investor presentation april 2018 -...
TRANSCRIPT
Investor Presentation April 2018
This presentation includes “forward looking statements” within the meaning of
federal securities laws. All statements, other than statements of historical fact,
included in this presentation are forward looking statements, including
statements regarding the Partnership’s future results of operations or ability to
generate income or cash flow, make acquisitions, or make distributions to
unitholders. Words such as “anticipate,” “project,” “expect,” “plan,” “goal,”
“forecast,” “intend,” “could,” “believe,” “may” and similar expressions and
statements are intended to identify forward-looking statements. Although
management believes that the expectations on which such forward-looking
statements are based are reasonable, neither the Partnership nor its general
partner can give assurances that such expectations will prove to be correct.
Forward looking statements rely on assumptions concerning future events and
are subject to a number of uncertainties, factors and risks, many of which are
outside of management’s ability to control or predict. If one or more of these
risks or uncertainties materialize, or if underlying assumptions prove incorrect,
the Partnership’s actual results may vary materially from those anticipated,
estimated, projected or expected.
Additional information concerning these and other factors that could impact the
Partnership can be found in Part I, Item 1A, “Risk Factors” of the Partnership’s
Annual Report on Form 10-K for the year ended March 31, 2017 and in the other
reports it files from time to time with the Securities and Exchange Commission.
Readers are cautioned not to place undue reliance on any forward-looking
statements contained in this presentation, which reflect management’s opinions
only as of the date hereof. Except as required by law, the Partnership
undertakes no obligation to revise or publicly update any forward-looking
statement.
2
Company Information
Contact Information
Forward Looking Statements NGL Energy Partners LP
Corporate Headquarters
NGL Energy Partners LP
6120 South Yale Avenue, Suite 805
Tulsa, Oklahoma 74136
Website
www.nglenergypartners.com
Investor Relations
Contact us at (918) 481-1119
or e-mail us at
(1) Market Data and Unit Count as of 4/6/2018. (NGL-B ticker for Class B Preferred Units)
(2) Balance Sheet Data as of 12/31/2017, Market Capitalization and Enterprise Value include Preferred Equity
NYSE Ticker NGL
Unit Price (1) 11.10 $
Market Capitalization (1)(2) 1.78 $ Billion
Enterprise Value (1)(2) 4.84 $ Billion
Yield (1) 14.05%
3
NGL Energy Partners LP
Overview
Segment Contribution
Crude
Logistics
Business Overview
4
Retail
Propane
Refined Products/
Renewables
Purchases and transports crude oil for resale to a pipeline injection point, storage terminal, barge loading facility, rail facility, refinery or trade hub
Provides transportation, terminaling, and storage of crude oil and condensate to third parties for a fixed-fee per barrel
Long term, take-or-pay contracts on Grand Mesa Pipeline
Provides services for the treatment, processing, and disposal of wastewater, and solids generated from oil and natural gas production
Revenue streams from the disposal of wastewater and solids, transportation of water through pipelines, truck and frac-tank washouts, and recovered hydrocarbons
Transports, stores, and markets NGLs to and from refiners, gas processors, propane wholesalers, propane retailers, proprietary terminals, petrochemical plants, diluent markets and other merchant users of NGLs
Large provider of butane to refiners for gasoline blending
Utilizes underground storage to take advantage of seasonal demand
Sells propane and distillates to end-users consisting of residential, agricultural, commercial and industrial customers
Seasonal business with majority of retail propane volume sold during the peak heating season from October through March
Focus on residential customers, high tank ownership and customer retention
Purchase refined petroleum products primarily in the Gulf Coast, Southeast, and Midwest regions of the United States and schedule them for delivery primarily on the Colonial, Plantation, Magellan and NuStar pipelines
Sell our products to commercial and industrial end users, independent retailers, distributors, marketers, government entities, and other wholesalers
Water
Solutions
Liquids
Business Diversity
5
Crude Oil
Production and
Transportation/
Storage Demand
Higher Prices
25%
Butane Blending,
Weather and NGL
Production
Lower Prices
15%
Lower Prices
