Are you seeing opportunities for beneficial reuse and mineral extraction, similar to TPL's water sourcing deal for Chevron and Select's announcements?

Yes, the company is engaged in talks for both. Mineral extraction (lithium, iodine) is further along. Beneficial reuse is gaining traction with hyperscalers and data centers due to groundwater pushback. They expect to make announcements as these firm up. The TPDES permit is also expected this month, which will enable economic projects in this area. “Everyone is in talks with multiple either hyperscalers or data centers that, because of the pushback they've received or are receiving on their developments on groundwater, it's becoming really a self-fulfilling prophecy that produced water is the answer in West Texas around getting these projects off the ground.”

When might the company be in a position to reinstate its dividend, given the balance sheet strengthening?

If about half of the Class D preferreds are redeemed this fiscal year, dividend reinstatement comes back on the table. The timing will then depend on leverage and capital allocation to high-EBITDA opportunities. This is the first time they've discussed it, and it's possibly happening in 2027. “If we get rid of about half of these Ds this fiscal year, then I think a distribution reinstatement comes back on the table. So then it will just be more perhaps a leverage question, how much capital do we have to spend for these big EBITDA opportunities that would be better on the short-term spend building something than paying out a distribution.”

Can you discuss the M&A environment and its likelihood given organic growth opportunities?

Consolidation in the water space makes sense, but there aren't many competitors. The company is preparing for M&A opportunities but is not currently in discussions. Historically, they lacked cash for all-cash deals and were hesitant to use low-priced equity. As their equity price increases, M&A becomes more accretive. “I think as our equity price increases, then it's more accretive, using an old term, to get back in the M&A game.”

NGL

NGL Energy Partners (NGL) Q1 FY27 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q1 FY27)· Energy· Aug 4, 2026

Source: earnings call transcript

Executive summary

NGL Energy Partners Q1 FY27 — Record Water Volumes Drive Strong Start and Raised Guidance

The company reported a strong start to FY27, driven by record water volumes and adjusted EBITDA in its Water Solutions segment, leading to an upward revision of full-year adjusted EBITDA guidance. Management is focused on deleveraging and strategically deploying capital into high-return water growth projects, while also preparing for future M&A and potential common unit distribution reinstatement.

Highlights

Record produced water volumes of 3.32 million barrels per day, growing 19.6% YoY.
Record Water Solutions adjusted EBITDA of $179.9 million, a 26% increase YoY.
Consolidated adjusted EBITDA from continuing operations increased nearly 30% to $186.2 million.
Fiscal 2027 adjusted EBITDA guidance raised by $10 million to a new range of $725 million to $735 million.
Operating expenses in Water Solutions segment decreased by $0.01 per barrel to $0.21 per barrel.

Concerns

Macro backdrop volatility could impact Water Solutions segment, though no specific quantified impact was stated.
Class D preferreds represent a significant liability, with only 50% expected to be redeemed this fiscal year.

Guidance & targets

Category	Target	Timeline	Confidence
Fiscal 2027 Adjusted EBITDA	$725 million to $735 million high materiality	FY27	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Water Solutions Generated 91% of the partnership's EBITDA for the quarter. Increase driven by higher disposal volumes from contracted producer customers and skim oil revenue due to higher skim oil volumes and crude prices. Operating expenses per barrel were lower by $0.01 YoY. Physical water disposal volumes: 3.32 million barrels per dayTotal volumes paid to dispose: 3.43 million barrels per dayOperating expenses: $0.21 per barrel	—	26%	—	$179.9 million Adjusted EBITDA
Crude Oil Logistics Adjusted EBITDA decreased from $9.6 million in prior year. Grand Mesa Pipeline volumes increased from 55,000 barrels per day in prior year. Grand Mesa Pipeline volumes: 74,000 barrels per day	—	—	—	$8.6 million Adjusted EBITDA
Liquids Logistics Adjusted EBITDA increased from $2.9 million in prior year. Largest driver was additional contracted activity through remaining butane terminals. Primary EBITDA contributor going forward is butane blending business, with majority of EBITDA occurring in the back half of the fiscal year.	—	—	—	$10.3 million Adjusted EBITDA

Orderbook & backlog

Produced water volume commitments 1.77 million barrels per day Q1 FY27

Represents approximately 53% of total volumes.

