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

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To: Elroy who wrote (32)	1/17/2024 2:19:25 PM
From: FIFO_kid2	of 109

Elroy- I was wondering what the related UBTI rate per share on this last year since it appears you have owned this for awhile because I am potentially interested in this company for a tax deferred account and don't want the $1000 trigger. I have to congratulate you on this pick for 2023 I didn't pull the trigger because it was over leveraged the UBTI potential and at the time I avoided companies with a high debt exposure but I think the risk in this stock has fallen tremendously since both the company related and macro favoring lower rates and share price weakness is starting to create an opportunity.

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To: FIFO_kid2 who wrote (34)	1/17/2024 4:10:19 PM
From: Elroy	of 109

I think in a retirement account you are much better of buying NGL options. Then any gain/loss will be tax free, and have zero UBTI. I don't know how to calculate the UBTI per share, and I think the forward outlook may be much different than the past few years, but not really sure.

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From: Elroy	1/17/2024 7:38:39 PM
	of 109

TULSA, Okla., January 17, 2024--( BUSINESS WIRE)--New Term Loan Facility NGL Energy Partners LP (NYSE: NGL) ("Partnership" or "NGL"), together with its wholly owned subsidiary NGL Energy Operating LLC ("NGL Energy Operating"), today announced plans to syndicate a new seven-year $700 million senior secured term loan facility (the "Term Loan Facility"). NGL Energy Operating will be the borrower under the Term Loan Facility. NGL Energy Operating expects to use the net proceeds of the Term Loan Facility, together with proceeds from any additional senior secured financing, to refinance existing debt (including repayment of existing senior notes); to pay related fees, costs and expenses; and for general corporate purposes. ---------- I think this may be good news, depending on the rate that they get for the new loan facility. This could give some indication of how NGL will do in the upcoming refinancing. ------ Preliminary Third Quarter Results In connection with the Term Loan Facility syndication, NGL is providing certain preliminary estimates of financial information for its fiscal third quarter ended December 31, 2023. For the three months ended December 31, 2023, NGL is estimating the following: Consolidated Adjusted EBITDA1: $150 - $160 million; and Capital expenditures (including both maintenance and growth): $30 - $40 million. In addition, NGL is providing the following information regarding the outstanding principal amount of certain of its debt as of December 31, 2023: Asset-based revolving credit facility borrowings of: $55.0 million Senior notes: 6.125% senior unsecured notes due 2025: $281 million; 7.5% senior unsecured notes due 2026: $320 million; and 7.500% senior secured notes due 2026: $2.050 billion. ----- I think the EBITDA is in line with the guidance they gave last call. It's down significantly from the year ago period. But their long term debt now is about $2.65b and $55m outstanding on the existing term loan. That's a decent three month reduction in debt...... The upsized $700m facility will be used in Q1 2024 to repurchase the 6.125% 2025 notes I think. Then the next step in the balance sheet is refinancing the $2.37b 2026 notes. The upsized term loan issuance may give us some idea of what rate to expect in the refi.

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To: Elroy who wrote (35)	1/18/2024 1:35:43 AM
From: FIFO_kid2	of 109

To be specific I sold 10 of the $5 puts due Friday in my Roth IRA and it appears most likely will get delivery of shares. Will $5000 in capital trigger the UBTI threshhold? Note I kept the investment very small for the UBTI consideration. I am 100% sure UBTI varies to some extent year to year The other option which I could take the distribution and move the shares into my taxable account before Dec 31 2024 given I am now old enough to take the distribution without a tax consideration. I was forced to do this with my Polymetal stock in 2023 since I had to obtain physical shares to retain ownership. In my options activity I NEVER outright buy them as it is a poor risk gamble most of the time I usually sell cash secured puts that I often cover if they trade in one cent increments, put credit spreads, butterfly spreads or iron condors which the last 3 strategies are hedged. The nickel denominated options in low price stocks like NGL I typically hold to maturity.

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To: FIFO_kid2 who wrote (37)	1/18/2024 7:00:03 AM
From: Elroy	of 109

NGL had news yesterday afternoon, so maybe you don't get put at $5.00 NGL Energy Partners LP Announces $700 Million Senior Secured Term Loan Facility and Provides Financial Update finance.yahoo.com I can't tell if the news is price moving, it actually seems about exactly in line with their forward guidance from last quarter. If the offering prices before Friday, the rate may affect the unit price, in either direction. I doubt $5,000 will trigger $1,000 in UBTI, so you're probably safe. I think NGL options can trade in pennies.

