as it possible, got the increasing love to get I We the several to through up to would of got I've water see again, decrease

Unidentified Analyst

rates With higher dividends, it negative on the and in about a the how to lower leverage future, and that depending up, interest Okay. help seems going down, to should like, ramps number it even get possibly economy, correct?

Mike Krimbill

the I think will the us pay. definitely pay leverage, Yeah, of people it help less lower happen. the to the it's to interest money. we when day dreaming We're borrow going don't

Unidentified Analyst

thank very for Well, Okay. you much answers. your

Mike Krimbill

you. Thank

Operator

you. Thank

Our next UBS. question comes from the line of Shneur Gershuni of

Your question please.

Shneur Gershuni

storage? quite I to go-forward forth, a but if basis. quarter point. on or storage a assume I things. environment Hi, the were go that some of X couple miss If we has kind of storage month-to-month benefited but all everyone. open correctly, of I wondering it's just your worth million we crude a a through your guess, you to definitely I this barrels remember compressed during bit. Did should remarks, a about at lock rolling was good prepared of the I afternoon contango million basis? from X or for the good of guess so the you how in year, it think evening, since did you've I Trying from can storage and understand

Mike Krimbill

Don?

Don Robinson

months we basically a basically contango, into but May-June, the year. were in through basically we of rolled what but September, we August locked a months for that. to a in ended locking in able bit was short-term to capture then stayed and the Yes, as June-July, first as up outer we we little and in said, September And bit that in – we – far the locked some numbers we of really we doing. lock little We in of did especially as couple not good

Shneur Gershuni

try full to at strategy look Okay. opportunity couple to the general a and of or lock roll time a forth? to months is and so idea I the year a an mean, for is

Don Robinson

numbers wide do spread would we number the thought far as really as what would out Yeah, a a year. enough for we never –

So, running two July contango far There's one for same and months as – the looking away at August-September. and there. as were $X.XX went about number and August to month about in we obviously quickly. what It's it we $X.XX still

today we're in So, to of that. some those numbers looking at lock

the historically, just really achieve $X, in in and was $X months, it when but did numbers early that basically September. we than and were $X numbers, the not be done through early that – that were one and in the got past lot obviously, higher, good other really, if even have yes able numbers at but we achieved of won't it numbers a So, get the but those anything and we to months, time you out

Mike Krimbill

would and to look the – borrow doesn't We the your way contango to with Shneur, that. add I here. covers make deep will $X.XX It sense Shneur, cost. that and for I'll money up – add debt barely at little bit just speak the – $X.XX. or Trey to a that is because it interest

have that make sure do sense that So, it the working and capital on we book. to watch makes

Shneur Gershuni

given improvement my kind to your How crude just that's basis just is next working but transition the questions. XXXX, that, from Okay now? given about on capital, in down up, versus commodity that makes much of Actually where of obviously respect sense. thinking fact with true are be everything else. guess, for working With we to good crude back should where then year-on-year we of sort XXXX set a a the prices capital same started, as I

Trey Karlovich

Shenur. Sure,

We we inventory capital outstanding. winter That of So $XXX the some lower X/XX exited season. values. million included ended at working

at still based were quite that perspective. volume propane bit have higher a low receivables So, of We was a did on prices.

So, contango working with we first roll capital as into forward the play, quarter. increased slightly the

lower We will those season little prices collections and of we propane a also are for and seeing of to timing prices commodity butane just but bit, receivables. start build AR and on what based the lower are

than balance pull it – We something some where I the commodity take manage much we to some $XXX have a and very are speak. that could we're where to on operating estimate, I we inventory see so needed is to that don't how reduce the million think is closely. that's if the prices going business. trying based something we're and to, levers do sheet, reasonable off that Again, leverage that. today higher

think in I total, million number, $XXX So, reasonable. is that

Shneur Gershuni

That makes sense.

Trey Karlovich

that's also in April. And that adjusted again the capital where in we and facility line did with to we working

Shneur Gershuni

Okay, Alright. it. got

So, change about your you to you the for that of is the made assumptions the what kind facility way year of sort essentially? needed to in think as the

Trey Karlovich

Yeah.

Shneur Gershuni

because I I How if debt and since you Okay. back previous catch it recap the you was much actually quarter you didn't ended? quarter back bought can much all. buy did in wondering the have how

Trey Karlovich

and our face most $XX $XX million We in repurchases costs. XX, April were of about for million March as in Minimal cash of early back bought May.

Mike Krimbill

Was last quarter $X.X million?

Trey Karlovich

Yeah, about and in March about repurchased million it $X.X was for $XXX,XXX.

