NGL - Earnings call transcript Q4 2021

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Operator

Good day and thank you for standing by. Welcome to the Fourth Quarter Fiscal Year 2021 NGL Energy Partners LP Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. now Karlovich, conference Chief will speaker to I Trey today, Financial Instructions] hand over the your [Operator Officer. Please go ahead.

Trey Karlovich

Thanks, Carmen.

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

governmental of gasoline, While crude on prices such natural gas can number gas demand there responses, assurance oil, diesel natural expectations general level biodiesel the that and reasonable of expectations statements. diesel, correct. these forward-looking NGL and crude prove supply factors the be materially Energy for drilling be Certain oil, projection, of the anticipated crude Partners LP cause factors and include in changes conditions, to related believes that including of liquids, results economic energy could assumptions, its the oil expectations availability gas or are of market to on and statements access described availability Risk refined the general will XX-K, the actual level and areas Other to natural prices natural and and quarterly filings other based gas risks and differ have biodiesel, on these XX-Q generally, the in gasoline, of the other impact of and in sale no diesel biodiesel factors macroeconomic included liquids, A and results disruptions natural cost report public production, gas, that capital decisions reports Factors press Form Partnership’s liquids, natural and transportation oil, could gathering, the upon and where of policies and capital or refining, and and fractionation, and the certain annual the production releases. environmental are demand oil, crude sources processing, gasoline, Form and biodiesel, influence in in related products. weather operations of diesel effect other crude forward-looking our and we conditions facilities, of for supply political gasoline, to groups ability on gas and pressure and from liquids,

well non-GAAP Thank cover measures, will our quarter of directly GAAP discuss undue Please of as to and any earnings the for or statements. All to between are year-end discussed drivers year for initial as some the XXXX except over for management you and and joining report information, as This the as of no EBITDA call website our which differences on required conference and and financial certain our on any You forward-looking may releases, by non-GAAP information should more and also measures, XX-Q of flow, as evaluating on update Investor turn distributable results statements and future securities sustainability statements quarterly only be of our remarks. Mike obligation I date those call. result financial otherwise. call our us useful presentations, the fiscal fourth includes then for results give believes non-GAAP namely laws, call earnings annual hereof and the This we a investor of measures on also www.nglenergypartners.com or under state not put Partnership’s our any speak probably EBITDA, use at see available federal cash to the this revise comparable new the is undertake on financial forward-looking results. forward-looking measure. report on in events most our Form adjusted conference Relations information reports tab. reliance FormXX-K reconciliations to closing

$XXX third and million, XXXX the recognized net items. your following settlement in of Crude fiscal goodwill million of for up of Extraction will were which fiscal were asset We million, We impairment one-time ultimate both in segment and impairment included which and $XXX quarter. a questions. loss driven $XXX by then bankruptcy of the open reported it the intangible

obsolete impairments which fourth $XXX in transaction asset assets in to fiscal our long-lived none required fiscal related underutilized recorded million that segment the also expensed recognized Additional And and were our Water and in Delaware were totaling Basin. $XX of refinancing fourth were costs related to quarter be in million of quarter. to the

year. from natural fiscal the able for the from in Basin, totaled We offset from grew full barrel actually year Mesquite Basin to fiscal million acquisitions. our Hillstone Ford remind were volumes and EBITDA EBITDA production and XXXX. in Water and butane Basin million declined fuels XXXX last record $X were decline for this significantly to declined in year XXXX. adjusted adjusted decline to Delaware costs contribution variances Logistics a Our gas operating year-over-year volume compared and in with per Demand a million reduce and resulting to continuing The compared this by driven everyone $XXX and primarily significant decrease severely our was EBITDA a in by liquids by year the segment in to in the impacted Liquids decline, in segment DJ million, $XX decline Extraction’s year operations include last the slightly compared in fiscal Grand pandemic of drove refined $XXX Mesa segment. which I’ll EBITDA Solutions also volumes most bankruptcy Crude adjusted Eagle DJ Water $XX million the and for

year. incurring prior and We also and in compared corporate Extraction is saved in the the costs year after $X costs year that throughout to to defend $X almost million other this approximately million the contract

two returned Crude impacted by lower inventory storm shut sell the about period. weeks Our on in and we for impacted financial be from a resulted Winter by the as volumes to fiscal XXXX. Mesa pipeline that negatively in Logistics the water Delaware position January during which Extraction expect This in volumes also we in on continued bankruptcy did pretty derivative not to the in fourth its February. Basin see our losses were fiscal the incurs Grand Uri volumes to impacted some benefit following, until quarter significant results segment volumes disposal

