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    NGL
    Earnings call· Mar 2026(Q4 FY26)

    NGL Energy Partners Q4 FY26 earnings call NGL

    May 28, 2026 Source

    Executive summary

    NGL Energy Partners LP Q4 FY26 — Record Water Solutions Performance & Capital Structure Improvement

    NGL Energy Partners concluded fiscal 2026 with strong performance, particularly in its Water Solutions segment, as it continues its strategic transformation into a pure-play water company. The quarter was marked by significant progress in simplifying the capital structure through refinancing and preferred unit redemptions, alongside disciplined capital allocation. The company is leveraging its integrated Delaware Basin system and long-term contracts to drive future growth, with a focus on expanding water infrastructure and monetizing noncore assets.

    Highlights

    5

    • Adjusted EBITDA from continuing operations for FY26 was approximately $660 million, reaching the high end of guidance.

    • The Water Solutions segment achieved record adjusted EBITDA of approximately $153 million in Q4 and $603 million for the full year.

    • Produced water volumes in the Water Solutions segment increased 10% year-over-year to approximately 3 million barrels per day in Q4.

    • Approximately 285,000 Class D preferred units were redeemed, representing 47% of the original amount and significantly reducing the highest cost of capital.

    • The partnership bought back 8.7 million common units at an average price of $5.72 under a $50 million buyback program.

    Concerns

    1

    • The company absorbed increased costs for the pipeline portion of new projects, rather than passing them on to customers.

    Guidance & targets

    4
    CategoryTargetConfidence
    Consolidated Adjusted EBITDA
    $715 million to $725 million
    high materiality
    High
    Growth Capital
    approximately $200 million
    medium materiality
    High
    Maintenance Capital
    about $45 million
    medium materiality
    High
    LEX II System Expandable Capacity
    up to 650,000 barrels of water per day
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Water Solutions
    Delivered record performance for the full year and Q4, driven by strong customer activity and an expanding infrastructure footprint in the Delaware Basin. This segment is the primary growth engine of the partnership.
    Adjusted EBITDA (Q4): $153 millionAdjusted EBITDA (FY26): $603 millionProduced water volumes (Q4): 3 million bbl/dProduced water volumes (FY26 average): 2.9 million bbl/dOperating expenses per barrel (Q4): $0.22Disposal volumes under volume commitments (FY26 end): 53% (up from 45%)Contractual/acreage dedicated volumes: >90%
    		—11%—$153 million
    Crude Oil Logistics
    Performance was stable, with efforts underway to contract more barrels for the Grand Mesa Pipeline in the DJ Basin, where activity is seeing an uptick.
    Adjusted EBITDA (Q4): $17 millionGrand Mesa Pipeline volumes (Q4): 78,000 bbl/dGrand Mesa Pipeline volumes (FY26 average): 72,000 bbl/d
    		———$17 million
    Liquids Logistics
    Significantly streamlined following divestitures of noncore assets, resulting in a smaller, less volatile business with stable performance, reduced seasonality, and lower capital requirements.
    Adjusted EBITDA (Q4): $17 million
    		———$17 million

    Operational metrics

    8
    Adjusted EBITDA from continuing operations
    $660 millionhigh end of guidance range
    FY26

    Full fiscal year adjusted EBITDA from continuing operations.

    Income from continuing operations (excluding goodwill impairment)
    $70 million
    Q4 FY26

    Income from continuing operations for the fourth quarter, excluding the impact of a goodwill impairment charge.

    Class D preferred units redeemed
    285,000 units
    FY26

    Number of Class D preferred units redeemed over the fiscal year.

    Class D preferred units redeemed (as % of original)
    47%
    FY26

    Percentage of original Class D preferred units redeemed.

    Common units bought back
    8.7 million units
    FY26

    Number of common units repurchased under the buyback program.

    Average price of common units bought back
    $5.72
    FY26

    Average price paid per common unit in the buyback program.

    Water Solutions EBITDA growth
    11%YoY
    FY26

    Year-over-year growth in adjusted EBITDA for the Water Solutions segment.

    Water Solutions contractual/acreage dedicated volumes
    >90%
    FY26

    Percentage of Water Solutions volumes that are either contractual volume commitments or acreage dedicated.