Deals & partnerships

Undisclosed producer Long-term volume commitment contract for produced water transport long-term

Supports the LEX II Extension project, expanding the LEX Pipeline System.

Multiple producers Additional produced water volume commitments

These commitments, along with the LEX II contract, represent roughly 53% of total volumes.

Capital programs

LEX II Extension project underway

Benefit:560,000 barrels per day of produced water transport capability

Expanding the current long-haul LEX Pipeline System to 81 miles, underwritten by a newly executed long-term volume commitment contract.

Water Solutions growth capital projects underway exceed $200 million

Start: FY27

Benefit:500,000 barrels per day of new capacity (200k bbl/d developed in Q1, 300k bbl/d in balance of year)

Heavily weighted to the first half of fiscal year 2027. A significant portion of the EBITDA generated will not be recognized until fiscal 2028. Includes accelerating development for existing contracts and working on FY28 deals.

Risks & headwinds

Macro backdrop volatility

potential impacts

Mitigation:Continuous conversations with producers to monitor activity levels.

TPDES permit delays past 3 years

October will be 3 years since applied

Mitigation:Received updates that permit will be received this month, expected to be economic.

What to watch in Q2 FY27

LEX II Extension in-service

by end of this calendar year

Current Under construction

Target In service

Why it matters

Verifies the timely completion and operational readiness of a significant water infrastructure project, impacting future capacity and contracted volumes.

The LEX II Extension is expected to be in service by the end of this calendar year.

Find out whether NGL delivers this. Inve re-checks your case every morning.

Q&A highlights

What is the opportunity set for additional growth investments in the Delaware, given potential constraints in H2 FY27 but long-term opportunities?

The company developed 200,000 bbl/d of new capacity in Q1 and plans another 300,000 bbl/d for the balance of the year, totaling 500,000 bbl/d of contracted capacity. This growth is expected to fill up, and they are already working on FY28 deals. There are no real constraints, just execution and timing for new deals that will likely be in spend and EBITDA in the next fiscal year.

“As we continue to develop, we continue to develop faster, bringing on 16, 18 wells this year, plus all the surface and the pipeline expansions. We're not constrained really by anything in that matter.”

asked by Derrick Whitfield · answered by Douglas White

2 min read 6 chapters

Detailed narrative

Deleveraging and Growth Strategy

NGL Energy Partners is executing a multiyear strategy focused on deleveraging the balance sheet through high-return water growth projects. The company expects the delevering trend to continue throughout the fiscal year, even with growth capital spend heavily weighted to the first half. This strategy positions the partnership to address the Class D preferreds later this fiscal year.

LEX II Extension Project

The LEX II Extension project is expanding the LEX Pipeline System to 81 miles, capable of transporting approximately 560,000 barrels per day of produced water from Eddy and Lea Counties, New Mexico, to Andrews County, Texas. This expansion is underwritten by a new long-term volume commitment contract, including increased volume commitments and an additional 4 township committed area in Eddy County.

The project is expected to be in service by the end of this calendar year.

Class D Preferreds Management

Management plans to redeem about 50% of the remaining Class D preferreds this fiscal year, leaving the balance outstanding. This approach prioritizes attractive investment opportunities with rates of return exceeding the cost of the Class D preferreds. The company is preparing for the possibility of these securities being put to them no sooner than January 1, 2028, noting they would be easily financed if exercised.

Future Growth and Capital Allocation

Looking ahead, NGL is positioning itself to potentially build another large diameter water pipeline, pursue M&A opportunities, and reinstate the common unit distribution. The company believes that reducing about half of the Class D preferreds this fiscal year makes distribution reinstatement a possibility in 2027, depending on leverage and capital allocation to high-EBITDA opportunities.

Beneficial Reuse and Mineral Extraction Opportunities

The company is actively engaged in discussions and moving forward with contracts for both beneficial reuse of produced water and mineral extraction (lithium and iodine). They anticipate making announcements as these opportunities firm up. Produced water is increasingly seen as a solution for hyperscalers and data centers facing groundwater development pushback in West Texas.

TPDES Permit Update

NGL expects to receive its TPDES permit through TCEQ this month, after a three-year application process. Management believes the permit will be economic, which is a critical first step for several exciting scoped projects related to water treatment and discharge. They highlight a competitive advantage in being first movers in this area.

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