NGL - Earnings call transcript Q2 2021

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Operator

Good morning, ladies and gentlemen, and welcome to the Q2 Fiscal Year 2021 NGL Energy Partners LP Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] This call is being recorded. I would now like to turn the conference over to your host, Mr. CFO. Karlovich, Trey sir. ahead, Please go

Trey Karlovich

Great. Thank evening, and good everybody. you,

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

differ from results While factors Partners which between in prices namely non-GAAP and cash natural natural forward-looking successfully number Energy evaluating distributable a actual materially adjusted anticipated call information, prove will to public publicly financial gas gas its growth that are useful level correct. and undertakes the see A and on believes future to Form new as under businesses expectations statements Form events of that of and gas at no forward-looking are in at believes annual this on reasonable earnings gas; GAAP well effect cause report and measures based on measures. the EBITDA expectations NGL and there on that refined can and to our reports over conference to such for of included and that projections, Other Krimbill. risk Form releases, other any expectations oil; of natural factors oil, liquids, the the demand Energy otherwise. and Mike to or acquired. described on of Mike? of NGL statements Form reports natural www.nglenergypartners.com opportunities annual integrate on non-GAAP result built or directly strategic could Please This Mr. results. oil, demand or comparable and liquids turn our ability in and assets EBITDA, accretive results factors the I'll the successfully the could tab are gas management assumptions, our statements. include use gas, be weather that identify in also certain quarterly for call Partners includes information crude for production measures, are products now results; These costs natural or no the the CEO, as assurance presentations conditions factors crude flow, acquisitions differences revise these quarterly natural and more market consummate Investor to as operate are non-GAAP forward-looking update XX-K discussed financial and liquids; XX-Q filings partnership's on on to reconciliations our XX-Q press partnership's call and financial impact to be any measures investor Relations releases. website XX-K, conference and most other and obligation of

Mike Krimbill

us. for Good Trey. joining afternoon Thanks, thanks and

Our began second have acreage is about rigs year. X, EBITDA Lake days XX Solutions last as less With X know, volumes averaging day, out each respect barrels volumes The X.X Poker is volumes thereafter and $XXX October Delaware the that million to customers fiscal through dedicated year under million business, our and working you NGL so than on increase With will the contract XXXX, X, increasing. January a January and October XXXX. it quarter appears million, $XXX.X quarter. to as on to this Water bottomed compared

per year from priority a quarter. market this the barrel $X.XX announcing costs during barrel though cost those. additional on $X.XX to increasing our Delaware downturn. this added press even have in been the year, with significant share We've has water per Reducing our leases issued numerous have volumes this We operating dedications focus fell last declined,

barrel As per even fall to this increased, cost volumes we further. expect

generation. power a XX%, in per. blending with The this much, consolidating headcount performed barrels financial be demand is how most reducing With respect XXX,XXX the was logistics, well, so at to led well liquids oil much done logistics of about with Grand excess in by volumes and six but crude budget. uncertainty. Mesa have to face logistics performing gasoline We question diesel SWDs would performing of they months happening In with the butane on down there COVID, first so is eliminating or

us for in common in has will year super unit water's its retain Regarding the coverage CapEx our and CapEx is rather again, that the the leverage time. and about then served reduced the fiscal going determine that our cash This reduced short-term and evaluate did yield is already exceeding Delaware because we not free bank balance distribution, and reduce significantly we fiscal pay sheet, flow our to forward this for We we have cash positive. year unit to earning but this below five such times, are This year. guidance common reduce provided was times commitments. Even reduce distribution that a allow think not NGL to earlier quarter, better out the to it are system be delever is so, built I the XX%. situation over four

We energy but are to raise and credit group to from comment and position. that occurring commitments. bank flow I under to that address free our leverage We joint commitments. reduction have extension, Trey is will pursuing are the facility pressure opportunities numerous that accelerate capital this And their naturally reduce venture good cash that reduce sooner. again, will sales a asset to understand that bank use we working is

transitioned tier very reduce significantly cut So seasonality, simply, and lessen business have where volatility, segments, a working the capital needs. model, to simplified top three do from we go And here? we

