[10-Q] NGL Energy Partners LP Quarterly Earnings Report
Filing Explained
The completed incentive issuance increases common-unit count; the filing also reports $3,314,999 thousand of debt and no repurchases under the $100 million authorization.
Form 10-Q is the company’s unaudited quarterly report. At June 30, 2026, the company reported that 1,000,000 common units vested and were issued, increasing outstanding common units to 124,814,289 from 123,814,289.
Because issuing additional units increases the total unit count, this completed issuance reduces an existing holder’s percentage ownership absent offsetting changes. The company also reports a repurchase program authorizing up to
The filing lists 2,125,000 exercisable Class D warrants, but does not report exercise or issuance under those warrants. Its diluted earnings-per-unit presentation includes 2,861,198 common units that would be issued under an if-converted method for a partial Class D redemption; that presentation is not reported as a completed issuance.
At June 30, 2026, the company reported
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended June 30, 2026
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from __________ to __________
Commission File Number: 001-35172
(Exact Name of Registrant as Specified in Its Charter)
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | ||||||||||
| (Address of Principal Executive Offices) | (Zip Code) | ||||||||||
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | o | x | ||||||||||||
| Non-accelerated filer | o | Smaller reporting company | ||||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
At July 31, 2026, there were 124,814,289 common units issued and outstanding.
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TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION | ||||||||
Item 1. | Financial Statements | 3 | ||||||
Unaudited Condensed Consolidated Balance Sheets at June 30, 2026 and March 31, 2026 | 3 | |||||||
Unaudited Condensed Consolidated Statements of Operations for the three months ended June 30, 2026 and 2025 | 4 | |||||||
Unaudited Condensed Consolidated Statements of Comprehensive Income for the three months ended June 30, 2026 and 2025 | 5 | |||||||
Unaudited Condensed Consolidated Statements of Changes in (Deficit) Equity for the three months ended June 30, 2026 and 2025 | 6 | |||||||
Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2026 and 2025 | 8 | |||||||
Notes to Unaudited Condensed Consolidated Financial Statements | 9 | |||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 34 | ||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 49 | ||||||
Item 4. | Controls and Procedures | 51 | ||||||
PART II - OTHER INFORMATION | ||||||||
Item 1. | Legal Proceedings | 52 | ||||||
Item 1A. | Risk Factors | 52 | ||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 52 | ||||||
Item 3. | Defaults Upon Senior Securities | 52 | ||||||
Item 4. | Mine Safety Disclosures | 52 | ||||||
Item 5. | Other Information | 52 | ||||||
Item 6. | Exhibits | 52 | ||||||
SIGNATURES | 53 | |||||||
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Forward-Looking Statements
This Quarterly Report on Form 10-Q (“Quarterly Report”) contains various forward-looking statements and information that are based on NGL Energy Partners LP’s (“we,” “us,” “our,” or the “Partnership”) beliefs and those of our general partner (“GP”), as well as assumptions made by and information currently available to us. These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. Certain words in this Quarterly Report such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “plan,” “project,” “will,” and similar expressions and statements regarding our plans and objectives for future operations, identify forward-looking statements. Although we and our GP believe such forward-looking statements are reasonable, neither we nor our GP can assure they will prove to be correct. Forward-looking statements are subject to a variety of risks, uncertainties and assumptions. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may vary materially from those expected. Among the key risk factors that may affect our consolidated financial position and results of operations are:
•the prices of crude oil, natural gas liquids, gasoline and energy prices generally;
•the general level of demand, and the availability of supply for crude oil, natural gas liquids and gasoline;
•the level of crude oil and natural gas drilling and production in areas where we have operations and facilities;
•the ability to obtain adequate supplies of products if an interruption in supply or transportation occurs and the availability of capacity to transport products to market areas;
•the effect of weather conditions on supply and demand for crude oil, natural gas liquids and gasoline;
•the effect of natural disasters, earthquakes, hurricanes, tornados, lightning strikes, or other significant weather events;
•the availability of local, intrastate, and interstate transportation infrastructure with respect to our transportation services;
•the availability, price, and marketing of competing fuels;
•the effect of energy conservation efforts on product demand;
•energy efficiencies and technological trends;
•the issuance of executive orders, changes in applicable laws, regulations and policies, including tax, environmental, transportation, and employment regulations, or new interpretations by regulatory agencies concerning such laws and regulations and the effect of such laws, regulations and policies (now existing or in the future) on our business operations;
•the effect of executive orders and legislative and regulatory actions on hydraulic fracturing, water disposal and transportation, the treatment of flowback and produced water, seismic activity, and drilling and right-of-way access on federal and state lands;
•delays or restrictions in obtaining, utilizing or maintaining permits and/or rights-of-way by us or our customers;
•hazards or operating risks related to transporting and distributing petroleum products that may not be fully covered by insurance;
•the maturity of the crude oil and natural gas liquids industries and competition from other markets;
•loss of key personnel;
•the impact of competition on our operations, including our ability to renew contracts with key customers;
•the ability to maintain or increase the margins we realize for our services;
•the ability to renew leases for our leased equipment and storage facilities;
•inflation, interest rates, tariffs and general economic conditions (including recessions and other future disruptions and volatility in the global credit markets, as well as the impact of these events on customers and suppliers);
•the nonpayment, nonperformance or bankruptcy by our counterparties;
•the availability and cost of capital and our ability to access certain capital sources;
•a deterioration of the credit and capital markets;
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•the ability to successfully identify and complete accretive organic growth projects;
•the costs and effects of legal and administrative proceedings;
•changes in general economic conditions, including market and macroeconomic disruptions resulting from global pandemics and related governmental responses, and international military conflicts (such as the war in Ukraine and conflicts in the Middle East);
•political pressure and influence of environmental groups upon policies and decisions related to the production, gathering, refining, processing, fractionation, transportation and sale of crude oil, natural gas and natural gas liquids; and
•information technology risks including the risk from cyberattacks, cybersecurity breaches, and other disruptions to our information systems.
You should not put undue reliance on any forward-looking statements. All forward-looking statements speak only as of the date of this Quarterly Report. Except as may be required by state and federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements as a result of new information, future events, or otherwise. When considering forward-looking statements, please review the risks discussed under Part I, Item 1A–“Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in Thousands, except unit amounts)
| June 30, 2026 | March 31, 2026 | ||||||||||
| ASSETS | |||||||||||
| CURRENT ASSETS: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net of allowance for expected credit losses of $ | |||||||||||
| Accounts receivable-affiliates | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $ | |||||||||||
| GOODWILL | |||||||||||
INTANGIBLE ASSETS, net of accumulated amortization of $ | |||||||||||
| OPERATING LEASE RIGHT-OF-USE ASSETS | |||||||||||
| OTHER NONCURRENT ASSETS | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND DEFICIT | |||||||||||
| CURRENT LIABILITIES: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accounts payable-affiliates | |||||||||||
| Accrued expenses and other payables | |||||||||||
| Advance payments received from customers | |||||||||||
| Current maturities of long-term debt | |||||||||||
| Operating lease obligations | |||||||||||
| Total current liabilities | |||||||||||
LONG-TERM DEBT, net of debt issuance costs of $ | |||||||||||
| OPERATING LEASE OBLIGATIONS | |||||||||||
| OTHER NONCURRENT LIABILITIES | |||||||||||
| COMMITMENTS AND CONTINGENCIES (NOTE 7) | |||||||||||
CLASS D PREFERRED UNITS, | |||||||||||
| REDEEMABLE NONCONTROLLING INTERESTS | |||||||||||
| DEFICIT: | |||||||||||
General partner, representing a | ( | ( | |||||||||
Limited partners, representing a | ( | ( | |||||||||
Class B preferred limited partners, | |||||||||||
Class C preferred limited partners, | |||||||||||
| Noncontrolling interests | |||||||||||
| Total deficit | ( | ( | |||||||||
| Total liabilities and deficit | $ | $ | |||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(in Thousands, except unit and per unit amounts)
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| REVENUES: | ||||||||||||||||||||||||||
| Product | $ | $ | ||||||||||||||||||||||||
| Service and other | ||||||||||||||||||||||||||
| Total Revenues | ||||||||||||||||||||||||||
| COST OF SALES: | ||||||||||||||||||||||||||
| Product | ||||||||||||||||||||||||||
| Service and other | ||||||||||||||||||||||||||
| Total Cost of Sales | ||||||||||||||||||||||||||
| OPERATING COSTS AND EXPENSES: | ||||||||||||||||||||||||||
| Operating | ||||||||||||||||||||||||||
| General and administrative | ||||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||
| Loss (gain) on disposal or impairment of assets, net | ( | |||||||||||||||||||||||||
| Operating Income | ||||||||||||||||||||||||||
| OTHER INCOME (EXPENSE): | ||||||||||||||||||||||||||
| Equity in earnings of unconsolidated entities | ||||||||||||||||||||||||||
| Interest expense | ( | ( | ||||||||||||||||||||||||
| Gain on early extinguishment of liabilities, net | ||||||||||||||||||||||||||
| Other income (expense), net | ( | |||||||||||||||||||||||||
| Income From Continuing Operations Before Income Taxes | ||||||||||||||||||||||||||
| INCOME TAX BENEFIT | ||||||||||||||||||||||||||
| Income From Continuing Operations | ||||||||||||||||||||||||||
| Income From Discontinued Operations, net of Tax | ||||||||||||||||||||||||||
| Net Income | ||||||||||||||||||||||||||
| LESS: NET INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO NONREDEEMABLE NONCONTROLLING INTERESTS | ( | ( | ||||||||||||||||||||||||
| LESS: NET LOSS (INCOME) FROM CONTINUING OPERATIONS ATTRIBUTABLE TO REDEEMABLE NONCONTROLLING INTERESTS | ( | |||||||||||||||||||||||||
| NET INCOME ATTRIBUTABLE TO NGL ENERGY PARTNERS LP | $ | $ | ||||||||||||||||||||||||
| NET INCOME (LOSS) FROM CONTINUING OPERATIONS ALLOCATED TO COMMON UNITHOLDERS (NOTE 3) | $ | $ | ( | |||||||||||||||||||||||
| NET INCOME FROM DISCONTINUED OPERATIONS ALLOCATED TO COMMON UNITHOLDERS (NOTE 3) | ||||||||||||||||||||||||||
| NET INCOME ALLOCATED TO COMMON UNITHOLDERS - BASIC (NOTE 3) | $ | $ | ||||||||||||||||||||||||
| NET INCOME ALLOCATED TO COMMON UNITHOLDERS - DILUTED (NOTE 3) | $ | $ | ||||||||||||||||||||||||
| BASIC AND DILUTED INCOME (LOSS) PER COMMON UNIT | ||||||||||||||||||||||||||
| Income (Loss) From Continuing Operations | $ | $ | ( | |||||||||||||||||||||||
| Income From Discontinued Operations, net of Tax | $ | $ | ||||||||||||||||||||||||
| Net Income | $ | $ | ||||||||||||||||||||||||
| BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING | ||||||||||||||||||||||||||
| DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING | ||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Comprehensive Income
(in Thousands)
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| Net income | $ | $ | ||||||||||||||||||||||||
| Other comprehensive loss | ( | |||||||||||||||||||||||||
| Comprehensive income | $ | $ | ||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Statement of Changes in (Deficit) Equity
(in Thousands, except unit amounts)
| Limited Partners | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred | Common | |||||||||||||||||||||||||||||||||||||||||||||||||
| General Partner | Units | Amount | Units | Amount | Noncontrolling Interests | Total Deficit | ||||||||||||||||||||||||||||||||||||||||||||
| BALANCE AT MARCH 31, 2026 | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||||
| Contributions from noncontrolling interest owners | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Distributions to preferred unitholders (Note 8) | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest owners | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Equity issued pursuant to incentive compensation plan (Note 8) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Investment in NGL Energy Holdings LLC | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| BALANCE AT JUNE 30, 2026 | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||||
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NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Statement of Changes in (Deficit) Equity
(in Thousands, except unit amounts)
| Limited Partners | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred | Common | |||||||||||||||||||||||||||||||||||||||||||||||||
| General Partner | Units | Amount | Units | Amount | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||
| BALANCE AT MARCH 31, 2025 | $ | ( | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Contributions from noncontrolling interest owners | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Distributions to preferred unitholders | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest owners | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Disposition of noncontrolling interest | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Common unit repurchases and cancellations | — | — | — | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Class D preferred units redemption - amount paid in excess of carrying value | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| BALANCE AT JUNE 30, 2025 | $ | ( | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(in Thousands)
| Three Months Ended June 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| OPERATING ACTIVITIES: | ||||||||||||||
| Net income | $ | $ | ||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
| Income from discontinued operations, net of tax | ( | ( | ||||||||||||
| Depreciation and amortization, including amortization of debt issuance costs | ||||||||||||||
| Gain on early extinguishment or revaluation of liabilities, net | ( | |||||||||||||
| Equity-based compensation expense | ||||||||||||||
| Loss (gain) on disposal or impairment of assets, net | ( | |||||||||||||
| Change in provision for expected credit losses | ||||||||||||||
| Net adjustments to fair value of derivatives | ( | ( | ||||||||||||
| Equity in earnings of unconsolidated entities | ( | |||||||||||||
| Distributions of earnings from unconsolidated entities | ||||||||||||||
| Lower of cost or net realizable value adjustments | ||||||||||||||
| Other | ||||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||
| Accounts receivable and affiliates | ||||||||||||||
| Inventories | ( | ( | ||||||||||||
| Other current and noncurrent assets | ||||||||||||||
| Accounts payable and affiliates | ( | ( | ||||||||||||
| Other current and noncurrent liabilities | ( | ( | ||||||||||||
| Net cash provided by operating activities-continuing operations | ||||||||||||||
| Net cash provided by operating activities-discontinued operations | ||||||||||||||
| Net cash provided by operating activities | ||||||||||||||
| INVESTING ACTIVITIES: | ||||||||||||||
| Capital expenditures | ( | ( | ||||||||||||
| Net settlements of derivatives | ||||||||||||||
| Proceeds from sales of assets | ||||||||||||||
| Proceeds from divestitures of businesses and investments, net | ||||||||||||||
| Net cash (used in) provided by investing activities-continuing operations | ( | |||||||||||||
| Net cash provided by investing activities-discontinued operations | ||||||||||||||
| Net cash (used in) provided by investing activities | ( | |||||||||||||
| FINANCING ACTIVITIES: | ||||||||||||||
| Proceeds from borrowings under ABL Facility | ||||||||||||||
| Payments on ABL Facility | ( | ( | ||||||||||||
| Payments on 2024 Term Loan B and 2026 Term Loan B | ( | ( | ||||||||||||
| Repayment and repurchase of senior notes | ( | |||||||||||||
| Payments on other long-term debt | ( | ( | ||||||||||||
| Debt issuance costs | ( | ( | ||||||||||||
| Contributions from noncontrolling interest owners | ||||||||||||||
| Distributions to preferred unitholders | ( | ( | ||||||||||||
| Distributions to noncontrolling interest owners | ( | ( | ||||||||||||
| Class D preferred unit repurchases | ( | |||||||||||||
| Common unit repurchases and cancellations | ( | |||||||||||||
| Payments to settle contingent consideration liabilities | ( | ( | ||||||||||||
| Net settlements of derivatives | ( | |||||||||||||
| Principal payments of finance leases | ( | |||||||||||||
| Investment in NGL Energy Holdings LLC | ( | |||||||||||||
| Net cash provided by (used in) financing activities | ( | |||||||||||||
| Net decrease in cash and cash equivalents | ( | ( | ||||||||||||
| Cash and cash equivalents, beginning of period | ||||||||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||||||||
| Supplemental cash flow information: | ||||||||||||||
| Cash interest paid | $ | $ | ||||||||||||
| Income taxes paid (net of income tax refunds) | $ | $ | ||||||||||||
| Supplemental non-cash investing and financing activities: | ||||||||||||||
| Distributions declared but not paid to preferred unitholders | $ | $ | ||||||||||||
| Accrued capital expenditures | $ | $ | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
Note 1—Organization and Operations
NGL Energy Partners LP (“we,” “us,” “our,” or the “Partnership”) is a Delaware master limited partnership. NGL Energy Holdings LLC serves as our general partner (“GP”). At June 30, 2026, our operations included three segments:
•Our Water Solutions segment transports, treats, recycles and disposes of produced and flowback water generated from crude oil and natural gas production. We also sell produced water for reuse and recycle to our producer customers to be used in their crude oil exploration and production activities. As part of processing water, we aggregate and sell recovered crude oil, also known as skim oil. We also dispose of solids such as tank bottoms, drilling fluids and drilling muds and perform other ancillary services such as truck washouts. Our activities in this segment are underpinned by long-term, fixed fee contracts and acreage dedications, a significant portion of which contain minimum volume commitments with leading oil and gas companies including large, investment grade producer customers.
•Our Crude Oil Logistics segment purchases crude oil from producers and marketers and transports it to refineries or for resale at pipeline injection stations, storage terminals, barge loading facilities, rail facilities and other trade hubs, and provides storage, terminaling, and transportation services through its owned assets. Our activities in this segment are supported by certain long-term, fixed rate contracts with acreage dedications and which include minimum volume commitments on our storage tanks and owned and leased pipelines.
