Lets see, some simple thoughts on NGL.
The partnership was near $6 before reporting Q1 2024 results in early June. At that time NGL was expected to do $645m in trailing four quarters EBITDA.
Q1 2024 missed EBITDA by about $35km, and the price drifted down to $4.
Now NGL has reported June Q 2025 results, and is on track to deliver $655m EBITDA in early June 2025. Further, while water sales in June Q 2024 were merely OK (flat with the previous quarter) they indicated that the month of July had water sales up more than 15% from the June Q levels. If that keeps up, then water EBITDA should jump strongly in Sep 2024. Then we've got the Lex 2 new pipeline completing in October and going into production, further increasing water sales and EBITDA. The other two divisions did generally well in June Q 2024, and so everything seems to be going along well, with water accelerating. $655m EBITDA for the four months through March 2025 seems very achievable, and perhaps low is water accelerates a bit.
So I think it seems reasonable for NGL to get back to $6.00 as this becomes clear to the market (hopefully after the next quarter), and then perhaps higher than $6.00 because once the June and Sep 2024 quarters are in the rear view mirror, and replaced by June and Sep 2025 EBITDA numbers in the outlook, NGL should be look to do $680m-$700m per four quarters fairly easily.
In other words, it seems reasonably likely (if everything just goes as planned) that Q2 2024 was the fundamental bottom, and the trends (EBITDA at least, that seems to be the important thing) is on it's way up. If that trend is accurate, and NGL can shift from a floor multiple to some sort of growth multiple, the unit price should react very well. |
