NGL Energy Partners LP Announces Second Quarter Results and Filing of Form 10-Q

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NGL Energy Partners LP Announces Second Quarter Results and Filing of Form 10-Q

TULSA, Okla.--(BUSINESS WIRE)-- NGL Energy Partners LP (NYS: NGL) , "NGL Energy," today reported net income of $10.1 million and Adjusted EBITDA of $26.3 million for the three months ended September 30, 2012. Net income per limited partner common unit for the quarter was $0.18. General and administrative expenses during the quarter ended September 30, 2012 included $0.6 million of costs related to acquisitions.

NGL Energy's results of operations for the three months ended September 30, 2012 include the operations acquired in a June 2012 merger with High Sierra Energy, LP ("High Sierra"), which contributed significantly to NGL Energy's net income. High Sierra's businesses include crude oil gathering, transportation and marketing; water treatment, disposal, and transportation; and natural gas liquids transportation and marketing.


For the six month period ended September 30, 2012, NGL Energy reported a net loss of $14.6 million and Adjusted EBITDA of $19.9 million. Net loss per limited partner common unit for the six months ended September 30, 2012 was $(0.37). The net loss was impacted by the following items:

  • General and administrative expenses during the quarter ended June 30, 2012 included $3.5 million of costs related to the merger with High Sierra.
  • NGL recorded a loss of $5.8 million resulting from the accelerated amortization of previously capitalized debt issuance costs upon closing of its new revolving credit facility.
  • Declining propane prices during April and May 2012 had an adverse impact on margins of NGL's wholesale marketing and supply segment, which NGL expects to recover when delivering future volumes. NGL has contracts whereby it has committed to purchase ratable volumes of propane at index prices. NGL seeks to manage the price risk associated with these contracts primarily by selling the inventory not stored immediately after it is received. When NGL sells product, it records the cost of sale at the average cost of all inventory at that location, which may include inventory purchased earlier at higher prices and stored for sale in the future. During periods of falling prices, this results in negative margins on these sales.

During October 2012, NGL Energy completed a business combination whereby it acquired certain entities that operate salt water disposal wells and related assets. During October and November 2012, NGL Energy acquired two retail propane businesses. On November 1, 2012, NGL Energy completed a business combination whereby it acquired certain entities that conduct crude oil purchasing and logistics operations in Texas and New Mexico.

A conference call to discuss NGL Energy's results of operations is scheduled for 3:00 p.m. Central Time on November 19, 2012. Analysts, investors, and other interested parties may access the conference call by dialing (800) 510-9661 and providing access code 81546845. An audio replay of the conference call will be available for 7 days beginning at 4:00 p.m. Central Time on November 19, 2012 and can be accessed by dialing (888) 286-8010 and providing access code 85915820.

NGL Energy also announced that it has filed its quarterly report on Form 10-Q for its fiscal quarter ended September 30, 2012 with the Securities and Exchange Commission. NGL Energy has posted a copy of the Form 10-Q on its website at www.nglenergypartners.com.

NGL Energy defines EBITDA as net income (loss) attributable to parent equity, plus income taxes, interest expense and depreciation and amortization expense. NGL Energy defines Adjusted EBITDA as EBITDA excluding the unrealized gain or loss on derivative contracts and the gain or loss on the disposal of assets and share-based compensation expenses. EBITDA and Adjusted EBITDA should not be considered an alternative to net income, income before income taxes, cash flows from operating activities, or any other measure of financial performance calculated in accordance with GAAP as those items are used to measure operating performance, liquidity or the ability to service debt obligations. NGL Energy believes that EBITDA provides additional information for evaluating its ability to make quarterly distributions to its unitholders and is presented solely as a supplemental measure. NGL Energy believes that Adjusted EBITDA provides additional information for evaluating its financial performance without regard to its financing methods, capital structure and historical cost basis. Further, EBITDA and Adjusted EBITDA, as NGL Energy defines them, may not be comparable to EBITDA and Adjusted EBITDA or similarly titled measures used by other entities. A reconciliation of Adjusted EBITDA to net income (loss) attributable to parent equity is shown below.

About NGL Energy Partners: NGL Energy Partners LP owns and operates a vertically integrated energy business. For further information about NGL Energy and the financial results disclosed in this press release, see NGL Energy's website at www.nglenergypartners.com.