•Our Liquids Logistics segment conducts supply operations for natural gas liquids to commercial, retail and industrial customers across the United States and Canada. These operations are conducted through our five owned terminals, third-party storage and terminal facilities, access to nine common carrier pipelines and a fleet of leased railcars. We also provide services for marine exports of butane through our facility located in Chesapeake, Virginia and we also own a propane pipeline in Michigan. We attempt to reduce our exposure to price fluctuations by using back-to-back physical contracts and pre-sale agreements that allow us to lock in a margin on a percentage of our winter volumes. We also enter into financially settled derivative contracts as economic hedges of our physical inventory, physical sales and physical purchase contracts.
Note 2—Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include our accounts and those of our controlled subsidiaries. Intercompany transactions and account balances have been eliminated in consolidation. Investments we do not control, but can exercise significant influence over, are accounted for using the equity method of accounting. We also own an undivided interest in a crude oil pipeline, and include our proportionate share of assets, liabilities, and expenses related to this pipeline in our unaudited condensed consolidated financial statements.
Our unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim consolidated financial information in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, our unaudited condensed consolidated financial statements exclude certain information and notes required by GAAP for complete annual consolidated financial statements. However, we believe that the disclosures made are adequate to make the information presented not misleading. Our unaudited condensed consolidated financial statements include all adjustments that we consider necessary for a fair presentation of our consolidated financial position, results of operations and cash flows for the interim periods presented. Such adjustments consist only of normal recurring items, unless otherwise disclosed in this Quarterly Report on Form 10-Q. Our unaudited condensed consolidated balance sheet at March 31, 2026 was derived from our audited consolidated financial statements for the fiscal year ended March 31, 2026 included in our Annual Report on Form 10-K (“Annual Report”) filed with the SEC on May 28, 2026.
These interim unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report. Due to the seasonal nature of certain of our operations and other factors, the results of operations for interim periods are not necessarily indicative of the results of operations to be expected for future periods or for the full fiscal year ending March 31, 2027.
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NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amount of assets and liabilities reported at the date of the consolidated financial statements and the amount of revenues and expenses reported during the periods presented.
Critical accounting estimates we make in the preparation of our unaudited condensed consolidated financial statements include, among others, determining the impairment of goodwill and long-lived assets, useful lives and recoverability of property, plant and equipment and amortizable intangible assets, the fair value of derivative instruments, estimating certain revenues, the fair value of asset retirement obligations, the fair value of assets and liabilities acquired in acquisitions, the recoverability of inventories, the collectability of accounts and notes receivable, the valuation of contingent consideration liabilities and accruals for environmental matters. Although we believe these estimates are reasonable, actual results could differ from those estimates.
Significant Accounting Policies
Our significant accounting policies are consistent with those disclosed in Note 2 of our audited consolidated financial statements included in our Annual Report.
Income Taxes
We qualify as a partnership for income tax purposes. As such, we generally do not pay federal income tax. Rather, each owner reports his or her share of our income or loss on his or her individual tax return. The aggregate difference in the basis of our net assets for financial and tax reporting purposes cannot be readily determined, as we do not have access to information regarding each partner’s basis in the Partnership.
We have a corporate subsidiary with a deferred tax liability of $28.1 million and $28.5 million at June 30, 2026 and March 31, 2026, respectively, in connection with certain of our acquisitions, which is included within other noncurrent liabilities in our unaudited condensed consolidated balance sheets. The deferred tax liability is primarily the tax effected cumulative temporary difference between the GAAP basis and tax basis of the acquired assets within the corporation. For GAAP purposes, certain of the acquired assets will be depreciated and amortized over time which will lower the GAAP basis. The deferred tax benefit recorded during the three months ended June 30, 2026 for the corporate subsidiary was $0.3 million with an effective tax rate of 21.0 %. The deferred tax benefit recorded during the three months ended June 30, 2025 for the corporate subsidiary was $0.5 million with an effective tax rate of 21.0 %.
We evaluate uncertain tax positions for recognition and measurement in our unaudited condensed consolidated financial statements. To recognize a tax position, we determine whether it is more likely than not that the tax position will be sustained upon examination, including resolution of any related appeals or litigation, based on the technical merits of the position. A tax position that meets the more likely than not threshold is measured to determine the amount of benefit to be recognized in our unaudited condensed consolidated financial statements. We had no
The following table presents income tax benefit for the periods indicated:
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Current income tax expense: | ||||||||||||||||||||||||||
| State | $ | $ | ||||||||||||||||||||||||
| Foreign | ||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||
| Deferred income tax benefit: | ||||||||||||||||||||||||||
| Federal | ( | ( | ||||||||||||||||||||||||
| Total | ( | ( | ||||||||||||||||||||||||
| Income tax benefit | $ | ( | $ | ( | ||||||||||||||||||||||
10
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Inventories
Inventories consist of the following at the dates indicated:
| June 30, 2026 | March 31, 2026 | |||||||||||||
| (in thousands) | ||||||||||||||
| Butane | $ | $ | ||||||||||||
| Crude oil | ||||||||||||||
| Propane | ||||||||||||||
| Other | ||||||||||||||
| Total | $ | $ | ||||||||||||
Other Noncurrent Assets
Other noncurrent assets consist of the following at the dates indicated:
| June 30, 2026 | March 31, 2026 | |||||||||||||
| (in thousands) | ||||||||||||||
Costs to obtain contracts with customers (1) | $ | $ | ||||||||||||
| Other | ||||||||||||||
| Total | $ | $ | ||||||||||||
(1) Represents the noncurrent portion of costs to obtain contracts with customers. At June 30, 2026 and March 31, 2026, the costs to obtain contracts with customers was $26.1 million and $27.2 million, respectively, of which $4.2 million is recorded within prepaid expenses and other current assets in our consolidated balance sheet at June 30, 2026.
Accrued Expenses and Other Payables
Accrued expenses and other payables consist of the following at the dates indicated:
| June 30, 2026 | March 31, 2026 | |||||||||||||
| (in thousands) | ||||||||||||||
| Accrued interest | $ | $ | ||||||||||||
| Accrued compensation and benefits | ||||||||||||||
| Distributions payable | ||||||||||||||
| Derivative liabilities | ||||||||||||||
| Excise and other tax liabilities | ||||||||||||||
| Other | ||||||||||||||
| Total | $ | $ | ||||||||||||
Variable Interest Entities
We decide at the inception of each arrangement whether an entity in which an investment is made or in which we have other variable interests is considered a variable interest entity (“VIE”). Generally, an entity is a VIE if: (1) the entity does not have sufficient equity at risk to finance its activities without additional subordinated financial support from other parties, (2) the entity’s investors lack any characteristics of a controlling financial interest or (3) the entity was established with non-substantive voting rights.
We consolidate VIEs when we are deemed to be the primary beneficiary. The primary beneficiary of a VIE is generally the party that both: (1) has the power to make decisions that most significantly affect the economic performance of the VIE and (2) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the VIE. If we are not deemed to be the primary beneficiary of a VIE, we account for the investment or other variable interests in a VIE in accordance with applicable GAAP.
11
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
We have two aviation entities whereby we own a 90 % interest and members of our management own a 10 % interest. We executed guarantees for the benefit of the lender that obligates us for the payment and performance of the aviation entities with respect to the repayment of the loans. Since we guaranteed the payment of the outstanding loans, we have concluded that the aviation entities are VIEs because the equity is not sufficient to fund the aviation entities’ activities without additional subordinated financial support. We have the power to make decisions that most significantly affect the economic performance of the aviation entities and have benefits through our ownership interest. Therefore, we have concluded that we are the primary beneficiary and will consolidate the aviation entities in our unaudited condensed consolidated financial statements and will include the noncontrolling interests as redeemable noncontrolling interests as discussed below.
The following table summarizes the balances related to the VIEs that are consolidated in our unaudited condensed consolidated balance sheets at the dates indicated (excluding intercompany eliminations at the time of consolidation) as well as our equity in the VIEs:
| June 30, 2026 | March 31, 2026 | |||||||||||||
| (in thousands) | ||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
| Accounts receivable, net | ||||||||||||||
| Accounts receivable-affiliates | ||||||||||||||
| Prepaid expenses and other current assets | ||||||||||||||
| Property, plant and equipment, net | ||||||||||||||
| Accounts payable | ( | ( | ||||||||||||
| Accrued expenses and other payables | ( | ( | ||||||||||||
| Current maturities of long-term debt | ( | ( | ||||||||||||
| Long-term debt, net | ( | ( | ||||||||||||
| Redeemable noncontrolling interests | ( | ( | ||||||||||||
| Partnership's equity in VIEs | $ | $ | ||||||||||||
Generally, the assets of the individual consolidated VIEs can be used only to settle liabilities of each respective individual consolidated VIE and the liabilities of the individual consolidated VIEs are liabilities for which creditors or beneficial interest holders do not have recourse to the general credit of the Partnership. In general, our maximum exposure to loss due to involvement with the VIEs is limited to the amount of capital investment in the VIEs, if any, or the potential obligation to perform on the guarantees of the outstanding loans.
Noncontrolling Interests
| Redeemable noncontrolling interests at March 31, 2026 | $ | |||||||
| Contributions from redeemable noncontrolling interest owners | ||||||||
| Net loss from continuing operations attributable to redeemable noncontrolling interests | ( | |||||||
| Redeemable noncontrolling interests at June 30, 2026 | $ | |||||||
12
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Contingent Consideration Liabilities
The following table summarizes changes in our contingent consideration liabilities (in thousands):
| Contingent consideration liabilities at March 31, 2026 (1) | $ | |||||||
| Liabilities settled | ( | |||||||
| Contingent consideration liabilities at June 30, 2026 (2) | $ | |||||||
(1) Includes $2.2 million which is recorded within accrued expenses and other payables and $15.8 million which is recorded within other noncurrent liabilities in our March 31, 2026 consolidated balance sheet.
(2) Includes $2.2 million which is recorded within accrued expenses and other payables and $15.2 million which is recorded within other noncurrent liabilities in our June 30, 2026 unaudited condensed consolidated balance sheet.
Reclassifications
As previously reported, it was determined that $7.3 million was incorrectly presented as Cost of Sales - Service and other instead of Cost of Sales - Product in our unaudited condensed consolidated statement of operations for the three months ended June 30, 2025. This amount was properly presented as Cost of Sales - Product in our unaudited condensed consolidated statement of operations starting with the six months ended September 30, 2025. As the amount was not considered material, it has been corrected in this Quarterly Report on Form 10-Q.
Recent Accounting Pronouncements
In May 2026, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818), which provides recognition, measurement, presentation, and disclosure requirements for all entities that generate, purchase, or receive environmental credits or have a regulatory compliance obligation that may be settled with environmental credits. The ASU is expected to improve the (i) understandability of financial accounting and reporting information about environmental credits and environmental credit obligations associated with regulatory compliance programs and (ii) comparability of that information by reducing diversity in practice. The ASU is effective for fiscal years beginning after December 15, 2027 (which is the Partnership’s fiscal year beginning April 1, 2028), and for interim periods within those fiscal years, with early adoption permitted. The ASU should be applied retrospectively through a cumulative effect adjustment to the opening balance of retained earnings as of the beginning of the annual period of adoption. We are currently evaluating the ASU to determine its impact on our consolidated financial statements.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements for Interim Reporting, which amends ASC 270 to provide clarity on the current interim reporting requirements. The ASU improves the navigability of the required interim disclosures and clarifying when that guidance is applicable, provides additional guidance on what disclosures should be provided in interim reporting periods and adds to ASC 270 a principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The ASU is effective for fiscal years beginning after December 15, 2027 (which is the Partnership’s fiscal year beginning April 1, 2028), and for interim periods within those fiscal years, with early adoption permitted. The amendments should be applied either prospectively or retrospectively to all prior periods presented in the financial statements. We are currently evaluating the ASU to determine its impact on our financial statement disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which includes amendments requiring, among other things, disclosure of disaggregated information about specific categories of expenses (purchases of inventory, employee compensation, depreciation, amortization, and depletion) included in certain expense captions on the income statement. Additionally, the amendments require disclosure of the total amount of selling expenses and an annual disclosure of the definition of selling expenses. The ASU is effective for fiscal years beginning after December 15, 2026 (which is the Partnership’s fiscal year beginning April 1, 2027), and for interim periods within fiscal years beginning after December 15, 2027 (which is the Partnership’s fiscal year beginning April 1, 2028), with early adoption permitted. The ASU may be applied either prospectively or retrospectively to all prior periods presented in the financial statements. We are currently evaluating the ASU to determine its impact on our financial statement disclosures.
13
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Note 3—Income (Loss) Per Common Unit
The following table presents our calculation of basic and diluted weighted average common units outstanding for the periods indicated:
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| Weighted average common units outstanding during the period: | ||||||||||||||||||||||||||
| Common units - Basic | ||||||||||||||||||||||||||
| Effect of Dilutive Securities: | ||||||||||||||||||||||||||
| Class D par warrants | ||||||||||||||||||||||||||
| Service awards (See Note 8) | ||||||||||||||||||||||||||
| Partial redemption of Class D Preferred Units (1) | ||||||||||||||||||||||||||
| Common units - Diluted | ||||||||||||||||||||||||||
(1) Under the if-converted method, amount represents the number of common units that would be issued to partially redeem outstanding Class D Preferred Units. Per the amended and restated limited partnership agreement (the “Partnership Agreement”), the Partnership can redeem up to 50% of the outstanding Class D Preferred Units, but is limited in the number of common units that can be used (the lower of 15% of the outstanding common units or 10 times the 30-day average daily trading volume) for the redemption.
Our income (loss) per common unit is as follows for the periods indicated:
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| (in thousands, except per unit amounts) | ||||||||||||||||||||||||||
| Income from continuing operations | $ | $ | ||||||||||||||||||||||||
| Less: Net income from continuing operations attributable to nonredeemable noncontrolling interests | ( | ( | ||||||||||||||||||||||||
| Less: Net loss (income) from continuing operations attributable to redeemable noncontrolling interests | ( | |||||||||||||||||||||||||
| Net income from continuing operations attributable to NGL Energy Partners LP | ||||||||||||||||||||||||||
| Less: Distributions to preferred unitholders (1) | ( | ( | ||||||||||||||||||||||||
| Less: Net (income) loss from continuing operations allocated to GP (2) | ( | |||||||||||||||||||||||||
| Net income (loss) from continuing operations allocated to common unitholders | $ | $ | ( | |||||||||||||||||||||||
| Net income from discontinued operations, net of tax | $ | $ | ||||||||||||||||||||||||
| Less: Net income from discontinued operations allocated to GP (2) | ( | |||||||||||||||||||||||||
| Net income from discontinued operations allocated to common unitholders | $ | $ | ||||||||||||||||||||||||
| Net income allocated to common unitholders - basic | $ | $ | ||||||||||||||||||||||||
| Plus: Distributions to preferred unitholders (3) | ||||||||||||||||||||||||||
| Less: Net income from continuing operations allocated to GP - diluted (2) | ( | |||||||||||||||||||||||||
| Net income allocated to common unitholders - diluted | $ | $ | ||||||||||||||||||||||||
| Basic and diluted income (loss) per common unit | ||||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | $ | ( | |||||||||||||||||||||||
| Income from discontinued operations, net of tax | ||||||||||||||||||||||||||
| Net income | $ | $ | ||||||||||||||||||||||||
(1) Includes distributions earned and declared for the three months ended June 30, 2026 and 2025 and the excess of the Class D Preferred Units (as defined herein) repurchase price over the carrying value of the units for the three months ended June 30, 2025.
(2) Net (income) loss allocated to the GP includes distributions to which it is entitled as the holder of incentive distribution rights.
(3) Under the if-converted method, amount represents the Class D Preferred Unit distributions that would be eliminated due to the partial redemption of the Class D Preferred Units.
14
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Note 4—Property, Plant and Equipment
Our property, plant and equipment consists of the following at the dates indicated:
| Description | Estimated Useful Lives | June 30, 2026 | March 31, 2026 | |||||||||||||||||||||||
| (in years) | (in thousands) | |||||||||||||||||||||||||
| Water treatment facilities and equipment (1) | - | $ | $ | |||||||||||||||||||||||
| Pipeline and related facilities | - | |||||||||||||||||||||||||
| Crude oil tanks and related equipment | - | |||||||||||||||||||||||||
| Buildings and leasehold improvements | - | |||||||||||||||||||||||||
| Natural gas liquids terminal and storage assets | - | |||||||||||||||||||||||||
| Land | ||||||||||||||||||||||||||
| Tank bottoms and linefill (2) | ||||||||||||||||||||||||||
| Information technology equipment | - | |||||||||||||||||||||||||
| Vehicles (3) | - | |||||||||||||||||||||||||
| Other | - | |||||||||||||||||||||||||
| Construction in progress | ||||||||||||||||||||||||||
| Gross property, plant and equipment | ||||||||||||||||||||||||||
| Accumulated depreciation | ( | ( | ||||||||||||||||||||||||
| Net property, plant and equipment | $ | $ | ||||||||||||||||||||||||
(1) Includes finance leases right-of-use assets of $10.3 million and $8.6 million at June 30, 2026 and March 31, 2026, respectively. Accumulated amortization related to these finance leases is included within accumulated depreciation.
(2) Tank bottoms, which are product volumes required for the operation of storage tanks, are recorded at historical cost. We recover tank bottoms when the storage tanks are removed from service. Linefill, which represents our portion of the product volume required for the operation of the proportionate share of a pipeline we own, is recorded at historical cost.
(3) Includes finance leases right-of-use assets of $0.5 million and $0.2 million at June 30, 2026 and March 31, 2026, respectively. Accumulated amortization related to these finance leases is included within accumulated depreciation.
The following table summarizes depreciation expense and capitalized interest expense for the periods indicated:
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Depreciation expense | $ | $ | ||||||||||||||||||||||||
| Capitalized interest expense | $ | $ | ||||||||||||||||||||||||
We record (gains) losses from the sales of property, plant and equipment and any write-downs in value due to impairment within loss (gain) on disposal or impairment of assets, net in our unaudited condensed consolidated statements of operations. The following table summarizes (gains) losses on the disposal or impairment of property, plant and equipment by segment for the period indicated:
| Three Months Ended June 30, 2026 | ||||||||||||||
| (in thousands) | ||||||||||||||
| Water Solutions | $ | |||||||||||||
| Crude Oil Logistics | ||||||||||||||
| Liquids Logistics | ( | |||||||||||||
| Corporate and Other | ( | |||||||||||||
| Total | $ | |||||||||||||
15
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Note 5—Intangible Assets
Our intangible assets consist of the following at the dates indicated:
| June 30, 2026 | March 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||
| Description | Weighted Average Remaining Useful Life | Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Net | |||||||||||||||||||||||||||||||||||||
| (in years) | (in thousands) | |||||||||||||||||||||||||||||||||||||||||||
| Customer relationships | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
| Customer commitments | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Rights-of-way and easements | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Executory contracts and other agreements | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Debt issuance costs (1) | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
(1) Includes debt issuance costs related to the ABL Facility (as defined herein). Debt issuance costs related to the fixed-rate notes and 2026 Term Loan B (as defined herein) are reported as a reduction of the carrying amount of long-term debt.
Amortization expense is as follows for the periods indicated:
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| Recorded In | 2026 | 2025 | ||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Depreciation and amortization | $ | $ | ||||||||||||||||||||||||
| Cost of sales - service | ||||||||||||||||||||||||||
| Interest expense | ||||||||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||||||||
The following table summarizes expected amortization of our intangible assets at June 30, 2026 (in thousands):
| Year Ending March 31, | |||||
| 2027 (nine months) | $ | ||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| 2031 | |||||
| 2032 | |||||
| Thereafter | |||||
| Total | $ | ||||
16
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Note 6—Long-Term Debt
Our long-term debt consists of the following at the dates indicated:
| June 30, 2026 | March 31, 2026 | |||||||||||||||||||||||||||||||||||||
| Face Amount | Unamortized Debt Issuance Costs (1) | Book Value | Face Amount | Unamortized Debt Issuance Costs (1) | Book Value | |||||||||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||||||||
| Asset-based revolving credit facility (“ABL Facility”) | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| 2026 senior secured term loan “B” credit facility (“2026 Term Loan B”) | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||
| Senior secured notes: | ||||||||||||||||||||||||||||||||||||||
| ( | ( | |||||||||||||||||||||||||||||||||||||
| ( | ( | |||||||||||||||||||||||||||||||||||||
| Other long-term debt | ( | ( | ||||||||||||||||||||||||||||||||||||
| Total long-term debt | ( | ( | ||||||||||||||||||||||||||||||||||||
| Less: Current maturities | ||||||||||||||||||||||||||||||||||||||
| Long-term debt | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
(1) Debt issuance costs related to the ABL Facility are reported within intangible assets, rather than as a reduction of the carrying amount of long-term debt. The unamortized debt issuance costs for the 2026 Term Loan B include a $4.5 million discount.
ABL Facility
Total commitments under the ABL Facility are $425.0 million and the sub-limit for letters of credit is $100.0 million. Availability under the ABL Facility is subject to a borrowing base that is determined by calculating the amount equal to the sum of our eligible cash, outstanding accounts receivable balances with investment and non-investment grade counterparties, certain inventory, including inventory on railcars and unsettled derivative contracts. These amounts are subject to certain percentage and dollar amount caps, as described within the ABL Facility. The borrowing base is calculated monthly pursuant to a borrowing base certificate we deliver to the administrative agent. Availability under the ABL Facility is based on the lower of the current borrowing base and the total commitments, less borrowings and outstanding letters of credit. At June 30, 2026, $177.0 million was outstanding under the ABL Facility, letters of credit outstanding were $49.5 million, and we had a borrowing base of $417.3 million. The ABL Facility is scheduled to mature at the earliest of (a) February 2, 2029 or (b) 91 days prior to the earliest maturity date in respect to any of our indebtedness in an aggregate principal amount of $50.0 million or greater, subject to certain exceptions.
The ABL Facility is secured by a lien on substantially all of our assets, including among other things, a first priority lien on our accounts receivable, inventory, pledged deposit accounts, cash and cash equivalents and related assets and a second priority lien on all of our other assets.
At June 30, 2026, the borrowings under the ABL Facility had a weighted average interest rate of 5.84 % calculated as a SOFR rate of 3.64 % plus a margin of 2.00 % for SOFR borrowings and the prime rate of 6.75 % plus a margin of 1.00 % on the alternate base borrowings. On June 30, 2026, the interest rate in effect on letters of credit was 2.00 %.
The ABL Facility contains various affirmative and negative covenants, including financial reporting requirements and limitations on indebtedness, liens, mergers, consolidations, liquidations and dissolutions, sales of assets, distributions and other restricted payments, investments (including acquisitions) and transactions with affiliates. The ABL Facility contains, as the only financial covenant, a fixed charge coverage ratio that is tested based on the financial statements for the most recently ended
17
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
fiscal quarter upon the occurrence and during the continuation of a Cash Dominion Event (as defined in the ABL Facility). At June 30, 2026, no Cash Dominion Event had occurred.
Compliance
At June 30, 2026, we were in compliance with the covenants under the ABL Facility.
2026 Term Loan B
The 2026 Term Loan B was issued at 99.50 % of par for gross proceeds of $945.3 million. The 2026 Term Loan B was issued pursuant to a credit agreement dated March 12, 2026 (“2026 Term Loan Credit Agreement”).
At June 30, 2026, the borrowings under the 2026 Term Loan B had an interest rate of SOFR of 3.63 % plus a margin of 3.50 %.
The 2026 Term Loan B is secured by first priority liens on substantially all of our assets other than our accounts receivable, inventory, pledged deposit accounts, cash and cash equivalents, renewable energy tax credits and related assets and second priority liens on our accounts receivable, inventory, pledged deposit accounts, cash and cash equivalents and related assets.
The 2026 Term Loan Credit Agreement contains various affirmative and negative covenants, including financial reporting requirements and limitations on indebtedness, liens, mergers, consolidations, liquidations and dissolutions, sales of assets, distributions and other restricted payments, investments (including acquisitions) and transactions with affiliates. The 2026 Term Loan Credit Agreement requires that we maintain, on a quarterly basis, beginning with the quarter ended June 30, 2026, a debt service coverage rate (as defined in the 2026 Term Loan Credit Agreement) of no less than 1.1 to 1.0. At June 30, 2026, our debt service coverage rate was approximately 2.73 to 1.0.
The 2026 Term Loan Credit Agreement contains other customary terms, events of default and covenants.
Compliance
At June 30, 2026, we were in compliance with the covenants under the 2026 Term Loan B.
Senior Secured Notes
The 2029 Senior Secured Notes bear interest at 8.125 % and the 2032 Senior Secured Notes bear interest at 8.375 %. Interest is payable on February 15, May 15, August 15 and November 15 of each year, beginning on May 15, 2024. The 2029 Senior Secured Notes mature on February 15, 2029 and the 2032 Senior Secured Notes mature on February 15, 2032.
The 2029 Senior Secured Notes and 2032 Senior Secured Notes were issued pursuant to an indenture dated February 2, 2024 (“Indenture”). The 2029 Senior Secured Notes and 2032 Senior Secured Notes are secured by first priority liens on substantially all of our assets other than our accounts receivable, inventory, pledged deposit accounts, cash and cash equivalents and related assets and second priority liens on our accounts receivable, inventory, pledged deposit accounts, cash and cash equivalents and related assets.
18
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
consolidate, merge or transfer or sell all or substantially all of our assets. These covenants are subject to a number of important exceptions and qualifications.
We have the option to redeem all or part of the 2029 Senior Secured Notes, at any time on or after February 15, 2026 at the redemption prices specified in the Indenture. We have the option to redeem all or part of the 2032 Senior Secured Notes, at any time on or after February 15, 2027 at the redemption prices specified in the Indenture.
The Indenture contains other customary terms, events of default and covenants.
Compliance
At June 30, 2026, we were in compliance with the covenants under the Indenture.
Other Long-Term Debt
On June 24, 2024, we entered into an equipment loan for $6.4 million with American Bank and Trust Company which bears interest at a rate of 8.50 % and is secured by an airplane. On September 24, 2024, we refinanced the loan and lowered the interest rate to 8.00 %. We have an aggregate principal balance of $4.6 million at June 30, 2026. This loan matures on June 24, 2030.
On October 1, 2024, we entered into a second equipment loan for $6.4 million with American Bank and Trust Company which bears interest at a rate of 8.00 % and is secured by an airplane. We have an aggregate principal balance of $4.8 million at June 30, 2026. This loan matures on September 24, 2030.
Debt Maturity Schedule
The scheduled maturities of our long-term debt are as follows at June 30, 2026:
| Year Ending March 31, | ABL Facility | 2026 Term Loan B | Senior Secured Notes | Other Long-Term Debt | Total | |||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||
| 2027 (nine months) | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| 2028 | ||||||||||||||||||||||||||||||||
| 2029 | ||||||||||||||||||||||||||||||||
| 2030 | ||||||||||||||||||||||||||||||||
| 2031 | ||||||||||||||||||||||||||||||||
| 2032 | ||||||||||||||||||||||||||||||||
| Thereafter | ||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Amortization of Debt Issuance Costs
Amortization expense for debt issuance costs related to long-term debt was $2.0 million and $2.0 million during the three months ended June 30, 2026 and 2025, respectively.
The following table summarizes expected amortization of debt issuance costs at June 30, 2026 (in thousands):
| Year Ending March 31, | ||||||||
| 2027 (nine months) | $ | |||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| 2031 | ||||||||
| 2032 | ||||||||
| Thereafter | ||||||||
| Total | $ | |||||||
19
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Note 7—Commitments and Contingencies
Legal Contingencies
On July 29, 2026, TOG Operating, LLC and Titus Oil & Gas III, LLC (“Titus”) filed a lawsuit against the Partnership and two of its subsidiaries, NGL Water Solutions Permian, LLC, and NGL Water Solutions, LLC, in the District Court of Reeves County, Texas (“Reeves County Matter”) alleging that the Partnership flooded out Titus’s mineral estate through our saltwater disposal operations. Titus has asserted claims for trespass, negligence (including negligence per se and gross negligence), statutory waste, nuisance, declaratory judgment, and unjust enrichment. Titus is seeking an unspecified amount of economic damages along with exemplary damages and injuctive relief. Concurrently, Titus filed a complaint with the Railroad Commission of Texas asking that the Railroad Commission of Texas terminate or suspend injection well permits for certain of our wells located in Reeves County, Texas (“RRC Matter”). At this time, no discovery has been conducted in either matter. Accordingly, we are unable at this time to predict the outcome of these matters or to reasonably estimate the possible loss or range of loss, if any, that may result, and no accrual has been made. The Partnership denies the allegations in the Reeves County Matter and the RRC Matter and intends to vigorously contest and defend both matters.
We are party to various other claims, legal actions, and complaints arising in the ordinary course of business. In the opinion of our management, the ultimate resolution of these claims, legal actions, and complaints, after consideration of amounts accrued, insurance coverage, and other arrangements, is not expected to have a material adverse effect on our consolidated financial position, results of operations or cash flows. However, the outcome of such matters is inherently uncertain, and estimates of our liabilities may change materially as circumstances develop.
Environmental Matters
At June 30, 2026, we have an environmental liability, measured on an undiscounted basis, of $1.3 million, which is recorded within accrued expenses and other payables in our unaudited condensed consolidated balance sheet. Our operations are subject to extensive federal, state, and local environmental laws and regulations. Although we believe our operations are in substantial compliance with applicable environmental laws and regulations, risks of additional costs and liabilities are inherent in our business, and there can be no assurance that we will not incur significant costs. Moreover, it is possible that other developments, such as increasingly stringent environmental laws, regulations and enforcement policies thereunder, and claims for damages to property or persons resulting from the operations, could result in substantial costs. Accordingly, we have adopted policies, practices, and procedures in the areas of pollution control, product safety, occupational health, and the handling, storage, use, and disposal of hazardous materials designed to prevent material environmental or other damage, and to limit the financial liability that could result from such events. However, some risk of environmental or other damage is inherent in our businesses.
Asset Retirement Obligations
We have contractual and regulatory obligations at certain facilities for which we have to perform remediation, dismantlement or removal activities when the assets are retired. Our liability for asset retirement obligations is discounted to present value. To calculate the liability, we make estimates and assumptions about the retirement cost and the timing of retirement. Changes in our assumptions and estimates may occur as a result of the passage of time and the occurrence of future events.
The following table summarizes changes in our asset retirement obligations, which is reported within other noncurrent liabilities in our unaudited condensed consolidated balance sheets (in thousands):
| Asset retirement obligations at March 31, 2026 | $ | ||||
| Liabilities incurred | |||||
| Liabilities settled | ( | ||||
| Accretion expense | |||||
| Asset retirement obligations at June 30, 2026 | $ | ||||
In addition to the obligations described above, we may be obligated to remove facilities or perform other remediation upon retirement of certain other assets. However, the fair value of the asset retirement obligation cannot currently be reasonably estimated because the settlement dates are indeterminable. We will record an asset retirement obligation for these assets in the periods in which settlement dates are reasonably determinable.
20
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Sales and Purchase Contracts
We have entered into product sales and purchase contracts for which we expect the parties to physically settle and deliver the inventory in future periods.
At June 30, 2026, we had the following commodity purchase commitments:
| Crude Oil (1) | Natural Gas Liquids | |||||||||||||||||||||||||
| Value | Volume (in barrels) | Value | Volume (in gallons) | |||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Fixed-Price Commodity Purchase Commitments: | ||||||||||||||||||||||||||
| Year Ending March 31, | ||||||||||||||||||||||||||
| 2027 (nine months) | $ | $ | ||||||||||||||||||||||||
| 2028 | ||||||||||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||||||||
| Index-Price Commodity Purchase Commitments: | ||||||||||||||||||||||||||
| Year Ending March 31, | ||||||||||||||||||||||||||
| 2027 (nine months) | $ | $ | ||||||||||||||||||||||||
| 2028 | ||||||||||||||||||||||||||
| 2029 | ||||||||||||||||||||||||||
| 2030 | ||||||||||||||||||||||||||
| 2031 | ||||||||||||||||||||||||||
| 2032 | ||||||||||||||||||||||||||
| Thereafter | ||||||||||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||||||||
(1) Our crude oil index-price purchase commitments exceed our crude oil index-price sales commitments (presented below) due primarily to our long-term purchase commitments for crude oil that we purchase and ship on the Grand Mesa Pipeline.
At June 30, 2026, we had the following commodity sale commitments:
| Crude Oil | Natural Gas Liquids | |||||||||||||||||||||||||
| Value | Volume (in barrels) | Value | Volume (in gallons) | |||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Fixed-Price Commodity Sale Commitments: | ||||||||||||||||||||||||||
| Year Ending March 31, | ||||||||||||||||||||||||||
| 2027 (nine months) | $ | $ | ||||||||||||||||||||||||
| 2028 | ||||||||||||||||||||||||||
| 2029 | ||||||||||||||||||||||||||
| 2030 | ||||||||||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||||||||
| Index-Price Commodity Sale Commitments: | ||||||||||||||||||||||||||
| Year Ending March 31, | ||||||||||||||||||||||||||
| 2027 (nine months) | $ | $ | ||||||||||||||||||||||||
| 2028 | ||||||||||||||||||||||||||
| 2029 | ||||||||||||||||||||||||||
| 2030 | ||||||||||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||||||||
We account for the contracts shown in the tables above using the normal purchase and normal sale election. Under this accounting policy election, we do not record the physical contracts at fair value at each balance sheet date; instead, we record the purchase or sale at the contracted value once the delivery occurs. Contracts in the tables above may have offsetting derivative contracts (described in Note 9) or inventory positions (described in Note 2).