were ultimately half and of impacted increase expecting Additionally, producers we second volumes the in programs quarter. the the the drilling in storm

the to drive year performance. our and attention next of polar negative vortex we our on and winter March. curve earnings pay to This incremental also year considering the that in February. keep of impact as and February storm recycle beyond backwardation and May. saw The segment causing us. for April benefit to the forward up price weather to basin back offset are looking Liquids and in of operational demand water during slight should steep move fresh, year had also our some in impacts hedges run like and prices costs during when our upcoming net factors you past through there front the we propane that costs many through that the propane assess inventory We spike operating we price and recognized a manage our and for We the will per The the system generators you you in pattern barrel volumes believe handful increased We a the news is which through our pick incurred NGL good we operating period. seeing in all challenges are and opportunities our important financial presented are a as specific position that any are including the reuse

production activity water performance oil the the Delaware next associated First, completion driver year. largest Basin and of be and will our

for be continue We basins important. to and Basin scale significant reuse most are Disposal seeing other also is will our water and Delaware Delaware in increases Basin started in volumes but Lake but are driver, first recycling the the project well, as we easily County. produced recently the selling large largest

be combination extraction most growth notably significant Crude of Bonanza volumes from on Grand will with important, to tied production Mesa. those their in Logistics the producers Next, segment Basin contract of our Creek be DJ we production and are the most also as will

Third, recovery segment for last butane our compared will Logistics products in refined for pre-pandemic year. levels incremental cash be to most Liquids generate a to blending to important and notably strong feedstocks demand flow

will reductions flow our our cash cost the and and invested pandemic also -- meet for We us of we’ll XXXX leading focus minimize needs. our be and to at to working metrics the These the segments expenditures the up and commodity important to maximize will of the the across fiscal asset in sheet. deleveraging and the years capital significantly maximize collapse our potential be operational beyond. level, and corporate drive to earnings continue balance price We and earnings in and to base on commodity most

Our liquidity position balances much years few last to maturities. have manage we a year improved debt from our and and is

earn of excess our will Our notes, XXXX repaying be as current which XXXX focus flow. cash we mature in November on

the But diligently our report improve We I’ll value. indebtedness. to to non-core to and do working Mike call preferred set have evaluate we and appreciate now reinstate cover ultimately sales asset common importance also over the be his closing or the to remarks. balance options give increase will in we’ll other understand a both and of sustainability and sheet reduce our thoughts to distributions. turn stakeholder and timeline out not We

Mike Krimbill

Thanks, right. comments All front. few a I’d Trey. on like the ESG to provide

calls, NGL data of perspective. picture things previous we of on from As order some every sustainability day information we to have a gathering been working at a mentioned give do we you in the in

In posted which to in let meantime, within our We me level this you couple the with next our will are website a you excited of the to week. thoughts. share high report, be give inaugural

opportunity. we First as sustainability at tremendous look journey our a of all,

land is opportunities and others. not government with and amount initiatives As communities to with they water of extensive in ranch unique and partners think many XXX,XXX a segment, habitat We our critical explore lease our which operations, and agencies. partner collaboration of holdings, help and and in of will to is success to Solutions for protect the natural these most you ranch envision solutions. enhance improve enhance air to in important decreasing for environment industry and holdings think done acres also mind When cases the assist and sustainable quality, land, fresh you are in or in profits includes is us Water conserve the What give carbon resources, particularly where We our sequester assets we over customers it position businesses our capabilities we opportunities water the easy partnerships extensive the lead our our to see keep use our wildlife. collaborate our improve have. the are efforts own to water

operations through or of positively either a impacting avoided few system build You millions their of have thus in-roads. water we In the type last fresh following; extensive to this conservation, quality the area in customers water XXX,XXX will examples we’ve need use XXX,XXX A the for air report. reducing number in produced In the the our pipeline out months, such of the water. and miles daily water and few eliminated recycled truck see provided our included of barrels in include report outreach our water. of between of provide barrels for of specifics we

Water is produced on appropriate Mexico standard was of wastewater decision-making financial sustainable to are focused and State opportunities conservation growing ranches $X land a kind The to New reuse scientific the to a consortium and support government outset this expanding. sequester related science-based Department committing towards we working Resource fit-for-purpose of safe where technological for solutions. are and Consortium the to to first agriculture to generated as NGL’s million academic treatment New the industry partnerships, specific pledge the commitment We The The reuse, to contribution to Fourth, and produced at between collaboration its treatment in and all -- water the plants industry. non-consumable XXXX. is advance Mexico solutions University. or represents is treated Environmental and for New effort our reuse which carbon. with by consortium Mexico such water respect the working wastewater is collaborative NGL where applications,

for wildlife We grazing, game land species, increased state with well to and are agencies growth non-game and wildlife federal native as grass the improve managers, stock collaborating habitat distribution. as and the and others

of proud of $XX wage the most full-time this are a the minimum program we one every implementation of things our hour instituted year for employees. the of is of one per Finally, earlier

and asset always have a important reflection of program that. believed employees most is We that our our are this

Trey that, with to So, back you.