25%
Motor Fuels
Supply/Demand
and Basis
Differentials
Lower Prices
10%
Water Volumes,
Rig Count and
Crude Oil Price
Higher Prices
25%
Primary Drivers:
Benefits From:
FY18 Forecasted
EBITDA
Contribution %:
NGL LOGO
The NGL business model has evolved into a vertically integrated business mix that serves as a natural hedge,
mitigating the impact of commodity price volatility across all segments
Crude
Logistics Water
Solutions
Liquids Retail
Propane Refined Products/
Renewables
Weather and
Heating Demand
Diversified Across Multiple Businesses and Producing Basins
Common Carrier Propane
Pipelines Basins
Grand Mesa Pipeline
Eagle Ford
Marcellus Shale
DJ Basin
Pinedale Anticline
Jonah Field
Niobrara Shale
Green River Basin
Bakken Shale
Wattenberg Field
Mississippi Lime
Granite Wash
Permian Basin
Water Services
NGL Assets
Crude Barges and
Tug Boats
Crude Oil Logistics
Colonial Products Pipeline
Retail Propane
TransMontaigne Terminal
NGL Rack Marketing Terminal
NGL Owned/Leased Assets
NGL Utilized Assets
Assets and Marketing
Presence Santa Fe Products Pipeline
Magellan Products Pipeline
NuStar Products Pipeline
NGL Crude Terminal
NuStar Energy Terminal
NGL Renewable Marketing
Terminal
6
NGL Operational Assumptions
7
Business Strategy
Build a Diversified
Vertically Integrated
Energy Business
Achieve Organic Growth
by Investing in New
Assets
Accretive Growth
through Strategic
Acquisitions
Focus on Businesses
that Generate Long-
Term Fee Based Cash
Flows
Transport crude oil from the wellhead to refiners
Refined Products from refiners to customers
Wastewater from the wellhead to treatment for disposal, recycle or discharge
Natural Gas Liquids from fractionators / hubs to end users, including refiners and retail propane customers
Projects that increase volumes, enhance our operations and generate attractive rates of return
Accretive organic growth opportunities that originate from assets we own and operate
Focused on projects within crude oil logistics, NGL liquids and refined products that provide high quality fee based revenues
Build upon our vertically integrated business
Scale our existing operating platforms
Enhance our geographic diversity
Continue our successful track record of acquiring companies and assets at attractive prices
Focus on long-term fee based contracts and back-to-back transactions that minimize commodity price exposure
Increase cash flows that are supported by certain fee-based multi-year contracts that include acreage dedication and volume commitments
Expand retail propane footprint where business has a high percentage of company owned tanks resulting in strong customer retention rates
Disciplined Capital
Structure
Target leverage levels that are consistent with investment grade companies
Maintain sufficient liquidity to manage existing and future capital requirements and take advantage of market opportunities
Prudent distribution coverage to manage commodity cycles and fund growth opportunities
8
Segment Contribution Recently Announced Divestitures
On December 26th 2017, NGL Energy Partners LP Announced the
Completion of the Sale of its 50% Interest in Glass Mountain Pipeline, LLC
to a fund managed by BlackRock Real Assets in partnership with
Navigator Energy Services for total gross consideration of $300 million
– The resulting debt reduction includes a prepayment in full of $195.0
million of 6.65% senior secured notes due June 19, 2022. Additionally
NGL repurchased approximately $88.7 million in principal amount of
its senior unsecured notes at various prices in the open market during
the quarter ended December 31, 2017
– As of 12/31/17, Glass Mountain Pipeline, LLC contributed
approximately $11.5 million in Adjusted EBITDA to NGL for FY2018
On November 7th 2017, NGL Energy Partners LP Announced an
Agreement to Sell Certain Retail Propane Businesses to DCC LPG for a
combined $220 Million
– NGL will retain this business through closing, which is scheduled for
March 31, 2018 and will also retain all profits generated through the
closing date
– These assets are expected to generate approximately $20 million in
Adjusted EBITDA from December 1, 2017 through March 31, 2018
resulting in a total value proposition to NGL of approximately $220
million
– The assets represent approximately 23% of FY2018 forecasted
EBITDA for the Retail Propane segment assuming normal weather
– Terms of the transaction provided for a $20 million cash deposit on
signing, which NGL immediately deployed towards debt repayment
Cushing
Alva
Arnett
Kingfisher
Glass Mountain Pipeline
STACK Extension
