NGL Energy Partners Q3 2026 Earnings Results & Report

NGL Energy Partners EPS Results

• Actual EPS: $0.10
• Consensus EPS: $0.16
• Beat/Miss: Missed by -$0.06
• One Year Ago EPS: N/A
• EPS Beat Rate: 2 of last 8 quarters

NGL Energy Partners Revenue Results

• Actual Revenue: $909.82 million
• Expected Revenue: $700.76 million
• Beat/Miss: Beat by +$209.06 million
• YoY Revenue Growth: N/A

NGL Energy Partners (NYSE:NGL) is a publicly traded master limited partnership that provides midstream energy services in the United States. The company’s operations support producers, refiners, marketers and other participants in the energy industry through the transportation, handling, storage and disposal of crude oil, produced water and other energy-related liquids.

NGL’s Water Solutions business gathers, transports, treats, recycles and disposes of produced water generated during oil and natural gas production. Its operations are concentrated in major U.S. oil-producing regions, including the Delaware Basin, where the company provides water-management services to exploration and production companies. The company has also operated crude oil logistics and liquids businesses that provide transportation, storage, marketing and related services for crude oil, natural gas liquids and refined petroleum products.

Organized in 2010 and listed on the New York Stock Exchange in 2011, NGL Energy Partners has developed from a diversified energy logistics partnership into a business with a greater emphasis on water services and related midstream infrastructure. Its assets and customer relationships are primarily focused on U.S. energy-producing and refining markets.

NGL Energy Partners Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Record water volumes and stronger Water Solutions results — Water Solutions Adjusted EBITDA rose to $154.5M (up 16.5% YoY) as physical disposal hit ~3.07M bbl/day in the quarter and exceeded 3.5M bbl/day in early January; full-year FY26 EBITDA guidance remains $650–$660M and management expects >$700M for FY27.
• Positive Sentiment: Capital-allocation progress — Management redeemed ~88,506 Class D preferred units (~15% of original), repurchased ~1.6M common units in the quarter (8.7M total, ~7% outstanding) and says leverage is down to the low ~4.0x area while prioritizing further Class D eliminations.
• Neutral Sentiment: Long-term technology and treatment initiatives — The company is advancing an AI/ML program to drive operational efficiencies and signed an MOU with Natura to explore nuclear-powered thermal desalination in Reeves County, with a TPDES permit draft expected soon; these are strategic but longer-term and currently non-material to near-term CapEx.
• Negative Sentiment: Lower results and strategic exits in liquids segments — Crude Oil Logistics and Liquids Logistics Adjusted EBITDA declined YoY (to $15.4M and $15.2M, respectively), driven by lower oil prices, fewer high-tariff committed volumes on Grand Mesa, and prior divestitures of propane/refined-products businesses that reduce segment diversification.

Presentation

[Operator]

Greetings. Welcome to NGL Energy Partners 3Q 2026 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Brad Cooper, CFO at NGL Partners. You may begin.

[Brad Cooper, CFO at NGL Energy Partners LP]

Good afternoon, and thank you to everyone for joining us on the call today. Our comments today will include plans, forecasts, and estimates that are forward-looking statements under the U.S. securities law. These comments are subject to assumptions, risks, and uncertainties that could cause actual results to differ from the forward-looking statements. Please take note of the cautionary language and risk factors provided in our presentation materials and our other public disclosure materials. We delivered another strong quarter highlighted by record water disposal volumes and water solutions, and continued execution on our financial strategy. For the quarter, adjusted EBITDA from continuing operations was $172.5 million, up from $158 million a year ago, a 9.2% increase. On the financial strategy front, we executed on two of our priorities: reducing higher cost preferred equity and repurchasing common units.

