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NGL Energy Partners LP Announces First Quarter Fiscal 2022 Financial Results

NGL Energy Partners LP (NYSE:NGL) (“NGL,” “our,” “we,” or the “Partnership”) today reported its first quarter Fiscal 2022 results. Highlights for the quarter include:

  • Loss from continuing operations for the first quarter of Fiscal 2022 of $134.5 million, compared to a loss from continuing operations of $33.8 million for the first quarter of Fiscal 2021
  • Adjusted EBITDA1 from continuing operations for the first quarter of Fiscal 2022 of $91.1 million, compared to $91.0 million for the first quarter of Fiscal 2021; Record quarterly Adjusted EBITDA of $81.5 million in the Water Solutions segment as produced water volumes approach pre-pandemic levels
  • Sale of the Partnership’s approximately 71.5% interest in Sawtooth Caverns, LLC for gross consideration of $70.0 million
  • Publication of the Partnership’s inaugural Sustainability Report, which can be found on the Partnership’s website (www.nglenergypartners.com)
  • Reaffirms Fiscal 2022 Adjusted EBITDA guidance of $570 million - $600 million and capital expenditure guidance of $100 million - $125 million2

“Our Water Solutions segment continues to drive the growth of the Partnership and performed very well during the first quarter. Adjusted EBITDA for the segment grew significantly quarter over quarter with both produced water volumes processed and Adjusted EBITDA achieving expectations. Results in our Crude Oil Logistics and Liquids Logistics segments were impacted by increases in our inventories and timing of recognizing hedge gains (losses). We expect to see improved results going forward due to embedded, unrealized gains in our inventory, with the annual result being in line with the low end of our original expectations for the fiscal year,” stated Mike Krimbill, NGL’s CEO. “Overall, the Partnership is pleased with the outlook for the future as both the macroeconomic environment and our Water Solutions business continue to improve,” Krimbill concluded.

Quarterly Results of Operations

The following table summarizes operating income (loss) and Adjusted EBITDA from continuing operations by reportable segment for the periods indicated:

 

 

Quarter Ended

 

 

June 30, 2021

 

June 30, 2020

 

 

Operating

Income (Loss)

 

Adjusted

EBITDA

 

Operating

Income (Loss)

 

Adjusted

EBITDA

 

 

(in thousands)

Water Solutions

 

$

7,583

 

 

 

$

81,511

 

 

 

$

(16,047

)

 

 

$

56,926

 

 

Crude Oil Logistics

 

(11,581

)

 

 

13,148

 

 

 

23,320

 

 

 

30,854

 

 

Liquids Logistics

 

(53,409

)

 

 

5,574

 

 

 

4,562

 

 

 

12,232

 

 

Corporate and Other

 

(11,927

)

 

 

(9,132

)

 

 

(22,620

)

 

 

(9,030

)

 

Total

 

$

(69,334

)

 

 

$

91,101

 

 

 

$

(10,785

)

 

 

$

90,982

 

 

Water Solutions

The Partnership processed approximately 1.7 million barrels of water per day during the quarter ended June 30, 2021, a 22.0% increase when compared to approximately 1.4 million barrels of water per day processed during the quarter ended June 30, 2020, due to higher production volumes in the Delaware Basin driven by the recovery in crude oil prices from the prior year. Additionally, brackish non-potable water, resale of raw produced water and recycled water revenue all increased driven by the demand for these services.

Revenues from recovered crude oil, including the impact from realized skim oil hedges, totaled $16.0 million for the quarter ended June 30, 2021, an increase of $5.9 million from the prior year period. This increase was due to an increase in the number of wells completed in our area of operations during the current period and higher crude oil prices, as well as a strategic decision made by the Partnership to store the majority of its recovered barrels due to low prices during the quarter ended June 30, 2020.

Operating expenses in the Water Solutions segment decreased to $0.26 per barrel compared to $0.32 per barrel in the comparative quarter last year primarily due to significant steps taken to reduce operating costs per barrel along with higher produced water volumes processed. The Water Solutions segment continues to evaluate additional cost saving initiatives.