Retail Assets
to be Sold
Note: See press releases on NGL Energy Partners website
Value received by NGL from announced divestitures totals ~$520 million
9
Segment Contribution Grand Mesa Pipeline
Source: Active O&G wells denoted with blue dots, current rig locations denoted by a black rig icon and the heat map represents permit activity in the last 180 days based on data from
DrillingInfo as of 2/12/18
Grand Mesa Pipeline NGL Crude Terminal
DJ Basin
Niobrara Shale
Wattenberg Field
Cushing Storage
= Lucerne & Riverside
= Platteville
Grand Mesa
Share of
Capacity
~550 miles of 20” Crude oil pipeline from the DJ Basin to
Cushing, OK
NGL/Grand Mesa have 37.5% undivided joint interest
150,000 BPD capacity
Origin Station
Terminals
Lucerne & Riverside Terminals in Weld County, CO
16 total truck unloading bays capable of unloading over 325
trucks per day in aggregate
620,000 BBL origin tankage
Batching
Capabilities
Grand Mesa offers two unique batching specs allowing
producers to preserve their crude oil quality
Gathering
Connectivity
The Lucerne origin has inbound receipt connections to
multiple gathering systems including:
Platte River Midstream
Saddle Butte Pipeline
Noble Midstream
Destination
Terminal
NGL’s Cushing Terminal has 3.6 million barrels of total shell
capacity
Offers producers connectivity to multiple markets
including the Gulf Coast via TransCanada Marketlink
Financial
Guidance
Year 1 EBITDA: ~$120 million (11/2016 – 10/2017)
Year 2 EBITDA: ~$150 million (11/2017 – 10/2018)
Average remaining contract term on the pipeline is
approximately 8 years
10
Operating Segments
11
Segment Contribution Crude Oil Logistics
Area of Operation
Assets
Asset Summary
4 NGL Crude Logistics Tows NGL Cushing Crude Oil Storage Tanks
Crude Oil Pipelines
– 100% interest in Grand Mesa Pipeline; 150MBPD
capacity
– Ship on 16 common carrier pipelines
Crude Oil Storage
– Own 8 storage terminal facilities
– 3.6 MMbbls of storage in Cushing
– 1.6 MMbbls of storage in addition to Cushing
Crude Oil Transportation
– 29 LACT units, ~155 owned trucks and ~246 trailers
– ~797 GP railcars leased or owned
– Own 10 tows, 20 barges, >25Mbbls per barge capacity
$28
$73 $61 $59
$120
$-
$50
$100
$150
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018E
$-
$20
$40
$60
$80
$100
1/31/2015 1/31/2016 1/31/2017 1/31/2018
12
Segment Contribution Crude Oil Logistics
Crude WTI Spot Price Adjusted EBITDA (In Millions)
Crude BBL’s/Day (In Thousands) FY 2018 Forecast Assumptions
126
230 184
94 112
- - - 42
93
0
100
200
300
400
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018E
Crude Oil Logistics Grand Mesa
Grand Mesa Pipeline
– Total volumes average ~93kbpd
– Contributes ~$130 million in Adjusted EBITDA
Crude Assets
– Full year contribution from the Houma Terminal and Port
Comfort Terminal
– Glass Mountain removed from 4Q18 forecast
Crude Oil Marketing/Transportation
– Crude Marketing assumes volume growth from full year of
Grand Mesa and other recently completed assets
– Crude Transportation includes Marine, Trucking, and Rail
assets
– Average WTI Crude Price of $52.03
13
Segment Contribution Water Solutions
Area of Operation
Assets
Asset Summary
NGL saltwater disposal facility with solids processing capacity
72 water treatment and disposal facilities, including 94 wells across the Permian (35), Eagle Ford (31), DJ (21), Bakken (3), Granite Wash (3) and Pinedale Anticline (1) basins
Combined total of ~1.7 million bpd of disposal capacity
8 facilities that can dispose of solids such as tank bottoms and drilling fluids
1 facility in the Pinedale Anticline that can process water to a recycle and discharge (freshwater) standard
Numerous water pipelines which directly connect from oil and gas producing wells to NGL’s salt water disposal facilities
– Currently ~200kbpd of wastewater on pipelines, continuing to increase across our footprint
$68
$126
$72 $63
$120
$-
$50
$100
$150
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018E
14
Segment Contribution Water Solutions
U.S Oil Rig Count(1) Adjusted EBITDA (In Millions)
Water Disposal BBL’s/Day (In Thousands) FY 2018 Forecast Assumptions
Water disposal volume averages 731kbpd
– Primary growth focused in Permian (Delaware) and DJ basins
– FY18 exit volumes over 850kbpd
Average skim oil percentage forecasted at 0.42% for each disposal volume
– Average WTI Crude Price of $52.03
Pipelines, Solids disposal, Washouts, and other service revenues increase with volumes
Growth capital adds 3 new facilities and 6 new disposal wells to existing footprint
(1) Baker Hughes as of February 2018.