[Brad Cooper, CFO at NGL Energy Partners LP]

During the quarter, we redeemed an additional 18,506 Class D Preferred Units, bringing total redemptions to 88,506, about 15% of the original Class D outstanding. On the Common Units, we repurchased 1.6 million units during the quarter and have now repurchased approximately 8.7 million units since program inception, which is almost 7% of the outstanding units at an average price of $5.70 per unit. We have almost fully exhausted the board-approved common unit repurchase plan. At current unit price levels, we are primarily focused on eliminating the Class D Preferred Units. With the water growth projects we have line of sight into and the Class D preferreds, we will be targeting these two over the next fiscal year. Doug will provide some prepared remarks shortly, but in early January, we eclipsed 3.5 million barrels per day of disposal volumes, which is a record for the partnership.

[Brad Cooper, CFO at NGL Energy Partners LP]

We experienced a few days in mid-January where volumes were under 3 million barrels a day due to the extreme cold weather most of the Midwest and Southeast experienced. We do not expect this to have a material impact on our full-year guide for fiscal 2026 due to the nature of how we contract. Recall that over 1.5 million barrels per day of our water disposal volume is under MVC or CVC, which allows us to get paid on volumes even if they are not disposed of. The new contracted volumes that Mike mentioned on the previous earnings call are coming online, and we anticipate a strong close to fiscal 2026. We are still guiding our full-year EBITDA to a range of $650 million-$660 million.

[Brad Cooper, CFO at NGL Energy Partners LP]

These new contracted volumes that have recently come online set us up for a strong start to fiscal 2027, where we are still projecting to exceed $700 million of EBITDA for the first time in the history of the partnership. In the third quarter of fiscal 2026, Water Solutions segment generated Adjusted EBITDA of $154.5 million versus $132.7 million in the prior-year third quarter, an increase of 16.5%. We again set a physical disposal volume record processing roughly 3.07 million barrels per day of physical produced water versus 2.6 million barrels per day in the prior-year third quarter, an increase of 17.1%. Total volumes we were paid to dispose that includes deficiency volumes were 3.13 million barrels per day in the third quarter versus 2.91 million barrels per day in the prior-year third quarter.

[Brad Cooper, CFO at NGL Energy Partners LP]

So total volumes we were paid to dispose were up approximately 7% third quarter of fiscal 2026 over third quarter of fiscal 2025. Operating expenses for the quarter were $0.18 per barrel due to non-recurring expense reductions. Crude Oil Logistics Adjusted EBITDA was $15.4 million in the third quarter of fiscal 2026 versus $17.3 million in the prior-year's third quarter. Physical volumes on the Grand Mesa Pipeline averaged approximately 85,000 barrels per day, up significantly from 61,000 barrels per day in the prior-year quarter. Margins for barrels on Grand Mesa were lower in the third quarter of fiscal 2026 when compared to the prior-year's third quarter due to lower oil prices as well as a reduction in volumes from committed producers with higher contracted tariffs.

[Brad Cooper, CFO at NGL Energy Partners LP]

Liquids Logistics Adjusted EBITDA was $15.2 million in the third quarter of fiscal 2026 versus $18.6 million in the prior-year's third quarter. Strategically, we executed a significant repositioning in April 2025 with this segment. We sold our wholesale propane business in 17 NGL terminals, exited the refined products business, and wound down our biodiesel marketing business. Today's liquid platform is more focused and anchored by our Centennial butane blending business. The streamlined footprint is performing as expected for the full-year. Now I will turn the call over to Doug White. Doug?

[Doug White, Executive VP at NGL Energy Partners LP]

Thank you, Brad. As Brad mentioned earlier, we entered into several volume commitment contracts in the Delaware Basin that included a large amount of asset development. Our development team executed these projects ahead of schedule and under budget. We are happy to report the water volumes associated with these projects is flowing and has been at or above our expectations. The capital investment included the Western Express Pipeline expansion of 27 miles of 24-inch pipeline, further expanding our reach into our customer footprint and providing flexibility to transport water to areas of underutilized capacity and away from areas burdened by seismicity and pore pressure constraints. I want to thank the operations team for their successful execution of these projects.