Crude Oil Logistics

Operating income for the first quarter of Fiscal 2022 decreased compared to the first quarter of Fiscal 2021 primarily due to an increase in net derivative losses on our inventory position as a result of increasing crude oil prices as well as lower activity and the reduction of minimum volume commitments on our Grand Mesa Pipeline. Revenues from third parties for Grand Mesa Pipeline decreased by $27.3 million, compared to the quarter ended June 30, 2020 due to lower third-party volumes transported on the pipeline. During the three months ended June 30, 2021, financial volumes on the Grand Mesa Pipeline averaged approximately 77,000 barrels per day, compared to approximately 119,000 barrels per day for the three months ended June 30, 2020.

Liquids Logistics

Operating loss for the Liquids Logistics segment totaled $53.4 million for the quarter ended June 30, 2021, including the $60.1 million loss on the sale of the Partnership’s membership interest in Sawtooth Caverns, LLC, which impacts comparability to the prior year period.

Total product margin per gallon, excluding the impact of derivatives, was $0.066 for the quarter ended June 30, 2021, compared to $0.024 for the quarter ended June 30, 2020. This increase in margin was primarily due to increased biodiesel and RIN prices and was offset by lower demand for other products. Refined products volumes decreased by approximately 26.7 million gallons, or 12.6%, during the quarter ended June 30, 2021 compared to the quarter ended June 30, 2020 due to tighter supply and continued weakness in demand in certain parts of the country due to the COVID-19 pandemic. Propane volumes decreased by approximately 82.0 million gallons, or 32.5%, as warmer weather during the quarter and higher prices led to weaker demand. Butane volumes increased by approximately 3.0 million gallons, or 2.5%, when compared to the quarter ended June 30, 2020.

Corporate and Other

Corporate and Other expenses decreased from the comparable prior year period primarily due the $10.2 million net loss recorded for the uncollectible portion of a loan receivable with a third party in the prior year.

Capitalization and Liquidity

Total liquidity (cash plus available capacity on our asset-based revolving credit facility) was approximately $303 million as of June 30, 2021. Borrowings on the Partnership’s revolving credit facility totaled $77 million, a $73 million increase to the March 31, 2021 balance. This increase was primarily due to increases in working capital balances as both inventory volumes and commodity prices increased.

The Partnership is in compliance with all of its debt covenants and has no significant debt maturities before November 2023. The Partnership still expects to generate excess cash flow in Fiscal Year 2022, which will be utilized to repay outstanding indebtedness and improve leverage.

First Quarter Conference Call Information

A conference call to discuss NGL’s results of operations is scheduled for 4:00 pm Central Time on Monday, August 9, 2021. Analysts, investors, and other interested parties may access the conference call by pre-registering here and providing access code 5592767. An archived audio replay of the conference call will be available for 7 days beginning at 1:00 pm Central Time on August 10, 2021, which can be accessed by dialing (855) 859-2056 and providing access code 5592767.

Non-GAAP Financial Measures

NGL defines EBITDA as net income (loss) attributable to NGL Energy Partners LP, plus interest expense, income tax expense (benefit), and depreciation and amortization expense. NGL defines Adjusted EBITDA as EBITDA excluding net unrealized gains and losses on derivatives, lower of cost or net realizable value adjustments, gains and losses on disposal or impairment of assets, gains and losses on early extinguishment of liabilities, equity-based compensation expense, acquisition expense, revaluation of liabilities, certain legal settlements and other. NGL also includes in Adjusted EBITDA certain inventory valuation adjustments related to TransMontaigne Product Services, LLC (“TPSL”), our refined products business in the mid-continent region of the United States (“Mid-Con”) and our gas blending business in the southeastern and eastern regions of the United States (“Gas Blending”), which are included in discontinued operations, and certain refined products businesses within NGL’s Liquids Logistics segment, as discussed below. EBITDA and Adjusted EBITDA should not be considered as alternatives to net loss, loss from continuing operations before income taxes, cash flows from operating activities, or any other measure of financial performance calculated in accordance with GAAP, as those items are used to measure operating performance, liquidity or the ability to service debt obligations. NGL believes that EBITDA provides additional information to investors for evaluating NGL’s ability to make quarterly distributions to NGL’s unitholders and is presented solely as a supplemental measure. NGL believes that Adjusted EBITDA provides additional information to investors for evaluating NGL’s financial performance without regard to NGL’s financing methods, capital structure and historical cost basis. Further, EBITDA and Adjusted EBITDA, as NGL defines them, may not be comparable to EBITDA, Adjusted EBITDA, or similarly titled measures used by other entities.