21
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Other Commitments
We have noncancelable agreements for product storage, railcar spurs, capital projects and real estate. The following table summarizes future minimum payments under these agreements at June 30, 2026 (in thousands):
| Year Ending March 31, | |||||
| 2027 (nine months) | $ | ||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| 2031 | |||||
| 2032 | |||||
| Thereafter | |||||
| Total | $ | ||||
Note 8—Equity
Partnership Equity
The Partnership’s equity consists of a 0.1 % GP interest and a 99.9 % limited partner interest, which consists of common units. Our GP has the right, but not the obligation, to contribute a proportionate amount of capital to the Partnership to maintain its 0.1 % GP interest. Our GP is not required to guarantee or pay any of our debts or obligations. At June 30, 2026, we owned 10.33 % of our GP.
General Partner Equity
In connection with the issuance of common units for the vesting of restricted units during the three months ended June 30, 2026, we issued 1,001 notional units to our GP for less than $0.1 million in order to maintain its 0.1 % interest in the Partnership.
Common Unit Repurchase Program
On April 8, 2026, the board of directors of our GP authorized a common unit repurchase program, under which we may repurchase up to $100.0 million of our outstanding common units from time to time in the open market, including pursuant to a repurchase plan administrated in accordance with Rule 10b5-1 under the Exchange Act, or in other privately negotiated transactions. This program does not have a fixed expiration date. The common unit repurchase program authorization does not obligate us to repurchase any dollar amount or number of common units. We did not repurchase any units under this program during the three months ended June 30, 2026.
Class B Preferred Units
As of June 30, 2026, there were 12,585,642 of our Class B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class B Preferred Units”) outstanding.
The following table summarizes the distributions declared on our Class B Preferred Units during the last two quarters:
| Three-Month | Distribution | Amount Paid to Class B | ||||||||||||||||||||||||||||||
| Date Declared | Record Date | Payment Date | SOFR | Rate | Preferred Unitholders | |||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||
| March 18, 2026 | April 1, 2026 | April 15, 2026 | % | $ | $ | |||||||||||||||||||||||||||
| June 17, 2026 | July 1, 2026 | July 15, 2026 | % | $ | $ | |||||||||||||||||||||||||||
22
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
The distribution amount paid on July 15, 2026 is included in accrued expenses and other payables in our unaudited condensed consolidated balance sheet at June 30, 2026.
Class C Preferred Units
As of June 30, 2026, there were 1,800,000 of our Class C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class C Preferred Units”) outstanding.
The following table summarizes the distributions declared on our Class C Preferred Units during the last two quarters:
| Three-Month | Distribution | Amount Paid to Class C | ||||||||||||||||||||||||||||||
| Date Declared | Record Date | Payment Date | SOFR | Rate | Preferred Unitholders | |||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||
| March 18, 2026 | April 1, 2026 | April 15, 2026 | % | $ | $ | |||||||||||||||||||||||||||
| June 17, 2026 | July 1, 2026 | July 15, 2026 | % | $ | $ | |||||||||||||||||||||||||||
The distribution amount paid on July 15, 2026 is included in accrued expenses and other payables in our unaudited condensed consolidated balance sheet at June 30, 2026.
Class D Preferred Units
As of June 30, 2026, there were 315,489 preferred units (“Class D Preferred Units”) and warrants exercisable to purchase an aggregate of 2,125,000 common units outstanding.
The following table summarizes the outstanding warrants at June 30, 2026:
| Issuance Date and Description | Number of Warrants | Exercise Price | ||||||||||||
| October 31, 2019 | ||||||||||||||
| Premium warrants | $ | |||||||||||||
| Par warrants | $ | |||||||||||||
All outstanding warrants are currently exercisable and any unexercised warrants will expire on the tenth anniversary of the date of issuance. The warrants will not participate in cash distributions.
The following table summarizes the distributions declared on our Class D Preferred Units during the last two quarters:
| Three-Month | Distribution | Amount Paid to Class D | ||||||||||||||||||||||||||||||
| Date Declared | Record Date | Payment Date | SOFR | Rate | Preferred Unitholders | |||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||
| March 18, 2026 | April 1, 2026 | April 15, 2026 | % | $ | $ | |||||||||||||||||||||||||||
| June 17, 2026 | July 1, 2026 | July 15, 2026 | % | $ | $ | |||||||||||||||||||||||||||
The distribution amount paid on July 15, 2026 is included in accrued expenses and other payables in our unaudited condensed consolidated balance sheet at June 30, 2026.
Equity-Based Incentive Compensation
On December 9, 2025, the board of directors of our GP approved the 2025 Long-Term Incentive Plan (“2025 Plan”), and unitholder approval was received on February 9, 2026. Our GP has granted certain restricted units to employees, which vest in tranches, subject to the continued service of the recipients through the vesting date (“Service Awards”).
23
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
The following table summarizes the Service Award activity during the three months ended June 30, 2026:
| Weighted-Average | ||||||||||||||
| Grant Date | ||||||||||||||
| Number of | Fair Value | |||||||||||||
| Units | Per Unit | |||||||||||||
| Unvested Service Award units at March 31, 2026 | $ | |||||||||||||
| Units vested and issued | ( | $ | ||||||||||||
| Unvested Service Award units at June 30, 2026 | $ | |||||||||||||
The following table summarizes the scheduled vesting of our unvested Service Awards at June 30, 2026:
| Year Ending March 31, | ||||||||
| 2027 (nine months) | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| Total | ||||||||
Service Awards are valued at the average of the high/low sales prices as of the grant date. We record the expense for each Service Award on a straight-line basis over the requisite period for the entire award (that is, over the requisite service period of the last separately vesting portion of the award), ensuring that the amount of compensation cost recognized at any date at least equals the portion of the grant-date value of the award that is vested at that date. Forfeitures of Service Awards are accounted for when they occur.
During the three months ended June 30, 2026, we recorded compensation expense related to Service Awards of $2.0 million.
The following table summarizes the estimated future expense we expect to record on the unvested Service Awards at June 30, 2026 (in thousands):
| Year Ending March 31, | ||||||||
| 2027 (nine months) | $ | |||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| Total | ||||||||
As of June 30, 2026, there are approximately 7.9 million units remaining available for issuance under the 2025 Plan. On July 15, 2026, 1,396,000 Service Awards were granted at a fair value per unit of $15.28 .
Note 9—Fair Value of Financial Instruments
The carrying values of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and other current assets and liabilities (excluding derivative instruments) approximate fair value because of the short-term nature of these instruments. Therefore, these assets and liabilities are not presented in the following table.
24
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Derivatives
The following table summarizes, by level within the fair value hierarchy, the estimated fair values of our derivative assets and liabilities reported in our unaudited condensed consolidated balance sheets at the dates indicated:
| June 30, 2026 | March 31, 2026 | |||||||||||||||||||||||||
| Derivative Assets | Derivative Liabilities | Derivative Assets | Derivative Liabilities | |||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Level 1 measurements | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||
| Level 2 measurements | ( | ( | ||||||||||||||||||||||||
| ( | ( | |||||||||||||||||||||||||
| Netting of counterparty contracts (1) | ( | ( | ||||||||||||||||||||||||
| Net cash collateral provided | ||||||||||||||||||||||||||
| Derivatives | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||
(1) Relates to commodity derivative assets and liabilities that are expected to be net settled on an exchange or through a master netting arrangement with the counterparty. Our physical contracts that do not qualify as normal purchase normal sale transactions are not subject to such master netting arrangements.
The following table summarizes the accounts that include our derivative assets and liabilities in our unaudited condensed consolidated balance sheets at the dates indicated:
| June 30, 2026 | March 31, 2026 | |||||||||||||
| (in thousands) | ||||||||||||||
| Prepaid expenses and other current assets | $ | $ | ||||||||||||
| Other noncurrent assets | ||||||||||||||
| Accrued expenses and other payables | ( | ( | ||||||||||||
| Other noncurrent liabilities | ( | ( | ||||||||||||
| Net derivative liability | $ | ( | $ | ( | ||||||||||
25
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
The following table summarizes our open derivative contract positions at the dates indicated. We do not account for these derivatives as hedges.
| Contracts | Settlement Period | Net Long (Short) Notional Units (in barrels) | Fair Value of Net Assets (Liabilities) | |||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| At June 30, 2026: | ||||||||||||||||||||
| Crude oil fixed-price (1) | July 2026–December 2027 | ( | $ | ( | ||||||||||||||||
| Propane fixed-price (1) | July 2026–September 2027 | |||||||||||||||||||
| Butane fixed-price (1) | July 2026–March 2027 | ( | ( | |||||||||||||||||
| Variable-to-fixed interest rate swaps (2) | July 2026–April 2028 | |||||||||||||||||||
| Other | July 2026–March 2027 | ( | ||||||||||||||||||
| ( | ||||||||||||||||||||
| Net cash collateral provided | ||||||||||||||||||||
| Net derivative liability | $ | ( | ||||||||||||||||||
| At March 31, 2026: | ||||||||||||||||||||
| Crude oil fixed-price (1) | April 2026–September 2027 | ( | $ | ( | ||||||||||||||||
| Propane fixed-price (1) | April 2026–March 2027 | ( | ||||||||||||||||||
| Butane fixed-price (1) | April 2026–March 2027 | ( | ( | |||||||||||||||||
| Variable-to-fixed interest rate swaps (2) | April 2026–April 2028 | ( | ||||||||||||||||||
| Other | April 2026–March 2027 | ( | ||||||||||||||||||
| ( | ||||||||||||||||||||
| Net cash collateral provided | ||||||||||||||||||||
| Net derivative liability | $ | ( | ||||||||||||||||||
(1) We may have fixed price physical purchases, including inventory, offset by floating price physical sales or floating price physical purchases offset by fixed price physical sales. These contracts are derivatives we have entered into as an economic hedge against the risk of mismatches between fixed and floating price physical obligations.
(2) See further discussion of these instruments in “Interest Rate Risk” below.
During the three months ended June 30, 2026 and 2025, we recorded net gains of $20.0 million and $9.4 million, respectively, from our commodity derivatives to cost of sales-product in our unaudited condensed consolidated statements of operations. These amounts do not include net gains and losses from our commodity derivatives related to our refined products and biodiesel businesses, as these amounts have been classified within discontinued operations within our unaudited condensed consolidated statement of operations for the three months ended June 30, 2025 (see Note 15).
During the three months ended June 30, 2026 and 2025, we recorded net gains of $1.5 million and net losses of $0.6 million, respectively, from our interest rate swaps to interest expense in our unaudited condensed consolidated statements of operations.
Credit Risk
We have credit policies that we believe minimize our overall credit risk, including an evaluation of potential counterparties’ financial condition (including credit ratings), collateral requirements under certain circumstances, and the use of industry standard master netting agreements, which allow for offsetting counterparty receivable and payable balances for certain transactions. At June 30, 2026, our primary counterparties were retailers, resellers, energy marketers, producers, refiners, and dealers. This concentration of counterparties may impact our overall exposure to credit risk, either positively or negatively, as the counterparties may be similarly affected by changes in economic, regulatory or other conditions. If a counterparty does not perform on a contract, we may not realize amounts that have been recorded in our unaudited condensed consolidated balance sheets and recognized in our net income.
26
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Interest Rate Risk
Long-Term Debt
The ABL Facility is variable-rate debt with interest rates that are generally indexed to the prime rate or SOFR plus an applicable margin (see Note 6 for the current rates on the ABL Facility).
The 2026 Term Loan B is variable-rate debt with interest rates that are generally indexed to SOFR plus an applicable margin (see Note 6 for the current rates on the 2026 Term Loan B).
Interest Rate Swaps
In March and April 2024, we entered into two $200.0 million interest rate swaps to reduce the variability of cash outflows associated with our floating-rate, SOFR-based instruments. One of the interest rate swaps expired in April 2026. For the other interest rate swap, we pay a fixed interest rate of 3.842 % in exchange for SOFR-based variable interest through April 2028.
Preferred Unit Distributions
The current distribution rate for the Class B, Class C and Class D Preferred Units is the three-month CME Term SOFR plus a fixed spread (see Note 8 for the current distribution rates).
Fair Value of Fixed-Rate Notes
The following table provides fair value estimates of our fixed-rate notes at June 30, 2026 (in thousands):
| 2029 Senior Secured Notes | $ | |||||||
| 2032 Senior Secured Notes | $ | |||||||
For the 2029 Senior Secured Notes and 2032 Senior Secured Notes, the fair value estimates were developed based on publicly traded quotes and would be classified as Level 2 in the fair value hierarchy.
Note 10—Segments
Our operations are organized into three reportable segments: (i) Water Solutions, (ii) Crude Oil Logistics and (iii) Liquids Logistics. These segments have been identified based on the differing products and services, regulatory environment and the expertise required for these operations. Our Liquids Logistics reportable segment includes operating segments that have been aggregated based on the nature of the products and services provided. Our chief operating decision maker (“CODM”) is our chief executive officer. Adjusted EBITDA is reviewed by the CODM to evaluate performance and make business decisions. We define Adjusted EBITDA for Water Solutions as revenue minus operating and general and administrative expense, which excludes accretion expense for asset retirement obligations (“Accretion Expense”) and legal and advisory costs associated with acquisitions and dispositions (“Acquisition Expense”), and plus or minus other reconciling items. We define Adjusted EBITDA for Crude Oil Logistics and Liquid Logistics as revenue minus cost of sales, which excludes unrealized gains and losses on derivatives, lower of cost or net realizable value adjustments and plus or minus other reconciling segment items. The calculation of Adjusted EBITDA for our three reportable segments is presented in the Reportable Segment Information tables below.
See Note 1 for a discussion of the products and services of our reportable segments. The remainder of our business operations is presented as “Corporate and Other” and consists of certain corporate expenses that are not allocated to the reportable segments and the amounts to eliminate intercompany or intersegment transactions. Intercompany or intersegment transactions are recorded based on prices negotiated between the segments. Intrasegment transactions eliminations are recorded within each reportable segment. None of the tables below include amounts related to our refined products and biodiesel businesses, as those amounts have been classified as discontinued operations within our unaudited condensed consolidated statements of operations for all periods presented see (see Note 15).
27
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Disaggregation of Revenue
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||
| Water Solutions: | ||||||||||||||||||||||||||
| Topic 606 revenues | ||||||||||||||||||||||||||
| Disposal service fees | $ | $ | ||||||||||||||||||||||||
| Sale of recovered crude oil | ||||||||||||||||||||||||||
| Sale of water | ||||||||||||||||||||||||||
| Other service revenues | ||||||||||||||||||||||||||
| Non-Topic 606 revenues | ||||||||||||||||||||||||||
| Total Water Solutions revenues | ||||||||||||||||||||||||||
| Crude Oil Logistics: | ||||||||||||||||||||||||||
| Topic 606 revenues | ||||||||||||||||||||||||||
| Crude oil sales | ||||||||||||||||||||||||||
| Crude oil transportation and other sales | ||||||||||||||||||||||||||
| Non-Topic 606 revenues | ||||||||||||||||||||||||||
| Total Crude Oil Logistics revenues | ||||||||||||||||||||||||||
| Liquids Logistics: | ||||||||||||||||||||||||||
| Topic 606 revenues | ||||||||||||||||||||||||||
| Butane sales | ||||||||||||||||||||||||||
| Propane sales | ||||||||||||||||||||||||||
| Other products sales | ||||||||||||||||||||||||||
| Service revenues | ||||||||||||||||||||||||||
| Non-Topic 606 revenues | ||||||||||||||||||||||||||
| Total Liquids Logistics revenues (1) | ||||||||||||||||||||||||||
| Corporate and Other: | ||||||||||||||||||||||||||
| Topic 606 revenues | ||||||||||||||||||||||||||
| Service revenues | ||||||||||||||||||||||||||
| Elimination of intersegment sales | ( | |||||||||||||||||||||||||
| Total Corporate and Other revenues | ||||||||||||||||||||||||||
| Total revenues | $ | $ | ||||||||||||||||||||||||
(1) During the three months ended June 30, 2026 and 2025, our Liquids Logistics revenues included $21.7 million and $15.0 million of non-US revenues, respectively.
28
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Reportable Segment Information
The following tables set forth certain selected financial information for our segments for the periods indicated:
| Three Months Ended June 30, 2026 | ||||||||||||||||||||||||||
| Water | Crude Oil | Liquids | Total | |||||||||||||||||||||||
| Solutions | Logistics | Logistics | Segments | |||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||||||||||||
| Cost of sales (1) | ||||||||||||||||||||||||||
| Operating, general and administrative expenses (2) | ||||||||||||||||||||||||||
| Other (3) | ||||||||||||||||||||||||||
| Adjusted EBITDA | $ | $ | $ | $ | ||||||||||||||||||||||
| Reconciling items: | ||||||||||||||||||||||||||
| Plus - all other Adjusted EBITDA | ( | |||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||
| Amortization in cost of sales - service | ||||||||||||||||||||||||||
| Interest expense | ||||||||||||||||||||||||||
| Loss on disposal or impairment of assets, net | ||||||||||||||||||||||||||
| Net unrealized gains on derivatives | ( | |||||||||||||||||||||||||
| Lower of cost or net realizable value adjustments | ||||||||||||||||||||||||||
| Asset retirement obligation accretion | ||||||||||||||||||||||||||
| Equity-based compensation | ||||||||||||||||||||||||||
| Other (4) | ||||||||||||||||||||||||||
| Income from continuing operations before income taxes (5) | $ | |||||||||||||||||||||||||
| Segment capital expenditures | $ | $ | $ | $ | ||||||||||||||||||||||
| All other capital expenditures | ||||||||||||||||||||||||||
| Total capital expenditures (6) | $ | |||||||||||||||||||||||||
| Segment assets (7) | $ | $ | $ | $ | ||||||||||||||||||||||
| All other assets (7) | ||||||||||||||||||||||||||
| Total assets (7) (8) | $ | |||||||||||||||||||||||||
(1) Amount excludes net unrealized gains and losses on derivatives, lower of cost or net realizable value adjustments, and amortization expense for certain intangible assets. For Crude Oil Logistics, the amount also excludes $2.6 million of realized losses from derivatives associated with crude oil barrels reclassified as linefill as of March 31, 2026.