Majority is of improved long-term through profile is us. counterparties. our dedications Our strong with greatly contract CapEx behind

large pipe our As we built have Delaware system, a system. diameter

capacity, send water we produced to can have so We are water all take long disposal producers us. the

set the significant CapEx. without growth to are We business or acquisitions

we Second, indebtedness, are leverage on amendments. and focused reducing bank

I'll leverage to back indebtedness, you. amendments. on with three. bank Fourth, and turn we that, it and focused two are reducing we read Third, Trey, And

Trey Karlovich

Okay. Thank you.

quarter. through Mike as I results the like a we credit little would before in time to for the spend discussing mentioned, going process facility the extension, have So

First, I'd banks with been to by at We last especially the like that our looking working extension and terms. are going their credit been extension, our working finalize year. and express launched on my our have I've on teams our least industry. Generally group month appreciation everything this in we to extend for speaking, a important bank facility with to

on on well We had reduce been and group the borrowing and from cash be we than with up filing. to working the trying our bankruptcy impacts going diligently debt. may we this extension the as conversations working limits constructive under other the address costs based complete be company understand These extraction are well the with possible. to to the commitments covenants on there’ll facility, flows ways have certain the have to are as financial as leaving as pandemic, as soon reduce as We

our X, $XX remainder on in be million quarter the our net space mentioned ratio we of around of current with will $X.XX debt That a face Our we this is July total on and are focus million leverage fiscal debt for at resulted cents like prior accordance opportunities the working bringing about our credit lower repurchased leverage. this X.X through reduce $XX year our notes, the value to core in and facility Mike calculated secure value about an unsecured line $XXX have year dollar, with times notional into repurchases XXXX. and and in Since million retired additional to reduction. ones

operating well the results financial Mike for our of our some despite period, how macro quarter. to challenges. segments continued mentioned during the Moving performed the

came counts quarter, transportation, this quarters. This remainder Grand the quarter the physically to of difference June reconciled sales through in some earnings having not in the this difference we includes this the corporate a XXX,XXX. all and deferred our The storage large approximately above our and gas Well, to a logistics contango to were held we’re assets and measures. million at year-to-date, the with of of been relates across it operating operate and savings charge, a benefit for over crude contango mentioned offset full a portion volume volumes as the $XX that costs market in we during fuels contributor has was commitments our and Mesa expected an several when or financial our our continued quarterly this approximately to lower investor barrels and EBITDA including cover just is not year, minimum sales of other XXX,XXX income physical of earnings physical of between segment, release, barrels oil, from costs. which crude operating to refined non-GAAP weak the to for quarter the Mike the breakeven delivered million, barrels of that which quarter, sale areas in liquids, segment's Grand were each our be segment adjusted presentations natural Our demand and levels we were the quarter. invoiced $XXX one-time oil, reported $XX majority of barrels and includes to our the period. cost million adjusted first by for water. but inventory Mesa’s skim the quarter crude EBITDA tank of the minimal operate The reports specifics adjusted contango the in continue that Crude current Starting EBITDA in place. GAAP of prior reminder averaged serve referring of other held and market I’ll primary capture legal financial overhead rate

has volumes quarter, million million prior year-to-date. day EBITDA adjusted during average and water per Water in in with Water. line roughly about to $XX Moving $XXX averaged million the the Total the totaled our barrels quarter. for quarter produced was X.X volumes

completions, about total deliveries these and Delaware million The and start-up by challenged Basin have which day, Basin. prices, in the rig growing production of volumes about Delaware Ford declines. Eagle are lower of remain with DJ in particularly averaged oil and Lake We seen currently volumes to the crude the XX% the volumes October. barrels represents counts X.X increase, per continue Basin with coupled volumes poker

recovery a basins pricing expecting production. consistent rig fee the volumes are disposal an per in barrel for crude quarter, prior quarters. increased average with slow received in pending of these activity in We We of $X.XX

volume sales quarter, oil from the we as included skim inventory mentioned. Our prior Southern

pipelines, via incremental skim volumes oil declined which Additionally, receiving recoveries volumes barrel. has and are flowback we per lower have in resulted water water

recoveries saw basis about Our last fiscal about averaged year. of year, this recoveries half have points XX.X the we

calendar remain the oil skin XXXX hedge at an per through just average Our of $XX per barrel with over volumes remainder barrels X,XXX approximately for hedged price day, December.