Other than for certain businesses within NGL’s Liquids Logistics segment, for purposes of the Adjusted EBITDA calculation, NGL makes a distinction between realized and unrealized gains and losses on derivatives. During the period when a derivative contract is open, NGL records changes in the fair value of the derivative as an unrealized gain or loss. When a derivative contract matures or is settled, NGL reverses the previously recorded unrealized gain or loss and record a realized gain or loss. NGL does not draw such a distinction between realized and unrealized gains and losses on derivatives of certain businesses within NGL’s Liquids Logistics segment. The primary hedging strategy of these businesses is to hedge against the risk of declines in the value of inventory over the course of the contract cycle, and many of the hedges cover extended periods of time. The “inventory valuation adjustment” row in the reconciliation table reflects the difference between the market value of the inventory of these businesses at the balance sheet date and its cost, adjusted for the impact of seasonal market movements related to our base inventory and the related hedge. NGL includes this in Adjusted EBITDA because the unrealized gains and losses associated with derivative contracts associated with the inventory of this segment, which are intended primarily to hedge inventory holding risk and are included in net income, also affect Adjusted EBITDA. In NGL’s Crude Oil Logistics segment, they purchase certain crude oil barrels using the West Texas Intermediate (“WTI”) calendar month average (“CMA”) price and sell the crude oil barrels using the WTI CMA price plus the Argus CMA Differential Roll Component (“CMA Differential Roll”) per NGL’s contracts. To eliminate the volatility of the CMA Differential Roll, NGL entered into derivative instrument positions in January 2021 to secure a margin of approximately $0.20 per barrel on 1.5 million barrels per month from May 2021 through December 2023. Due to the nature of these positions, the cash flow and earnings recognized on a GAAP basis will differ from period to period depending on the current crude oil price and future estimated crude oil price which are valued utilizing third-party market quoted prices. NGL is recognizing in Adjusted EBITDA the gains and losses from the derivative instrument positions entered into in January 2021 to properly align with the physical margin NGL is hedging each month through the term of this transaction. This representation aligns with management’s evaluation of the transaction.

Distributable Cash Flow is defined as Adjusted EBITDA minus maintenance capital expenditures, income tax expense, cash interest expense, preferred unit distributions and other. Maintenance capital expenditures represent capital expenditures necessary to maintain the Partnership’s operating capacity. For the CMA Differential Roll transaction, as discussed above, we have included an adjustment to Distributable Cash Flow to reflect, in the period for which they relate, the actual cash flows for the positions that settled that are not being recognized in Adjusted EBITDA. Distributable Cash Flow is a performance metric used by senior management to compare cash flows generated by the Partnership (excluding growth capital expenditures and prior to the establishment of any retained cash reserves by the Board of Directors) to the cash distributions expected to be paid to unitholders. Using this metric, management can quickly compute the coverage ratio of estimated cash flows to planned cash distributions. This financial measure also is important to investors as an indicator of whether the Partnership is generating cash flow at a level that can sustain, or support an increase in, quarterly distribution rates. Actual distribution amounts are set by the Board of Directors.

Forward-Looking Statements

This press release includes “forward-looking statements.” All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Actual results could vary significantly from those expressed or implied in such statements and are subject to a number of risks and uncertainties. While NGL believes such forward-looking statements are reasonable, NGL cannot assure they will prove to be correct. The forward-looking statements involve risks and uncertainties that affect operations, financial performance, and other factors as discussed in filings with the Securities and Exchange Commission. Other factors that could impact any forward-looking statements are those risks described in NGL’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other public filings. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, specifically those under the heading “Risk Factors.” NGL undertakes no obligation to publicly update or revise any forward-looking statements except as required by law.

