NGL Energy Partners LP (NGL) | Investment Case

1. Company Snapshot

1.a. Company Description

NGL Energy Partners LP engages in the transportation, storage, blending, and marketing of crude oil, natural gas liquids, refined products / renewables, and water solutions.The company operates in three segments: Water Solutions, Crude Oil Logistics, and Liquids Logistics.The Water Solutions segment transports, treats, recycles, and disposes produced and flowback water generated from oil and natural gas production; aggregates and sells recovered crude oil; disposes solids, such as tank bottoms, and drilling fluid and muds, as well as performs truck and frac tank washouts; and sells produced water for reuse and recycle, and brackish non-potable water.

The Crude Oil Logistics segment purchases crude oil from producers and marketers, and transports it to refineries for resale at pipeline injection stations, storage terminals, barge loading facilities, rail facilities, refineries, and other trade hubs; and provides storage, terminaling, and transportation services through pipelines.The Liquids Logistics segment supplies natural gas liquids, refined petroleum products, and biodiesel to commercial, retail, and industrial customers in the United States and Canada through its 24 terminals, third-party storage and terminal facilities, and nine common carrier pipelines, as well as through fleet of leased railcars.This segment is also involved in the marine export of butane through its facility located in Chesapeake, Virginia.

NGL Energy Holdings LLC serves as the general partner of the company.The company was founded in 1940 and is headquartered in Tulsa, Oklahoma.

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1.b. Last Insights on NGL

NGL Energy Partners LP's recent performance was negatively impacted by a slow Q1, with earnings missing expectations. The company's decision to exit the underperforming liquids business is a positive step, but the short-term effects of this transition are unclear. The LEX II expansion, which will significantly boost capacity and free cash flow, is a long-term growth driver. However, recent asset sales and debt refinancing have not yet translated into improved financial performance. The company's recent asset sales and cash proceeds totaling approximately $270 million have not been fully utilized to reduce debt or improve operations.

1.c. Company Highlights

Last Price	9.94
Change Percentage	0.51%
Open	9.93
Previous Close	9.89
Market Cap ( Millions)	1250
Volume	351898
Year High	10.29
Year Low	2.64
M A 50	7.84
M A 200	5.22

FCF Yield	16.14%
Dividend Yield	0.00%
ROE	22.72%
Debt / Equity	99.39%
Net Debt / EBIDTA	22.18%
Price To Book	10.22
Price Earnings Ratio	10.09
Price To FCF	6.2
Price To sales	0.33
EV / EBITDA	2.64

2. NGL Energy Partners' Solid Quarter Driven by Water Solutions Growth

NGL Energy Partners reported a solid quarter with consolidated adjusted EBITDA from continuing operations reaching $167.3 million, a 12% increase from the prior year's $149.4 million. The increase was primarily driven by the performance of the Water Solutions business segment, which saw adjusted EBITDA rise 18% to $151.9 million. The company's actual EPS came out at -$0.27, missing estimates of -$0.11. Revenue growth is expected to decline by 51.1% next year, according to analyst estimates.

Publication Date: Nov -30

                                    📋 Highlights
                                    Record Water Volumes:
                                                with 30% growth in Grand Mesa volumes and 4% increase in physical water disposal to 2.8 million barrels/day.
EBITDA Growth:
                                                of 12% to $167.3 million, driven by Water Solutions segment’s 18% rise to $151.9 million in adjusted EBITDA.
Guidance Raised:
                                                from $615–$625 million to $650–$660 million, supported by 750,000 bbl/day new contracted growth projects.
Capital Structure Moves:
                                                including 5% unit repurchase (6.8 million units) and $15 million annual interest savings via Term Loan B repricing.
Balance Sheet Strengthening:
                                                with 15% Class D preferred purchase and projected <4x leverage, aiming for zero ABL by year-end.

                                

Operational Highlights

The Water Solutions segment's physical water disposal volumes were up 4% to 2.8 million barrels per day, and the company has underwritten new growth capital projects for approximately 750,000 barrels per day of newly contracted volume commitments, scheduled to be placed into service by the end of the calendar year. The CEO highlighted that NGL generates the most adjusted EBITDA annually of any water company and expects to become more of a pure-play water company as its adjusted EBITDA from water operations continues to grow.

Capital Structure and Guidance

NGL has taken steps to strengthen its balance sheet, purchasing 88,506 units of the Class D preferred and repurchasing 4.4 million units in the quarter. The company projects a zero ABL balance at the end of the fiscal year and approximately 4x leverage. The company has achieved annual interest savings of $15 million on the Term Loan B through repricing and remains opportunistic in addressing its capital structure.

Valuation and Outlook

With an EV/EBITDA ratio of 2.62, the market appears to be pricing in a relatively modest growth trajectory for NGL Energy Partners. The company's P/S Ratio is 0.32, indicating a potentially undervalued stock. As the company continues to grow its Water Solutions segment and strengthen its balance sheet, investors may want to keep an eye on NGL's progress towards its goal of becoming a pure-play water company. The company's ROE is 22.72%, and ROIC is 9.82%, indicating a relatively efficient use of capital.

3. NewsRoom

The 11.7% Preferred Yield Of NGL Energy Partners Is Exceptionally Attractive

Dec -03

Source: seekingalpha.com

NGL Energy Partners: Attractive Growth Proposal As Water Business Ramps Up

Nov -28

Source: seekingalpha.com

Top 2 Energy Stocks You May Want To Dump This Month

Nov -13

Source: benzinga.com

Devon Energy Corp Surpasses EPS Estimates with $1.09, Revenue Falls Short at $2.8 Billion in Q3 2025

Nov -05

Source: gurufocus.com

NGL Energy Partners LP Common Units (NGL) Q2 2026 Earnings Call Transcript

Nov -05

Source: seekingalpha.com

NGL Energy Partners LP Announces Second Quarter Fiscal 2026 Financial Results

Nov -04

Source: businesswire.com

NGL Energy Partners LP $NGL Shares Sold by D.A. Davidson & CO.

