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

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From: Elroy	2/8/2024 11:53:31 AM
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NGL reports after the close today. NGL's fiscal year ends in March, so they're reporting Q3 (December). In the previous report they did not update fiscal 2024 EBITDA guidance of more than $645m because they said they were working on some asset sales, and the sales would sell some EBITDA. They refinanced their long term debt about 10 days ago, and they announced that they are paying 50% of the arrearage (through Dec 2023) at the end of Feb 2024. They haven't announced any asset sales since the last call. There is some stuff in the debt filings that allows them to sell up to $200m of assets, and use the funds toward the preferred arrearage and perhaps pay off some of the D preferred series. In the S&P 500 Global Credit note on the new NGL debt the analyst wrote that he expects fiscal 2025 EBITDA to be $700-$720m. It's unclear where that estimate came from. Since the last call NGL has had what's called an Open Season for their Grand Mesa pipeline. That's when they sell future capacity in fixed committed contracts. Maybe they'll tell us how it went in today's call. In January they announced that they are building another water pipeline. No idea the cost or how long it takes from announcement to operations, but that indicates water demand is doing perhaps OK. Lets see, I think the interesting items from the call that I'd like to hear are 1- what's their EBITDA forecast for fiscal 2025? and 2- Use of cash going forward - What is the plan for paying the remainder of the preferred arrearage, paying off or refinancing the preferred stock, and then when the preferred stock is "handled" what's the plan for useage of free cash above debt Interest, preferred dividends, and Cap Ex? Are common unit distributions perhaps on the horizon? My hunch is they spend fiscal year 2025 delvering and paying off preferred stock, and then in fiscal 2026 (begins June quarter 2026) distributions resume. But....who knows? They could resume with a nominal distribution in June quarter 2025 to make unit holders feel happy.....

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From: Elroy	2/8/2024 10:05:22 PM
	of 109

NGL reported pretty much in line with their pre-announced guidance. They confirmed EBITDA for fiscal 2024 (ends March) will be $645m. Since there is only one quarter to go, it means March Q EBITDA should be $182m. They said on the call that they will sell some assets before March 31st (some real estate) and then they will pay the second half of the arrearage soon after that. That will make the preferred stock current. Plans for fiscal 2025 (ends March 2025) will come out in the next earnings call, in early June. So we gotta wait for forward guidance beyond the current quarter. I think they plan to use operating cash flows going forward to repurchase the preferred series D and growth Cap Ex, and perhaps common unit distributions. The series D preferred expires in summer 2027, so they've gotta buy them back before then. Future debt reduction spending will go toward the D's. Growth Cap Ex will also become a focus. Whether there will be any cash for common unit distributions after those two efforts remains to be seen. All in all it was an OK and in line report. I think the next catalyst for the stock price will be EBITDA guidance for next year. How much will they grow? Not sure, but even without growth $645m EBITDA is quite a lot, so they can do well with that level of EBITDA, but of course more is better.

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From: Elroy	2/9/2024 2:14:20 PM
	of 109

Key bits from the conference call we recently held an open season on the Grand Mesa Pipeline. On January 5, we closed the open season on the Grand Mesa Pipeline and had a new 5-year MVC with the same counterparty, whose prior contract expired on December 31. Does this mean that the result of the Open Season is the current customer extended his contract for five years? If so, seems like a strange process to me. Why not just negotiate with the customer, and announce the extension? Outside of entering into a new 5-year MVC agreement, this counterparty will also be the shipper on the pipeline, freeing up $18 million to $20 million of working capital. This is a permanent release of working capital. This sounds like from now on the customer owns the oil inventory when it enters the pipeline? Perhaps previously NGL owned it until delivery, so it was NGL's inventory "in the pipe"? Looking forward, we are focused on following: payment of the remaining preferred distribution of arrearages as soon as possible, then reinstatement of the Class B, C and D distribution as soon as possible. Rather than limiting growth capital as we have up until now, we will look for investments to expand our footprint, strengthen our competitive position that will also increase the quality, consistency and amount of our adjusted EBITDA. One example of this is the recently announced expansion of Lea County Express Pipeline system. The growth CapEx and adjusted EBITDA for this project will be included in our fiscal 2025 guidance. Finally, we expect to grow adjusted EBITDA each year for the foreseeable future led by our Delaware Water Solutions business. With respect to our adjusted EBITDA, we are affirming the previous guidance of $500 million plus for water and $645 million for the partnership. Our guidance for adjusted EBITDA and growth CapEx in fiscal year '25 will obviously be higher than the current fiscal year, so we will announce that at our year-end earnings call.