NGL provides Adjusted EBITDA guidance that does not include certain charges and costs, which in future periods are generally expected to be similar to the kinds of charges and costs excluded from Adjusted EBITDA in prior periods, such as income taxes, interest and other non-operating items, depreciation and amortization, net unrealized gains and losses on derivatives, lower of cost or net realizable value adjustments, gains and losses on disposal or impairment of assets, gains and losses on early extinguishment of liabilities, equity-based compensation expense, acquisition expense, revaluation of liabilities and items that are unusual in nature or infrequently occurring. The exclusion of these charges and costs in future periods will have a significant impact on the Partnership’s Adjusted EBITDA, and the Partnership is not able to provide a reconciliation of its Adjusted EBITDA guidance to net income (loss) without unreasonable efforts due to the uncertainty and variability of the nature and amount of these future charges and costs and the Partnership believes that such reconciliation, if possible, would imply a degree of precision that would be potentially confusing or misleading to investors.

About NGL Energy Partners LP

NGL Energy Partners LP, a Delaware limited partnership, is a diversified midstream energy company that transports, stores, markets and provides other logistics services for crude oil, natural gas liquids and other products and transports, treats and disposes of produced water generated as part of the oil and natural gas production process.

For further information, visit the Partnership’s website at www.nglenergypartners.com.

____________________

1 See the “Non-GAAP Financial Measures” section of this release for the definition of Adjusted EBITDA and a discussion of this non-GAAP financial measure.

2 See the “Forward-Looking Statements” section of this release for more information.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

(in Thousands, except unit amounts)

 

June 30, 2021

 

March 31, 2021

ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

2,471

 

 

 

$

4,829

 

 

Accounts receivable-trade, net of allowance for expected credit losses of $2,154 and $2,192, respectively

844,072

 

 

 

725,943

 

 

Accounts receivable-affiliates

8,775

 

 

 

9,435

 

 

Inventories

246,181

 

 

 

158,467

 

 

Prepaid expenses and other current assets

106,418

 

 

 

109,164

 

 

Total current assets

1,207,917

 

 

 

1,007,838

 

 

PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $804,971 and $776,279, respectively

2,548,552

 

 

 

2,706,853

 

 

GOODWILL

744,439

 

 

 

744,439

 

 

INTANGIBLE ASSETS, net of accumulated amortization of $509,622 and $517,518, respectively

1,187,070

 

 

 

1,262,613

 

 

INVESTMENTS IN UNCONSOLIDATED ENTITIES

21,425

 

 

 

22,719

 

 

OPERATING LEASE RIGHT-OF-USE ASSETS

143,365

 

 

 

152,146

 

 

OTHER NONCURRENT ASSETS

54,722

 

 

 

50,733

 

 

Total assets

$

5,907,490

 

 

 

$

5,947,341

 

 

LIABILITIES AND EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Accounts payable-trade

$

763,220

 

 

 

$

679,868

 

 

Accounts payable-affiliates

101

 

 

 

119

 

 

Accrued expenses and other payables

182,230

 

 

 

170,400

 

 

Advance payments received from customers

16,408

 

 

 

11,163

 

 

Current maturities of long-term debt

2,230

 

 

 

2,183

 

 

Operating lease obligations

45,864

 

 

 

47,070

 

 

Total current liabilities

1,010,053

 

 

 

910,803

 

 

LONG-TERM DEBT, net of debt issuance costs of $52,385 and $55,555, respectively, and current maturities

3,370,908

 

 

 

3,319,030

 

 

OPERATING LEASE OBLIGATIONS

96,910

 

 

 

103,637

 

 

OTHER NONCURRENT LIABILITIES

115,438

 

 

 

114,615

 

 

 

 

 

 