Nov -01

Source: defenseworld.net

Solid Fundamentals, Cyclical Downturns Have Led To New Purchases

Oct -13

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.38%)

6. Segments

Liquids Logistics

Expected Growth: 4.65%

NGL Energy Partners LP's Liquids Logistics segment growth of 4.65% is driven by increasing demand for crude oil transportation, strategic acquisitions, and expansion of existing infrastructure. Additionally, growing production in the Permian Basin and increasing exports of US crude oil contribute to the segment's growth.

Crude Oil Logistics

Expected Growth: 6.15%

NGL Energy Partners LP's Crude Oil Logistics segment growth of 6.15% is driven by increasing demand for crude oil transportation, expansion of pipeline infrastructure, and strategic acquisitions. Additionally, growing production in the Permian Basin and increasing exports of US crude oil contribute to the segment's growth.

Water Solutions

Expected Growth: 8.5%

NGL Energy Partners LP's Water Solutions segment growth is driven by increasing demand for water management services in the Permian Basin, coupled with the company's strategic acquisitions and expansion of its water infrastructure. Additionally, the growing need for water recycling and reuse in the oil and gas industry, as well as increasing regulatory pressures, contribute to the segment's 8.5% growth.

7. Detailed Products

Crude Oil Logistics

NGL Energy Partners LP provides crude oil logistics services, including transportation, storage, and marketing of crude oil.

Refined Products and Renewables

NGL Energy Partners LP offers refined products, including gasoline, diesel, and jet fuel, as well as renewable energy products, such as biodiesel and ethanol.

Water Solutions

NGL Energy Partners LP provides water disposal and treatment services for the oil and gas industry.

Liquids and Refined Products Terminaling

NGL Energy Partners LP operates terminals for the storage and distribution of refined products, including gasoline, diesel, and jet fuel.

Gathering and Processing

NGL Energy Partners LP provides gathering and processing services for natural gas and natural gas liquids.

8. NGL Energy Partners LP's Porter Forces

Forces Ranking

Threat Of Substitutes

NGL Energy Partners LP operates in the midstream energy sector, which has limited substitutes. However, the company's services can be substituted with other forms of energy transportation and storage, posing a moderate threat.

Bargaining Power Of Customers

NGL Energy Partners LP's customers are primarily large energy companies, which have limited bargaining power due to the company's strategic position in the midstream energy sector.

Bargaining Power Of Suppliers

NGL Energy Partners LP relies on a diverse range of suppliers for its operations, which reduces the bargaining power of individual suppliers. However, the company is still exposed to fluctuations in commodity prices and supply chain disruptions.

Threat Of New Entrants

The midstream energy sector has high barriers to entry, including significant capital requirements and regulatory hurdles, which limits the threat of new entrants.

Intensity Of Rivalry

The midstream energy sector is highly competitive, with several established players competing for market share. NGL Energy Partners LP faces intense rivalry from its peers, which can lead to pricing pressure and reduced margins.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	79.36%
Debt Cost	8.81%
Equity Weight	20.64%
Equity Cost	11.96%
WACC	9.46%
Leverage	384.46%

11. Quality Control: NGL Energy Partners LP passed 1 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Delek Logistics Partners

A-Score: 6.4/10

Value: 4.9

Growth: 3.0

Quality: 4.6

Yield: 10.0

Momentum: 7.5

Volatility: 8.7

1-Year Total Return ->

Global Partners

A-Score: 6.0/10

Value: 6.9

Growth: 3.9

Quality: 3.1

Yield: 10.0

Momentum: 5.0

Volatility: 7.0

1-Year Total Return ->

Genesis Energy

A-Score: 5.8/10

Value: 7.0

Growth: 3.4

Quality: 1.5

Yield: 9.0

Momentum: 7.5

Volatility: 6.3

1-Year Total Return ->

NGL Energy Partners

A-Score: 4.7/10

Value: 7.6

Growth: 3.6

Quality: 5.0

Yield: 0.0

Momentum: 9.0

Volatility: 3.0

1-Year Total Return ->

Overseas Shipholding Group

A-Score: 4.2/10

Value: 6.6

Growth: 5.9

Quality: 5.3

Yield: 0.0

Momentum: 5.0

Volatility: 2.7

1-Year Total Return ->

Martin Midstream Partners

A-Score: 3.8/10

Value: 9.8

Growth: 2.6

Quality: 3.7

Yield: 1.0

Momentum: 1.5

Volatility: 4.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

0.88%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

9.46%

NGL Energy Partners LP - US62913M1071

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on NGL

1.c. Company Highlights

Lower Quality

Strong Momentum

Cheaper

Earnings Miss

Revenues Miss

Lower Growth

Fairly Valued

Stable Momentum

Average Growth

Revenues Beats

Medium Volatility

Weak Momentum

Earnings Beats

Lower Yield

2. NGL Energy Partners' Solid Quarter Driven by Water Solutions Growth

Operational Highlights

Capital Structure and Guidance

Valuation and Outlook

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.38%)

6. Segments

Liquids Logistics

Expected Growth: 4.65%

Crude Oil Logistics

Expected Growth: 6.15%

Water Solutions

Expected Growth: 8.5%

7. Detailed Products

Crude Oil Logistics

Refined Products and Renewables

Water Solutions

Liquids and Refined Products Terminaling

Gathering and Processing

8. NGL Energy Partners LP's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: NGL Energy Partners LP passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

9.94$

Current Price

9.94$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA