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

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,

2012

2012

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

385,494

84,004

Receivables from affiliates

3,238

2,282

Inventories

264,556

94,504

Prepaid expenses and other current assets

57,000

10,002

Total current assets

736,297

198,624

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

425,641

237,652

GOODWILL

515,881

170,647

INTANGIBLE ASSETS, net of accumulated amortization of $17,646 and $8,174, respectively

345,942

139,780

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 payables

68,724

14,143

Advance payments received from customers

74,814

20,293

Payables to affiliates

11,780

9,462

Current maturities of long-term debt

78,033

19,484

Total current liabilities

653,101

144,751

LONG-TERM DEBT, net of current maturities

569,903

199,177

OTHER NONCURRENT LIABILITIES

2,599

212

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, respectively

839,977

384,604

Subordinated units — 5,919,346 units outstanding at September 30, 2012 and March 31, 2012

11,784

19,824

Accumulated other comprehensive income —

Foreign currency translation

28

31

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 Ended

Six Months Ended

September 30,

September 30,

2012

2011

2012

2011

REVENUES:

Retail propane

$

57,003

$

19,225

$

116,211

$

32,077

Natural gas liquids logistics

350,368

190,816

541,985

368,809

Crude oil logistics

711,021

-

784,538

-

Water services

15,810

-

17,751

-

Other

1,308

-

1,461

-

Total Revenues

1,135,510

210,041

1,461,946

400,886

COST OF SALES:

Retail propane

29,666

13,208

67,107

21,314

Natural gas liquids logistics

328,283

188,246

512,328

366,113

Crude oil logistics

693,687

-

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:

Operating

39,431

7,250

62,769

14,392

General and administrative

10,443

4,164

20,403

6,200

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 income

263

99

629

225

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 Taxes

10,159

(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.

Three Months Ended

Six Months Ended

September 30,

September 30,

Segment

2012

2011

2012

2011

(in thousands)

Retail propane

Propane gallons sold

20,057

7,961

39,327

12,964

Distillate gallons sold

3,024

-

6,273

-

Natural gas liquids logistics

Propane gallons sold

137,840

109,468

256,755

212,166

Other natural gas liquids gallons sold

186,795

19,654

251,750

38,100

Crude oil logistics

Crude oil barrels sold

7,479

-

8,461

-