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

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From: FIFO_kid2	5/31/2024 11:37:02 PM
	of 103

Slightly offtopic to the Ameritrade holder who transitioned to Schwab I noticed the brokerage doesn't consider NGL as a nonequity option under section 1256 like Ameritrade.

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From: Elroy	6/6/2024 4:55:10 PM
	of 103

NGL reported their March Q and fiscal year 2024 (ends March) results. EBITDA missed badly. They affirmed at least $645m EBITDA for FY24 on Feb 8th, and today delivered $601m. Ouch. Water EBITDA was $508m, which is slightly above guidance. Their water business is going great, something in the other two less profitable business lines is not. The forward guidance is Ok - EBITDA to grow to $665m (up 10% from the disappointing fiscal 2024), but Cap Ex to be ~$210m. Water EBITDA to grow to $55m (up 10%). They missed last year's EBITDA guidance, so who knows whether we can count on this year's EBITDA forecast. They announced a $50m unit repurchase. Cap Ex is eating up a lot of free cash flow, but I guess that's OK as long as it delivers EBITDA growth over time. I'm not sure if this report and guidance moves the units in either direction. The March Q miss is disappointing, but the key business (Water) did a bit better than expected, it's going to be 85% of EBITDA in the current year, so, who really cares about the other two businesses? Then again they are both massive, and can eat up EBITDA (as just happened) if they stumble. Hmmm, lets see. For the upcoming year. $665m EBITDA minus $232m interest on $2.9 billion 8.25% long term debt. $123m preferred stock dividends $10m interest on the line of credit (maybe there's $100m on the revolver now? Not sure) -------- -$365 cash obligations = $300m cash flow minus $210m Cap Ex = $90m unused cash minus $50m unit repurchase (maybe) = $40m cash with no place to go. ------ Ok, I guess it's a "build out the system for future growth" year, and buy some cheap units.

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To: Elroy who wrote (85)	6/6/2024 5:24:59 PM
From: Elroy	of 103

Listened to the NGL call. Interesting - they say now that the balance sheet is fixed and the preferreds are current and they have the unit repurchase authorization, they can purchase any part of the capital structure (pay down term loan debt, pay down revolver, repurchase preferred stock, but units). They think the units are the most attractively priced item in the capital structure.

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From: Elroy	6/6/2024 6:29:22 PM
	of 103

NGL - I'm not sure what caused the EBITDA miss in the March 2024 quarter. The good news is it wasn't water. The plan to repurchase units (if they actually do it) is interesting. They said it's the best use of capital. The preferreds pay about 14%, so if buying units is the best use of their capital it means the units must in the near future be expected to pay more than 14%. If they buy units at $5.00, that's better than buying 14% preferreds if the units are paying 75 cents or more per year. Perhaps that's a future near term plan? I don't like the miss, but there was also something in the conference call that said the $210m Cap Ex for fiscal year 2025 something like 60% of it is for the Lex 2 build out, which completes in November 2024. If they don't have similar growth projects after November, that frees up perhaps $100m in Cap Ex from future years which can go toward a distribution, which means $1.00 per unit is within reach, and also would explain why they'd rather buy untis around their current price of $5.00 than buy back 14% preferreds. I think the price dips tomorrow, but I think this is worth sitting around for another year and seeing how it plays out.

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From: Elroy	6/7/2024 9:33:47 PM
	of 103

Some key tidbits from the earnings call transcript..... Tarek Hamid And then I guess, on Grand Mesa you talked about sort of a handful of potential opportunities to increase volumes over the next few months. I guess we'd just love to get kind of your sense on sort of the magnitude of that, sort of how do you think about kind of the exit volumes on Grand Mesa year-end versus kind of year-end '25 versus year-end '24? Brad Cooper Yes, I think with what Don and his team are working on right now, line of sight, we probably assume 70,000 barrel a day range today, call it 50% uptick from there. I think north of 100 with the potential to get to 110, 115 per day over the next six to 12 months. ------------------------- That's phenomenal if true. They think Grand Mesa may increase volumes by 50% in 9 months? It's hard to believe, but amazing if true. ------------------------- Tarek Hamid And then just last one for me. You talked about looking at potential strategic alternatives for the Liquids business. Just love to get any kind of additional flavor you have there? Are you thinking kind of acquisitions, divestitures, joint ventures, sort of where is your head at on that? Brad Cooper Yes, I think it's more on the divestiture side. We've got a suite of assets in that Liquids business, hard assets that could fetch a nice multiple for the right buyer. We don't need to do anything. I think it's just a continued rationalization of each business unit and each segment and what assets we have at our disposal. ------------------ That sounds nice. This business produced EBITDA of $70m in a disappointing year just completed. If they can sell it for $700m cash, that could put the "what to do about the preferreds?" question to rest. Lets hope they sell it at a nice multiple to EBITDA. ---------------- Gregg Brody ...going back to water. Could you talk about the underlying volume growth you're assuming excluding LEX II? And then how does LEX II layer in and how should we think about how volumes are going to ramp there? Brad Cooper Well, if LEX -- let's say LEX II is 200, if we're at 2.6-ish, I mean 10%, 260. So that's kind of LEX II plus what we -- the other contract we talked about that goes from [350 to 450] (ph). So it's really -- I mean, the good news is that, it's really what we've already got in our back pocket. So if there are additional deals, contracts, volumes, that'll -- it would be a higher rate of increase than the 9%, 10%. ---- Can anyone understand the question or the answer? I can't.