[Doug White, Executive VP at NGL Energy Partners LP]

In the quarter, we achieved an all-time daily record of approximately 3.3 million barrels of water, and on January 16th, we received over 3.5 million barrels of water in a single day. This reflects the capacity increase from the capital investment I just mentioned. Our ability to execute large growth projects at attractive multiples over the last several years, combined with our operational capabilities, is allowing us to deliver consistent economic results. We continue to engage our producer customers with opportunities, and we are working to secure additional disposal contracts in fiscal year 2027. We continue to improve the business, and as an example, we are in our second year of development of our AI machine-based learning project, which will begin to contribute to operational efficiencies in this calendar year.

[Doug White, Executive VP at NGL Energy Partners LP]

We are utilizing the millions of data points collected through our SCADA system, automated electric power consumption meters, and system flow models, which are fed into our proprietary AI model, and it is identifying opportunities to increase revenues and decrease expense. We are excited to continue to grow this project over time and increase the AI impact on our business. As an update to our large-scale produced water treatment strategy in the Delaware Basin, we recently entered into an MOU with Natura Resources, a leading advanced modular nuclear reactor developer. We are pursuing a combination of nuclear power applied to thermal desalination technology in Reeves County, Texas, where our outfall for the TPDES discharge permit is located. We are progressing toward a final draft of that permit this month and expect to receive an issued permit early this year.

[Doug White, Executive VP at NGL Energy Partners LP]

These steps lead us closer to realizing our medium to long-term goals of large-scale disposition of produced water. I'll now turn the call over to our CEO, Mike Krimbill.

[H. Michael Krimbill, CEO at NGL Energy Partners LP]

Thanks, Doug, and good afternoon, everyone. I have some just brief comments. With respect to current operations, you have heard that we achieved another great quarter exhibiting continued growth. There are several takeaways worth mentioning. One, we continue to move towards a predominantly water solutions company as we grow our water footprint and shed non-water assets. Two, this effectively eliminates the seasonality of our cash flows and improves the consistency and predictability of those cash flows. Three, we already have significant growth contracted for fiscal 2027 beginning April 1 of this year. Now let's look at our capital allocation priorities. First, our capital must finance internal growth projects for our producer customers. As we discussed on the previous quarter's earnings call, our growth capital increased by over $100 million in the second and third quarters of this fiscal year as new opportunities presented themselves.

[H. Michael Krimbill, CEO at NGL Energy Partners LP]

As Doug said, these projects are currently in service. Next, we focused on redeeming the Class D. As Brad said, we have redeemed about 15% of the outstanding preferreds. But importantly, our leverage has declined to the low 4.0 times area. So we will be looking to take out a significant portion of the remaining Class Ds in the very near future. So stay tuned for that. Finally, we look at our common units opportunistically to purchase and retire them at attractive prices. The board and management team have acted proactively to eliminate dilution and actually reduce the common units outstanding. So going back to November of 2024, you may remember we purchased 23.3 million long-term common unit warrants that had strike prices from 1,350 to about 1,750, and we paid $6.9 million. These purchases eliminated approximately 18% of future dilution.

[H. Michael Krimbill, CEO at NGL Energy Partners LP]

Currently, we've reduced the outstanding, as Brad said, by nearly 7% through our board-approved unit repurchase plan. So combined, we shouldn't lose sight. We have eliminated dilution of our common equity by approximately 25%. We will continue taking advantage of attractive common unit prices while balancing liquidity and leverage requirements. In closing, we believe the future of our business 5-20+ years from now is not dependent upon drilling more and more SWDs. That is our situation presently and in the near future. But ultimately, we must treat the produced water to a quality that can be released on the surface for irrigation, industrial, and municipal use. We are closer to that goal. Natura agreement and the anticipated discharge permit are two of the steps in that direction. Not all of our initiatives on this journey will work, but time and technology is on our side.

[H. Michael Krimbill, CEO at NGL Energy Partners LP]

I think with that, we open it up for questions.

[Operator]

Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. The first question today is coming from Derrick Whitfield from Texas Capital. Derrick, your line is live.