0
100
200
300
400
500
1/31/2015 1/31/2016 1/31/2017 1/31/2018
Permian Basin Eagle Ford Basin DJ Basin
207
443
570 502
731
2.4
3.4 3.0
2.0
3.1
-
1.0
2.0
3.0
4.0
5.0
0
200
400
600
800
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018E
Water BPD Skim Oil BPD
15
Segment Contribution Liquids
Area of Operation
Assets
Asset Summary
Railcar Rack NGL Thackerville Liquids Terminal West Memphis NGL Wholesale Liquids Terminal
21 terminals serving over 400 customers
– 12 terminals with rail unloading capability, 4 multi-
product terminals, 9 pipe-connected terminals
Approximately 3.5 million barrels of leased underground
storage, 0.35 million barrels of above ground storage
Sawtooth NGL Caverns - 5 Caverns with ~6.1 million
barrels of butane and propane storage capacity in Utah
Shipper on 5 common carrier pipelines
~ 5,000 leased railcars
– A portion of these railcars roll off lease in FY 2018
$87 $93 $101
$64 $65
$-
$50
$100
$150
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018E
16
Segment Contribution Liquids
Heating Degree Days Adjusted EBITDA (In Millions)
Propane, Butane & Other NGL’s GAL’s/Day (In Thousands) Propane, Butane & Other NGL’s Margin/GAL
Note: Did not provide butane volumes and margins in FY2014 and prior
$0.06
$0.04 $0.04 $0.03 $0.03
$0.13
$0.11
$0.06
$0.01 $-
$0.05
$0.10
$0.15
$0.20
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018E
Propane Margin Butane Margin
3,261 3,522 3,400 3,471
3,972
1,180 1,320 1,251 1,485
2,155
1,081 986 941 1,079
0
1,000
2,000
3,000
4,000
5,000
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018E
Propane Butane Other NGLs
17
Segment Contribution Retail Propane
Area of Operation
Assets
Asset Summary
Propane storage tanks at retail location Propane delivery truck
Own or lease 128 customer service locations
Own or lease 119 satellite distribution locations
Aggregate propane storage capacity of 17.5 million gallons
Aggregate distillate storage capacity of 5.6 million gallons
Own 500 bulk storage tanks with capacities ranging from 2,000 to 90,000 gallons
72% residential customers; 27% commercial and industrial customers
18
Segment Contribution
Sample of Trade Names Adjusted EBITDA (In Millions)
Propane & Distillate GAL’s/Day (In Thousands)
Retail Propane
Total Propane Volume and Heating Degree Days(1)
(1) NOAA National Centers for Environmental information, Climate at a Glance: U.S. Time Series, Heating Degree Days, published February 2018, retrieved on
February 9, 2018 from http://www.ncdc.noaa.gov/cag/
$91 $97 $79
$91
$115
$-
$50
$100
$150
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018E
445 464 416
487
561
96 96 84 82 90
$0.96 $0.98 $1.08
$0.99 $0.98
$0.53 $0.59
$0.54 $0.59 $0.55
$-
$0.50
$1.00
$1.50
0
100
200
300
400
500
600
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018E
Propane Distillate
Propane Margin Distillate Margin
162,361 169,279 152,238 177,599
204,647
4,731 4,487
3,729 3,831
4,130
0
2000
4000
6000
0
50,000
100,000
150,000
200,000
250,000
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018E
Degree Days
GAL's (In Thousands)
Retail Propane Volumes Heating Degree Days
19
Segment Contribution Refined Products/Renewables
Area of Operation
Assets
Asset Summary
Collins, MS Refined Products Terminal E Energy Adams Ethanol Plant
Line Space on the Colonial and Plantation pipelines
Sales from approximately 200 terminals over 37 states
Approx. 9.0 million barrels of storage capacity
Long-term Lease of TLP SE Terminals along Colonial and
Plantation pipelines
– Additional Storage capacity throughout the United States
Rack sales through common carrier pipeline terminals
Equity owner in Ethanol Plant in Nebraska
$8
$79
$134 $125
$50
$-
$50
$100
$150
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018E
20
Segment Contribution
DOE Total U.S. Gas Supplied(1) Adjusted EBITDA (In Millions)
Refined Products/Renewables BBL’s/Day (In Thousands) FY 2018 Forecast Assumptions
Refined Products/Renewables
(1) Department of Energy EIA weekly data for 2/9/18.