CLASS D 9.00% PREFERRED UNITS, 600,000 and 600,000 preferred units issued and outstanding, respectively

551,097

 

 

 

551,097

 

 

 

 

 

 

EQUITY:

 

 

 

General partner, representing a 0.1% interest, 129,724 and 129,724 notional units, respectively

(52,348

)

 

 

(52,189

)

 

Limited partners, representing a 99.9% interest, 129,593,939 and 129,593,939 common units issued and outstanding, respectively

448,963

 

 

 

582,784

 

 

Class B preferred limited partners, 12,585,642 and 12,585,642 preferred units issued and outstanding, respectively

305,468

 

 

 

305,468

 

 

Class C preferred limited partners, 1,800,000 and 1,800,000 preferred units issued and outstanding, respectively

42,891

 

 

 

42,891

 

 

Accumulated other comprehensive loss

(258

)

 

 

(266

)

 

Noncontrolling interests

18,368

 

 

 

69,471

 

 

Total equity

763,084

 

 

 

948,159

 

 

Total liabilities and equity

$

5,907,490

 

 

 

$

5,947,341

 

 

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

(in Thousands, except unit and per unit amounts)

 

 

Three Months Ended June 30,

 

 

2021

 

2020

REVENUES:

 

 

 

 

Water Solutions

 

$

130,226

 

 

 

$

88,065

 

 

Crude Oil Logistics

 

553,624

 

 

 

276,039

 

 

Liquids Logistics

 

804,805

 

 

 

479,998

 

 

Other

 

 

 

 

313

 

 

Total Revenues

 

1,488,655

 

 

 

844,415

 

 

COST OF SALES:

 

 

 

 

Water Solutions

 

10,338

 

 

 

4,700

 

 

Crude Oil Logistics

 

537,257

 

 

 

217,557

 

 

Liquids Logistics

 

777,198

 

 

 

454,336

 

 

Other

 

 

 

 

454

 

 

Total Cost of Sales

 

1,324,793

 

 

 

677,047

 

 

OPERATING COSTS AND EXPENSES:

 

 

 

 

Operating

 

65,784

 

 

 

64,987

 

 

General and administrative

 

15,774

 

 

 

17,158

 

 

Depreciation and amortization

 

84,102

 

 

 

83,986

 

 

Loss on disposal or impairment of assets, net

 

67,536

 

 

 

12,022

 

 

Operating Loss

 

(69,334

)

 

 

(10,785

)

 

OTHER INCOME (EXPENSE):

 

 

 

 

Equity in earnings of unconsolidated entities

 

212

 

 

 

289

 

 

Interest expense

 

(67,130

)

 

 

(43,961

)

 

Gain on early extinguishment of liabilities, net

 

51

 

 

 

19,355

 

 

Other income, net

 

1,249

 

 

 

1,035

 

 

Loss From Continuing Operations Before Income Taxes

 

(134,952

)

 

 

(34,067

)

 

INCOME TAX BENEFIT

 

450

 

 

 

301

 

 

Loss From Continuing Operations

 

(134,502

)

 

 

(33,766

)

 

Loss From Discontinued Operations, net of Tax

 

 

 

 

(1,486

)

 

Net Loss

 

(134,502

)

 

 

(35,252

)

 

LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS

 

(438

)

 

 

(51

)

 

NET LOSS ATTRIBUTABLE TO NGL ENERGY PARTNERS LP

 

$

(134,940

)

 

 

$

(35,303

)

 

NET LOSS FROM CONTINUING OPERATIONS ALLOCATED TO COMMON UNITHOLDERS

 

$

(159,332

)

 

 

$

(55,815

)

 

NET LOSS FROM DISCONTINUED OPERATIONS ALLOCATED TO COMMON UNITHOLDERS

 

$

 

 

 

$

(1,485

)

 

NET LOSS ALLOCATED TO COMMON UNITHOLDERS

 

$

(159,332

)

 

 

$

(57,300

)

 

BASIC LOSS PER COMMON UNIT

 

 

 

 

Loss From Continuing Operations

 

$

(1.23

)

 

