NGL Energy Partners LP (NYSE:NGL) Q2 2020 Earnings Conference Call - Final Transcript

Nov 08, 2019 • 11:00 am ET

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NGL Energy Partners LP (NYSE:NGL) Q2 2020 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] Our first question comes from the line of TJ Schultz from RBC Capital Markets. Your question please.

Analyst
TJ Schultz

Great, thanks. Maybe for Doug, what percent of the expected Delaware volumes by the end of next year will be on contract or part of an acreage dedication, and what percent is supported by MVCs?

Executive
Doug White

Hey, TJ. Thank you. Right now, I believe we're somewhere close to 70% of all either acreage dedicated or MVCs in the Delaware. That really is pretty in line with the percentage of our piped water. Also really our trucked waters is the undedicated portion of our portfolio in the Delaware. As we continue to bring on more facilities, and then also, we see the Poker Lake contract ramp next year, we'll see that 70% pushing more towards the 80%, 85%. On the MVC basis; I would say on MVC basis in the Delaware, of that 70% of committed, 30% of that's MVC.

Analyst
TJ Schultz

Okay, thanks. And then maybe a question on recycling more high level. You've indicated building these ponds. So what recycling now is done via some of these mobile units and how does that evolve or is that evolving to something different more quickly that would utilize these ponds and pipes. Just trying to understand the opportunity that sits there for you all as you look to contract that recycling business?

Executive
Doug White

Sure. The mobile units are more focused on on-the-fly or lower volume production. With our long history of recycling and treating, we've been down that road and consider them. We didn't see it as an answer for anything we could scale. That's why we do not focus on those. Because we have such a large pipeline system in place now, we're able to strategically place very low capex pits and recycle equipment that is really centralized, but not on a big plant basis, more of a central facility with equipment and pits that store the water.

Our interconnect to our produced water system is where we receive the produced water to treat. Our average facility can treat 50,000 barrels per day, scalable for -- to 100,000 barrels per day for not a lot more capex. And our goal is to -- and what we've already entered into -- we have a 10-year acreage dedication on our first facility on our McCloy Ranch. We are delivering that water through the acre dedication, but then that has opened up opportunities for us and other dedications or other contracts within 8-mile to 10-mile radius of that facility, all delivered by pipe as well.

Analyst
TJ Schultz

Okay. Great. That's helpful. Just lastly, Mike or Trey, the implied valuation on the GP and some recent transactions that were disclosed imply plans I would think to grow the distribution over the next few years. But how do you view distribution growth versus buybacks, just given where the stocks trading right now? Thanks.

Executive
Mike Krimbill

We think, number one, we probably end up in the midstream space where everyone eliminates their IDRs. So when do