Southeast (Colonial and Plantation pipelines)
– Total volumes average approximately 130kbpd
– Average margin of $0.03 per gallon
– Additional storage at Collins and butane blending to contribute a full year
Rack & Mid-Continent
– Diesel demand growth in the Permian basin
– Increased storage capacity by ~250kbbls
– Average margin less than $0.01 per gallon
Renewables
– No significant legislative impact
7,500
8,000
8,500
9,000
9,500
10,000
2011 to 2015 Range
2011 to 2015 Average 2016
2017 2018
27
186
270
386 429
10 15 16 19 18
$0.05
$0.03
$0.01
$0.05
$0.01
$0.05
$-
$0.02
$0.04
$0.06
$0.08
$0.10
0
100
200
300
400
500
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018E
Refined Products Renewables
Refined Products Margin per GAL Renewables Margin per GAL
21
Financial Overview
22
Financial Objectives
The Partnership has made significant strides and will continue to
pursue a flexible balance sheet with a leverage target of less than
3.25x on a compliance basis
Goal of achieving investment grade rating
Increasing fee-based business and long-term contracts with high
credit quality customers
Transitioning to a more traditional midstream repeatable cash flow
model
Continue to pursue opportunities to find and execute on low cost of
capital financing in the current and future environments
Consistently pursuing strategies that increase NGL’s unit price and
lower cost of debt
Five business segments provide multiple growth platforms
Accretive growth through organic growth projects and strategic
acquisitions focused on assets backed by multi-year fee based
contracted cash flows
Sufficient liquidity to operate the business and execute growth objectives
Targeting over 1.3x distribution coverage
Excess distribution coverage will be used to strengthen the balance
sheet and fund growth opportunities
Strong Balance
Sheet
Cash Flow
Predictability
Lower Cost of
Capital
Accretive Capital
Projects
Robust Distribution
Coverage
3Q '18 3Q '17 % Variance
Total Volume (In Thousand's)
Refined Products/Renewables
Gasoline (BBL's) 22,902 22,227 3%
Diesel (BBL's) 15,004 13,215 14%
Ethanol (BBL's) 900 1,125 -20%
Biodiesel (BBL's) 477 733 -35%
Crude Oil (BBL's) 10,006 7,527 33%
Liquids
Propane (GAL's) 399,211 386,854 3%
Butane (GAL's) 191,504 149,403 28%
Other NGL's (GAL's) 104,136 89,974 16%
Retail Propane
Propane (GAL's) 62,058 56,572 10%
Distillates (GAL's) 9,381 9,139 3%
Water Disposal (BBL's) 72,624 47,489 53%
Total Revenue 4,463.3$ 3,406.6$ 31%
Total Cost of Sales 4,272.8$ 3,228.0$ 32%
Adjusted EBITDA 122.6$ 120.7$ 2%
Distributable Cash Flow 60.8$ 76.0$ -20%
Distribution to LP Unitholders 0.39$ 0.39$ 0%
TTM Distribution Coverage 0.70x 1.52x
Maintenance Capex 12.2$ 5.2$ 134%
Growth Capex with Investments 53.9$ 74.6$ -28%
Covenant Compliance Leverage 5.1x 4.5x
Total L-T Debt (Excluding Working Capital Facility) 1,907.0$ 2,341.0$ -19%
Working Capital Facility 1,014.5$ 875.5$ 16%
Total Liquidity 471.8$ 913.9$ -48%
23
3rd Quarter Update
Segment Summary
– Grand Mesa outperformed expectations while the rest of Crude Logistics
performed in-line with expectations
– Liquids was impacted by unrecovered railcar fleet costs, excess storage
capacity and significant butane supply impacting differentials, and performed
below expectations
– Retail Propane performed in-line with expectations
– Water Solutions outperformed expectations and has continued to benefit from
the increased rig counts and increased completion activities related to drilled
but uncompleted wells in the basins in which it operates, particularly in the
Permian Basin
– Refined Products/Renewables continues to face headwinds due to a reduction
in gasoline values at our terminals relative to NYH, low line space on Colonial
pipeline and backwardated forward curves, and performed below expectations
Quarterly Summary Performance ($’s In Millions)
(1) Does not include acquisition expenses.