(2) Amount excludes Accretion Expense and Acquisition Expense.
(3) Amount includes interest income and certain other non-operating income and expense items less Adjusted EBITDA related to our noncontrolling interests.
(4) Amount includes the net of Adjusted EBITDA related to our noncontrolling interests, unrealized gains and losses on investments and marketable securities and certain other non-operating income and expense items.
(5) Total domestic income from continuing operations before income taxes for the quarter ended June 30, 2026 was $78.7 million and total non-US income from continuing operations before income taxes for the quarter ended June 30, 2026 was $1.0 million.
(6) Amount includes additions to property, plant and equipment and intangible assets, including the acquisition of assets.
(7) Information is presented as of June 30, 2026.
(8) Total assets includes $14.1 million of non-US total assets.
29
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
| Three Months Ended June 30, 2025 | ||||||||||||||||||||||||||
| Water | Crude Oil | Liquids | Total | |||||||||||||||||||||||
| Solutions | Logistics | Logistics | Segments | |||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||||||||||||
| Cost of sales (1) | ||||||||||||||||||||||||||
| Operating, general and administrative expenses (2) | ||||||||||||||||||||||||||
| Other (3) | ( | ( | ||||||||||||||||||||||||
| Adjusted EBITDA | $ | $ | $ | $ | ||||||||||||||||||||||
| Reconciling items: | ||||||||||||||||||||||||||
| Plus - all other Adjusted EBITDA | ( | |||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||||||||
| Interest expense | ||||||||||||||||||||||||||
| Gain on disposal or impairment of assets, net | ( | |||||||||||||||||||||||||
| Net unrealized gains on derivatives | ( | |||||||||||||||||||||||||
| Lower of cost or net realizable value adjustments | ( | |||||||||||||||||||||||||
| Gain on early extinguishment of liabilities, net | ( | |||||||||||||||||||||||||
| Asset retirement obligation accretion | ||||||||||||||||||||||||||
| Adjustments related to unconsolidated entities (4) | ||||||||||||||||||||||||||
| Other (5) | ||||||||||||||||||||||||||
| Income from continuing operations before income taxes (6) | $ | |||||||||||||||||||||||||
| Segment capital expenditures | $ | $ | $ | $ | ||||||||||||||||||||||
| All other capital expenditures | ||||||||||||||||||||||||||
| Total capital expenditures (7) | $ | |||||||||||||||||||||||||
| Segment assets (8) | $ | $ | $ | $ | ||||||||||||||||||||||
| All other assets (8) | ||||||||||||||||||||||||||
| Total assets (8) (9) | $ | |||||||||||||||||||||||||
(1) Amount excludes net unrealized gains and losses on derivatives and lower of cost or net realizable value adjustments.
(2) Amount excludes Accretion Expense and Acquisition Expense.
(3) Amount includes Adjusted EBITDA related to our unconsolidated entities, interest income and certain other non-operating income and expense items less Adjusted EBITDA related to our noncontrolling interests.
(4) Amount represents the sum of the amount excluded from our equity in earnings of unconsolidated entities, including, depreciation and amortization, interest expense, and gains and losses on disposal or impairment of assets.
(5) Amount includes the net of Adjusted EBITDA related to our noncontrolling interests, unrealized gains and losses on investments and marketable securities and certain other non-operating income and expense items.
(6) Total domestic income from continuing operations before income taxes for the quarter ended June 30, 2025 was $29.1 million and total non-US income from continuing operations before income taxes for the quarter ended June 30, 2025 was $1.0 million.
(7) Amount includes additions to property, plant and equipment and intangible assets, including the acquisition of assets.
(8) Information is presented as of June 30, 2025.
(9) Total assets includes $17.6 million of non-US total assets.
Note 11—Transactions with Affiliates
The following table summarizes our related party transactions for the periods indicated:
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Sales to entities affiliated with management | $ | $ | ||||||||||||||||||||||||
30
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Affiliate balances consist of the following at the dates indicated:
| June 30, 2026 | March 31, 2026 | |||||||||||||
| (in thousands) | ||||||||||||||
| Accounts receivable-affiliates | ||||||||||||||
| Entities affiliated with management | $ | $ | ||||||||||||
| Accounts payable-affiliates | ||||||||||||||
| Entities affiliated with management | $ | $ | ||||||||||||
Other Related Party Transactions
Acquisition of Interest in NGL Energy Holdings LLC
During the three months ended June 30, 2026, we purchased, in two transactions, a 1.64 % interest in our GP for $1.8 million in cash and accounted for this as a deduction within limited partners’ equity in our unaudited condensed consolidated balance sheet.
On July 27, 2026, we purchased, in a single transaction, a 1.33 % interest in our GP for $1.5 million in cash.
Note 12—Revenue from Contracts with Customers
We recognize revenue for services and products under revenue contracts as our obligations to either perform services or deliver or sell products under the contracts are satisfied. Our revenue contracts in scope under ASC 606 primarily have a single performance obligation and we do not receive material amounts of non-cash consideration.
The majority of our revenue agreements are in scope under ASC 606 and the remainder of our revenue comes from contracts that contain nonmonetary exchanges or leases in the scope of ASC 845 and ASC 842, respectively. See Note 10 for a detail of disaggregated revenue.
Remaining Performance Obligations
| Year Ending March 31, | |||||
| 2027 (nine months) | $ | ||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| 2031 | |||||
| 2032 | |||||
| Thereafter | |||||
| Total | $ | ||||
Contract Assets and Liabilities
The following tables summarize the balances of our contract assets and liabilities at the dates indicated:
| June 30, 2026 | March 31, 2026 | |||||||||||||
| (in thousands) | ||||||||||||||
| Accounts receivable from contracts with customers | $ | $ | ||||||||||||
| Contract assets (current) | $ | $ | ||||||||||||
31
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
| Contract liabilities at March 31, 2026 | $ | |||||||
| Payment received and deferred | ||||||||
| Payment recognized in revenue | ( | |||||||
| Contract liabilities at June 30, 2026 | $ | |||||||
Costs to Obtain Contracts with Customers
Capitalized costs to obtain contracts with customers was $26.1 million and $27.2 million at June 30, 2026 and March 31, 2026, respectively, and are included within other noncurrent assets in our unaudited condensed consolidated balance sheets. During the three months ended June 30, 2026, $1.1 million of amortization expense related to these costs was recorded within operating expense in our unaudited condensed consolidated statement of operations.
Note 13—Leases
Lessee Accounting
Our leasing activity primarily includes product storage, office space, real estate, railcars, vehicles and equipment.
The following table summarizes the components of our lease cost for the periods indicated:
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Operating lease cost (1) | $ | $ | ||||||||||||||||||||||||
| Variable lease cost (1) | ||||||||||||||||||||||||||
| Short-term lease cost (1) | ||||||||||||||||||||||||||
| Finance lease cost | ||||||||||||||||||||||||||
| Amortization of right-of-use asset (2) | ||||||||||||||||||||||||||
| Interest on lease obligation (3) | ||||||||||||||||||||||||||
| Total lease cost | $ | $ | ||||||||||||||||||||||||
(1) Included in operating expenses in our unaudited condensed consolidated statements of operations.
(2) Included in depreciation and amortization expense in our unaudited condensed consolidated statements of operations.
(3) Included in interest expense in our unaudited condensed consolidated statements of operations.
The following table summarizes maturities of our lease obligations at June 30, 2026 (in thousands):
| Operating | Finance | ||||||||||
| Year Ending March 31, | Leases | Leases (1) | |||||||||
| 2027 (nine months) | $ | $ | |||||||||
| 2028 | |||||||||||
| 2029 | |||||||||||
| 2030 | |||||||||||
| 2031 | |||||||||||
| 2032 | |||||||||||
| Thereafter | |||||||||||
| Total lease payments | |||||||||||
| Less imputed interest | ( | ( | |||||||||
| Total lease obligations | $ | $ | |||||||||
(1) At June 30, 2026, the short-term finance lease obligation of $3.4 million is included in accrued expenses and other payables and the long-term finance lease obligation of $5.1 million is included in other noncurrent liabilities in our unaudited condensed consolidated balance sheet.
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NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
The following table summarizes supplemental cash flow information related to our leases for the periods indicated:
| Three Months Ended June 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| (in thousands) | ||||||||||||||
| Supplemental Cash Flow Information | ||||||||||||||
| Cash paid for amounts included in the measurement of lease obligations | ||||||||||||||
| Operating cash outflows from operating leases | $ | $ | ||||||||||||
| Operating cash outflows from finance leases | $ | $ | ||||||||||||
| Financing cash outflows from finance leases | $ | $ | ||||||||||||
| Right-of-use assets obtained in exchange for lease obligations | ||||||||||||||
| Operating leases | $ | $ | ||||||||||||
| Finance leases | $ | $ | ||||||||||||
Lessor Accounting and Subleases
Our lessor arrangements include storage, railcar, office space and surface contracts. We also, from time to time, sublease certain of our storage capacity and railcars to third-parties. Fixed rental revenue is recognized on a straight-line basis over the lease term. During the three months ended June 30, 2026 and 2025, fixed rental revenue was $3.3 million and $3.0 million, respectively, which includes $1.1 million and $0.7 million of sublease revenue, respectively.
The following table summarizes future minimum lease payments to be received under various noncancelable operating lease agreements at June 30, 2026 (in thousands):
| Year Ending March 31, | |||||
| 2027 (nine months) | $ | ||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| 2031 | |||||
| 2032 | |||||
| Thereafter | |||||
| Total | $ | ||||
Note 14—Allowance for Current Expected Credit Losses
ASU 2016-13 requires that an allowance for expected credit losses be recognized for certain financial assets that reflects the current expected credit loss over the financial asset’s contractual life. The valuation allowance considers the risk of loss, even if remote, and considers past events, current conditions and reasonable and supportable forecasts. We adopted the practical expedient under ASU 2025-05 that allows us to assume that the current conditions as of the balance sheet date do not change for the remaining life of our current accounts receivable and contract assets.
We are exposed to credit losses primarily through the sale of products and services and notes receivable from third-parties. A counterparty’s ability to pay is assessed through a credit process that considers the payment terms, the counterparty’s established credit rating or our assessment of the counterparty’s credit worthiness and other risks. We can require prepayment or collateral to mitigate credit risks.
We group our financial assets into pools of counterparties with similar risk characteristics for the purpose of determining the allowance for expected credit losses. Each reporting period, we assess whether a significant change in the risk of expected credit loss has occurred. Among the quantitative and qualitative factors considered in calculating our allowance for expected credit losses are historical financial data, including write-offs and allowances, current conditions, industry risk and current credit ratings. Financial assets will be written off in whole, or in part, when practical recovery efforts have been exhausted and no reasonable expectation of recovery exists. Subsequent recoveries of amounts previously written off are recorded as an increase to the allowance for expected credit losses. We manage receivable pools using past due balances as a key credit quality indicator.
33
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
The following table summarizes changes in our allowance for expected credit losses for the period indicated:
| Accounts Receivable | Notes Receivable and Other | |||||||||||||
| (in thousands) | ||||||||||||||
| Allowance for expected credit losses at March 31, 2026 | $ | $ | ||||||||||||
| Change in provision for expected credit losses | ( | |||||||||||||
| Write-offs charged against the provision | ( | |||||||||||||
| Allowance for expected credit losses at June 30, 2026 | $ | $ | ||||||||||||
Note 15—Discontinued Operations
As previously reported, we met the criteria for classifying the operations of our refined products business and biodiesel business as discontinued. The following table summarizes the results of operations from discontinued operations related to these businesses for the periods indicated:
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Revenues | $ | $ | ||||||||||||||||||||||||
| Cost of sales | ||||||||||||||||||||||||||
| Operating expenses (1) | ( | |||||||||||||||||||||||||
| General and administrative expenses | ||||||||||||||||||||||||||
| Gain on disposal or impairment of assets, net | ( | |||||||||||||||||||||||||
| Operating income from discontinued operations | ||||||||||||||||||||||||||
| Interest expense | ( | |||||||||||||||||||||||||
| Income from discontinued operations, net of tax | $ | $ | ||||||||||||||||||||||||
(1) Negative amount relates to the reversal of a previously recognized bad debt allowance.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following is a discussion of NGL Energy Partners LP’s (“we,” “us,” “our,” or the “Partnership”) financial condition and results of operations as of and for the three months ended June 30, 2026. The discussion should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q (“Quarterly Report”), as well as Part II, Item 7–“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026 (“Annual Report”) filed with the Securities and Exchange Commission on May 28, 2026.
Recent Developments
Discontinued Operations
As previously reported, the operations of our refined products business and biodiesel business have been classified as discontinued operations (see Note 15 to our unaudited condensed consolidated financial statements included in this Quarterly Report).
Water Disposal Agreement with Minimum Volume Commitment and Extension of Acreage Dedication
On May 7, 2026, we announced a further expansion of our Lea County Express Pipeline System to increase capacity by 165,000 barrels of water per day with a capability to transport approximately 560,000 barrels of water per day on the LEX II system. This expansion is underwritten by a newly executed long-term volume commitment contract that includes increased volume commitments, and an additional four township committed area in Eddy County, New Mexico. The LEX II expansion is expected to be in service by the end of calendar year 2026. Additionally, this expansion is expandable up to 650,000 barrels of water per day.
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Consolidated Results of Operations
How We Evaluate Our Operations
We use a variety of financial and operating metrics to analyze our performance. Our consolidated financial metrics include operating income, income from continuing operations and Adjusted EBITDA. We evaluate segment operating results using operating income, Adjusted EBITDA and our operating metrics, which include various volume and rate statistics that are relevant for the respective segment. These operating metrics allow investors to analyze the various components of segment financial results in terms of volumes and rate/price. We use these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial results. For additional information on our operating metrics, see the respective segment discussions below.
The following table summarizes our unaudited condensed consolidated statements of operations for the periods indicated:
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Revenues | $ | 989,992 | $ | 622,156 | ||||||||||||||||||||||
| Cost of sales | 684,409 | 382,812 | ||||||||||||||||||||||||
| Operating expenses | 78,885 | 70,768 | ||||||||||||||||||||||||
| General and administrative expenses | 17,568 | 13,740 | ||||||||||||||||||||||||
| Depreciation and amortization | 61,895 | 66,585 | ||||||||||||||||||||||||
| Loss (gain) on disposal or impairment of assets, net | 1,916 | (9,199) | ||||||||||||||||||||||||
| Operating income | 145,319 | 97,450 | ||||||||||||||||||||||||
| Equity in earnings of unconsolidated entities | — | 201 | ||||||||||||||||||||||||
| Interest expense | (67,068) | (65,545) | ||||||||||||||||||||||||
| Gain on early extinguishment of liabilities, net | — | 1,492 | ||||||||||||||||||||||||
| Other income (expense), net | 1,496 | (3,515) | ||||||||||||||||||||||||
| Income from continuing operations before income taxes | 79,747 | 30,083 | ||||||||||||||||||||||||
| Income tax benefit | 299 | 182 | ||||||||||||||||||||||||
| Income from continuing operations | 80,046 | 30,265 | ||||||||||||||||||||||||
| Income from discontinued operations, net of tax | 35 | 39,379 | ||||||||||||||||||||||||
| Net income | 80,081 | 69,644 | ||||||||||||||||||||||||
| Less: Net income from continuing operations attributable to nonredeemable noncontrolling interests | (1,377) | (705) | ||||||||||||||||||||||||
| Less: Net loss (income) from continuing operations attributable to redeemable noncontrolling interests | 28 | (17) | ||||||||||||||||||||||||
| Net income attributable to NGL Energy Partners LP | $ | 78,732 | $ | 68,922 | ||||||||||||||||||||||
| Adjusted EBITDA - Continuing Operations (1) | $ | 186,218 | $ | 143,972 | ||||||||||||||||||||||
(1) See Adjusted EBITDA definition and reconciliation in “Non-GAAP Financial Measures” section below.
Changes in commodity prices and sales volumes affect both revenues and cost of sales in our unaudited condensed consolidated statements of operations and, therefore, the impact is largely offset between these line items.
Operating income increased $47.9 million for the three months ended June 30, 2026, compared with the same period in 2025, primarily as a result of the following:
•Water Solutions – an increase of $53.6 million due primarily to higher water disposal revenues from an increase in produced water volumes processed, higher revenues from recovered crude oil and higher pipeline revenues;
•Crude Oil Logistics – an increase of $5.2 million due primarily to increased gains on derivatives and lower losses on the disposal of assets, partially offset by lower product margins;
•Liquids Logistics – a decrease of $7.4 million due primarily to lower expenses in the prior year period, which included a gain on the sale of assets, partially offset by higher butane margins, service revenue, and derivative gains; and
•Corporate and Other – an increase in operating losses of $3.5 million due primarily to equity-based compensation expense.