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From: Elroy	1/18/2024 7:20:32 AM
	of 109

From Yahoo chat board - they say the ratings companies have assigned ratings to the proposed $700m term loan. S&P highlights: "The company will use proceeds from this issuance to repay its outstanding senior unsecured notes due 2025 and 2026." "we assigned our 'B+' issue-level rating to its new $700 million TLB" - TLB is Term Loan B "NGL Energy will use the $700 million senior secured TLB to repay around $600 million of existing senior notes due in 2025 and 2026." "We expect credit metrics to continue improving. Through fiscal 2025, we anticipate EBITDA of $700 million-$720 million per year. We also project adjusted leverage of around 5x for fiscals 2024 and 2025, with a further decline to 4.5x in 2026. We expect this leverage reduction to stem from the repayment of accrued distributions on preferred equity and gradual repayment of Class D balance." "We expect NGL Energy to continue selling additional noncore assets, assisting in reducing preferred equity balance." Fitch Highlights: "Fitch has assigned a 'BB-'/'RR2' rating to Operating's proposed senior secured term loan B" "Fitch has assigned the senior secured notes, which are co-issued by Operating and NGL Energy Finance Corp (Finance), a 'BB-'/'RR2' rating" "The rating also reflects NGL's plan to end the arrearage on the preferred units with cash payments." ------------ The big news in that writing is the EBITDA forecast for the next fiscal year. Fiscal 2024 (March) is supposed to be $645m+, so EBITDA improving to $700m or more in the next twelve months sounds quite good.

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From: Elroy	1/18/2024 7:27:31 AM
	of 109

Fitch Rates NGL Energy Partners' Long-Term IDR 'B' fitchratings.com. Fitch expects the proposed term loan B to lower the financial burden by allowing NGL to address the preferreds arrearages currently accruing at high interest rates, and to accelerate NGL's efforts in addressing the potential liquidity overhang caused by the class D preferred units in the medium term. Management expects the leverage to be at approximately 4.5x by FYE 2024.

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From: Elroy	1/18/2024 7:59:02 AM
	of 109

Moody's upgrades NGL Energy's CFR to B2, rates new term loan B2 New York, January 17, 2024 -- Moody's Investors Service ("Moody's") upgraded NGL Energy Partners LP's (NGLEP or NGL Energy) corporate family rating (CFR) to B2 from B3, probability of default rating (PDR) to B2-PD from B3-PD, and senior unsecured notes rating to Caa1 from Caa2 and changed the outlook to stable from positive. Moody's also assigned a B2 rating to NGL Energy Operating LLC's proposed $700 million backed senior secured first-lien term loan B and affirmed the B2 rating on the existing $2.05 billion senior secured first lien notes due 2026 and changed the outlook to stable from positive. NGLEP's SGL-3 speculative grade liquidity rating was unchanged. Management plans to apply all near term free cash flow to reduce debt and repurchase preferred shares with a goal to permanently delever the business.

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From: Elroy	1/18/2024 9:02:40 AM
	of 109

Lets see, S&P gives the proposed $700m term loan a B+ rating. Does anyone know what rate that translates to for a coupon? Here's something that says a "B" rating is at 7.67%. ycharts.com

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To: Elroy who wrote (42)	1/19/2024 10:03:10 AM
From: Elroy	of 109