 

$

(0.43

)

 

Loss From Discontinued Operations, net of Tax

 

$

 

 

 

$

(0.01

)

 

Net Loss

 

$

(1.23

)

 

 

$

(0.44

)

 

DILUTED LOSS PER COMMON UNIT

 

 

 

 

Loss From Continuing Operations

 

$

(1.23

)

 

 

$

(0.43

)

 

Loss From Discontinued Operations, net of Tax

 

$

 

 

 

$

(0.01

)

 

Net Loss

 

$

(1.23

)

 

 

$

(0.44

)

 

BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING

 

129,593,939

 

 

 

128,771,715

 

 

DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING

 

129,593,939

 

 

 

128,771,715

 

 

EBITDA, ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW RECONCILIATION

(Unaudited)

The following table reconciles NGL’s net loss to NGL’s EBITDA, Adjusted EBITDA and Distributable Cash Flow:

 

 

Three Months Ended June 30,

 

 

2021

 

2020

 

 

(in thousands)

Net loss

 

$

(134,502

)

 

 

$

(35,252

)

 

Less: Net income attributable to noncontrolling interests

 

(438

)

 

 

(51

)

 

Net loss attributable to NGL Energy Partners LP

 

(134,940

)

 

 

(35,303

)

 

Interest expense

 

67,130

 

 

 

44,066

 

 

Income tax benefit

 

(450

)

 

 

(301

)

 

Depreciation and amortization

 

83,357

 

 

 

83,202

 

 

EBITDA

 

15,097

 

 

 

91,664

 

 

Net unrealized (gains) losses on derivatives

 

(16,264

)

 

 

26,671

 

 

CMA Differential Roll net losses (gains) (1)

 

24,310

 

 

 

 

 

Inventory valuation adjustment (2)

 

1,218

 

 

 

3,820

 

 

Lower of cost or net realizable value adjustments

 

(3,806

)

 

 

(32,003

)

 

Loss on disposal or impairment of assets, net

 

67,538

 

 

 

13,084

 

 

Gain on early extinguishment of liabilities, net

 

(87

)

 

 

(19,355

)

 

Equity-based compensation expense (3)

 

960

 

 

 

2,302

 

 

Acquisition expense (4)

 

67

 

 

 

157

 

 

Other (5)

 

2,068

 

 

 

4,348

 

 

Adjusted EBITDA

 

$

91,101

 

 

 

$

90,688

 

 

Adjusted EBITDA - Discontinued Operations (6)

 

$

 

 

 

$

(294

)

 

Adjusted EBITDA - Continuing Operations

 

$

91,101

 

 

 

$

90,982

 

 

Less: Cash interest expense (7)

 

63,359

 

 

 

40,399

 

 

Less: Income tax benefit

 

(450

)

 

 

(301

)

 

Less: Maintenance capital expenditures

 

7,745

 

 

 

9,168

 

 

Less: CMA Differential Roll (8)

 

23,932

 

 

 

 

 

Less: Preferred unit distributions paid

 

 

 

 

15,030

 

 

Distributable Cash Flow - Continuing Operations

 

$

(3,485

)

 

 

$

26,686

 

 

____________________

(1)

Adjustment to align, within Adjusted EBITDA, the net gains and losses of the Partnership’s CMA Differential Roll derivative instruments positions with the physical margin being hedged. See “Non-GAAP Financial Measures” section above for a further discussion.

(2)

Amount reflects the difference between the market value of the inventory at the balance sheet date and its cost, adjusted for the impact of seasonal market movements related to our base inventory and the related hedge. See “Non-GAAP Financial Measures” section above for a further discussion.

(3)

Equity-based compensation expense in the table above may differ from equity-based compensation expense reported in the footnotes to our unaudited condensed consolidated financial statements included in the Partnership’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021. Amounts reported in the table above include expense accruals for bonuses expected to be paid in common units, whereas the amounts reported in the footnotes to our unaudited condensed consolidated financial statements only include expenses associated with equity-based awards that have been formally granted.