[Derrick Whitfield, Managing Director and Senior Energy Analyst at Texas Capital]

Good afternoon, guys. Derrick Whitfield with Texas Capital. So congrats on your quarter and also on the strong operating performance of your water business. Maybe just starting there on the macro environment, given the volatility in crude prices, can you speak to the firmness of the growth projects you highlighted in 2Q and really speak to the appetite of producers to further address and commit to future water disposal needs given the volatility we're currently seeing in crude prices?

[Brad Cooper, CFO at NGL Energy Partners LP]

Yeah, Derrick. I mean, I think Mike hit on it. I mean, the projects and the capital spend that we outlined on the last call, those projects are online here at the beginning of this calendar year. Doug, you want to kind of take what you're seeing maybe into this current year and maybe through the end of next fiscal year for us?

[Doug White, Executive VP at NGL Energy Partners LP]

Yeah, Derrick, when we look at the projects that we have completed, those came with volume commitments, and those were for long-term. So those are very financially firm. As we see the oil price fluctuate, even when it dipped down to $55 range, we really didn't see a big change from our customers. As the consolidations happened, certainly in the Delaware Basin, and we saw some more of that announced today, that consolidation has created more of a level activity level versus what it may have been a few years ago when there was a lot more private equity type of producers in the basin. But as it has matured, we're seeing our customers and our large customers just on a continuous drilling forward and frac spreads, etc. The other real big driver for us is asking about what does it look like prospectively.

[Doug White, Executive VP at NGL Energy Partners LP]

The other big driver is there is such a large wedge of foundational volumes of produced water in the Delaware Basin that when we saw, for an example, we hit that record on Friday the 16th in January. That was right before the storm. We saw some people drop some frac crews or pause some frac crews. The uptick of water that happens when there is even a small slowdown is reflective positive for our business. We're not active recyclers like some others are. When that recycling may slow down because it doesn't have frac crew to send water to, all of that produced water has to go somewhere, and that comes to us. So we're continuing to see large opportunities for large-scale projects prospectively and expect to nail down some of those firmly in the coming months.

[Derrick Whitfield, Managing Director and Senior Energy Analyst at Texas Capital]

Terrific. And specific to Natura's release this morning, it seems the market was concerned about the near-term capital obligations for a project that might not be material for several quarters, if not years. I guess, A, how would you characterize this water treatment opportunity in volume and values? And then B, how material is the current CapEx obligation?

[Doug White, Executive VP at NGL Energy Partners LP]

Yeah, good question. So we continue to explore the alternatives to injection based on seismicity, pore pressure increasing. Just being prudent operators, we've continued for several years to be looking for other alternatives to injection. You might remember our very successful desalination project in Pinedale, Wyoming. We have a history and experience in the side of the desal part of the business. We know it takes several factors to come together for those projects to coalesce. What's happened in the past year? Texas has passed the water bill, right? $1 billion a year of support for new water in Texas. The federal government's support of production of domestically sourced critical minerals. Requests from our customers. Our customers are paying attention, the producers, and saying, "Hey, NGL, where are you going to take my water?

[Doug White, Executive VP at NGL Energy Partners LP]

What opportunities are there for something different rather than Loving County or Reeves County?" We've addressed a lot of that in the short to medium term and some percentages of the very long term with our Andrews County out-of-basin assets. But then we have to look at and say, "What does it take to create large-scale desalination?" which we very, very firmly believe is part of the future and the portfolio going forward. Basic requirements for that, first, you have to have produced water volumes that support an economic-scaled plant. We check that box, right? Our large system. There's a reason we applied for our outfalls on our TPDES permit in the particular location in Reeves County. That's because we can deliver 800,000 barrels a day of water to that location. You need those economies of scale to have an economic project. Second is available energy source.

[Doug White, Executive VP at NGL Energy Partners LP]

You have to have an energy source for the treatment plant. Or as it goes with Natura, it becomes a means of treatment itself. Very interestingly, nuclear power generation produces about 60% waste heat of its energy. We would use that waste heat to be able to do thermal desalination of our water. It's not really even about the electricity, the 40% of electricity that's produced. It's really about the waste heat. We would be taking waste heat and treating waste water to create new water for the state of Texas, use the waste off of that process, which is concentrated brine, which has concentrated up the minerals within that brine. Then we're working on recovery of critical minerals through that. You put all those pieces together. That's what it takes to get there. Our MOU with Natura, we're very excited about.