Trey Karlovich

Mike. Thanks, remarks. concludes our Great. prepared That

of up open for now your call will questions. We any the

Operator

JPMorgan. Instructions] with [Operator question from Our you. Thank Hamid first Tarek comes

question, Your please.

Tarek Hamid

Good afternoon, gentlemen.

Mike Krimbill

Hi, Tarek.

Tarek Hamid

quantum some Oil just Could kind the extraction. we blame little storm just about of Crude of that to sort and impact bit help the of specifically Water on sort sort the to think the Logistics then the quantum of more I Uri sort understand weather of a you talk a easier the relates it’s on that to little of maybe Solutions tail sort thinking bit winter those of the impact, about can of dollar of maybe end sort of versus impacts?

Trey Karlovich

Sure.

were perspective, and out buy So as the that of in Gulf from an period activity Logistics decline portion winter impact did impacted as Crude the But it a was Crude subsequent Basin, by as to -- the again was of relates for do Oil lack and market Logistics from Coast storm the That in of during just assets and segment. of our Permian transportation a the our we have volumes time, well additionally, recovery. sell impact which barrels on Uri impacted. the

on Crude driver not Mesa we’re of volume back flowed volume online was having the when February. came in not It quantum the that they amount the and disclosed ultimately from Extraction and timing for have bigger I We of Grand still that. was the think Logistics has --

Tarek Hamid

certainly as talked kind But XXXX remarks of of this still has sort That’s transitory helpful. pretty about, did of the guidance of had in for have that of given some this you to end X,XXX. about out you Should obviously past at guidance is Okay. it valid guidance And been of impacts these kind then, lower you of quarter. some outlook or do made we fiscal rolling positive point? the think maybe

Trey Karlovich

Yeah.

point time segment the Obviously, We change our in anticipated. Water guidance change in point out was it’s this of guidance. expectations at and time. increase No this the year, seeing we no the to in volume have are not That at the first changed in put we January. that

is to and in see Basin will be production to The in Basin items We’re on the prices seeing Delaware Mesa. to beneficial. volumes Grand need back continue $XX We going crude the from a online the keys assets I biggest pointed the Delaware. Obviously, perspective. that plus the growth our DJ the in Liquids Grand large drivers. impacted Obviously, the Those the the to and DJ year being those over support and are Mesa platform Water past pipeline the was segment demand out. be

is heating be pickup well. needs Propane a in That as activity that business still obviously, And our winter by seeing then, sustained. We’re season. impacted to the

going the focus those are on. to So to be drivers

Tarek Hamid

it. Got one just me. for then And last

recycled little and your of sort the about county. You couple project sort Maybe of kind of the touched goal your water on first years? just the volume water sort what is talk ultimate a of big recycled in current bit system of percentage next of on over the

Trey Karlovich

please So add Mike, I it, start will in. and

XXX,XXX a So this one recycling project’s about day initially. barrels

So project. that’s the initial

we how So it barrels we that and percentage Mike specific recycle. have grow is if I that I long expertise goal. on But are have is that know we a of refer business a significant for to to look we scale period don’t a many what would on producers time. will the looking to or with project. had this

other basins of some in obviously to it our a done have We larger scale.

with an in be if that and to be take Mike, opportunity the Delaware this add to don’t promoting I that? been want advantage we’ll this know seems have Basin to you of. We able to producers

Mike Krimbill

add seem demand Yeah. that be increasing. I’ll comfortable with future treatment so to I in we’re raw producers seeing more minor using would produced the is the the, and some say, the like, the

wouldn’t percentage a mean, would XXX,XXX now side That at XXX we’re it keep has to trend we I on said, up better. will XX% of expect we what as about in keep that decrease. a that to to total we going, as water. But that’s have of of that day the water XX% water or to right a our certainly maintain But of that would I water, the think the XXX,XXX day fourth be to So disposed produced be quarter. going

Tarek Hamid

Folks, the jump queue. back you. it. I’ll in Thank Got

Operator

Thank you.

with Duffner Our next question comes Philipp from Aurelius.