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In addition to the items discussed above, other income was higher primarily due to realized gains on marketable securities, partially offset by higher interest expense (as discussed below).
Segment Operating Results for the Three Months Ended June 30, 2026 and 2025
Water Solutions
The following table summarizes the operating results of our Water Solutions segment for the periods indicated:
| Three Months Ended June 30, | ||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||
| (in thousands, except per barrel and per day amounts) | ||||||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Water disposal service fees (1) | $ | 182,079 | $ | 162,075 | $ | 20,004 | ||||||||||||||
| Sale of recovered crude oil | 51,866 | 24,808 | 27,058 | |||||||||||||||||
| Recycled water (2) | 1,718 | 1,419 | 299 | |||||||||||||||||
| Other revenues (1)(2) | 18,693 | 12,978 | 5,715 | |||||||||||||||||
| Total revenues | 254,356 | 201,280 | 53,076 | |||||||||||||||||
| Expenses: | ||||||||||||||||||||
| Cost of sales-excluding impact of derivatives | 3,541 | 1,657 | 1,884 | |||||||||||||||||
| Cost of sales-derivative gain-unrealized | (19,036) | (3,514) | (15,522) | |||||||||||||||||
| Cost of sales-derivative loss-realized | 11,603 | — | 11,603 | |||||||||||||||||
| Operating expenses | 63,370 | 55,333 | 8,037 | |||||||||||||||||
| General and administrative expenses | 1,175 | 1,245 | (70) | |||||||||||||||||
| Depreciation and amortization expense | 53,317 | 58,076 | (4,759) | |||||||||||||||||
| Loss on disposal or impairment of assets, net | 1,818 | 3,536 | (1,718) | |||||||||||||||||
| Total expenses | 115,788 | 116,333 | (545) | |||||||||||||||||
| Segment operating income | $ | 138,568 | $ | 84,947 | $ | 53,621 | ||||||||||||||
| Adjusted EBITDA - Continuing Operations (3) | $ | 179,856 | $ | 142,869 | $ | 36,987 | ||||||||||||||
| Produced water processed (barrels per day) | ||||||||||||||||||||
| Delaware Basin | 2,962,381 | 2,411,622 | 550,759 | |||||||||||||||||
| Eagle Ford Basin | 176,712 | 200,773 | (24,061) | |||||||||||||||||
| DJ Basin | 175,962 | 159,219 | 16,743 | |||||||||||||||||
| Total | 3,315,055 | 2,771,614 | 543,441 | |||||||||||||||||
| Recycled water (barrels per day) | 145,817 | 239,845 | (94,028) | |||||||||||||||||
| Total (barrels per day) | 3,460,872 | 3,011,459 | 449,413 | |||||||||||||||||
| Skim oil sold (barrels per day) | 6,177 | 4,603 | 1,574 | |||||||||||||||||
| Service fees for produced water processed ($/barrel) (4)(5) | $ | 0.60 | $ | 0.64 | $ | (0.04) | ||||||||||||||
| Recovered crude oil for produced water processed ($/barrel) (4) | $ | 0.17 | $ | 0.10 | $ | 0.07 | ||||||||||||||
| Operating expenses for produced water processed ($/barrel) (4) | $ | 0.21 | $ | 0.22 | $ | (0.01) | ||||||||||||||
(1) Water disposal service fees and Other revenues in the table above differ from the amounts reported in Note 10 to our unaudited condensed consolidated financial statements included in this Quarterly Report, as the amounts in Note 10 are disaggregated by the performance obligations with type of contract and service provided and the timing of the transfer of goods and services, while the amount above is presented based on how management reviews performance. In the table above, revenues from reimbursements from construction projects, booster operating fees and generator rentals and pipeline revenue are included in Other revenues, while in Note 10 the amounts are included in Water disposal service fees.
(2) Brackish non-potable water, which was previously included in Other revenues, was reclassified and is now included in Recycled water.
(3) See Adjusted EBITDA definition and reconciliation in “Non-GAAP Financial Measures” section below.
(4) Total produced water barrels processed during the three months ended June 30, 2026 and 2025 were 301,669,982 and 252,216,853, respectively. These amounts do not include 6,457,258 barrels and 16,367,740 barrels for the three months ended June 30, 2026 and 2025, respectively, related to payments made by certain producers for committed volumes not delivered. In addition, water pipeline revenue, which is included in Other revenues, includes payments from a producer for 3,597,195 and 9,446,030 committed barrels not delivered during the three months ended June 30, 2026 and 2025, respectively.
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(5) Excluding payments made by certain producers for committed volumes not delivered, service fees for produced water processed ($/barrel) would have been $0.58/barrel and $0.61/barrel during the three months ended June 30, 2026 and 2025, respectively.
Water Disposal Service Fee Revenues. The increase was due primarily to an increase in produced water volumes processed from contracted customers.
Recovered Crude Oil Revenues. The increase was due primarily to higher realized crude oil prices received from the sale of skim oil barrels and an increase in skim oil barrels sold due to more skim oil recovered from receiving more produced water.
Recycled Water Revenues. Revenue from recycled water primarily includes the sale of produced water and recycled water for use in our customers’ completion activities. The increase was due primarily to higher pricing for recycled water. partially offset by lower recycled water volumes related to timing of water to be used in completions.
Other Revenues. Other revenues primarily include reimbursements from construction projects, booster operating fees and generator rentals, water pipeline revenues and solids disposal revenues. The increase was due primarily to higher water pipeline revenue primarily from a new contract that began in February 2026 as well as higher reimbursements from construction projects and booster operating fees.
Cost of Sales-Excluding Impact of Derivatives. The increase was due primarily to amortization of an intangible asset and higher recycling costs, partially offset by lower costs incurred that will be reimbursed by producers for generator and fuel costs at various booster stations.
Operating and General and Administrative Expenses. The increase was due primarily to higher royalty expense from increased volumes related to certain saltwater disposal wells, higher utilities expense due to increased produced water volumes processed and higher severance taxes due to the increase in revenue from recovered crude oil.
Depreciation and Amortization Expense. The decrease was due primarily to certain long-term assets being fully amortized, impaired or sold during the fiscal year ended March 31, 2026 and three months ended June 30, 2026, partially offset by depreciation of newly developed facilities and infrastructure.
Loss on Disposal or Impairment of Assets, Net. During the three months ended June 30, 2026, we recorded:
•a net loss of $1.9 million primarily related to writing down the net book value of certain saltwater disposal wells and capital projects due to abandonment and the retirement of certain other assets; and
•a net gain of $0.1 million primarily related to the sale of certain assets.
During the three months ended June 30, 2025, we recorded:
•a net loss of $3.1 million primarily related to writing down the net book value of certain saltwater disposal wells and capital projects due to abandonment and the retirement of certain other assets;
•a net loss of $1.2 million primarily related to the sale of certain assets; and
•a gain of $0.7 million from insurance recoveries for certain saltwater disposal facilities and boosters damaged in a prior period.
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Crude Oil Logistics
The following table summarizes the operating results of our Crude Oil Logistics segment for the periods indicated:
| Three Months Ended June 30, | ||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||
| (in thousands, except per barrel amounts) | ||||||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Crude oil sales | $ | 430,714 | $ | 158,528 | $ | 272,186 | ||||||||||||||
| Crude oil transportation and other sales | 8,746 | 9,103 | (357) | |||||||||||||||||
| Total revenues | 439,460 | 167,631 | 271,829 | |||||||||||||||||
| Expenses: | ||||||||||||||||||||
| Cost of sales-excluding impact of derivatives | 424,254 | 148,410 | 275,844 | |||||||||||||||||
| Cost of sales-derivative gain-unrealized | (12,605) | (1,131) | (11,474) | |||||||||||||||||
| Cost of sales-derivative loss (gain)-realized | 5,827 | (161) | 5,988 | |||||||||||||||||
| Operating expenses | 9,145 | 9,208 | (63) | |||||||||||||||||
| General and administrative expenses | 664 | 647 | 17 | |||||||||||||||||
| Depreciation and amortization expense | 6,200 | 6,065 | 135 | |||||||||||||||||
| Loss on disposal or impairment of assets, net | 117 | 3,921 | (3,804) | |||||||||||||||||
| Total expenses | 433,602 | 166,959 | 266,643 | |||||||||||||||||
| Segment operating income | $ | 5,858 | $ | 672 | $ | 5,186 | ||||||||||||||
| Adjusted EBITDA - Continuing Operations (1) | $ | 8,641 | $ | 9,583 | $ | (942) | ||||||||||||||
| Crude oil sold (barrels) | 4,359 | 2,424 | 1,935 | |||||||||||||||||
| Crude oil transported on owned pipelines (barrels) | 6,705 | 4,990 | 1,715 | |||||||||||||||||
| Crude oil storage capacity - owned and leased (barrels) (2) | 5,232 | 5,232 | — | |||||||||||||||||
| Crude oil storage capacity leased to third-parties (barrels) (2) | 1,650 | 1,650 | — | |||||||||||||||||
| Crude oil inventory (barrels) (2) | 334 | 391 | (57) | |||||||||||||||||
| Crude oil sold ($/barrel) | $ | 98.810 | $ | 65.399 | $ | 33.411 | ||||||||||||||
| Cost per crude oil sold ($/barrel) (3) | $ | 97.328 | $ | 61.225 | $ | 36.103 | ||||||||||||||
| Crude oil product margin ($/barrel) (3) | $ | 1.482 | $ | 4.174 | $ | (2.692) | ||||||||||||||
(1) See Adjusted EBITDA definition and reconciliation in “Non-GAAP Financial Measures” section below.
(2) Information is presented as of June 30, 2026 and June 30, 2025, respectively.
(3) Cost and product margin per barrel excludes the impact of derivatives.
Crude Oil Sales and Cost of Sales-Excluding Impact of Derivatives. The increases in sales and cost of sales, excluding the impact of derivatives, were primarily due to higher commodity prices during the three months ended June 30, 2026 and higher production on acreage dedicated to us in the DJ Basin during the three months ended June 30, 2026, compared to the three months ended June 30, 2025.
During the three months ended June 30, 2026, the crude oil product margin and margin per barrel decreased compared to the three months ended June 30, 2025 due to selling higher priced inventory into a declining market and due to the expiration of a crude oil purchase agreement with a certain producer during the three months ended March 31, 2026. Crude oil product margin calculations do not include gains and losses from derivatives that may offset the movement in the physical margin.
Crude Oil Transportation and Other Sales. The decrease was primarily due to lower pipeline revenue resulting from the expiration of certain transportation services contracts on third-party pipelines and lower rental revenue due to the sale of our railcars.
During the three months ended June 30, 2026, physical volumes on the Grand Mesa Pipeline averaged approximately 74,000 barrels per day, compared to approximately 55,000 barrels per day during the three months ended June 30, 2025. Higher contracted volumes were shipped on the Grand Mesa Pipeline due to higher production on acreage dedicated to us in the DJ Basin.
Operating and General and Administrative Expenses. Operating and general and administrative expenses during the three months ended June 30, 2026 were consistent with the three months ended June 30, 2025.
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Depreciation and Amortization Expense. The increase during the three months ended June 30, 2026 was primarily due to depreciation of recently completed capital projects.
Loss on Disposal or Impairment of Assets, Net. During the three months ended June 30, 2026, we recorded a net loss of $0.1 million primarily due to disposal or retirement of certain assets. During the three months ended June 30, 2025, we recorded a net loss of $3.9 million on the sale of assets. This amount is comprised of a loss from the sale of linefill held on third-party pipelines of $5.6 million, which includes a loss from derivatives of $1.7 million from hedging transactions relating to the sale of linefill barrels. The losses from the sale of linefill barrels are partially offset by a net gain of $1.7 million on the sale of railcars that were sold during the three months ended June 30, 2025.
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Liquids Logistics
The following table summarizes the operating results of our Liquids Logistics segment for the periods indicated. As discussed above, the operating results of our refined products and biodiesel businesses have been classified as discontinued operations and prior periods have been retrospectively adjusted.
| Three Months Ended June 30, | ||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||
| (in thousands, except per gallon amounts) | ||||||||||||||||||||
| Butane: | ||||||||||||||||||||
| Sales | $ | 144,431 | $ | 99,745 | $ | 44,686 | ||||||||||||||
| Cost of sales-excluding impact of derivatives | 135,580 | 94,310 | 41,270 | |||||||||||||||||
| Cost of sales-derivative gain-unrealized | (8,686) | (1,486) | (7,200) | |||||||||||||||||
| Cost of sales-derivative loss (gain)-realized | 2,549 | (901) | 3,450 | |||||||||||||||||
| Product margin | 14,988 | 7,822 | 7,166 | |||||||||||||||||
| Propane: | ||||||||||||||||||||
| Sales | 39,744 | 61,693 | (21,949) | |||||||||||||||||
| Cost of sales-excluding impact of derivatives | 38,052 | 61,368 | (23,316) | |||||||||||||||||
| Cost of sales-derivative gain-unrealized | (384) | (1,369) | 985 | |||||||||||||||||
| Cost of sales-derivative gain-realized | (795) | (818) | 23 | |||||||||||||||||
| Product margin | 2,871 | 2,512 | 359 | |||||||||||||||||
| Other products: | ||||||||||||||||||||
| Sales | 105,827 | 90,230 | 15,597 | |||||||||||||||||
| Cost of sales-excluding impact of derivatives | 102,696 | 86,151 | 16,545 | |||||||||||||||||
| Cost of sales-derivative loss (gain)-unrealized | 1,351 | (23) | 1,374 | |||||||||||||||||
| Cost of sales-derivative loss (gain)-realized | 221 | (12) | 233 | |||||||||||||||||
| Product margin | 1,559 | 4,114 | (2,555) | |||||||||||||||||
| Service: | ||||||||||||||||||||
| Sales | 6,014 | 1,417 | 4,597 | |||||||||||||||||
| Cost of sales | 241 | 335 | (94) | |||||||||||||||||
| Product margin | 5,773 | 1,082 | 4,691 | |||||||||||||||||
| Expenses: | ||||||||||||||||||||
| Operating expenses | 6,370 | 6,227 | 143 | |||||||||||||||||
| General and administrative expenses | 812 | 659 | 153 | |||||||||||||||||
| Depreciation and amortization expense | 1,710 | 1,567 | 143 | |||||||||||||||||
| Gain on disposal or impairment of assets, net | (11) | (16,655) | 16,644 | |||||||||||||||||
| Total expenses | 8,881 | (8,202) | 17,083 | |||||||||||||||||
| Segment operating income | $ | 16,310 | $ | 23,732 | $ | (7,422) | ||||||||||||||
| Adjusted EBITDA - Continuing Operations (1) | $ | 10,285 | $ | 2,871 | $ | 7,414 | ||||||||||||||
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| Three Months Ended June 30, | ||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||
| (in thousands, except per gallon amounts) | ||||||||||||||||||||
| Natural gas liquids storage capacity - owned and leased (gallons) (2) | 46,841 | 52,721 | (5,880) | |||||||||||||||||
| Butane sold (gallons) | 119,846 | 96,938 | 22,908 | |||||||||||||||||
| Butane sold ($/gallon) | $ | 1.205 | $ | 1.029 | $ | 0.176 | ||||||||||||||
| Cost per butane sold ($/gallon) (3) | $ | 1.131 | $ | 0.973 | $ | 0.158 | ||||||||||||||
| Butane product margin ($/gallon) (3) | $ | 0.074 | $ | 0.056 | $ | 0.018 | ||||||||||||||
| Butane inventory (gallons) (2) | 24,295 | 40,177 | (15,882) | |||||||||||||||||
| Propane sold (gallons) | 41,082 | 66,775 | (25,693) | |||||||||||||||||
| Propane sold ($/gallon) | $ | 0.967 | $ | 0.924 | $ | 0.043 | ||||||||||||||
| Cost per propane sold ($/gallon) (3) | $ | 0.926 | $ | 0.919 | $ | 0.007 | ||||||||||||||
| Propane product margin ($/gallon) (3) | $ | 0.041 | $ | 0.005 | $ | 0.036 | ||||||||||||||
| Propane inventory (gallons) (2) | 13,052 | 13,283 | (231) | |||||||||||||||||
| Other products sold (gallons) | 61,175 | 71,616 | (10,441) | |||||||||||||||||
| Other products sold ($/gallon) | $ | 1.730 | $ | 1.260 | $ | 0.470 | ||||||||||||||
| Cost per other products sold ($/gallon) (3) | $ | 1.679 | $ | 1.203 | $ | 0.476 | ||||||||||||||
| Other products product margin ($/gallon) (3) | $ | 0.051 | $ | 0.057 | $ | (0.006) | ||||||||||||||
| Other products inventory (gallons) (2) | 4,526 | 6,017 | (1,491) | |||||||||||||||||
(1) See Adjusted EBITDA definition and reconciliation in “Non-GAAP Financial Measures” section below.
(2) Information is presented as of June 30, 2026 and June 30, 2025, respectively.