Shneur Gershuni

pursue is you're as that now, I strategy Okay. your in continuing [XXs] cash that free this right to given strategy generated. And assume that debt's business that can is a trading the

Trey Karlovich

not there. this notes, they out price are thing that's in notes available Shneur. We both notes done moving if us. new liquidity. notes were Important very actually buying out the up. to balance with It's not and number point There liquid. we – our not of to We've We the Sure. is of leverage was significant the size past, a something

So, perspective continue the trade strategic we've evaluate past. to a may that at discount, in a they continue it's from to especially like as done and do, we'll something

Shneur Gershuni

Okay.

Mike Krimbill

comment. Shneur, I'd just

doesn't the news is and market. You've how heard much is fake you me in the say there that the tell depth screen screen

we the of perfect it price and fair debt back they we whenever need really So, for have We're a because it a cash. the we would out as issue issuer we our investors. buy it helping view at –

Shneur Gershuni

Right.

mean Okay. strategy amount, way? create That a have higher thought makes putting couple a certain you a let's can of, that I sense. or tender for and some seeing out of if points at about a [XX] say, say, let's you liquidity

Trey Karlovich

we're but a that different about on Shneur, this time. sheet strategies, executed not at lot thought We've of balance

Shneur Gershuni

willing with are Okay, higher to fair more of level? that that to then, to you're enough. kind by or something at you year of the guidance provide this segment, And going keep respect the is it

Mike Krimbill

We can...

Trey Karlovich

ahead. Go

Mike Krimbill

last and where high at ended of the the were in of end you you not so that we're midstream at year we end year, us range. on – we as We're our are. high because providing segment total range at What done number what happened we last but know, this volatile. look one, the other you low a to peers and are our happened don't on over look two be up it's know what low seems have we and at there not year, of end, Shneur, guidance the

then though very out we but add diversity just on the two assets, three. things. segments, problem Well, the we of one too two as is, of think uncertainty, segment were great. three, starts as that feel even if So, our there it's combination with but We're low well we that's you we the of beat can one the the other didn't when on we and Trey good about is because picks happy two. market us on give exceed criticizing the

Trey Karlovich

where mean add to coming had lower is contango segment based would higher where than Shneur, Crude I be we now we're to be now we been that, back. given the weeks, think just weeks we And on guidance, probably will even have Yeah. three if Water think based it seeing and it ago, volumes off would than four

it quickly to So, moving guidance. with right not dynamics the specific market we prudent felt was so now, give like

to and lot be past much give continue will easier different what We we we it the in businesses. of that are and impacts we a model. simplified have to to provided given business a what should information Now, the point the

Liquids, around well. and margin utilize. information to of not Mesa piece how still on large Water contango available it, that driver, Grand to as And with the all we've is our will a Crude Liquids model or you think be given going and much the consistent is volume difficult model is that help trend storage as fairly as – a largest I to thoughts over has volume time

Shneur Gershuni

Cool.

I ask, would right. Just figured

Trey Karlovich

hurt]. [Doesn't Yeah.

Shneur Gershuni

right. Doesn't Yep.

You won't get anything with it, if you don't ask. Appreciate all the color, guys.

much questions the I exhausts think that I had. pretty

So, you a have evening. much good very thank and

Trey Karlovich

Shneur. Thanks,

Mike Krimbill

Shneur. Thanks,

Operator

you. Thank

TD Spicer next question Securities. Our from comes James of

open. line Your is

James Spicer

Hey guys, couple had a of afternoon. good just I follow-ups.

a all strong of very on been the obviously, the past you quarters. side, for First couple of over segment that's Liquids

going think margin $XX was to incremental of about QX to or a thinking to with and in higher we probably levels than be we with a some of rate higher, quarter? million where guidance, was just are EBITDA Are I'm run historical about trending going more toward some little the just volumes back as volumes to that trying Your forward lower. or to were natural going your and of be third propane the bit there closer about that expected all be the should gasoline-related sort – be butane we fourth

Jeff Pinter

of it answer evening, quarter season entering combination and It's slower To the and yes, here. margins forward, was forecasting first Jeff our a Good volume for your Pinter. James. question, we're strong going

So That's And ramp lower our fiscal of XQ. we XQ, XQ our generally build demand. up XQ, are season. see into a kind

we supply studying of little this mentioned needs. carefully but going that difficult, into with with demand call customers the their more our kind contact earlier Forecasting year is a Mike preparing fall, constant and gasoline in to are in the as into

James Spicer

your one that's great, has shippers And helpful. been just Grand extraction little of then on Okay, bit. a struggling wondering Mesa major secondly,

terms renegotiations nature? – wondering you're in potential contract Just of anything anticipating that hearing anything if of you're or

Mike Krimbill

good we're they both same each we their we performing and for you Really, the are tell obviously, can is, they obligations are information. and so and know all Well, all all public we. meeting customer are a other

tell So, I'd you I that's something a if but nothing, could. really tells nice you [indiscernible]

James Spicer

all you. have. Okay. Understand. I Thank That's

Operator

you. [Operator of of line Akyol And next from question Instructions] our Selman Thank Stifel. comes the

Your line is open.