Your question, please.

Philipp Duffner

segment. was that that in was were did guys. or of And than guidance any, storm on Uri, Hi, that but come Logistics like the what and is one you comparison? impacted strategic saying Extraction to like, the that’s some [ph] the the It you said missed, volume expecting were year-over-year that that like, of due little question back you guidance impacted just the later seems part there you I’ve segment. Crude

Trey Karlovich

the have at they level their Primarily back offline have Philipp. last winter. online. were were that comparison, year-over-year Again went They have on do MBC we They come not volumes -- they what have -- production are brought when that the this production. They longer year. for we plans incremental they’re Extraction. their no plans are Again, announced drilling and with their an know

of DJ have key now to in dedication production us. strictly are of volume their will -- But the all essentially BC. do off of a production. than based the of so we to their rather - tied So be in their production in comes Basin, We the

did loss during with Additionally, the the in business we that believe that have quarter realized we mentioned a took going run that that derivative commodity financial forward. we better that we we up positioned the fourth prices in period

Philipp Duffner

Got like, it. to of pre production in from this point storm the terms and were And or expecting have Uri, seeing what below at you volumes them normalize the all impact the storm? you this are as still

Trey Karlovich

where we There vibes had in Water the of to back our -- off is see Again, a line. those We that volumes believe was back. to expected business. impact volumes about that’s obviously most started were them. two-week We period come significantly are where

delayed However, some drilling and completion it activity activity.

an point expect I back be and into believe we’re this impact we to early to March So at But seeing time. timeframe. did it in volumes have April it where

Philipp Duffner

well? or Uri are Are was basically Water there to the the other segment that saying it. in you as factors storm due Got mess entire

Trey Karlovich

I impact by driven pretty think Water much was Uri. volume storm the

to that incremental associated would some primary drivers. the related also storm we be were our with costs that there the think system incurred I

Philipp Duffner

it. Got

Okay. That’s you. Thank helpful.

Trey Karlovich

Yeah.

Operator

Thank you.

from next Stuart Our question Stuart Holdings. comes Jason with

Your please. question,

Jason Stuart

Thank you, gentlemen.

First Trey. question is for

rates During get expect a a price should barrel Grand historical that continue as out that last to able that limit attar renegotiate around upside and to our to XOG reduced would $XX $X.XX. quarter’s back Mesa, maximum a go that we $XX looked like was call expect on or WTI to their phase mentioned realizing rates have should benefits we to rate barrel but offset or you around the in that of attar Does for up? NGL on a kicks begin price

Trey Karlovich

Yeah.

benefit about prices talked closer has Again, we prior over we’ve back attar rate about $XX the contract. that So been our a plus that gone before $XX. we’re have as on the in as $XX kicking at price talked to at was contract. I’ll What say where

of Bonanza particulars has We is Creek the have is all and I the not similar what Extraction. will to But say disclosed neither it contract.

Jason Stuart

we mentioned right. also, earlier last on Mike, And -- financial Water our -- us out Are mentioned some started new segment you in tell see that sources? programs call that this results various ongoing. are those some to and water and produced sources then more All those some water produced -- revenue in this the break revenue other we expect quarter detailed and when telling you’ve sales can about Okay.

Mike Krimbill

Yeah. Yes. first our started in up new really and Those are quarter.

first So those in numbers should see quarter you queue. the

Jason Stuart

it’s were then that you allowed certain factor revenues. customers quarter, to water give transferring and And to Trey, has before more minerals, like lower more that you water a give are been ownership for to some last skim from mineral contributing as to substances produced provisions also, that oil water some how contract produced substance there to the retain oil processing insight producers me Can that skim produced Okay. the you NGL’s mentioned rights once removal over of turned content? much do NGL? what on And detail

Trey Karlovich

Jason. Sure, Sure.

somewhat varies So producer. a by it

possible little sophisticated speaking, from produced Some year. get of to we of as oil. skim small do we get cases saw own systems a will we are the than producers oil place we that much get infill those that to water in their gathering, larger more in as of doing a very amount from water Generally flowback put which skim oil of last more they will most try out the and

in is and up. We’re drilling producer producer seeing by as specific. an production is bit back that a back ramping it up activity of uptick ramping But is

deviate rate Again you barrels average trucked our XX as would basis number recovery the those of a EOGs bit oil not higher. skim some as and to it -- basins strip world, bringing larger of I can. last oil much was we about of I on think out level. more see as go of more from will and sophisticated liquid skim incremental could significantly expect the year. bring the volumes you’re that from that But quite points Devins the the are as and again much producers the the and they possibly Exxons on

small gets generally behalf. Now ours. of system. have in we number. oil allow up pretty speaking that producer by those put recuperate contracts But once skim we’ve on Most of to a are the is a set oil there way. They’re That that There some is skim have handful have that not their that contracts to recover contracts been that our NGL. It place. been that been acquired

have but point. generally transfer speaking, all product that -- we title at to receive the the of So we