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From: Elroy	2/14/2024 8:22:00 AM
	of 109

NGL preferred stock looks quite interesting for income investors. The tickers are NGL-B and NGL-C. Why interesting. Both were originally fixed rate preferreds paying about 9%. The B's began floating last year, and now pay about 12.8%. The C's float from April 15th this year, and from then on will also pay about 12.8%. All preferred stock is in arrears, and acruing obligations. The B's had earned $8.88 through Dec 31st last year, the C's about $8.06. The B's and C's are perpetual. There are also D's which are private held. The D's expire in summer 2027. NGL has indicated that going forward their uses of free cash flows will be to retire the D's and increases Growth Cap ex. There may be some nominal common unit distribution, but also, there may not! Since NGL plans to spend money to retire the D's (about $550m outstanding) it seems they may leave the B's and C's outstanding for, well, quite a long time. A quick rought financial look at NGL is as follows: EBITDA = $650m, I think this is going up to around $700m next fiscal year (fiscal year ends March), but they haven't given guidance yet. Debt interest + Preferred dividend payments = $350m Cap Ex = $150m+ So they have $150m left over each year with nowhere to go, less if they spend on growth Cap Ex. They have $550m preferred class D outstanding, and they plan to buy that back before 2027 (or perhaps they refinance it with other preferreds sooner?). NGL has already announced plans to pay half the arrearage this month, and plan to pay the remainder soon after some planned asset sales which are expected to occur before March 31st, 2024. finance.yahoo.com Well, it seems to me a good idea to just sit in the B's and C's and collect 12.8% until NGL retires them. Both are now trading at about $32, and will pay $8.50-$9.25 in the next few months. So ignoring taxes, you've got a chance to buy 12.8% preferred stock for $32 - $9 = about $23. Seems like a not too bad idea.

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From: Elroy	2/14/2024 6:56:39 PM
	of 109

Director James Collingworth just bought 100,000 units of NGL at $5.82. Not too shabby! openinsider.com

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From: Elroy	2/29/2024 9:42:50 AM
	of 109

This company is similar to NGL's water division. NGL's water division is about 2.5x larger in EBITDA than these guys, but worth watching to get an opinion on how the space is going. Aris Water Solutions, Inc. Reports Fourth Quarter and Full Year 2023 Results and Provides 2024 Outlook finance.yahoo.com

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From: Elroy	3/1/2024 4:49:10 PM
	of 109

Some comments from Aris call Strategically, we have remained disciplined in our approach to capital allocation, growing organically under long-term contractual agreements, while selectively evaluating and closing new agreements in an improving pricing environment. There is greater demand for water infrastructure in the Northern Delaware Basin than there are existing assets, and we have the opportunity to participate in further growth at attractive rates of return.

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From: Elroy	3/18/2024 3:05:00 PM
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I received a K-1 for NGL-C (the series C preferred stock) that I held in my Roth account. It throws off zero MLP -style interesting income. All the boxes are zero. The only thing on the K-1 is the amount of USD I bought last year in NGL-C. It didn't pay a distribution in 2023, so perhaps that has something to do with it. But I suspect each year the preferreds will be treated for taxes like regular company preferred stock and not MLP preferred stock. But ya never know! --- Before the end of March NGL is supposed to sell some assets and soon after pay the second hald of the arrearage. Perhaps that news comes out in March, lets see.

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From: Elroy	3/19/2024 9:14:27 AM
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Lets see - the next bit of news expected from NGL is they planned to do some asset sales in Q1 2024, and soon thereafter pay the second half of the arrearage on their various tranches of preferred stock (which are all currently in arrears). If the sale goes through, I'd expect an announcement by early April latest (perhaps in March if they put out a press release the day of the sale). That could help the preferred stock a bit if they announce the second arrearage payment along with the sale. I would think it makes sense for them (if the sale is going through) to make the second arrearage payment before April 15th, and then on April 15% make the regular preferred stock payments, meaning their all their obligations are current for the first time in about three years. The next bit of news after that is fiscal 2025 (March) guidance. That will come on about June 1st with the Q1 2024 earnings release. The main use of cash going forward (once the second half of the arrearage is paid) is retirement of about $550m series D preferred stock. It is due in summer 2027, so they've got three years to save that up or refinance or do whatever the plan to do about that. My hunch is NGL can get to $9 by this time next year. But the fsical 2025 guidance (how high will EBITDA go?) is the key determinant of the share price.

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From: Elroy	3/27/2024 6:54:13 AM
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3 Refining & Marketing MLP Stocks for Your Basket zacks.com While uncertainties persist regarding oil consumption and fuel market volatility, select stocks like Sunoco LP (SUN Quick Quote SUN- Free Report) , Global Partners LP (GLP Quick Quote GLP- Free Report) and NGL Energy Partners LP (NGL Quick Quote NGL- Free Report) show promise for above-average performance and stock appreciation. These firms possess characteristics that can mitigate the impact of inflation, and their defensive posture and reliance on fee-based business models render them well-equipped for an uncertain market environment, particularly amid rising consumer prices.

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