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To: Elroy who wrote (88)	6/8/2024 9:34:32 AM
From: Elroy	of 103

Well, my take on NGL after the report is ...... The report was pretty disappointing. A big miss on EBITDA in March Q. Fortunately, the key segment (Water) did well and forward guidance for water is about in line. Water provided ~83% of last year's EBITDA, and it should provide a similar percentage next year (which implies the other two segments bounce back from the bad March Q). They have a pipeline (Grand Mesa) which is perpetually under capacity. They think it may get more useage this year, but I think they've thought that for a long time, so we'll see. They said something about it's volumes increasing by 50%, but I don't think that's signed contracts, it's perhaps just talk. The other business (propane/butane wholesale) is lumpy, and they say they are exploring selling it or parts of it. They've been able to get good multiples of EBITDA in sales. This business had $70m EBITDA in a disappointing year last year. If they can get anything close to $700m cash, that would be amazing I think. It would allow them to repurchase all their preferreds ($930m) using sales proceeds and the revolver. Hopefully they unload this business this year. The other interesting bit of the NGL story now is they're spending $125m on a water pipeline expansion project (Lex 2). It coimpletes in October and begins producing revenue immediately as they have a signed long term customer with minimum commitment. That project is 60% of the $210m Cap Ex they'll spend this year. This is interesting, because if it completes on time, it means from October 2024 their annual Cap Ex run rate is about $100m rather than this year's $210m, and they will have a step up in EBITDA as the Lex 2 begins contributing. That combo of higher EBITDA and lower Cap Ex sounds like a great recipe for a common unit distribution. It sounds like more than $125m per year free cash flow from October on compared to Jan to Sep 2024. It's plenty to implement a $1.00 per unit distribution. NGL has about $930pm preferred stock, which all pay about 13% from this summer. So......if they can sell the Butane/Propane business for anything close to $700m, they could use the line of credit and the proceeds to repurchase the high yielding preferreds, and then in October when the Lex 2 comes online, they'll have reduced Cap Ex costs since the Lex 2 project isn't consuming Cap Ex cash any more, they'll have a step up in Ebitda due to Lex 2 going into service, but ..... they'll have about $80m reduced EBITDA due to selling the propane/butane biz. The preferreds now are consuming $110m in annual dividends, so.......selling propane/butane and buying all the preferreds actually IMPROVES cash flows. I think Lex 2 is a given, just complete the project. The big question is whether they can get an attractive price for the propane/butane business. If so, NGL should look pretty good by Q4 2024, and implement a common distribution in 2025. So conclusion = March 2024 results were poor due to weakness in the two less important divisions, but the forward outlook is, well, potentially awesome. I think a year from now NGL is likely $8.00 or so, and it could be higher if the distribution number is higher.

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To: Elroy who wrote (89)	6/12/2024 4:57:49 PM
From: Elroy	of 103

Here's some tidbits from the NGL conference call insidermonkey.com JPM Q: on Grand Mesa you talked ... increase volumes over the next few months.... how do you think about kind of the exit volumes on Grand Mesa year-end versus kind of year-end ’25 versus year-end ’24? Brad Cooper: Yes, I think with what Don and his team are working on right now ... we probably assume 70,000 barrel a day range today, call it 50% uptick from there. I think north of 100 with the potential to get to 110, 115 per day over the next six to 12 months. ---- My Comment - if this actually comes to pass it sounds like it would be super profitable. I wonder how serious a response that is from Brad Cooper? ----- those volume increases you’re talking about at Grand Mesa are pretty significant. What’s the dynamic — what’s the dynamic that’s driving that type of volumes coming towards you? Brad Cooper: I think we’ve been pretty clear and open that when the basin gets back to about 500,000 barrels a day, that’s where we historically saw tightness within the basin on the pipeline. I think December production was north of 500,000 barrels, 509,000. I think that coupled with just the amount of calls and discussions Don Robinson is having with producers, gives us confidence that we can grow the volumes from where they are today out of this current trough. ----

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To: Elroy who wrote (90)	6/22/2024 8:22:39 AM
From: Elroy	of 103

NGL Energy Partners LP Announces Quarterly Cash Distribution for the Class B, Class C, and Class D Preferred Units These preferreds are yielding about 13%. finance.yahoo.com NGL Energy Partners LP (NYSE: NGL) announced today that the Board of Directors of its general partner declared a distribution for the quarter ending June 30, 2024 to be paid to the holders of the Partnership’s 12.511% Class B Floating Rate Cumulative Redeemable Perpetual Preferred Units ("Class B Preferred Units") and the 12.682% Class C Floating Rate Cumulative Redeemable Perpetual Preferred Units ("Class C Preferred Units") in accordance with the terms outlined in NGL’s partnership agreement. Each of the Class B Preferred Units will receive a quarterly distribution of $0.7820 and each of the Class C Preferred Units will receive a quarterly distribution of $0.7926 per unit on July 15, 2024, to holders of record on July 1, 2024.

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From: Elroy	8/6/2024 3:17:54 PM
	of 103

Hopefully this means they are producing more cash than expected, and at a minimum they aren't going bankrupt....... ch-aviation.com Odd news for a partnership that had preferred stock in arrears for three years until about three months ago, and hasn't paid a distribution for three years. Hopefully it indicates positive news on the horizon....

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From: Elroy	8/6/2024 4:22:08 PM
	of 103

This is the only publicly traded peer company for NGL's water business. It's about 40% the size of NGL's water business (and a potential acquisition target down the road, I think). -- Aris Water Solutions, Inc. Reports Second Quarter 2024 Results, Increases Full Year Adjusted EBITDA Guidance finance.yahoo.com Full year EBITDA forecast got increased from $185m-$200m to $195m to $205m. I'm not all that familiar with the specifics of their drivers, but I think Q2 came in better than they were expecting. Q2 EBITDA was forecast as $44m to $48m, and it actually came in at $50m. Hopefully something similarly positive happens with NGL....

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