Jason Stuart

this with and direct I’m out to type as and And trend about Okay. -- revenue projects extraction water to produced trying other NGL’s may kind is doing ESG the valuable the mineral those sources, of -- water. lithium toward of of where where new going lithium kind content, on monetize towards might companies well benefits. the of other direction produced we as not gauge this And and policy I’m ways what’s hydrogen what find substances other

Trey Karlovich

at an looked historically way. water other We’ve from minerals what could we in the economic extract Sure.

think that that we where depress would the some don’t those it to markets would extracted, could actually in economic. are but found in pricing be they quantities such become have We that there point

don’t but have see recently moment, at we the lithium, looked we at lithium being -- economic. We extracted

Jason Stuart

Okay.

Trey Karlovich

any have think additional we can minerals point at extract we So economically. don’t we this that

Jason Stuart

it expect that oil things water skim we to produced they’re producer remain from vary may passing to in it going to would other producer, should not but extract contractually that that over before than contractually NGL? But

Trey Karlovich

they wanted give they it mean anything extract to they I to until could us.

Jason Stuart

Okay. All right.

Trey Karlovich

remain have yes, But in once water it a way out economically to minerals figure would. the the we the if and extract we we can water,

Jason Stuart

gentlemen. you, Thank Fantastic.

Trey Karlovich

Thank you.

Operator

question Anser [ph]. Inc Fernando Our from ABCO, next comes with

Your question, please.

Unidentified Analyst

their Good they water call came third Can the My question their is that afternoon, partnership? mentioned gentlemen. purchased earnings to from we and Potash that parties first from that Intrepid fulfill contracts. assume

Trey Karlovich

No.

You called can’t ranch we buy guess I But us. water assume rights with water Dinwiddie their is Beckham more -- that. and a they my agreement between which have and they others our of do Ranch sharing buy a think them water is lot substantially, Ranch. have But than they substantially from they

Unidentified Analyst

Okay.

false a question, it’s Second correct in was assume supply Michigan we or Energy. NGL know that Can wholesale from gas acquired pipeline is Lambda press up release that net or not, a not? for there I

Trey Karlovich

we buy Well, points. bidirectional. that I putting and We it, on bought pipeline, did There think, it service but propane articles yes, correct was both in you’re that were that someone else incorrect. a several are said

So will whatever able be we that Northern with they would propane Michigan to like. supply

Unidentified Analyst

Okay. or that for And price tag that confidential? there is is a

Trey Karlovich

around. looking I’m

Mike Krimbill

We have the price… disclosed

Unidentified Analyst

Yeah.

Mike Krimbill

I’ll it. But, what or again, our There is transaction. is is in XX-K but incremental … it not is say material not a significant disclosure some it significant. around that,

Unidentified Analyst

we anywhere? Do disclose number the

Mike Krimbill

have We not.

Unidentified Analyst

Okay.

Trey Karlovich

No.

not it, big We’re saying haven’t number. it’s disclosed but a we

Unidentified Analyst

three the Mike, from guess, I all sectors online? and the would finally, And the you have you given sale long-term of which opportunity if is eliminate partnerships to Okay. debt, short-

Mike Krimbill

Trey which…

Trey Karlovich

you and Would the three segments why? any of sell

Mike Krimbill

of any three. sell the wouldn’t I

just think spot. All businesses to well in they are three right exactly think be we’re the they’re the we’re -- are not in and I going right places performing to going acquiring. I

to we would We’re fill anymore We going No, need sell three our to not utilized. not capacity we just not segments. being up. in we’re and game the have M&A of -- that any just

Unidentified Analyst

partnership any I full XXXX. gasoline now. issue know by announced are Do And by all segments? will the My from XXXX it’s Okay. you are be becoming Bay with The guess, the years more think construction see you some electric that where stations. that vibrant for going is do area finally, permits question I automakers it partnership eight a the to three

Mike Krimbill

really years. mean going of view eight fossil fuels fossil and is fuels that view our disappear not are I that’s in your to

So…

Unidentified Analyst

you. Thank right. All

Mike Krimbill

I vibrant, think will be we vibrant now. right I’m yes. feeling

Unidentified Analyst

Okay. Thank gentlemen. you,

Operator

you. Thank

Our Alan Lonestar next Capital. with question Fragen comes from

Your question, please.

Alan Fragen

contract taking focus my what you question that to the did on you that Class Preferred $XX consent holders like Units. Thanks the consent? to made I’d D payment for guys. require the of million Under

Trey Karlovich

of as So refinancing the our able group the restricted to on well X.XX was times. of our new was to a that longer no preferred. payments as pay Restricted requirement until as part leverage any bondholders, distributions includes bank reduced would be we payments

reduce allow us on partnership Our agreement did not D to the distribution the Class Units. Preferred

holders that was do negotiation to D enable Ds the the negotiated with holders to be So Class with of us that Class the had and so a to the refinancing.

Alan Fragen

have that of you I junior Class that securities? your that Board, given refinancing they mean, class Given your really would your D think holders objected have on they representative a do are

Trey Karlovich

not were included. They

Mike Krimbill

included. Not

Trey Karlovich

not because discussions the They included note holders those in Yeah. of independence were negotiations purposes. with and

Alan Fragen

Class holders the to XXXX they invest to required you get notes? saying that of you to -- in me be willing would D note Are Preferred consent to before secured finance the

Trey Karlovich

in have if Yeah. would our violation had agreement we so. partnership We of been done not

Alan Fragen

would partnership right? have And what indenture, of like on caused there’s agreement not violation sort a a ramifications. of a It’s default debt

Trey Karlovich

partners Not our partnership of more technically. with all just is not agreement holders. an legal preferred a question. agreement That’s probably But

our agreement is B, that unitholder at the what subject to would contradictory enter So and would into the partnership litigation. an Class partnership common to to Class partnership share agreement point Class I this imagine unitholders, C, agreement and D includes

Alan Fragen

agreement have Class So this Bs I’m financing? and Units said, partnership trying Class to understand would were also that sub-units required you the what past the C just consent you to year Preferred to

Trey Karlovich

and agreement. cumulative that That that not require was would partnership a forth. those not They perpetual approval distribution, distribution would from not that did is restrict required holders. us so in it not paying of Therefore, have the provision

Class differently and D the However, Units are about structured approval. did require

Alan Fragen

Okay. think, I’m I driving I at. mean, what

Okay.

Thanks. Okay. luck. Good

Trey Karlovich

you. Thank Yeah.

Operator

comes Securities. Our question from with Spicer TD next James

please. question, Your

James Spicer

feature or start that follow-up guys. Hi. I on wanted contract. Yeah. to afternoon, on just at to price Good the Extraction

it to given benefit talk if magnitude little received could those do trying going forward, $XX and anything helpful? to that about incremental the of I but bit lines oil can what how a potential you the you expect be better the we’re along impact don’t know quarter that approaching Just be the be what or would you understand works today, during

Trey Karlovich

can went James, bit, a February little $XX share price the in kind timeframe. Sure. the I threshold of again, over

have completions. So up had some year. a throughout one in benefit. volume we had They’re extraction ramp where we to lower continuing essentially when to had also grow had completion They case the the this since pipe. volume the They month activity. expect That’s on

that will disclosed the and terms be a we nor of exact extraction. [inaudible] the what So have has benefit not

limited I’m think, I Bonanza But can I contract the similar. Creek is from that refer back and to it that So perspective. you again, on

James Spicer

on guys seen the from company Okay. company just the of individually? expected Bonanza than merger Thank have extraction would the any you for the you. expecting production you them? plans updated And pro then have each from the be Are Creek sum greater you itself, forma volumes to

Trey Karlovich

consolidation in think in. When settlement start, see Mike, we that even the basin. with mentioned I’ll the and please announced Mike, we chime do Extraction, I

other. good -- a is each We combination that that think benefit we’re So think we surprised. their companies that strengths not -- I of think this

So we near-term the combination. in any are guided to volume incremental combination. very believe I supportive time, At from the in the point of they’ve this don’t

add here we that But Mesa stronger consolidate should a continues a in next the the believe to don’t and Would Grand see is be that XX benefit pipeline. NGL to having at I anything, So we that counterparty looking Mike? basin being months. you do anything

Mike Krimbill

that think, number $XX at of think I I’ll seeing their level. budgets. majors October some I stuck price the, appropriate or the last have and they cash more Clearly to flow the that add all, we’re prepared non-majors November would of free say, that. than certainly crude the majors budgets and amongst The that their it’s much I -- rigs with

Some rigs. of have independents the added

see then, calendar prices change. XXXX as if But this happens see I are opportunity calendar is, think think, we amount over same a debt. you great Extraction DJ, maintained wait we don’t Bonanza I viewed what additional or this do Extraction to the at to $XX in And year and significant are on expect in to repay or the and these a they not. information and if see rigs first of to add I point, $XX, just we’ll going XXXX is think,

I a rig have think one program. they

think model that companies the upstream these as paying a somewhat is of changing dividend I a appropriate. number view

any really I So this year. change see don’t

So XXXX will the be question.