   
 
NGL ENERGY PARTNERS LP
Unaudited Condensed Consolidated Balance Sheets
As of September 30, 2012 and March 31, 2012
(U.S. Dollars in Thousands, except unit amounts)
 
September 30,March 31,
20122012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$26,009$7,832

Accounts receivable - trade, net of allowance for doubtful accounts of $1,356 and $818, respectively

385,49484,004
Receivables from affiliates3,2382,282
Inventories264,55694,504
Prepaid expenses and other current assets 57,000  10,002
Total current assets736,297198,624
 

PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $25,326 and $12,843, respectively

425,641237,652
GOODWILL515,881170,647
INTANGIBLE ASSETS, net of accumulated amortization of $17,646 and $8,174, respectively345,942139,780
OTHER NONCURRENT ASSETS 5,658  2,766
Total assets$2,029,419 $749,469
 
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable$419,750$81,369
Accrued expenses and other payables68,72414,143
Advance payments received from customers74,81420,293
Payables to affiliates11,7809,462
Current maturities of long-term debt 78,033  19,484
Total current liabilities653,101144,751
 
LONG-TERM DEBT, net of current maturities569,903199,177
OTHER NONCURRENT LIABILITIES2,599212
 
COMMITMENTS AND CONTINGENCIES
 
PARTNERS' EQUITY:
General Partner — 0.1% interest; 50,821 and 29,245 notional units outstanding, respectively(51,052)442
Limited Partners — 99.9% interest —
Common units — 44,850,439 and 23,296,253 units outstanding, respectively839,977384,604
Subordinated units — 5,919,346 units outstanding at September 30, 2012 and March 31, 201211,78419,824
Accumulated other comprehensive income —
Foreign currency translation2831
Noncontrolling interests 3,079  428
Total partners' equity 803,816  405,329
Total liabilities and partners' equity$2,029,419 $749,469
   
 
NGL ENERGY PARTNERS LP
Unaudited Condensed Consolidated Statements of Operations
Three Months and Six Months Ended September 30, 2012 and 2011
(U.S. Dollars in Thousands, except unit and per unit amounts)
 
Three Months EndedSix Months Ended
September 30,September 30,
2012 20112012 2011
REVENUES:
Retail propane$57,003$19,225$116,211$32,077
Natural gas liquids logistics350,368190,816541,985368,809
Crude oil logistics711,021-784,538-
Water services15,810-17,751-
Other 1,308  -  1,461  - 

Total Revenues

 1,135,510  210,041  1,461,946  400,886 
 
COST OF SALES:
Retail propane29,66613,20867,10721,314
Natural gas liquids logistics328,283188,246512,328366,113
Crude oil logistics693,687-770,570-
Water services 2,054  -  2,670  - 
Total Cost of Sales 1,053,690  201,454  1,352,675  387,427 
 
OPERATING COSTS AND EXPENSES:
Operating39,4317,25062,76914,392
General and administrative10,4434,16420,4036,200
Depreciation and amortization 13,361  1,701  22,588  3,078 
Operating Income (Loss)18,585(4,528)3,511(10,211)
 
OTHER INCOME (EXPENSE):
Interest income26399629225
Interest expense(8,692)(1,012)(12,492)(2,313)
Loss on early extinguishment of debt--(5,769)-
Other, net 3  46  29  131 
Income (Loss) Before Income Taxes10,159(5,395)(14,092)(12,168)
 
INCOME TAX PROVISION (77) -  (536) - 
 
Net Income (Loss)10,082(5,395)(14,628)(12,168)
 
Net (Income) Loss Allocated to General Partner(694)5(789)12
 
Net (Income) Loss Attributable to Noncontrolling Interests(9)-51-
 
Net Income (Loss) Attributable to Parent Equity    
Allocated to Limited Partners$9,379 $(5,390)$(15,366)$(12,156)
 
Basic and Diluted Earnings (Loss) per Common Unit$0.18 $(0.36)$(0.37)$(0.88)
 
Basic and Diluted Earnings (Loss) per Subordinated Unit$0.18 $(0.36)$(0.38)$(0.88)
 
Basic and Diluted Weighted average units outstanding:
Common 44,831,836  8,864,222  35,730,492  9,370,997 
Subordinated 5,919,346  5,919,346  5,919,346  4,431,423 
 
 

OPERATIONAL DATA

The following table summarizes the volume of product sold and wastewater processed for the three months and six months ended September 30, 2012 and 2011. Gallons sold by our natural gas liquids logistics segment shown in the table below include sales to our retail segment.

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Three Months EndedSix Months Ended
September 30,September 30,

Segment

2012 201120122011
(in thousands)
Retail propane
Propane gallons sold20,0577,96139,32712,964
Distillate gallons sold3,024-6,273-
 
Natural gas liquids logistics
Propane gallons sold137,840109,468256,755212,166
Other natural gas liquids gallons sold186,79519,654251,75038,100
 
Crude oil logistics
Crude oil barrels sold7,479-8,461-