This is pretty odd. I've created a S&P Global Account, and can access their report on the $700m term loan. The S&P report says this - Through fiscal 2025, we anticipate EBITDA of $700 million-$720 million per year. Where does S&P get that forecast from? Any idea? NGL has guided EBITDA to $645m+ for the fiscal year ending March 2024, and has given no fiscal 2025 guidance. Do we think NGL shared their fiscal 2025 EBITDA forecast with S&P, and S&P has (oddly) released it? Or.......S&P is just guessing (seems like strange behavior for a ratings agency). --- NGL Energy Partners L.P. Upgraded To 'B' On Extending Maturity Profile; Debt Rating Assigned; Outlook Stable On Jan. 17, NGL Energy Partners L.P., a diversified midstream energy company, announced its intention to issue a $700 million senior secured term loan B (TLB) due 2031. The company will use proceeds from this issuance to repay its outstanding senior unsecured notes due 2025 and 2026. Following the announcement, S&P Global Ratings raised its issuer credit rating on NGL Energy to 'B' from 'B-'. At the same time, we assigned our 'B+' issue-level rating to its new $700 million TLB. Our '2' recovery rating indicates our expectation for substantial (70%-90%; rounded estimate: 70%) recovery in the event of default. We also affirmed our 'B+' issue-level rating on the company's existing $2 billion senior secured notes due 2026. Our '2' recovery rating on that debt indicates our expectation for substantial (70%-90%; rounded estimate: 70%) recovery. The stable outlook reflects our expectation that NGL Energy will continue to generate strong EBITDA and free cash flow, while reducing its adjusted leverage to about 4.5x-5x in fiscal years 2025 and 2026. We expect the company to address its additional maturities in the near term. NEW YORK (S&P Global Ratings) Jan. 17, 2024—S&P Global Ratings today took the rating actions listed above. Our issuer credit rating 'B' on NGL Energy is underpinned by a series of strategic financial decisions and its robust operational performance. The company's plan to repay existing senior notes is set to significantly improve its debt maturity profile and reduce refinancing risk. We anticipate the company will address the remaining maturities in its capital structure in the near term. We also expect NGL Energy to use free cash flow to repay accrued distributions of its preferred shares. NGL Energy's strong performance in its water solutions segment, particularly in the Delaware basin, has been a key driver of profitability and contributes to its increasing scale of operations and EBITDA. Anticipated capital structure refinancing will improve NGL Energy's credit profile. NGL Energy will use the $700 million senior secured TLB to repay around $600 million of existing senior notes due in 2025 and 2026. We believe this is a first step to address the capital structure and expect NGL to also address its $2,050 million senior secured notes due in February 2026. This refinancing, while not increasing total debt balance, should positively impact NGL's weighted average debt maturity, extending it from two years to over six years, and significantly reduce refinancing risks. Additionally, the company will have sufficient cash flow in the next 12 months to address its $253 million accrued distributions on preferred equity classes B, C, and D. Our base-case scenario anticipates NGL Energy to repay the outstanding preferred equity class D balance by 2028 with support from robust operational cash flows and potential asset sales. Robust performance in its water solutions segment underpins operational success. NGL Energy has significant operational scale with a presence in key production areas like the Delaware, DJ and Eagleford basins. Notably, its water solutions operations in the Delaware basin contribute approximately 70% to its EBITDA. This segment's EBITDA has doubled over the past three years, reaching $463 million in fiscal-year 2023 (ended March 2023), supported by ongoing oil and gas production growth. Projections indicate about an 8% rise in natural gas productions in the Delaware basin over the next two years, while Permian crude oil output potentially peaks at around 8 million barrels per day by 2029. However, NGL Energy is exposed to crude oil and liquids price volatility as these segments account for about 30% of its EBITDA. We expect credit metrics to continue improving. Through fiscal 2025, we anticipate EBITDA of $700 million-$720 million per year. We also project adjusted leverage of around 5x for fiscals 2024 and 2025, with a further decline to 4.5x in 2026. We expect this leverage reduction to stem from the repayment of accrued distributions on preferred equity and gradual repayment of Class D balance. This aligns with NGL Energy's strategic focus to strengthen its financial position while maintaining operational growth. Leverage reduction is partly due to the company's strategy of selling noncore assets, a move that has proven effective in the past year with asset sales at a low double-digit EBITDA multiple. We expect NGL Energy to continue selling additional noncore assets, assisting in reducing preferred equity balance. We anticipate NGL Energy to generate an average of $250 million in free cash flow from operations annually. This consistent cash flow could combine with noncore asset sales to position NGL Energy to further strengthen its financial standing and enhance its credit profile. The stable outlook reflects an improved capital structure and our expectation that NGL will continue to generate strong EBITDA and free cash flows sufficient to repay its accrued distributions on preferred equity. It also reflects our expectation that the company will address the additional maturities in its capital structure in the near term. We expect adjusted leverage to decline to about 5x in fiscal-year 2025 and 4.5x in fiscal-year 2026. We could take a negative rating action if NGL Energy's adjusted leverage exceeds 6.5x. This could happen due to: A substantial decline in EBITDA driven by commodity price volatility; Lower drilling activity on its dedicated acreage; or An accrual of distributions on preferred units. Additionally, we could lower the rating if NGL cannot refinance its $2,050 million senior notes in the near term. Although unlikely during the next 12 months, we could consider a positive rating action if we expect the company to maintain leverage below 4.5x while increasing its EBITDA. Environmental factors are a moderately negative consideration in our credit rating analysis of NGL. Although the partnership's water solutions segment supports the longevity of its business, it also faces multiple risks related to energy transition. This includes longer-term volume risks from reduced drilling activity and demand due to the transition to renewable energy sources. Governance is also a moderately negative consideration because of NGL's history of leveraging acquisitions, which have stretched its balance sheet and led us to assess its financial risk profile as highly leveraged.

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