[Doug White, Executive VP at NGL Energy Partners LP]

While it will have no CapEx demand to NGL on the nuclear side, our plan has not changed, and our CapEx forecast and demand has not changed. We are looking forward to developing the scaled treatment, and that will come over time. We won't go straight to a giant-scale treatment. Our TPDES discharge permit even has caps and ceilings on the amount of water you can discharge over a certain period of years. For us to start, maybe we start with a 50,000-barrel-a-day plant that's able to be scaled. Most likely, we'll be using natural gas to power that plant, not heavy CapEx demand. Then as we move forward, we sign contracts with our customers. We sign contracts with downstream users of our new water. We can create the economics around a larger CapEx spend to scale the project.

[Doug White, Executive VP at NGL Energy Partners LP]

Natura, should that come to fruition, Natura has their own economics of their own capital spend around their project. But we would put the two projects together to really create a really unique and exciting project.

[Derrick Whitfield, Managing Director and Senior Energy Analyst at Texas Capital]

Tremendously helpful. If I could just ask one more, only because you piqued my interest on the AI and machine learning side, maybe speak to the amount of value you've recovered to date and really the amount of potential value you could recover as you see this starting to take root within the organization?

[Doug White, Executive VP at NGL Energy Partners LP]

Well, I think you can see in our OpEx numbers how would they continue to improve. It's very hard to simply quantify that large move that we achieved this last quarter just down to the AI project. But certainly, the AI project is having influence on expenses. What most don't really focus on is the impact on revenues. The more water we can move more efficiently utilizing and increasing our utilization of our existing assets saves us capital. We don't have to drill new wells. We don't have to build new facilities. That goes straight to the bottom line. Obviously, with helping out on reducing capital spend, we reduce capital spend. We increase our low multiple returns, which is great, payback returns. So if you're looking for just a dollar amount or a percentage, right now, I don't feel comfortable saying what that is.

[Doug White, Executive VP at NGL Energy Partners LP]

We are seeing increases in just efficiencies to start. As you know, these machine-based products, they learn from themselves and continue to create more and more value. So as time goes on, Derrick, I think as we see true, I guess, discernible returns on that or dollars, we'll be able to share that down the road.

[Derrick Whitfield, Managing Director and Senior Energy Analyst at Texas Capital]

Fantastic. Great update.

[Doug White, Executive VP at NGL Energy Partners LP]

Thank you.

[Operator]

Thank you. Once again, it will be star one on your phone at this time if you wish to ask a question on today's call. The next question is coming from Tarek Hamid from J.P. Morgan. Tarek, your line is live.

[Nevin Mathew, Analyst at JPMorgan Chase & Co.]

Hi, good afternoon. This is Nevin on for Tarek. You had mentioned consolidation a little earlier. We were just wondering if you had any conversations with Devon following the deal announcement earlier this week. And if so, were there any takeaways on potential changes to activities or volume?

[Doug White, Executive VP at NGL Energy Partners LP]

We've been so busy with preparing for this call and running the business, Nevin, we have not had the opportunity to have those conversations with Devon.

[Nevin Mathew, Analyst at JPMorgan Chase & Co.]

That's understandable. All right. Thank you.

[Operator]

Thank you. There were no other questions in queue at this time. I would now like to hand the call back to Brad Cooper for closing remarks.

[Brad Cooper, CFO at NGL Energy Partners LP]

Thanks, everyone, for joining today. We'll catch up with you in June on our year-end call.

[Operator]

Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Brad Cooper, CFO
• Doug White, Executive VP
• H. Michael Krimbill, CEO

Analysts

• Derrick Whitfield, Managing Director and Senior Energy Analyst at Texas Capital
• Nevin Mathew, Analyst at JPMorgan Chase & Co.