(3) Cost and product margin per gallon excludes the impact of derivatives.
Butane Sales and Cost of Sales-Excluding Impact of Derivatives. The increase in sales and cost of sales, excluding the impact of derivatives, during the three months ended June 30, 2026, compared to the three months ended June 30, 2025 were due primarily to higher butane prices and volumes during the three months ended June 30, 2026, compared to the three months ended June 30, 2025.
Butane product margins, excluding the impact of derivatives, increased during the three months ended June 30, 2026, compared to the three months ended June 30, 2025 due to strong export markets and gasoline blending.
Propane Sales and Cost of Sales-Excluding Impact of Derivatives. The decreases in sales and cost of sales, excluding the impact of derivatives, were due primarily to the sale of most of our wholesale propane business and 17 of our natural gas liquids terminals (“Wholesale Propane Disposition”) to a third-party in the prior year period.
Propane product margins, excluding the impact of derivatives, increased during the three months ended June 30, 2026, compared to the three months ended June 30, 2025 primarily due to the Wholesale Propane Disposition.
Other Products Sales and Cost of Sales-Excluding Impact of Derivatives. The increases in sales and cost of sales, excluding the impact of derivatives, were primarily due to increased commodity prices during the three months ended June 30, 2026, compared to the three months ended June 30, 2025.
Other products sales product margins, excluding the impact of derivatives, decreased during the three months ended June 30, 2026, compared to the three months ended June 30, 2025 primarily due to lower asphalt volumes due to tighter supply.
Service Sales and Cost of Sales. The sales include storage, terminaling and transportation services income. Sales during the three months ended June 30, 2026 increased due to a new terminaling contract. Cost of sales was consistent with the three months ended June 30, 2025.
Operating and General and Administrative Expenses. The increase during the three months ended June 30, 2026 compared to the three months ended June 30, 2025, was primarily due to adjustments to ad valorem taxes in the prior year due to the Wholesale Propane Disposition and foreign currency losses, partially offset by expense reductions due to the Wholesale Propane Disposition.
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Depreciation and Amortization Expense. The increase during the three months ended June 30, 2026 was primarily due to depreciation of recently completed capital projects.
Gain on Disposal or Impairment of Assets, Net. During the three months ended June 30, 2026, we recorded a net gain of less than $0.1 million due to the sale of certain assets. During the three months ended June 30, 2025, we recorded a net gain of $18.2 million due to the Wholesale Propane Disposition. We also recorded a net loss of $1.6 million related to the impairment of certain right-of-use assets.
Corporate and Other
The operating loss within “Corporate and Other” includes the following components for the periods indicated:
| Three Months Ended June 30, | ||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Service revenues | $ | 160 | $ | 164 | $ | (4) | ||||||||||||||
| Expenses: | ||||||||||||||||||||
| General and administrative expenses | 14,917 | 11,189 | 3,728 | |||||||||||||||||
| Depreciation and amortization expense | 668 | 877 | (209) | |||||||||||||||||
| Gain on disposal or impairment of assets, net | (8) | (1) | (7) | |||||||||||||||||
| Total expenses | 15,577 | 12,065 | 3,512 | |||||||||||||||||
| Operating loss | $ | (15,417) | $ | (11,901) | $ | (3,516) | ||||||||||||||
| Adjusted EBITDA - Continuing Operations (1) | $ | (12,564) | $ | (11,351) | $ | (1,213) | ||||||||||||||
(1) See Adjusted EBITDA definition and reconciliation in “Non-GAAP Financial Measures” section below.
Service Revenues. These revenues relate to billings to the noncontrolling interest holders for usage of the airplanes acquired in June and October 2024.
General and Administrative Expenses. The increase during the three months ended June 30, 2026 was due primarily to equity-based compensation expense related to grants made under the 2025 Long-Term Incentive Plan and a reduction in the allocation of insurance premiums to the other business segments.
Depreciation and Amortization Expense. The decrease during the three months ended June 30, 2026 was due to information technology equipment and software that became fully depreciated during the year ended March 31, 2026.
Interest Expense
The following table summarizes the components of our consolidated interest expense for the periods indicated:
| Three Months Ended June 30, | ||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Senior secured notes | $ | 45,102 | $ | 45,261 | $ | (159) | ||||||||||||||
| 2026 senior secured term loan “B” credit facility (“2026 Term Loan B”) | 17,153 | — | 17,153 | |||||||||||||||||
| Asset-based revolving credit facility (“ABL Facility”) | 3,153 | 1,886 | 1,267 | |||||||||||||||||
| 2024 senior secured term loan “B” credit facility (“2024 Term Loan B”) | — | 14,144 | (14,144) | |||||||||||||||||
| Other indebtedness | 15 | 510 | (495) | |||||||||||||||||
| Total debt interest expense | 65,423 | 61,801 | 3,622 | |||||||||||||||||
| Amortization of debt issuance costs | 3,161 | 3,120 | 41 | |||||||||||||||||
| Unrealized (gain) loss on interest rate swaps | (1,620) | 868 | (2,488) | |||||||||||||||||
| Realized loss (gain) on interest rate swaps | 104 | (244) | 348 | |||||||||||||||||
| Total interest expense | $ | 67,068 | $ | 65,545 | $ | 1,523 | ||||||||||||||
The debt interest expense increased $3.6 million during the three months ended June 30, 2026 primarily due to a higher weighted average loan balance for the 2026 Term Loan B compared to the 2024 Term Loan B in the three months ended
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June 30, 2025. In addition, the ABL Facility had a higher average daily outstanding balance during the three months ended June 30, 2026 as compared to the prior year period.
Non-GAAP Financial Measures
In addition to financial results reported in accordance with accounting principles generally accepted in the United States (“GAAP”), we have provided the non-GAAP financial measures of EBITDA and Adjusted EBITDA. These non-GAAP financial measures are not intended to be a substitute for those reported in accordance with GAAP. These measures may be different from non-GAAP financial measures used by other entities, even when similar terms are used to identify such measures.
We define EBITDA as net income (loss) attributable to NGL Energy Partners LP, plus interest expense, income tax expense (benefit), and depreciation and amortization expense. We define Adjusted EBITDA as EBITDA excluding net unrealized gains and losses on derivatives, lower of cost or net realizable value adjustments, gains and losses on disposal or impairment of assets, gains and losses on early extinguishment of liabilities, equity-based compensation expense, revaluation of liabilities and other. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income, income from continuing operations before income taxes, cash flows from operating activities, or any other measure of financial performance calculated in accordance with GAAP, as those items are used to measure operating performance, liquidity or the ability to service debt obligations. We believe that EBITDA provides additional information to investors for evaluating our ability to make quarterly distributions to our unitholders and is presented solely as a supplemental measure. We believe that Adjusted EBITDA provides additional information to investors for evaluating our financial performance without regard to our financing methods, capital structure and historical cost basis. Further, EBITDA and Adjusted EBITDA, as we define them, may not be comparable to EBITDA, Adjusted EBITDA, or similarly titled measures used by other entities.
For purposes of our Adjusted EBITDA calculation, we make a distinction between realized and unrealized gains and losses on derivatives. During the period when a derivative contract is open, we record changes in the fair value of the derivative as an unrealized gain or loss. When a derivative contract matures or is settled, we reverse the previously recorded unrealized gain or loss and record a realized gain or loss.
The following table reconciles net income to EBITDA and Adjusted EBITDA for the periods indicated:
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Net income | $ | 80,081 | $ | 69,644 | ||||||||||||||||||||||
| Less: Net income from continuing operations attributable to nonredeemable noncontrolling interests | (1,377) | (705) | ||||||||||||||||||||||||
| Less: Net loss (income) from continuing operations attributable to redeemable noncontrolling interests | 28 | (17) | ||||||||||||||||||||||||
| Net income attributable to NGL Energy Partners LP | 78,732 | 68,922 | ||||||||||||||||||||||||
| Interest expense | 67,049 | 65,525 | ||||||||||||||||||||||||
| Income tax benefit | (299) | (182) | ||||||||||||||||||||||||
| Depreciation and amortization | 62,925 | 65,826 | ||||||||||||||||||||||||
| EBITDA | 208,407 | 200,091 | ||||||||||||||||||||||||
| Net unrealized gains on derivatives (1) | (39,360) | (7,540) | ||||||||||||||||||||||||
| Lower of cost or net realizable value adjustments (2) | 6,288 | (2,944) | ||||||||||||||||||||||||
| Loss (gain) on disposal or impairment of assets, net (3) | 1,907 | (47,579) | ||||||||||||||||||||||||
| Gain on early extinguishment of liabilities, net | — | (1,492) | ||||||||||||||||||||||||
| Equity-based compensation expense | 1,991 | — | ||||||||||||||||||||||||
| Other (4) | 7,020 | 4,431 | ||||||||||||||||||||||||
| Adjusted EBITDA | $ | 186,253 | $ | 144,967 | ||||||||||||||||||||||
| Adjusted EBITDA - Discontinued Operations (5) | $ | 35 | $ | 995 | ||||||||||||||||||||||
| Adjusted EBITDA - Continuing Operations | $ | 186,218 | $ | 143,972 | ||||||||||||||||||||||
(1) Due to the continued conflict between the United States and Iran, crude oil prices fluctuated significantly during the three months ended June 30, 2026. To better match the movement of inventory and derivative losses with the physical gains recognized by our Crude Oil Logistics segment in June 2026 and July 2026 and to align with how management evaluated these transactions, approximately $5.8 million of gains from settled contracts are included within this amount.
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(2) Lower of cost or net realizable value adjustments in the table above differ from lower of cost or net realizable value adjustments reported in our unaudited condensed consolidated statements of cash flows, as the amounts reported in the table above represent the change in lower of cost or net realizable value adjustments recorded in our unaudited condensed consolidated statements of operations, which includes reversals, whereas the amounts reported in our unaudited condensed consolidated statements of cash flows represent the lower of cost or net realizable value adjustments recorded at the balance sheet date.
(3) Excludes amounts related to unconsolidated entities and noncontrolling interests.
(4) Amounts represent accretion expense for asset retirement obligations, expenses incurred related to legal and advisory costs associated with acquisitions and dispositions, unrealized gains and losses on investments and marketable securities and a loss from a legal dispute. In addition, the amount for the three months ended June 30, 2026 includes approximately $2.6 million of realized losses from derivatives associated with crude oil barrels reclassified as linefill as of March 31, 2026.
(5) Amounts include our refined products and biodiesel businesses.
The following tables reconcile depreciation and amortization amounts per the EBITDA table above to depreciation and amortization amounts in our unaudited condensed consolidated statements of operations and unaudited condensed consolidated statements of cash flows for the periods indicated:
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Depreciation and amortization per EBITDA table | $ | 62,925 | $ | 65,826 | ||||||||||||||||||||||
| Intangible asset amortization recorded to cost of sales-service | (1,602) | — | ||||||||||||||||||||||||
| Depreciation and amortization attributable to noncontrolling interests | 572 | 783 | ||||||||||||||||||||||||
| Depreciation and amortization attributable to unconsolidated entities | — | (24) | ||||||||||||||||||||||||
| Depreciation and amortization per unaudited condensed consolidated statements of operations | $ | 61,895 | $ | 66,585 | ||||||||||||||||||||||
| Depreciation and amortization per EBITDA table | $ | 62,925 | $ | 65,826 | ||||||||||||||||||||||
| Amortization of debt issuance costs recorded to interest expense | 3,161 | 3,120 | ||||||||||||||||||||||||
| Amortization of royalty expense recorded to operating expense | 62 | 62 | ||||||||||||||||||||||||
| Depreciation and amortization attributable to noncontrolling interests | 572 | 783 | ||||||||||||||||||||||||
| Depreciation and amortization attributable to unconsolidated entities | — | (24) | ||||||||||||||||||||||||
| Depreciation and amortization per unaudited condensed consolidated statements of cash flows | $ | 66,720 | $ | 69,767 | ||||||||||||||||||||||
The following table summarizes additional amounts attributable to discontinued operations in the EBITDA and Adjusted EBITDA table above for the period indicated:
| Three Months Ended June 30, 2025 | ||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Net unrealized gains on derivatives | $ | (15) | ||||||||||||||||||||||||
| Gain on disposal or impairment of assets, net | $ | (38,373) | ||||||||||||||||||||||||
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The following tables reconcile operating income (loss) to Adjusted EBITDA by segment for the periods indicated:
| Three Months Ended June 30, 2026 | |||||||||||||||||||||||||||||||||||||||||
| Water Solutions | Crude Oil Logistics | Liquids Logistics | Corporate and Other | Continuing Operations | Discontinued Operations | Consolidated | |||||||||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||||||||||||||
| Operating income (loss) | $ | 138,568 | $ | 5,858 | $ | 16,310 | $ | (15,417) | $ | 145,319 | $ | — | $ | 145,319 | |||||||||||||||||||||||||||
| Depreciation and amortization | 53,317 | 6,200 | 1,710 | 668 | 61,895 | — | 61,895 | ||||||||||||||||||||||||||||||||||
| Amortization in cost of sales-service | 1,602 | — | — | — | 1,602 | — | 1,602 | ||||||||||||||||||||||||||||||||||
| Net unrealized gains on derivatives | (19,036) | (12,605) | (7,719) | — | (39,360) | — | (39,360) | ||||||||||||||||||||||||||||||||||
| Lower of cost or net realizable value adjustments | — | 6,341 | (53) | — | 6,288 | — | 6,288 | ||||||||||||||||||||||||||||||||||
| Loss (gain) on disposal or impairment of assets, net | 1,818 | 117 | (11) | (8) | 1,916 | — | 1,916 | ||||||||||||||||||||||||||||||||||
| Equity-based compensation expense | — | — | — | 1,991 | 1,991 | — | 1,991 | ||||||||||||||||||||||||||||||||||
| Other income (expense), net | 1,420 | (388) | 341 | 123 | 1,496 | — | 1,496 | ||||||||||||||||||||||||||||||||||
| Adjusted EBITDA attributable to noncontrolling interests | (1,946) | — | — | (21) | (1,967) | — | (1,967) | ||||||||||||||||||||||||||||||||||
| Other | 4,113 | 3,118 | (293) | 100 | 7,038 | — | 7,038 | ||||||||||||||||||||||||||||||||||
| Discontinued operations | — | — | — | — | — | 35 | 35 | ||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 179,856 | $ | 8,641 | $ | 10,285 | $ | (12,564) | $ | 186,218 | $ | 35 | $ | 186,253 | |||||||||||||||||||||||||||
| Three Months Ended June 30, 2025 | |||||||||||||||||||||||||||||||||||||||||
| Water Solutions | Crude Oil Logistics | Liquids Logistics | Corporate and Other | Continuing Operations | Discontinued Operations | Consolidated | |||||||||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||||||||||||||
| Operating income (loss) | $ | 84,947 | $ | 672 | $ | 23,732 | $ | (11,901) | $ | 97,450 | $ | — | $ | 97,450 | |||||||||||||||||||||||||||
| Depreciation and amortization | 58,076 | 6,065 | 1,567 | 877 | 66,585 | — | 66,585 | ||||||||||||||||||||||||||||||||||
| Net unrealized gains on derivatives | (3,514) | (1,132) | (2,879) | — | (7,525) | — | (7,525) | ||||||||||||||||||||||||||||||||||
| Lower of cost or net realizable value adjustments | — | — | (2,944) | — | (2,944) | — | (2,944) | ||||||||||||||||||||||||||||||||||
| Loss (gain) on disposal or impairment of assets, net | 3,536 | 3,921 | (16,655) | (1) | (9,199) | — | (9,199) | ||||||||||||||||||||||||||||||||||
| Other (expense) income, net | (133) | 1 | (328) | (3,055) | (3,515) | — | (3,515) | ||||||||||||||||||||||||||||||||||
| Adjusted EBITDA attributable to unconsolidated entities | 221 | — | 4 | — | 225 | — | 225 | ||||||||||||||||||||||||||||||||||
| Adjusted EBITDA attributable to noncontrolling interests | (1,485) | — | — | (68) | (1,553) | — | (1,553) | ||||||||||||||||||||||||||||||||||
| Other | 1,221 | 56 | 374 | 2,797 | 4,448 | — | 4,448 | ||||||||||||||||||||||||||||||||||
| Discontinued operations | — | — | — | — | — | 995 | 995 | ||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 142,869 | $ | 9,583 | $ | 2,871 | $ | (11,351) | $ | 143,972 | $ | 995 | $ | 144,967 | |||||||||||||||||||||||||||
Liquidity, Sources of Capital and Capital Resource Activities
General
Our principal sources of liquidity and capital resource requirements are cash flows from our operations, borrowings under the ABL Facility, issuing long-term notes, common and/or preferred units, loans from financial institutions, asset securitizations or asset sales. We expect our primary cash outflows to be related to capital expenditures, interest, repayment of debt maturities and distributions.
