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   Gold/Mining/EnergyNGL to da moon (well, maybe to $10?)!!


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From: Elroy9/23/2023 5:51:33 PM
   of 109
 
Interesting volume in NGL on Friday, more than the day after the last conference call.

No idea why. NGL was having a good day, trying to break out of it's recent $3.80-$3.90 range to the upside, then collapsed at the end of the day.

I wonder what drives 3x-4x normal volume on zero news?

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From: Elroy10/9/2023 10:38:14 AM
   of 109
 
NGL back above $4.00 finally.

I've loaded up on long Apr '24 $2.50 calls against short Apr '24 $5.00 (and a few $7.50) puts. I think sometime between now and March 2024 NGL is going to have great results and / or raise EBITDA guidance, and that pushes the unit price above $5.00 by April expiration.

Maybe not Q3 results, but for sure by the reporting of Q4 results.

I think this one is still "off the radar" for most investors.

I think by Q2 2025 it will be once again paying distributions, and have a price around $10. I can wait.

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From: Elroy11/9/2023 6:04:39 PM
   of 109
 
NGL Energy Partners LP Announces Second Quarter Fiscal 2024 Financial Results

finance.yahoo.com

  • Adjusted EBITDA(1) for the second quarter of Fiscal 2024 of $176.2 million, compared to $142.2 million for the second quarter of Fiscal 2023


  • Record Water Solutions’ quarterly Adjusted EBITDA(1) of $140.4 million for the second quarter of Fiscal 2024, a 34.0% increase compared to the second quarter of Fiscal 2023


Our Water Solutions segment continues to outperform, so we are increasing our Fiscal 2024 Adjusted EBITDA(2) guidance for this segment to $500 million plus.

We are reaffirming our full year consolidated Adjusted EBITDA(2) guidance of $645 million plus rather than increasing it commensurate with the Water Solutions’ increase as we are anticipating asset sales plus uncertainty around the Liquid Logistics segment’s performance in the face of a potentially warmer than normal winter." stated Mike Krimbill NGL’s CEO

Borrowings on the Partnership’s ABL Facility totaled approximately $156.0 million (compared to $180m last Q).

Long term debt was down $54m to $2.78b

So the line of credit and LT debt were reduced by $78m in the quarter. Not too shabby.

There is an investor presentation on the web site......

chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://irp.cdn-website.com/3038c594/files/uploaded/20231109_EarningsCall.pdf

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From: Elroy11/10/2023 9:14:09 AM
   of 109
 
From the Sep 2023 conference call....

Adjusted EBITDA for the second quarter was $176.2 million compared to $142.2 million for the second quarter of fiscal '23. This EBITDA number is more than $700m annualized. It's fantastic.

With this strong start to the fiscal year, we are raising the full year guidance for Water Solutions from $485 million to $500 million plus.

Moving to liquids logistics, butane and propane are seasonal with the majority of their adjusted EBITDA coming in the back half of the fiscal year. ...that means the next two quarters....

We are reaffirming our full year consolidated adjusted EBITDA guidance of $645 million plus. Not increasing EBITDA guidance is disappointing. Water is expected to be $15m ahead of guidance, so the other stuff may be expected to be $15m below guidance...

We are increasing asset sales another $25 million to $100 million for the fiscal year. Depending on the timing of these asset sales, there could be EBITDA associated with these sales that would reduce our full year results. Ok, cash is good.

We are also hedging against a warm winter that could impact the results of our liquids logistics unit. Not sure what this means. What are they "hedging"?
We are increasing our growth capital expenditures to $100 million versus previous guidance of $65 million due to the growth opportunities in the Delaware for our water solutions segment. I suppose this may be good, as it makes future water growth more likely...

We should see a small impact to our adjusted EBITDA in the fourth quarter and a full year impact starting in fiscal 2025 from these projects. We are planning to fund this additional growth capital with the incremental asset sales I just mentioned. Ok, so they're selling some stuff, and using the proceeds to invest in water. That sounds great, actually. Water is the future for these guys.

we anticipate paying off the '25 unsecured notes by March 31, 2024. That's $208m debt reduction planned ...

we had 2 items that positively impacted our quarterly results. First, we sold certain saltwater disposal assets and intangible assets in the Pinedale Anticline Basin. A portion of the transaction was allocated between the termination of the water disposal contract and the sale of the assets based on the relative fair value. Approximately $7.8 million of the total consideration was allocated to the termination of the water disposal contract, which was a favorable impact to adjusted EBITDA for the quarter.
Second, recall from the previous quarter, we stored skim oil volumes in the Eagle Ford Basin that didn't meet pipeline specs. This issue was resolved in the second quarter and the oil was sold in the quarter and positively impacted adjusted EBITDA by approximately $4 million. Ok, this sounds like the $140m water EBIITDA benefited from about $12m of stuff that is more like one time items and not recurring. That's no good....

With respect to our EBITDA guidance, water year-to-date EBITDA, $263 million. We only need to generate $237 million in the second half to achieve the $500 million, so we raised water guidance to $500 million plus. This is being conservative, not an indication that we expect a decline. Water volumes have started out lower or slower in October, so third quarter water EBITDA should be between first and second quarter actuals and an anticipated increase in the fourth quarter.Ok, that doesn't add up at all. Last Q water EBITDA was $123 m and this Q it was $140m. So if next Q is in the middle, and then up in March, the water EBITDA guidance is at MINIMUM $124m Dec + $125m Mar '24. That's $249m for Dec + Mar, and they've already done $263m in June and Sep, so the MINIMUM total is $512m for fiscal '24.

