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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