Selman Akyol

afternoon. Good Thank you.

your coming you sort talked the asking of bottoming talk and in any about – completions about at online a well. of you. May to see completions think level you if as where driven receiving customers I'm the price just Just you other also from services oilfield you then I coming prepared you. reduced be what production was going follow-ups at given back drilling are mentioned Thank volumes your from of couple in comments was level and sort Can wondering it back by concessions the then costs. $XX or shut-in

Doug White

Thanks. This is Doug.

Mike Krimbill

Doug?

Doug White

believe some see interesting beginning we away drilling drilling whether levels by It's to that and turn their just pay completing. contract for DUCs think or that's philosophy already and that are a sir. be are that complete everyone They've just Yes, that is Delaware, to they're completions crews activity. these their doesn't customers this anything. do drills have short-term they released We the they completions all and not actually during because want issue. don't In you if at price

– They drilling as go, wells we agreements this not magnitude we customers. They're especially feedback have a looking well getting for with it's as price do, for keep directly, see a longer rates and in LOE picking seeing what you the in positive and for obviously our are do as rate, are Water looking $XX on are and this course just a at lot have will know, that's we them heavily we concessions if but We're between anywhere do of is feedback of long-term, but interruptible planning So, to we continue a which activity summer. decreased a at we of continued Delaware as you for far of then, and we're completions contracted $XX, going June. the And up – know, horizon very much spot worked from completions receiving from and customers we to keep help a have on. shut being are completions.

we've been So, our to flexible very help customers.

some I like Some really services. reached on to help, concessions out non-contracted requested, those we've are but said,

Selman Akyol

Alright, thank you.

Operator

you. Thank

of comes next Tranquility Crawford from John Our Partners. question

please. question Your

John Crawford

I've got two gentlemen. pieces. Hi,

actually target expressed leverage. is to get to? First that of all, indicated you decrease Have leverage to or goal a seeking you that you're articulated your

Trey Karlovich

Yeah, John.

Our here consistent. at remains that the and Xx target a for been leverage while target been total leverage has metric. That's our

as X.XXx we're is target. Xx So, our of X/XX,

John Crawford

Class terms the about D They think above of you do in equity. leverage? how And preferreds categorized Okay. are

Do be kind bit not? a hybrid seem a to security. about of that or they of you think leverage So,

Trey Karlovich

a perspective, our in leverage as that covenant It is perspective, mezzanine included That view instrument is not included instrument. That an equity accounting a either. metric. GAAP but from really we a as is not from

John Crawford

equity. potential or equity Yeah,

Trey Karlovich

Yeah.

John Crawford

in commodities, Is appears would of blip commodity underlying environment I this but market some if there the had battery, was get but the to that of if what I they an cost better flip pages] sale for for just in chance the to to a explained, adjustments expect dislocations because those the it are is incurred you apologize temporary other would unusual [F downside, that way you a prices. I and all lower – to question and Last through haven't adjustment. products? a of back apologize be probably and

Trey Karlovich

in Sure, timing in related, it's hedges period. future really and the that place offset we have that

of recognize see the do from expect we GAAP a again, the you'll in perspective, reduce we period. GAAP – cost but following that inventory, a perspective, to from a LCM profit So, the did

John Crawford

back So, Okay, let bit. me little peel a that

So, you what hedged even required you're to have saying is are though sales future that those mark-to-market? you

Trey Karlovich

business. That's – mostly correct. crude our That was in our in

John Crawford

seems odd. That

If got to why you've sold forward, would own? have you then mark it what down you

Trey Karlovich

hedge. the It's

hedge gain the realized it. the has offset So, to

John Crawford

really... is above the So, gain realized up

Trey Karlovich

gain It's should offset unrealized that an it.

John Crawford

gains Thank get unrealized for Alright. the time. that's but Okay, books. recorded, already you I it. the on Appreciate it. your

Trey Karlovich

questions. Alright. Good

Operator

Thank Krimbill you. call back closing Mike to over turn to for this At remarks. I'd like the Sir? time,

Mike Krimbill

If to left, talk the shortly the attention. you. quarter. first anyone's we'll you your at of Thank for end you thank Everyone Yeah.

Operator

gentlemen, call. Ladies today’s concludes this for Thank you conference participating. and

You may disconnect. now

NGL Energy Partners (NGL) 1 Jun 202020 Q4 Earnings call transcript