(2) Covenant Compliance Leverage excludes the working capital facility and includes Pro Forma effects or projects in construction, or recent acquisitions/divestitures
(1)
(2)
(1)
Executed balance sheet and leverage improving transactions:
– Note Repurchases:
• Repurchased the remaining balance of 6.65% Senior Secured Notes
• Repurchased approximately $89 million of outstanding Unsecured
Notes at 98.8% of par
– Asset Sales:
• Announced an Agreement to Sell Certain Retail Propane Businesses
to DCC LPG for a combined $220 Million
• Announced the Completion of the Sale of its 50% Interest in Glass
Mountain Pipeline, LLC for total gross consideration of $300 million
$169
$320
$274
$235 $225-235
$168
$266 $290
$182
$225
FY 2014 FY 2015 FY2016 FY 2017 FY2018E
Distributable Cash Flow Distributions
1.0x
1.2x
1.0x
1.3x
1.0x
FY 2014 FY 2015 FY2016 FY 2017 FY2018E
24
Performance Metrics
Distributable Cash Flow & Total Distributions (In Millions)
Adjusted EBITDA (In Millions) Acquisition, Growth and Maintenance Capex (In Millions)
Distribution Coverage
1.3x
Target
(1) Does not include TLP capital expenditures (2) Includes the GP and preferred unit distributions if any
(1)
(2)
$24
$184
$271
$443 $424 $381
$440-450
IPO FY 2013 FY 2014 FY 2015 FY2016 FY 2017 FY 2018E
$491
$1,269
$961
$138 $164
$- $59
$133 $160
$600
$334
$150-200
$14 $32 $35 $30 $26 $30
FY 2013 FY 2014 FY 2015 FY2016 FY 2017 FY 2018E
Acquisitions Growth Capital Maintenance Capital
12/31/2017 3/31/2017 Variance
Cash and Equivalents 28,469$ 12,264$ 16,205$
Total Debt:
Senior Secured Revolving Credit Facilities
Working Capital Facility 1,014,500 814,500 200,000
Acquisition Facility 125,000 - 125,000
6.650% Senior Secured Notes due 2022 - 250,000 (250,000)
5.125% Senior Notes due 2019 360,781 379,458 (18,677)
6.875% Senior Notes due 2021 367,048 367,048 -
7.500% Senior Notes due 2023 656,589 700,000 (43,411)
6.125% Senior Notes due 2025 412,507 500,000 (87,493)
Other Long-Term Debt 11,684 15,525 (3,841)
Total Debt, Excluding Working Capital Facility 1,933,609$ 2,212,031$ (278,422)$
10.75% Class A Convertible Preferred Units 76,056$ 63,890$ 12,166$
Redeemable Noncontrolling Interest 4,011 3,072 939
Equity:
General Partner (50,869) (50,529) (340)
Limited Partners 1,823,740 2,192,413 (368,673)
Class B preferred limited partners 202,731 - 202,731
Accumulated Other Comprehensive Loss (1,478) (1,828) 350
Noncontrolling interests 7,270 26,746 (19,476)
Total Capitalization 3,995,070$ 4,445,795$ (450,725)$
2.9x
3.2x 3.2x
3.9x
4.7x
4.0x
.0x
1.5x
3.0x
4.5x
6.0x
FY 2013 FY 2014 FY 2015 FY2016 FY 2017 FY 2018E
Credit Profile
Debt Maturities as of 12/31/17 (In Millions)
Covenant Compliance Leverage
3.25x
Target
Capitalization (In Thousands)
(1) Covenant Compliance Leverage excludes acquisition expenses, excludes the working capital facility and includes Pro Forma adjustments for projects in construction or recent acquisitions/divestitures. Total
Indebtedness at December 31, 2017 per the Partnership’s Credit Facility and used for covenant compliance totaled $1.9 billion .
(2) Convertible Preferred Units included in Total Partners’ Capital calculation.
(1)
25
This
is
tied
out
$1,140
$361 $367
$657
$413
$-
$200
$400
$600
$800
$1,000
$1,200
Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23 Jan-24 Jan-25
Credit Facility due 10/2021 5.125% Notes due 7/2019 6.875% Notes due 10/2021
7.500% Notes due 11/2023 6.125% Notes due 2/2025
NGL Operational Assumptions
26
Key Investment Highlights
Diversified and
Attractive Asset Base
Multiple business segments with significant geographic diversity reduce cash flow volatility
Presence in the highest rate of return oil & gas producing regions in North America as well as the highest growing
population areas for consumer demand
Natural hedge between business segments reduces commodity price volatility and risk exposure
Vertical and Horizontal
Integration
Vertical integration allows for capture of margin across the value chain from wellhead to end-user
Emphasis on asset ownership drives ability to capitalize on multiple revenue/bolt-on opportunities
Offer a menu of services to producers and customers
Stable Cash Flows
Focus on medium to long-term, repeatable fee-based cash flows
Combination of fee-based, take-or-pay, acreage dedication, margin-based and cost-plus revenue contracts
Targeting ~70% fee based revenues in normal commodity price environment
Strong Credit Profile and
Liquidity
Targeting a capital structure with compliance leverage of under 3.25x
Targeting a distribution coverage over 1.3x on a TTM basis
Excess distribution coverage will be reinvested in growth opportunities and reduce indebtedness
Experienced & Incentivized
Management Team
Extensive industry and MLP experience with proven record of acquiring, integrating, operating and growing
successful businesses
Senior management holds significant limited partner interests, which strengthens alignment of incentives with
lenders and public unitholders
Supportive general partner which is privately owned, of which over 65% is held by current and former management
and directors, with no indebtedness
27
Appendix
28
NGL Organizational Chart
NGL Energy Holdings LLC
G.P. (DE LLC) 0.1% GP Interest
IDR’s
NGL Energy Operating LLC
(DE LLC)
NGL Water Solutions (NGL Water Solutions, LLC)
Members
(1) Includes the operations of our Legacy Gavilon crude oil logistics, refined products, and renewables businesses.