    Industry KPIs

    6
    MetricValueDetails
    Pipeline throughput storage560,000 bbl/dbbl/d
    Sanctioned expansion backlog—
    Basin level production volume3 million bbl/dbbl/d
    Cost of supply unit cash cost$0.22$/barrel
    FCF shareholder distributions$50 millionUSD
    Take or pay contract structure53%%

    Orderbook & backlog

    1
    Common Unit Buyback Program$50 millionFY26

    Board-approved program for common unit repurchases.

    Deals & partnerships

    2
    Variousdivestiture

    Sale of wholesale propane and rack marketing businesses, closed in April.

    Existing customerscustomer contractlong-term

    Long-term volume commitment contract for the LEX II system expansion, primarily with current customers.

    Capital programs

    1
    LEX II System Expansionunderway
    Period spend: bulk in Q1-Q3 FY27

    Benefit: 165,000 bbl/d capacity increase, total 560,000 bbl/d, expandable to 650,000 bbl/d

    Expansion of the LEX II system, underwritten by a long-term volume commitment contract. The capital for this expansion is included in the approximately $200 million growth capital for FY27, with the majority spent in the first three quarters.

    Risks & headwinds

    2
    Goodwill impairment chargeQ4 FY26

    Unquantified

    Mitigation: Not explicitly stated, but the company reported income from continuing operations excluding this charge.

    Increased pipeline project costsFY27

    Unquantified

    Mitigation: The company is absorbing these costs and not passing them on to customers.

    Q&A highlights

    5

    Does the $200 million growth CapEx for FY27 include projects beyond the LEX II expansion?

    The bulk of the $200 million growth capital is for the LEX II expansion, but it also includes some incremental projects.

    “A bulk of that $200 million is the LEX II. There are some incremental projects embedded in that $200 million.”

    asked by Derrick Whitfield · answered by Brad Cooper

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Transformation to Pure-Play Water Company

    NGL Energy Partners is actively transforming into a pure-play water company, a strategy highlighted by the sale of its wholesale propane and rack marketing businesses in April. This divestiture significantly reduced volatility in reported EBITDA and working capital. The Liquids segment will continue to be rightsized through the monetization of noncore assets, aligning the partnership's focus with its high-growth Water Solutions segment.

    02

    Capital Structure Simplification and Debt Reduction

    The company made meaningful progress on its capital structure priorities, completing a $950 million refinancing transaction that extended maturities. This provided cash to reduce Class D preferred units, with approximately 285,000 units redeemed during FY26, representing 47% of the original amount. This action significantly lowered the highest cost of capital, and the company plans to continue reducing Class Ds using free cash flow and noncore asset sales.

    03

    Record Performance in Water Solutions Segment

    The Water Solutions segment delivered a record year, with adjusted EBITDA reaching approximately $603 million for the full fiscal year and $153 million in Q4. Produced water volumes increased 10% year-over-year to 3 million barrels per day in Q4, with total volumes paid on at 3.1 million barrels per day. The segment's operating expenses per barrel improved to $0.22 in Q4, reflecting efficiency gains and system optimization.

    04

    LEX II System Expansion and Future Demand

    NGL announced a further expansion of its LEX II system, increasing capacity by 165,000 barrels per day to approximately 560,000 barrels per day, with potential for expansion up to 650,000 barrels per day. This expansion is underwritten by a long-term volume commitment contract, including increased volume commitments and an additional 4 township committed area in Eddy County. Management noted incredible demand for additional capacity in the basin, driven by accelerated development and efficiencies.

    05

    Crude Oil Logistics Activity Uptick

    The Crude Oil Logistics segment, particularly the Grand Mesa Pipeline, is experiencing an uptick in activity in the DJ Basin. This is attributed to smaller, private equity-backed players consolidating acreage and implementing more cohesive development plans. Management expects this increased activity to carry into fiscal 2027 and the subsequent fiscal years, driving more barrels through the pipeline.

    06

    Advancements in Next-Gen Water Opportunities

    NGL is making progress on beneficial reuse and water desalination projects. The company anticipates receiving a draft permit from TCEQ for these initiatives within weeks. Additionally, significant progress is being made on an energy campus project that would integrate nuclear power, a data center, and large-scale desalination, showcasing the company's commitment to future-oriented water solutions.

    AI-generated summary of the company’s earnings call. Not investment advice.