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We believe that our anticipated cash flows from operations and the borrowing capacity under the ABL Facility will be sufficient to meet our liquidity needs. Our borrowing needs vary during the year due in part to the seasonal nature of certain businesses within our Liquids Logistics segment. Our greatest working capital borrowing needs generally occur during the period of June through December, when we are building our natural gas liquids inventories in anticipation of the butane blending and propane heating seasons. Our working capital borrowing needs generally decline during the period of January through March, when the cash inflows from our Liquids Logistics segment are the greatest. In addition, our working capital borrowing needs vary with changes in commodity prices. A significant increase in commodity prices could drive up our working capital demands and limit our ability to continue to delever our balance sheet and restrict our financial flexibility. To protect our liquidity and leverage, we have in the past and may in the future enter into economic hedges that mitigate this exposure when we are building inventory.
Cash Management
We manage cash by utilizing a centralized cash management program that concentrates the cash assets of our operating subsidiaries in joint accounts for the purposes of providing financial flexibility and lowering the cost of borrowing, transaction costs and bank fees. Our centralized cash management program provides that funds in excess of the daily needs of our operating subsidiaries are concentrated, consolidated or otherwise made available for use within our consolidated group. All of our wholly-owned operating subsidiaries participate in this program. Under the cash management program, depending on whether a participating subsidiary has short-term cash surpluses or cash requirements, we provide cash to the subsidiary or the subsidiary provides cash to us.
Short-Term Liquidity
Our principal sources of short-term liquidity consist of cash flows from our operations and borrowings under the ABL Facility, which we believe will provide liquidity to operate our business, manage our working capital requirements and repay current maturities.
Total commitments under the ABL Facility are $425.0 million, subject to a borrowing base, and includes a sub-limit for letters of credit of $100.0 million. At June 30, 2026, $177.0 million was outstanding under the ABL Facility, letters of credit outstanding were $49.5 million and we had a borrowing base of $417.3 million. The ABL Facility is scheduled to mature at the earliest of (a) February 2, 2029 or (b) 91 days prior to the earliest maturity date in respect to any of our indebtedness in an aggregate principal amount of $50.0 million or greater, subject to certain exceptions.
For additional information related to the ABL Facility, see Note 6 to our unaudited condensed consolidated financial statements included in this Quarterly Report.
As of June 30, 2026, our current assets exceeded our current liabilities by approximately $92.9 million.
Long-Term Financing
We expect to fund our long-term financing requirements by issuing long-term notes, common units and/or preferred units, loans from financial institutions, asset securitizations or asset sales.
Senior Secured Notes
On February 2, 2024, we closed on our private offering of $900.0 million of 8.125% senior secured notes due 2029 (“2029 Senior Secured Notes”) that mature on February 15, 2029 and $1.3 billion of 8.375% senior secured notes due 2032 (“2032 Senior Secured Notes”) that mature on February 15, 2032. Interest on the 2029 Senior Secured Notes and 2032 Senior Secured Notes is payable on February 15, May 15, August 15 and November 15 of each year.
2026 Term Loan B
On March 12, 2026, we entered into a new seven-year $950.0 million 2026 Term Loan B. The 2026 Term Loan B matures on March 11, 2033 and will amortize in equal quarterly installments in aggregate annual amounts equal to 1.0% of the original principal amount, with the balance payable on maturity. The amount outstanding at June 30, 2026 is $947.6 million.
For additional information related to our long-term debt, see Note 6 to our unaudited condensed consolidated financial statements included in this Quarterly Report.
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Capital Expenditures, Acquisitions and Other Investments
The following table summarizes expansion and maintenance capital expenditures (which excludes additions for tank bottoms and linefill and has been prepared on the accrual basis) for the periods indicated.
| Capital Expenditures | ||||||||||||||||||||||||||||||||
| Expansion | Maintenance | |||||||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||
| Three Months Ended June 30, | ||||||||||||||||||||||||||||||||
| 2026 | $ | 96,647 | $ | 15,451 | ||||||||||||||||||||||||||||
| 2025 | $ | 9,953 | $ | 11,099 | ||||||||||||||||||||||||||||
There were no acquisitions, non-cash capital expenditures or other investments during the three months ended June 30, 2026 or 2025.
Capital expenditures for the fiscal year ending March 31, 2027 are expected to be approximately $200 million for growth and $45 million for maintenance.
Distributions Declared
On June 17, 2026, the board of directors of our GP declared a cash distribution for the quarter ended June 30, 2026 to the holders of the Class B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class B Preferred Units”), the Class C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class C Preferred Units”) and the 9.00% Class D Preferred Units (“Class D Preferred Units”). The total distribution of $18.8 million was made on July 15, 2026 to the holders of record at the close of trading on July 1, 2026.
The board of directors of our GP expects to evaluate the reinstatement of the common unit distributions in due course, taking into account a number of important factors, including our leverage, liquidity, the sustainability of cash flows, upcoming debt maturities, capital expenditures and the overall performance of our businesses.
For additional information related to the payment of distributions, see Note 8 to our unaudited condensed consolidated financial statements included in this Quarterly Report.
Contractual Obligations
Our contractual obligations primarily consist of purchase commitments, outstanding debt principal and interest obligations, operating lease obligations, finance lease obligations, asset retirement obligations and other commitments.
For a discussion of contractual obligations, see Note 6, Note 7 and Note 13 to our unaudited condensed consolidated financial statements included in this Quarterly Report.
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Sources (Uses) of Cash
The following table summarizes the sources (uses) of cash and cash equivalents for the periods indicated related to continuing operations (see the footnotes to our unaudited condensed consolidated financial statements included in this Quarterly Report for the footnotes referenced in the table):
| Cash Flow | Three Months Ended June 30, | ||||||||||||||||
| Category | 2026 | 2025 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Sources of cash and cash equivalents: | |||||||||||||||||
| Net cash provided by operating activities-continuing operations | Operating | $ | 77,003 | $ | 17,256 | ||||||||||||
Net proceeds from borrowings under ABL Facility (see Note 6) | Financing | 42,000 | — | ||||||||||||||
| Proceeds from sales of assets | Investing | 12,473 | 61,120 | ||||||||||||||
Net settlements of derivatives (see Note 9) | Investing | 693 | 5,116 | ||||||||||||||
| Proceeds from divestitures of businesses and investments, net | Investing | — | 87,243 | ||||||||||||||
| Uses of cash and cash equivalents: | |||||||||||||||||
Capital expenditures (see Note 10) | Investing | (108,762) | (22,129) | ||||||||||||||
Distributions to preferred unitholders (see Note 8) | Financing | (18,753) | (31,536) | ||||||||||||||
Payments on 2024 Term Loan B and 2026 Term Loan B (see Note 6) | Financing | (2,375) | (1,750) | ||||||||||||||
| Class D preferred unit repurchases | Financing | — | (100,010) | ||||||||||||||
Net payments on borrowings under ABL Facility | Financing | — | (72,000) | ||||||||||||||
| Repayment and repurchase of senior notes | Financing | — | (17,274) | ||||||||||||||
| Common unit repurchases and cancellations | Financing | — | (8,068) | ||||||||||||||
| Other sources / (uses) – net | Investing and Financing | (5,748) | (1,919) | ||||||||||||||
| Net decrease in cash and cash equivalents-continuing operations | $ | (3,469) | $ | (83,951) | |||||||||||||
Operating Activities-Continuing Operations. The increase in net cash provided by operating activities during the three months ended June 30, 2026 was due primarily to higher earnings from operations as well as fluctuations in working capital, particularly accounts receivable and accounts payable, due to higher crude oil prices and the timing of invoices and payments on construction projects.
Environmental Legislation
See our Annual Report for a discussion of proposed environmental legislation and regulations that, if enacted, could result in increased compliance and operating costs. However, at this time we cannot predict the structure or outcome of any future legislation or regulations or the eventual cost we could incur in compliance.
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements that are applicable to us, see Note 2 to our unaudited condensed consolidated financial statements included in this Quarterly Report.
Critical Accounting Estimates
The preparation of financial statements and related disclosures in conformity with GAAP requires the selection and application of appropriate accounting principles to the relevant facts and circumstances of our operations and the use of estimates made by management. We have identified certain more critical judgment areas in the application of our accounting policies that are most important to the portrayal of our consolidated financial position and results of operations. The application of these accounting policies, which requires subjective or complex judgments regarding estimates and projected outcomes of future events, and changes in these accounting policies, could have a material effect on our consolidated financial statements. There have been no material changes in the critical accounting estimates previously disclosed in our Annual Report.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
Long-Term Debt
A portion of our long-term debt is variable-rate debt. Changes in interest rates impact the interest payments of our variable-rate debt but generally do not impact the fair value of the liability. Conversely, changes in interest rates impact the fair value of our fixed-rate debt but do not impact its cash flows.
The ABL Facility is variable-rate debt with interest rates that are generally indexed to the prime rate or a secured overnight financing rate (“SOFR”) plus an applicable margin. At June 30, 2026, $177.0 million was outstanding under the ABL Facility at a weighted average interest rate of 5.84%. A change in interest rates of 0.125% would result in an increase or decrease of our annual interest expense of $0.2 million, based on borrowings outstanding at June 30, 2026.
The 2026 Term Loan B is variable-rate debt with interest rates that are generally indexed to the SOFR plus an applicable margin. At June 30, 2026, $947.6 million was outstanding under the 2026 Term Loan B with an interest rate of SOFR of 3.63% plus a margin of 3.50%. A change in interest rates of 0.125% would result in an increase or decrease of our annual interest expense of $1.2 million, based on borrowings outstanding at June 30, 2026.
Interest Rate Swaps
In March and April 2024, we entered into two $200.0 million interest rate swaps to reduce the variability of cash outflows associated with our floating-rate, SOFR-based instruments. One of the interest rate swaps expired in April 2026. An increase of 10% in the value of the underlying interest rate swap would result in a net change in the fair value of our interest rate swap of less than $0.1 million at June 30, 2026.
Preferred Unit Distributions
The current distribution rate for the Class B Preferred Units is the three-month CME Term SOFR interest rate plus a tenor spread adjustment of 0.26161% plus a spread of 7.213% (see Note 8 to our unaudited condensed consolidated financial statements included in this Quarterly Report for a further discussion). A change in interest rates of 0.125% would result in an increase or decrease of our quarterly Class B Preferred Unit distribution of $0.1 million, based on the Class B Preferred Units outstanding at June 30, 2026.
The current distribution rate for the Class C Preferred Units is the three-month CME Term SOFR interest rate plus a spread of 7.384% (see Note 8 to our unaudited condensed consolidated financial statements included in this Quarterly Report for a further discussion). A change in interest rates of 0.125% would result in an increase or decrease of our quarterly Class C Preferred Unit distribution of less than $0.1 million, based on the Class C Preferred Units outstanding at June 30, 2026.
The current distribution rate for the Class D Preferred Units is the three-month CME Term SOFR interest rate plus a spread of 7.00% (see Note 8 to our unaudited condensed consolidated financial statements included in this Quarterly Report for a further discussion). A change in interest rates of 0.125% would result in an increase or decrease of our quarterly Class D Preferred Unit distribution of $0.1 million, based on the Class D Preferred Units outstanding at June 30, 2026.
Commodity Price Risk
Our operations are subject to certain business risks, including commodity price risk. Commodity price risk is the risk that the market value of crude oil or natural gas liquids will change, either favorably or unfavorably, in response to changing market conditions. Procedures and limits for managing commodity price risks are specified in our market risk policy. Open commodity positions and market price changes are monitored daily and are reported to senior management and to marketing operations personnel.
The crude oil and natural gas liquids industries are “margin-based” and “cost-plus” businesses in which our realized margins depend on the differential of sales prices over our supply costs. We have no control over market conditions. As a result, our profitability may be impacted by sudden and significant changes in the price of crude oil and natural gas liquids.
We engage in various types of forward contracts and financial derivative transactions to reduce the effect of price volatility on our product costs, to protect the value of our inventory positions, and to help ensure the availability of product
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during periods of short supply. We attempt to balance our contractual portfolio by purchasing volumes when we have a matching purchase commitment from our commercial, retail and industrial customers. We may experience net unbalanced positions from time to time. In addition to our ongoing policy to maintain a balanced position, for accounting purposes we are required, on an ongoing basis, to track and report the market value of our derivative portfolio.
Although we use financial derivative instruments to reduce the market price risk associated with forecasted transactions, we do not account for financial derivative transactions as hedges. All changes in the fair value of our physical contracts that do not qualify as normal purchases and normal sales and settlements (whether cash transactions or non-cash mark-to-market adjustments) are reported within cost of sales-product (for purchase contracts) in our unaudited condensed consolidated statements of operations, regardless of whether the contract is physically or financially settled, and within cash flows from operations in our unaudited condensed consolidated statements of cash flows.
The following table summarizes the hypothetical impact on the June 30, 2026 fair value of our commodity derivatives of an increase of 10% in the value of the underlying commodity.
| Increase (Decrease) To Fair Value | |||||
| (in thousands) | |||||
| Crude oil (Water Solutions segment) | $ | (499) | |||
| Crude oil (Crude Oil Logistics segment) | $ | 246 | |||
| Propane (Liquids Logistics segment) | $ | 634 | |||
| Butane (Liquids Logistics segment) | $ | 15,512 | |||
| Other (Liquids Logistics segment) | $ | 236 | |||
Changes in commodity prices may also impact the volumes that we are able to transport, dispose, store and market, which also impact our cash flows.
Credit Risk
Our operations are also subject to credit risk, which is the risk of loss from nonperformance by suppliers, customers or financial counterparties to a contract. Procedures and limits for managing credit risk are specified in our credit policy. Credit risk is monitored daily and we believe we minimize exposure through the following:
•requiring certain customers to prepay or place deposits for our products and services;
•requiring certain customers to post letters of credit or other forms of surety;
•monitoring individual customer receivables relative to previously-approved credit limits;
•requiring certain customers to take delivery of their contracted volume ratably rather than allow them to take delivery at their discretion;
•entering into master netting agreements that allow for offsetting counterparty receivable and payable balances for certain transactions;
•reviewing the receivable aging regularly to identify issues or trends that may develop; and
•requiring marketing personnel to manage their customers’ receivable position and suspend sales to customers that have not timely paid outstanding invoices.
At June 30, 2026, our primary counterparties were retailers, resellers, energy marketers, producers, refiners, and dealers.
Fair Value
We determine the fair value of our exchange traded derivative financial instruments utilizing publicly available prices, and for non-exchange traded derivative financial instruments, we utilize pricing models for similar instruments including publicly available prices and forward curves generated from a compilation of data gathered from third-parties.
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Item 4. Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rule 13(a)-15(e) and 15(d)-15(e) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), that are designed to ensure the information required to be disclosed in our filings and submissions under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission and that such information is accumulated and communicated to our management, including the principal executive officer and principal financial officer of our GP, as appropriate, to allow timely decisions regarding required disclosure.
We completed an evaluation under the supervision and with participation of our management, including the principal executive officer and principal financial officer of our GP, of the effectiveness of the design and operation of our disclosure controls and procedures at June 30, 2026. Based on this evaluation, the principal executive officer and principal financial officer of our GP have concluded that as of June 30, 2026, such disclosure controls and procedures were effective.
There have been no changes in our internal controls over financial reporting (as defined in Rule 13(a)-15(f) of the Exchange Act) during the three months ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We are involved from time to time in various legal proceedings and claims arising in the ordinary course of business. For information related to legal proceedings, see the discussion under the caption “Legal Contingencies” in Note 7 to our unaudited condensed consolidated financial statements included in this Quarterly Report, which is incorporated by reference into this Item 1.
Item 1A. Risk Factors
There have been no material changes in the risk factors previously disclosed in Part I, Item 1A–“Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the three months ended June 30, 2026, no director or officer of the Partnership adopted terminated
Item 6. Exhibits
| Exhibit Number | Description | |||||||
| 31.1* | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||
| 31.2* | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||||
| 32.1* | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||
| 32.2* | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||
| 101.INS** | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
| 101.SCH** | Inline XBRL Schema Document | |||||||
| 101.CAL** | Inline XBRL Calculation Linkbase Document | |||||||
| 101.DEF** | Inline XBRL Definition Linkbase Document | |||||||
| 101.LAB** | Inline XBRL Label Linkbase Document | |||||||
| 101.PRE** | Inline XBRL Presentation Linkbase Document | |||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||
* Exhibits filed with this report.
** The following documents are formatted in Inline XBRL (Extensible Business Reporting Language): (i) Unaudited Condensed Consolidated Balance Sheets at June 30, 2026 and March 31, 2026, (ii) Unaudited Condensed Consolidated Statements of Operations for the three months ended June 30, 2026 and 2025, (iii) Unaudited Condensed Consolidated Statements of Comprehensive Income for the three months ended June 30, 2026 and 2025, (iv) Unaudited Condensed Consolidated Statements of Changes in (Deficit) Equity for the three months ended June 30, 2026 and 2025, (v) Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2026 and 2025, and (vi) Notes to Unaudited Condensed Consolidated Financial Statements.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| NGL Energy Partners LP | |||||||||||
| By: | NGL Energy Holdings LLC, its general partner | ||||||||||
| Date: August 4, 2026 | By: | /s/ H. Michael Krimbill | |||||||||
| H. Michael Krimbill | |||||||||||
| Chief Executive Officer | |||||||||||
| Date: August 4, 2026 | By: | /s/ Bradley P. Cooper | |||||||||
Bradley P. Cooper | |||||||||||
| Chief Financial Officer | |||||||||||
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