99.9% LP Interest
Limited Partners
NGL Energy Partners LP (NYSE: NGL)
(DE LP)
NGL Liquids (NGL Liquids, LLC)
NGL Retail Propane (NGL Propane, LLC)
NGL Refined
Products/Renewables (TransMontaigne LLC)
100%
100%
NGL Crude Logistics (NGL Crude Logistics, LLC) (1)
121,083,664 C.U. Outstanding
2017 2016 2017 2016
Net income (loss) 56,769$ 1,293$ (180,517)$ 117,388$
Less: Net income attributable to noncontrolling interests (89) (317) (221) (6,091)
Less: Net (income) loss attributable to redeemable noncontrolling interests (424) - 261 -
Net income (loss) attributable to NGL Energy Partners LP 56,256 976 (180,477) 111,297
Interest expense 51,825 41,486 151,391 105,283
Income tax expense 364 1,114 934 2,036
Depreciation and amortization 67,025 64,644 204,514 171,746
EBITDA 175,470 108,220 176,362 390,362
Net unrealized losses (gains) on derivatives 775 (3,957) 16,851 (737)
Inventory valuation adjustment 27,786 7,859 6,439 40,552
Lower of cost or market adjustments (3,907) 731 5,504 839
(Gain) loss on disposal or impairment of assets, net (111,479) 35 (11,241) (203,469)
Loss (gain) on early extinguishment of liabilities, net 21,141 - 22,479 (30,890)
Revaluation of investments - - - 14,365
Equity-based compensation expense 12,228 6,865 27,114 39,859
Acquisition expense 186 378 132 1,539
Revaluation of liabilities - - 5,600 -
Other 448 617 3,089 7,734
Adjusted EBITDA 122,648 120,748 252,329 260,154
Less: Cash interest expense 49,043 38,405 142,758 96,796
Less: Income tax expense 364 1,114 934 2,036
Less: Maintenance capital expenditures 12,156 5,205 26,677 17,901
Less: Other 316 19 549 19
Distributable Cash Flow 60,769$ 76,005$ 81,411$ 143,402$
Three Months Ended December 31, Nine Months Ended December 31,
(in thousands)
29
3Q’18 Adjusted EBITDA Walk
30
3Q’18 & 3Q’17 Adjusted EBITDA by Segment
Crude Oil Logistics Water Solutions Liquids Retail Propane
Refined Products and
Renewables Corporate and Other Consolidated
Operating income (loss) 106,279$ (1,373)$ 22,290$ 23,972$ (4,791)$ (21,846)$ 124,531$
Depreciation and amortization 20,092 24,586 6,247 11,130 323 962 63,340
Amortization recorded to cost of sales 85 - 70 - 1,350 - 1,505
Net unrealized losses (gains) on derivatives 962 8,504 (8,550) (141) - - 775
Inventory valuation adjustment - - - - 27,786 - 27,786
Lower of cost or market adjustments 5,207 - - - (9,114) - (3,907)
(Gain) loss on disposal or impairment of assets, net (107,574) 2,929 (214) 908 (7,529) - (111,480)
Equity-based compensation expense - - - - - 12,228 12,228
Acquisition expense - - - - - 186 186
Other income, net 5 190 93 29 151 1,639 2,107
Adjusted EBITDA attributable to unconsolidated entities 3,887 144 - 902 1,018 - 5,951
Adjusted EBITDA attributable to noncontrolling interest - (185) - (637) - - (822)
Other 1,377 91 21 (1,041) - - 448
Adjusted EBITDA 30,320$ 34,886$ 19,957$ 35,122$ 9,194$ (6,831)$ 122,648$
Crude Oil Logistics Water Solutions Liquids Retail Propane
Refined Products and
Renewables Corporate and Other Consolidated
Operating (loss) income (9,163)$ (11,898)$ 24,765$ 21,772$ 8,209$ (11,128)$ 22,557$
Depreciation and amortization 16,503 27,150 4,441 11,379 404 890 60,767
Amortization recorded to cost of sales 100 - 195 - 1,458 - 1,753
