| From: Elroy | 6/7/2024 9:33:47 PM | | | | | | 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.
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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.
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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.
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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.
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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%.
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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 | | | | 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 | | | | 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.
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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?
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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 | | | | 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 | | | | | | 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 | | | | | | 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).
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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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| From: Elroy | 8/8/2024 6:30:57 PM | | | | | | NGL Energy Partners LP Announces First Quarter Fiscal 2025 Financial Results
finance.yahoo.com
These numbers look OK to modestly positive. Positive because nothing nasty appears to have happened, and in these big complex energy companies it seems like something often goes wrong.
I listened to the conference call, and the main important thing they said was water volumes in the month of July were 2.7m processed (versus 2.43m in June Q) and 0.3m paid but not processed (due to minimum volume commitments) (versus 0.16m in June Q). So.....in the month of July, water volumes are up 15% compared to the June Q average. If that continues for all of the Sep Q, it means water EBITDA is going to be about $170m+, which means they're going to easily exceed their fiscal '25 EBITDA forecast.
Water is the best segment in terms of profits. If that segment grows, nothing else matters too much.
Whether NGL units respond to this positive conference call news about July water volumes or not, I got no idea, but it definitely gives us something to look forward to when they report the Sep quarter. |
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| From: Elroy | 8/12/2024 8:33:28 AM | | | | | | 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. |
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| From: Elroy | 9/24/2024 9:29:58 AM | | | | | | NGL Energy Partners LP Announces Quarterly Cash Distribution for the Class B, Class C, and Class D Preferred Units
finance.yahoo.com
TULSA, Okla., September 19, 2024--( BUSINESS WIRE)--NGL Energy Partners LP (NYSE: NGL) announced today that the Board of Directors of its general partner declared a distribution for the quarter ending September 30, 2024 to be paid to the holders of the Partnership’s 12.806% Class B Floating Rate Cumulative Redeemable Perpetual Preferred Units ("Class B Preferred Units") and the 12.716% 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 $0.8004 and each of the Class C Preferred Units will receive a quarterly distribution of $0.7947 per unit on October 15, 2024, to holders of record on October 1, 2024.
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This is the second dividend payment since the NGL preferred came out of arrears and became current. If NGL just reports reasonably well, and investors believe the preferred dividends will continue, I would expect their prices to rise above $25 par value. Both B's and C's pay above 12.5%. That's going to be super attractive as interest rates decline.
Both B's and C's float, so the declines in interest rates will also reduce the preferred dividend, but they're still going to be much more attractive than cash.
NGL has perked up a bit recently. The next three quarters of results should show a significant improvement in free cash flows, giving the partnership lots of options of what to do with the cash. The next big milestone is the not publicly traded preferred D series (about $600m) which expires in summer 2025. NGL has to either repurchase them or refinance them before then. |
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| To: Elroy who wrote (96) | 9/24/2024 1:15:05 PM | | From: FIFO_kid2 | | | | | I was quite surprised the stock sold off below $4 given the short term catalyst with Lex 2. I saw it as a gift and my average now is down to 4.35. Hoping the size of my position doesn't trigger UBTI |
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