NGL Energy Partners LP: A Fiscal Quarter to Remember

TULSA, Okla.?NGL Energy Partners LP (NYSE:NGL) has just released its financial results for the third quarter of fiscal 2020, and let?s just say, if earnings surprises were a game, they?re definitely playing to win.

Quarterly Highlights

The Partnership reported earnings from continuing operations of $49.1 million for the quarter ending December 31, 2019. That?s a significant drop from the $97.2 million reported for the same quarter last year. But hey, it?s not all doom and gloom. For the nine-month period ending December 31, 2019, NGL flipped the script with income from continuing operations of $42.5 million, a stark contrast to the $137.3 million loss from continuing operations reported for the previous year.

Operational Transformation

CEO Mike Krimbill has been busy. In his remarks, he emphasized that the company?s transformation to a more predictable business model is nearing completion. This shift aims to enhance cash flow predictability and reduce earnings volatility?two things that are music to investors? ears.

During the quarter, NGL?s Water Solutions segment completed the Hillstone acquisition, which, for readers unfamiliar, is kind of a big deal. This deal not only brought in long-term acreage dedications but also included minimum volume commitments with some of the best producers in the Delaware Basin. In a world where revenue forecasts can sometimes feel like a shot in the dark, this is a solid step towards stability.

Operational Metrics

In terms of operational metrics, NGL transported nearly 1.6 million barrels per day of produced water and 134,000 barrels per day of crude oil on the Grand Mesa Pipeline. The Liquids segment, too, had a robust quarter, optimizing a portfolio that now boasts 27 terminals and around 5,000 rail cars. This kind of operational efficiency is crucial in today?s market.

Acquisition Impact

The acquisition of Hillstone Environmental Partners, completed on October 31, 2019, for a total purchase price of $642.5 million, is certainly a feather in NGL?s cap. The assets acquired include:

• Minimum volume commitments covering over 110,000 acres.
• 19 saltwater disposal wells with a total disposal capacity of 580,000 barrels per day.
• A network of produced water pipelines with a transportation capacity of 680,000 barrels per day.
• 22 permits for developing an additional 660,000 barrels per day of disposal capacity.

That?s a lot of barrels! It seems NGL is not just treading water; they?re diving deep into new opportunities.

Looking Ahead

So what does this all mean for NGL and its sector peers? The focus on asset diversification across its business units could serve as a model for others in the oil and gas space, especially as the industry grapples with volatility and changing market dynamics. If NGL can continue to refine its operations and maintain its momentum, we might just see it climbing the ranks in the sector.

In conclusion, while the EPS consensus might suggest some caution, NGL?s proactive strategies and strong operational metrics could very well lead to a bright financial future. After all, in the world of energy, it?s not just about surviving; it?s about thriving.