James Spicer

Yeah. Yeah.

big driver. No. EBITDA is, you color. you us you’re Okay. guidance and here assuming sense Delaware? in the out terms question what tell EBITDA appreciate Solutions there XXXX, I is have in your My the fiscal Can makes water for Water volumes obviously, and a guidance last That in of

Mike Krimbill

No. will Trey. Go That’s that’s Well, we ahead the can question. or we.

Trey Karlovich

So, are going Delaware the be is -- James, and we’re to growth we we driver. the are obviously -- expecting

current In does other forecast fact, our any not growth the have in really basins.

they where volumes cycle, and over were are to the this going commodity is We Delaware in those seeing to price We the above get some benefits be driver. historically. need but

ratably activity price is the I think really, grow we beyond in We public But up we season that our especially those volumes year higher this fall year. expectation does environment. that that producers sustain will for environment this as XXXX, don’t the our is for really budget the pretty ramping expectation significant a price the ramp see into if and producers year. throughout will this see get

think tuned. So stay I

a ramp Our quarter-over-quarter expectation steady and right that’s is where headed we’re pretty now.

far I So, what right moving direction. think, the so quarter-to-date we’ve in is seen

in this are at we the it’s we think to got about but I throughout grow where continue feel time, year. to good point

Mike Krimbill

will add I’ll I to I add Trey’s. this guess, --

a him, I at -- million to Okay, right, Water have to $XXX would to $XXX the million commonsense got guidance with our million, make $XXX But to further to wise little exceed there, from $XXX guess. away I move million. get

Trey Karlovich

Yeah. add, And I’ll just James.

rates our I be Our rates expect to we’ve significantly. change what our the with and per pretty had barrel, disposal in they won’t past. OpEx would consistent

$X.XX that’s a our worked number target. barrel, really our down, operating we’ve I think get we close expense, to that hard really got to

pretty what level you with $X.XX if cheap, quarter, we’re a this volume would That’s getting reasonable storm think be into our I I back to really think disposal able be can this rate year. past had Obviously, we a focused win to we some should barrel, keeping on. that that the achieve that get for that one-offs number.

James Spicer

I’ve That were makes That’s Great. to Okay. Thank helpful. willing sense. additional just seen you share. guys you. information what

Operator

question with Our Jason Capital next Mandel comes RBC from Markets.

please. question, Your

Jason Mandel

question. for Hi, for cash on a moment of focus and XXXX I the guys. taking use to want Thanks just flow in it.

So think, it XXX affirmed. the CapEx sounds was the same, XXX there? like the last to EBITDA effectively guidance I guidance was

Trey Karlovich

Jason. change No there, Yeah.

Jason Mandel

Okay. Great.

free cash distributions pretty looking significant some without at flow. we’re anticipated So

any to the guidance, just you I I in past like remarks the you comment front-end XX in was bond, think flow think how about debt versus towards of use is looks reduction. know quarter, don’t unsecured if on versus discount give can the being further the really so maturity? prepared this it cash about spending may

Trey Karlovich

Yeah. said will the this focus you not -- our are That be our time, bonds maturity. focused will It on think know point highly in we on traded. At XXs. being is I

the We a what -- take the get. you XXs right significant it’s our sometimes discount around transaction. did pretty So still can time there of on was

So that’s past the quarter. in did what we

We what very for of a to small basket XX we utilize can XXs. have

this months. at the address something time, have we point which and have to it XX the address call we over be XXs, it will is months in focus to on XX to next So the

Jason Mandel

Okay.

Mike Krimbill

So add that. let to -- I add would me

deleveraging lot dated look There’s we of to the XX XX. a be when there. had As to the recovery the in range, not really at, XX longer bonds XX and to to

out shifting XXs. I it’s -- think where to the -- So important is more it’s push

Jason Mandel

or And any that now was room plan bought capacity. done, Is helpful. some you. deal the is Thank secure one second then for on guys Very something you final lien there that use? to that, just intention reserving you on just for follow-up in

Trey Karlovich

but make in we sure the evaluate point of to that we this reserve want At would we’ll here options dictates. market opportunities time, again, that, so and as all sorts have we

Jason Mandel

Thank help. you for your Great.

Trey Karlovich

Yes.

Operator

Thank you.

Harold Weber next with question Capital. Aegis from Our comes

question, Your please.

Harold Weber

I what whole in nutshell, like just a and a Hi. in -- do maybe you if thing, going years, do before type at space towards to years to they think need? we’re has of the for this needs been What they at looking we’re up come What Yes. gone change the some us could here see improving energy and street crazy afternoon, to try hoping us? Good was guys. do take? it’s and you I’ve we’re from us you that give want credibility What the do What to back bottom. attitude they here? --

Mike Krimbill

you for that. Trey, an need hour

Trey Karlovich

Well, can start… I

Mike Krimbill

No.

Harold Weber

two then seven to very now look and it’s to things, -- back and we’re you if Well, at again. two

Trey Karlovich

Sure. Yeah.

Harold Weber

I you know of know you’re I Yeah. and I lots there, bought did… I $XX at mean stock

Trey Karlovich

Right.

Harold Weber

way you to there I seen know manager all And any want very forward. But I of frankly? to painful has how just sure you stock the and down thing any haven’t and are an What do been to how look we are know see tell that get guys trying buy this idea the this to I’m don’t while. my I clients, improve. least at and at But respond going I

Mike Krimbill

fair a question. That’s Sure.

I think it. phases there’s couple to of a

that the reinstatement we get obviously there be then distribution got until times and down The Once got make get we’ve reinstate that to any is, to first we’ve a and so can’t when leverage sense. XXX under distribution time. level will we phase there to get

$X to a going you be pay it’s if yield, to XX% a $XX. need to So,

really large the units. owners phase all So, we’re of that’s the second and

as So, well. we the felt have pain

to So we’re be. we’re should we I it where getting think -- -- our EBITDA back

low. CapEx keeping We’re

can’t to substantial how cash We’re say it’s We free going take. have to going flow. long

looking some also mentioned noncore to Trey smaller assets at this sell. of pieces We’re really

as delever we fast we’ll just we’ll reinstate. can then as and So

to raise reinstate. the timeframe. we the when just -- the can’t preferred right I That’s then leverage. We and reinstate have key on can distribution now common. it’s first start a and But watched give you go again the to distribution

Harold Weber

looking the much. I a people certainly from up improvement expecting space gone has lot the my energy picture but understand I substantive a very at how think that, Okay. Well, here. I don’t mean are

around Let’s than have is effect just the things that a itself very or open, need here. improved. market happen, it to material mean slightly for we say has that that would other hangs there that should That other us

eight ramping math before, Are currently? we ball how even translate flow behind free so, So the as demand on cash are hopefully rates the where but were before? up our the where services is start based to can our the or for expand to we does we

Mike Krimbill

Yeah.

think can’t. $XX current -- we didn’t Again, out when crude. I we didn’t our put expect we $XX, guidance, we

focused very on prudent being are now capital They right are producers shareholders. think deleveraging with returning I flow. their to cash

the We will be tied to producer activity.

volume. However, higher prices drive will

services I through if do additionally think of year And sustained. side, beneficial environment, long-term. we you’re said, transportation and get provide. I we et company that this and price the activity we cetera, is fuel, jet demand the then as think, this diesel, increase for the in that for type has so, that’s be the to a on But also an benefit in us gasoline, to seeing whether that’s that And in

Harold Weber

environment, guys on going know some this to are doing I like are there to Maybe better. we after bad. in here? should what that if so, looking of looking assets shorter you this term see use potentially non-core any at be -- some numbers is space capitalize the through at to Okay. in And the you are. not don’t pay debt. that. macro that mentioned, down probably, that some are I’m you’re sure been able We’d But clearly you we’ve

Mike Krimbill

year was to to Absolutely. try not Yeah. a assets as Last time the sell market…

Harold Weber

are Surely. much But better. things now

much Now different. things are

Mike Krimbill

Yeah.

Harold Weber

there so …and going activity in on many space. the are

Mike Krimbill

Yeah.

So a that it evaluate. continue -- do will we We or need that that’s -- something deleveraging. to to level evaluation that’s price at

Harold Weber

Certainly.

you. Thank Okay.

Operator

Thank like you. for it remarks. back questions And not showing would I any further in I’m to final queue. any turn to management the

Mike Krimbill

for quarter. you you you Thank We to appreciate the your time. we’ll Thank next Carmen. and it interest. for Great, talk

Operator

disconnect. program today’s you this you. Thank concludes And may now and

NGL Energy Partners (NGL) 4 Jun 212021 Q4 Earnings call transcript