Net unrealized losses (gains) on derivatives 732 (1,304) (3,387) 2 - - (3,957)
Inventory valuation adjustment - - - - 7,859 - 7,859
Lower of cost or market adjustments - - - - 731 - 731
Loss (gain) on disposal or impairment of assets, net 4,655 2,323 60 (62) (6,941) (1) 34
Equity-based compensation expense - - - - - 6,865 6,865
Acquisition expense - - - (2) - 380 378
Other income, net 721 1,214 4 19 16,220 1,829 20,007
Adjusted EBITDA attributable to unconsolidated entities 2,577 54 - (111) 1,867 - 4,387
Adjusted EBITDA attributable to noncontrolling interest - (667) - (583) - - (1,250)
Other 481 116 20 - - - 617
Adjusted EBITDA 16,606$ 16,988$ 26,098$ 32,414$ 29,807$ (1,165)$ 120,748$
Three Months Ended December 31, 2017
(in thousands)
Three Months Ended December 31, 2016
(in thousands)
31
3Q’18 YTD & 3Q’17 YTD Adjusted EBITDA by Segment
Crude Oil Logistics Water Solutions Liquids Retail Propane
Refined Products and
Renewables Corporate and Other Consolidated
Operating income (loss) 111,832$ (10,075)$ (104,589)$ 8,878$ 30,747$ (56,031)$ (19,238)$
Depreciation and amortization 61,885 73,847 18,718 34,205 971 2,801 192,427
Amortization recorded to cost of sales 254 - 211 - 4,131 - 4,596
Net unrealized losses on derivatives 2,473 11,526 2,763 89 - - 16,851
Inventory valuation adjustment - - - - 6,439 - 6,439
Lower of cost or market adjustments 5,207 - - - 297 - 5,504
(Gain) loss on disposal or impairment of assets, net (111,290) 3,114 117,515 2,004 (22,585) - (11,242)
Equity-based compensation expense - - - - - 27,114 27,114
Acquisition expense - - - - - 132 132
Other income, net 99 210 100 280 486 4,938 6,113
Adjusted EBITDA attributable to unconsolidated entities 11,507 425 - 891 3,125 - 15,948
Adjusted EBITDA attributable to noncontrolling interest - (619) - (385) - - (1,004)
Revaluation of liabilities - 5,600 - - - - 5,600
Other 3,790 276 64 (1,041) - - 3,089
Adjusted EBITDA 85,757$ 84,304$ 34,782$ 44,921$ 23,611$ (21,046)$ 252,329$
Crude Oil Logistics Water Solutions Liquids Retail Propane
Refined Products and
Renewables Corporate and Other Consolidated
Operating (loss) income (28,827)$ 63,136$ 33,092$ 10,553$ 169,365$ (66,690)$ 180,629$
Depreciation and amortization 34,496 76,713 13,315 31,771 1,237 2,744 160,276
Amortization recorded to cost of sales 284 - 585 - 4,229 - 5,098
Net unrealized losses (gains) on derivatives 951 (2,138) 239 211 - - (737)
Inventory valuation adjustment - - - - 40,552 - 40,552
Lower of cost or market adjustments - - - - 839 - 839
Loss (gain) on disposal or impairment of assets, net 14,617 (91,958) 109 (96) (126,101) (4) (203,433)
Equity-based compensation expense - - - - - 39,859 39,859
Acquisition expense - - - - - 1,539 1,539
Other (expense) income, net (589) 1,524 67 339 19,099 5,420 25,860
Adjusted EBITDA attributable to unconsolidated entities 7,651 (9) - (388) 3,543 - 10,797
Adjusted EBITDA attributable to noncontrolling interest - (2,298) - (442) - - (2,740)
Other 1,276 279 60 - - - 1,615
Adjusted EBITDA 29,859$ 45,249$ 47,467$ 41,948$ 112,763$ (17,132)$ 260,154$
(in thousands)
Nine Months Ended December 31, 2016
(in thousands)
Nine Months Ended December 31, 2017