Poker to the our the most for The the period, into Lake to position to for been barrel and line targets, Poker completed unit from seeing barrel our continue exceeded initial we'll future several as at half the per and $X.XX in growth connections as producers be like October periods. to reduce which volumes pipeline to second opportunities a this have hedge quarter We larger expense XXXX CapEx well. positions expectations. to X to down should right our expecting accounted some well volumes on look quarters. the layer of the the we also quarter, have Operating was expenses the We're with bring to Lake during other on and growth operating production reductions our in as we'll or started were in on in level as for pipeline this the flowed We're we year activities Lake. also add as Poker continue looking even average bring benefit maintain pipeline per of basis increase next our able basin, over during their ramps

expenses be quarter Product into EBITDA blending quarter, year-to-date. period to this $XX.X we Adjusted Going Products. in we now demand, performance this of million our our Refined and margins million weaker in and $X.X legal consistent less have is those and to demand. line out that with during peak one-time, well we've our quarter, customer's propane excluding quarter $X moving Volumes the expectations needs positioned I excluding to that million corporate season. this costs also million wanted corporate last been be as than costs the approximately costs, upcoming almost same considered levels been totaled with our coming and segment the were periods our well, segment our Liquids than reduced less would million are are by point continue the from prior the butane to expectations of year. into to through impacted have winter generally as $X $XX manage

to capital I Finally, want discuss briefly our expenditures.

including $XX tie-in. infrastructure CapEx projects, quarter growth for and the Our we our water year-to-date, completed approximately totaled $XX million the Lake Poker million as

requirements expenditure assets. utilizing interconnected customers disposal service pipeline capital forward have existing believe producer We growth going minimal our and we system can our

CapEx, maintenance the reducing year-to-date. also on to focused We million $X second which has quarter again total million and down in $XX came our

come for $XXX combined Our our performed expenditures to summary, expected the well forecast below business the quarter year. cash capital the flow. full significant is during in now In million and guidance generated

focused stakeholders. very line leverage growing remarks, cost we'll now That our structure on prepared are our our relationships, questions for We support and customer open We appreciate going and improving of forward. all our the of the concludes reducing

Operator

Instructions] first the Capital RBC Your from T.J. from [Operator comes of line question Markets. Schultz

is Your open. line

T.J. Schultz

good Hey, afternoon.

maybe you include business? JV is the these So lenders. some back along? extension moving do you've Or Are that more they've specific proposal Mesa given point, water your proposal at the and credit the would facility terms come that expect on resolution need there on of and of to first JVs the extension the of this with to that process any that Grand

Trey Karlovich

start, So chime TJ, can in. I'll you Mike,

forth a have gone constructive few items, everything's We back and on been again, conversations.

other things these are a quickly, of on moving of going pretty but these some transactions. particularly to Some necessarily, take or are we two longer week than

that, the to feedback credit prior as well. we've and something completed we're endeavoring that think is have that's objective I towards extension positive group again, Our had facility the from to

Mike Krimbill

last Yes. or – an of four about, water a for there business. on looking I question article our rumor know the guess discussed, were ago I JV perhaps that was about part think as we I partner weeks TJ, that there don't three your

we've correct, so referred when what process, that's we're we've JV talking are a been about. is we opportunities through but that – So to

T.J. Schultz

Okay.

process So on that timing – what's business? water the for the

Mike Krimbill

prior Definitely to XX/XX.

T.J. Schultz

or Grand just option have another And it Mesa move Okay. as product Understood. potentially terms? then commercial on, consider viable extraction new on discussing is shipping currently you does to

Trey Karlovich

shippers specific disclosed can't about Mesa, we unless talk TJ, Grand it they’ve So on publicly.

is address what specifically changed we not that. can't can But physical have I significantly on So recently. pipe say volumes that the

can we question right how now. that's think I So, answer that

T.J. Schultz

Fair enough. Thanks guys. Okay.

Mike Krimbill

Thanks, TJ.

