What is the split between new and existing clients for the LEX II expansion, and what drives the need for further expansion to 650,000 barrels?

The LEX II expansion primarily involves amending and extending agreements with current customers, including longer terms and additional volume commitments. There is significant and increasing demand for additional capacity in the basin, driven by accelerated development, not commodity prices. “There is an incredible amount of demand for additional capacity in the basin. That should answer that question. It's continuing to increase and continuing to have a line out the door of demand for additional capacity.”

What is the activity outlook for the DJ Basin, particularly regarding producers' plans for acceleration, beyond the Q1 pull-forward?

Activity in the DJ Basin is very good, with smaller, private equity-backed players consolidating acreage and implementing more cohesive development plans. This uptick is expected to continue into the current and next couple of fiscal years, driven by development acceleration and efficiency gains, rather than commodity prices. “We are really seeing very, very good activity in the DJ this year. We're also seeing some of the smaller players, private equity-backed players really have consolidated acreage and have a more cohesive development plan moving forward.”

How are beneficial reuse and water desalination opportunities progressing, and what future opportunities are foreseen?

Progress is being made on previously announced projects, with a draft permit from TCEQ expected soon. The energy campus project, including nuclear power, a data center, and large-scale desalination, is also making significant progress. “We are continuing to make progress on those previously announced projects. We expect our draft permit from TCEQ any day now in the next -- certainly within the next few weeks, which has taken a lot of effort, making a lot of progress.”

NGL

NGL Energy Partners (NGL) Q4 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q4 FY26)· Energy· May 28, 2026

Source: earnings call transcript

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

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

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

Guidance & targets

Category	Target	Timeline	Confidence
Consolidated Adjusted EBITDA	$715 million to $725 million high materiality	FY27	High
Growth Capital	approximately $200 million medium materiality	FY27	High
Maintenance Capital	about $45 million medium materiality	FY27	High
LEX II System Expandable Capacity	up to 650,000 barrels of water per day medium materiality	Future	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
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

Orderbook & backlog

Common Unit Buyback Program $50 million FY26

Board-approved program for common unit repurchases.

Deals & partnerships

Various divestiture

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

Existing customers customer contract long-term

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

Capital programs

LEX II System Expansion underway

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

Goodwill impairment charge Q4 FY26

Unquantified

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

Increased pipeline project costs FY27

Unquantified

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

Q&A highlights

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 read 6 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.