Whatever, but their full year water guidance of $500m+ is well below where it should end up if their next two quarter's guidance is remotely accurate.


-------

I think the water story is very good with these guys.

And I think they begin paying distributions again by Q2 2025, and when that happens NGL will be closer to $10 than where it is now.

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To: Elroy who wrote (20)11/17/2023 2:05:21 PM
From: Area51
   of 109
 
Leverage down to 4.14x, versus 6.11 a year ago?| Chart looks good (cup and handleish). You sold me, I'm back in for a few shares.

Your $10 target by early 2025 is not crazy if things develop according to their plan.

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To: Area51 who wrote (21)11/17/2023 2:33:27 PM
From: Elroy
1 Recommendation   of 109
 
I don't think much needs to develop, things can just stay the way they are now and it probably gets to $10 by Q2 2025. That's 20 months, not two years.

By Q1 2024 they will have paid off the $208m remaining in 2025 notes.
By Q2 or Q3 2024 they will refinance the remaining $2.6b 2026/7 debt into perhaps $2.8b 2031 8.5% debt.

At that point they have $260m per year in debt interest payments, and maybe $140m per year in Cap Ex.

The next issue is about $930m in floating rate preferred stock, which will be about $400m or less in arrearage by summer 2024.

Raising $2.8b new debt to pay down $2.6b old debt leaves $200m left over. That's half the $400m arrearage.

With $600m per year in EBITDA, we can just call that free cash flow, and it means they've got $300m per year to handle the remaining $200m arrearage, with $100m left over for "other" (it always comes up).

And in fact, EBITDA is probably going to be more than $600m in fiscal 2025 (Mar). And it's probably growing.

Once they've paid the arrearage (probably by Q1 2025 latest) they've got $300m LT debt interest, $120m preferred dividends, and $150m Cap Ex, leaving at least $65m for "whatever". That's enough for a 65 cents per unit annual distribution.

We'll see. Once they get to next summer the future will be much more clear, but I think a $10 unit price and a ~65 cents per year distribution looks very reasonable for the June 2025-Mar 2026 fiscal year.

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From: Elroy11/29/2023 8:51:34 PM
   of 109
 
NGL presented at a BofA conference yesterday, and today it's up 20 cents on 2x daily volume.

I don't know what they said at the conference, but it seems to be being well received.

Lets see what happens tomorrow.

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From: Elroy12/6/2023 7:37:53 AM
   of 109
 
NGL Energy Partners LP Announces 2023 Open Season for Grand Mesa Pipeline Starting December 6, 2023

finance.yahoo.com

Grand Mesa provides takeaway capacity for crude oil producers in the Denver-Julesburg Basin. It originates in Weld County, Colorado and extends approximately 550 miles southeast to NGL Crude Cushing, LLC’s storage terminal at Cushing, Oklahoma. The pipeline is capable of receiving and batch transporting up to 150,000 barrels per day for delivery into the Cushing hub, which affords its shippers access to both U.S. Midcontinent refining and trading markets as well as the Texas Gulf Coast refinery complex. The pipeline not only supports the continued growth and production in the area, but does so in a cost-effective and environmentally responsible way by reducing the current utilization of rail and truck transportation.

NGL held open seasons in 2016 and in 2021 seeking commitments from shippers interested in shipping on Grand Mesa’s pipeline system. NGL is holding the current open season to contract available capacity on the Grand Mesa pipeline at a discounted rate. The total capacity being offered in this open season is 40,000 barrels per day for delivery into the Cushing hub.

------

Does anyone have any idea whether this is good or bad news?

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To: Elroy who wrote (24)12/6/2023 8:53:25 AM
From: Elroy
   of 109
 
Hmmm, it appears NGL has twice before held "Open Seasons" for the Grand Mesa pipeline, once in 2016 and once in 2021.

Here's the 2021 announcement:

feeds.issuerdirect.com

I don't see any press release indicating the results of that 2021 open season, so perhaps there will not be a press release indicating the results of the current Open Season.

I'm not really sure what to make of this, but it seems like bad news as we'd prefer to have the Grand Mesa pipeline already be at capacity, and since NGL is (evidently) trying to sell 40k barrels per day of capacity in this Open Season, I guess it means that there is 40k barrels of capacity which are not currently purchased by customers.

And the wording in the press release about a "discounted rate" doesn't seem appealing. I guess there is a trade off between spot prices and pre-contracted prices, so it's probably normal wording, but still, I'd prefer it if demand were so high that they were selling capacity at elevated rates.....

NGL is holding the current open season to contract available capacity on the Grand Mesa pipeline at a discounted rate.

Not really sure what to make of this announcement. I guess it's normal, but whether it's a positive or negative indicator I don't know. I suppose it depends on the results of the Open Season, something we may not get to see until future quarterly results are released.

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From: Elroy12/15/2023 1:01:55 PM
   of 109
 
NGL bustin' through $5.

NGL's publicly traded preferreds are now trading ABOVE par. I think that means the market expects them to be made current (they're in arrears at the moment) withing a reasonable timeframe.

NGL did two investor conferences in the past 3-4 weeks. Maybe they spread some good news.

NGL has an ongoing Open Season now to fill up it's Grand Mesa pipeline. Maybe the bidding is coming in higher than expected?

Anyways, so far so good.

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