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

Nov 08, 2019 • 11:00 am ET


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


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Mike Krimbill

Products business, reducing indebtedness by $300 million.

For those of you who look in their rear-view mirror to make investment decisions, in the last 20 months, 24 months, we have sold assets for approximately $2.1 billion, while retaining Grand Mesa of course and purchased assets for approximately $1.5 billion, math that would lead one to believe that EBITDA would have declined. But no, EBITDA has actually increased over 50% from about $380 million to nearly $600 million.

So what do we accomplished? The business has become more simplified and focused with three segments versus five. The three businesses are much less volatile with the sale of Refined Products and less seasonal with the sale of Retail Propane. Crude and NGL Logistics are repeatable predictable cash flow streams. Water Solutions, less so currently as a result of the significant growth going forward.

We have reduced total leverage by nearly two turns already and have a couple of $100 million of working capital debt to eliminate by 12/31. We have established the largest water system in the U.S. with nearly 3 million barrels a day of disposal capacity and many hundreds of miles of pipelines. More importantly, we invested in the Delaware Basin with the highest rates of return for producers meaning less commodity risk. It is also the basin with the highest water to oil ratio. We exited the other basins that we felt had greater commodity price or seismic risk.

We are focused on creating a profile for the water business, similar to the G&P business, long-term contracts 5 years to 20 years, significant acreage dedications, minimum volume commitments, a focus on pipe water not truck, Mesquite as I said is 95% piped, Hillstone is 100% piped.

We have created massive redundancy for our producers by building many 24-inch pipelines and two 30-inch pipelines all connected to our SWDs. We are not a water disposal company, but rather Water Solutions partner. We offer many services to our customers. Disposal, of course; second, recycle. This is extremely important in New Mexico where we need to protect and conserve freshwater and utilize recycled water for fracking instead. Recycle is not a small volume mobile unit, but rather an extensive produced water pipe system that provides produced water to recycle ponds throughout Lea and Eddy County.

NGL can provide frac quality water taking out undissolved solids and corrosive metals like iron, so producers don't need to add chemicals. We own ranches in Lea County of approximately 200,000 acres. On our Fee Land we are building recycle ponds, landfills that are important to disposal of the unresolved solids removed from produced water, cliche mines for building roads and drilling pads, and we're even currently evaluating construction of solar fields on our fee land to produce electricity.

So what's in store for the next 18 months? A significant increase in water volumes; we have built the infrastructure to handle large increases in produced and flow back water. Two, we continued reduction in working capital debt,