(4)

Amounts represent expenses we incurred related to legal and advisory costs associated with acquisitions.

(5)

Amounts for the three months ended June 30, 2021 and 2020 represent non-cash operating expenses related to our Grand Mesa Pipeline, unrealized losses on marketable securities and accretion expense for asset retirement obligations.

(6)

Amounts include the operations of TPSL, Gas Blending and Mid-Con.

(7)

Amounts represent interest expense payable in cash for the period presented, excluding changes in the accrued interest balance.

(8)

Amount represents the cash portion of the adjustments of the Partnership’s CMA Differential Roll derivative instrument positions, as discussed above, that settled during the period.

ADJUSTED EBITDA RECONCILIATION BY SEGMENT

 

Three Months Ended June 30, 2021

 

Water

Solutions

 

Crude Oil

Logistics

 

Liquids

Logistics

 

Corporate

and Other

 

Consolidated

 

(in thousands)

Operating income (loss)

$

7,583

 

 

 

$

(11,581

)

 

 

$

(53,409

)

 

 

$

(11,927

)

 

 

$

(69,334

)

 

Depreciation and amortization

62,981

 

 

 

12,409

 

 

 

6,967

 

 

 

1,745

 

 

 

84,102

 

 

Amortization recorded to cost of sales

 

 

 

 

 

 

73

 

 

 

 

 

 

73

 

 

Net unrealized losses (gains) on derivatives

3,566

 

 

 

(14,454

)

 

 

(5,376

)

 

 

 

 

 

(16,264

)

 

CMA Differential Roll net losses (gains)

 

 

 

24,310

 

 

 

 

 

 

 

 

 

24,310

 

 

Inventory valuation adjustment

 

 

 

 

 

 

1,218

 

 

 

 

 

 

1,218

 

 

Lower of cost or net realizable value adjustments

 

 

 

(11

)

 

 

(3,795

)

 

 

 

 

 

(3,806

)

 

Loss (gain) on disposal or impairment of assets, net

7,491

 

 

 

(42

)

 

 

60,087

 

 

 

 

 

 

67,536

 

 

Equity-based compensation expense

 

 

 

 

 

 

 

 

 

960

 

 

 

960

 

 

Acquisition expense

 

 

 

 

 

 

 

 

 

67

 

 

 

67

 

 

Other income, net

612

 

 

 

196

 

 

 

363

 

 

 

78

 

 

 

1,249

 

 

Adjusted EBITDA attributable to unconsolidated entities

459

 

 

 

 

 

 

(10

)

 

 

(55

)

 

 

394

 

 

Adjusted EBITDA attributable to noncontrolling interest

(954

)

 

 

 

 

 

(529

)

 

 

 

 

 

(1,483

)

 

Other

(227

)

 

 

2,321

 

 

 

(15

)

 

 

 

 

 

2,079

 

 

Adjusted EBITDA

$

81,511

 

 

 

$

13,148

 

 

 

$

5,574

 

 

 

$

(9,132

)

 

 

$

91,101

 

 

 

Three Months Ended June 30, 2020

 

Water

Solutions

 

Crude Oil

Logistics

 

Liquids

Logistics

 

Corporate

and Other

 

Continuing

Operations

 

Discontinued

Operations

(TPSL, Mid-Con,

Gas Blending)

 

Consolidated

 

(in thousands)

Operating (loss) income

$

(16,047

)

 

 

$

23,320

 

 

 

$

4,562

 

 

 

$

(22,620

)

 

 

$

(10,785

)

 

 

$

 

 

 

$

(10,785

)

 

Depreciation and amortization

58,133

 

 

 

16,795

 

 

 

8,156

 

 

 

902

 

 

 

83,986

 

 

 

 

 

 

83,986

 

 

Amortization recorded to cost of sales

 

 

 

 

 

 

77

 

 

 

 

 

 

77

 

 

 

 

 

 

77

 

 

Net unrealized losses (gains) on derivatives

13,312

 

 

 

14,638

 

 

 

(1,279

)

 

 

 

 

 

26,671

 

 

 