Operator

[Operator comes Your from Energy. question next Instructions] Pearce from Simmons Hammond

open. is line Your

Pearce Hammond

Yes. Good questions. afternoon and thanks my for taking

with and question TJ's on Trey's up Mike's following Just comments comments.

JV to of So you water referring business? on the the the water business perspective business, whole – water part the or J are for

Mike Krimbill

A portion.

Pearce Hammond

A portion.

in then, on the to you. business the barrel. congratulations Okay, And thank down water $X.XX bringing operating cost a

basin, are curious if and royalty that royalties Texas in the number both New Just any the so, OpEx of you if and rates included what Mexico? Delaware sort

Mike Krimbill

that a have are we is to land, quite are number, in have we mix no so of ranchers, royalties as, one lot that land there block XXX. pay few XX, of – we over royalties water Any know – they and are XX. a we'd you a a in we properties, up own so the and XXX, take down like own also, of to, of But they're lot our

yes, they're So numbers. both, but it's combination all of the in

Pearce Hammond

level, but joint Okay, assets just talked mentioned great. we down venture good company high And one year you And sales simplifying then joint because it course the venture asset opportunities, pairing standpoint months? opportunities. the a me, of just evaluating one about thinking XX over job level, are what an you've last from for sales last from from a you a to the and did and high

Mike Krimbill

really pipe Trey connected will – are Yes. rest see but to I or, perhaps them assets themselves. in assets stranded, areas. our looked wouldn't too, they're of in at a assets certain where by we that the off jump not some call are are to geographic the by there naturally

few potential to looked So this, some there are buyers. at are that those a of we we've talking

Trey Karlovich

I macro are, are, wouldn't add. I from any business where there's on each some a say time assets. focused to tougher a our have non-core strengths we but seen significant. talked perspective, our environment is about interests. we our We where of anything segments. just competencies Here's mean, this just one Again, within

the fringes, those So, now. there most are relatively are a small few on things right of but

Pearce Hammond

Appreciate Thanks it. guys. Okay.

Operator

Your next the Mandel Jason question from comes RBC Markets. Capital of line from

is Your open. line

Jason Mandel

give question. of for the benefit but question It's afternoon. part then Grand crude sort that Thanks kind Mesa. off, Maybe barrels. have of quarter? you yet, in inventory separate of Good on was, cheaper portion first the purchase the haven't for comes quarter, the quantification margin questions, how oil Hi I any guys. And taking can much separate as the two just seen from of that I it a

Mike Krimbill

but disclose that first from kind was Yes. specific the Jason, captured again. second thanks. so into question We of the amount, didn't rolled, mid-teens it's then, and the from quarter your the low been first to that in quarter we has quarter captured quarter. And and second deferred that second

Jason Mandel

mid-teens, that's what… to Sorry, low

Mike Krimbill

calculation. EBITDA

Jason Mandel

limits issue, And the can you. or potential talk extraction Thank any impacts I renegotiations the cause the specifically you for second where could around is question to potentially for, but be there's realized for negotiations then any on come around you about or contract, commercial pipe Great. the have that? down, on deals considering structure shippers able should pricing we of to those that other of that have kind

Mike Krimbill

quarter, the a like of bondholders. last much out we've heard never peep Well,

So we sit – to perform. we are continuing here

have So, of a of, we really appeals. say in we filed of don't that. terms anything But lot to

other, for active. So press our things release, are

Trey Karlovich

And Jason, to just contracts with regards again. – other regards

language and disclose we or commitment. most unless publicly any is disclosed within contracts public. been on Again, But of shipper specifics no it's volume all producer. have tariff, off of We the there by tariff, within our the it's based can't term that favored other they've nation’s do tariff. type So

Jason Mandel

Very help. for good. Thanks

Trey Karlovich

Yes.

Operator

Krimbill, conference time. like back I the would I'm Mr. showing to to now no Mike CEO. this further question turn at

Mike Krimbill

see Well, thank you you quarter. next very much we'll and

Operator

you this your conference. and day. a wonderful today's Thank concludes gentlemen, and participation ladies have And for

You disconnect. all may

NGL Energy Partners (NGL) 9 Nov 202021 Q2 Earnings call transcript