 

 

 

26,671

 

 

Inventory valuation adjustment

 

 

 

 

 

 

3,840

 

 

 

 

 

 

3,840

 

 

 

 

 

 

3,840

 

 

Lower of cost or net realizable value adjustments

 

 

 

(29,060

)

 

 

(2,963

)

 

 

 

 

 

(32,023

)

 

 

 

 

 

(32,023

)

 

Loss on disposal or impairment of assets, net

329

 

 

 

1,450

 

 

 

4

 

 

 

10,239

 

 

 

12,022

 

 

 

 

 

 

12,022

 

 

Equity-based compensation expense

 

 

 

 

 

 

 

 

 

2,302

 

 

 

2,302

 

 

 

 

 

 

2,302

 

 

Acquisition expense

12

 

 

 

 

 

 

 

 

 

145

 

 

 

157

 

 

 

 

 

 

157

 

 

Other income, net

256

 

 

 

338

 

 

 

377

 

 

 

64

 

 

 

1,035

 

 

 

 

 

 

1,035

 

 

Adjusted EBITDA attributable to unconsolidated entities

465

 

 

 

 

 

 

(1

)

 

 

(62

)

 

 

402

 

 

 

 

 

 

402

 

 

Adjusted EBITDA attributable to noncontrolling interest

(487

)

 

 

 

 

 

(536

)

 

 

 

 

 

(1,023

)

 

 

 

 

 

(1,023

)

 

Intersegment transactions (1)

 

 

 

 

 

 

(27

)

 

 

 

 

 

(27

)

 

 

 

 

 

(27

)

 

Other

953

 

 

 

3,373

 

 

 

22

 

 

 

 

 

 

4,348

 

 

 

 

 

 

4,348

 

 

Discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(294

)

 

 

(294

)

 

Adjusted EBITDA

$

56,926

 

 

 

$

30,854

 

 

 

$

12,232

 

 

 

$

(9,030

)

 

 

$

90,982

 

 

 

$

(294

)

 

 

$

90,688

 

 

____________________

(1) Amount reflects the transactions with TPSL, Mid-Con and Gas Blending that are eliminated in consolidation.

OPERATIONAL DATA

(Unaudited)

 

Three Months Ended

 

June 30,

 

2021

 

2020

 

(in thousands, except per day amounts)

Water Solutions:

 

 

 

Produced water processed (barrels per day)

 

 

 

Delaware Basin

1,428,222

 

 

1,106,355

 

Eagle Ford Basin

91,843

 

 

95,375

 

DJ Basin

118,801

 

 

132,365

 

Other Basins

28,082

 

 

32,324

 

Total

1,666,948

 

 

1,366,419

 

Solids processed (barrels per day)

1,316

 

 

1,899

 

Skim oil sold (barrels per day)

2,500

 

 

687

 

 

 

 

 

Crude Oil Logistics:

 

 

 

Crude oil sold (barrels)

7,994

 

 

9,292

 

Crude oil transported on owned pipelines (barrels)

7,034

 

 

10,476

 

Crude oil storage capacity - owned and leased (barrels) (1)

5,239

 

 

5,239

 

Crude oil inventory (barrels) (1)

1,147

 

 

1,622

 

 

 

 

 

Liquids Logistics:

 

 

 

Refined products sold (gallons)

185,306

 

 

211,974

 

Propane sold (gallons)

170,279

 

 

252,289

 

Butane sold (gallons)

122,574

 

 

119,566

 

Other products sold (gallons)

92,853

 

 

114,222

 

Natural gas liquids and refined products storage capacity - owned and leased (gallons) (1)

168,677

 

 

399,251

 

Refined products inventory (gallons) (1)

2,776

 

 

2,656

 

Propane inventory (gallons) (1)

60,673

 

 

77,968

 

Butane inventory (gallons) (1)

45,911

 

 

73,291

 

Other products inventory (gallons) (1)

40,691

 

 

31,583

 

____________________

(1)

Information is presented as of June 30, 2021 and June 30, 2020, respectively.

 

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