Investor Presentation January 2019 - NGL Energy Partners LP … · This presentation includes “forward looking statements” within the meaning of federal securities laws. All statements,

Investor Presentation

January 2019

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, 2018 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

[email protected]

(1) Market Data and Unit Count as of 1/11/2018. (NGL-PB ticker for Class B Preferred Units)

(2) Balance Sheet Data as of 9/30/2018, Market Capitalization and Enterprise Value include Preferred Equity

NYSE Ticker NGL

Unit Price (1) 10.56 $

Market Capitalization (1)(2) 1.74 $ Billion

Enterprise Value (1)(2) 4.16 $ Billion

Yield (1) 14.77%

http://www.nglenergypartners.com/

mailto:[email protected]

3

NGL Energy Partners LP

Overview

Segment Contribution

Crude

Logistics

Business Overview

4

Refined Products/

Renewables

Purchases and transports crude oil for resale to pipeline injection points, storage terminals, barge loading facilities, rail facilities, refineries and other trade hubs

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 sales of recovered hydrocarbons and freshwater

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

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

Purchase unfinished gasoline blending components for subsequent blending into finished gasoline to supply our marketing business as well as third parties

Water

Solutions

Liquids

Note: On July 10th 2018, NGL Energy Partners LP announced that it closed the previously announced transaction to sell the remainder of its Retail Propane Business.

See press release on NGL Energy Partners website

Business Diversity

5

Crude Oil

Production and

Transportation/

Storage Demand

Higher Prices

35%

Butane Blending,

Weather and NGL

Production

Lower Prices

10%-15%

Motor Fuels

Supply/Demand

and Basis

Differentials

Lower Prices

10%-15%

Water Volumes,

Rig Count and

Crude Oil Price

Higher Prices

40%

Primary Drivers:

Benefits From:

Targeted

EBITDA

Contribution %:

NGL LOGO

With the sale of its Retail Propane assets, NGL is making a strategic shift in its business which positions the Partnership to

focus on, and reinvest in, Crude Logistics and Water Solutions, its two best performing and largest growth platforms

Crude

Logistics Water

Solutions

Liquids

Refined Products/

Renewables


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 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 Gas Blending Terminal

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

Wastewater from the wellhead to treatment for disposal, recycle or discharge

Natural Gas Liquids from fractionators / hubs to refineries and end users

Refined Products from refiners to 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

Invest in existing businesses such as crude oil logistics and water solutions which 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 dedications or volume commitments

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

Operating Segments

9

Crude Logistics Platform

Grand Mesa Pipeline Crude Assets Crude Transportation Crude Marketing

~550 miles of 20” Crude oil

pipeline from the DJ Basin to

Cushing, OK

150,000 BPD capacity

16 total truck unloading bays

970,000 BBL origin tankage

Our Crude Oil Logistics segment purchases crude oil from producers and transports it to refineries or for resale at pipeline

injection stations, storage terminals, barge loading facilities, rail facilities, refineries, and other trade hubs, and provides

storage, terminaling, trucking, marine and pipeline transportation services through its owned assets

4 NGL Crude Logistics Tows NGL Cushing Crude Oil Storage Tanks

Own 6 storage terminal facilities

3.6 MMbbls of storage in Cushing

1.7 MMbbls of storage in addition

to Cushing

Own 10 tow boats, 22 barges with

>25Mbbls per barge capacity

797 GP railcars leased or owned

163 owned trucks and 260 owned

trailers

27 LACT units

Operations are centered near

areas of high crude oil production,

such as the Bakken, DJ, Permian,

Eagle Ford, Anadarko, STACK,

SCOOP, Granite Wash,

Mississippi Lime, and southern

Louisiana at the Gulf of Mexico

10

Segment Contribution Grand Mesa Pipeline

Source: Current rig locations denoted by a black rig icon and the heat map represents permit activity in the last 180 days with permits denoted as dots based on data from DrillingInfo

as of 8/7/18

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

970,000 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

Total volumes for FY19 expected to average ~115kbpd

Average remaining contract term on the pipeline is

approximately 7 years

$-

$20

$40

$60

$80

$100

12/31/2015 12/31/2016 12/31/2017 12/31/2018

$28

$73

$48 $48

$107

$165-175

$13 $11

$12

$-

$40

$80

$120

$160

$200

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019E

Glass Mountain Crude Oil Logistics

11

Segment Contribution Crude Oil Logistics

Crude WTI Spot Price Area of Operation

Adjusted EBITDA (In Millions) FY 2019 Forecast Assumptions

Grand Mesa Pipeline

– Total volumes average ~115kbpd

Crude Assets

– Cushing market rates reduced with no assumed Contango

– Glass Mountain Sale in FY 2018

Crude Oil Marketing/Transportation

– Three new tow boats are put into service (1 every three

months starting in June)

– Assumed Crude Price forward curve April 1, 2018 – March

31, 2019 ($64.56-$59.63)

$61 $59

$118

12

Water Solutions Platform

Water Disposal Recycling & Freshwater Solids Solutions Water Pipelines

~134 completed SWD wells with

over 3.2 million BPD of total

capacity spanning:

Pinedale Anticline (WY)

DJ (CO)

Eagle Ford (TX)

Midland (TX)

Delaware (TX)

24x7 operations at most locations

1 water recycling facilities with

65,000 BPD of total capacity

Recycling opportunities in

Delaware Basin

Over 60 million barrels of water

recycled and discharged since

inception

11.6 million barrels per year of

freshwater rights in New Mexico

23 million barrels per year of

freshwater capacity in Texas

8 solids disposal facilities with

60,000 BPD of total capacity in

Texas

2 solids facilities in Colorado

Solids Processing Facility (C6)

Solids Slurry Injection (C9)

Provides producers with in-field

disposal alternative for Gels, High

Solids Content Water, Water and

Oil-Based Mud, and Tank Bottoms

2 landfill facilities in permitting

stages in New Mexico

Provides producers with in-field

disposal alternative for Gels, High

Solids Content Water, Water and

Oil-Based Mud, and Tank Bottoms

generated from oil and natural gas

production and drilling activities

~100 miles of water pipelines

owned by NGL plus > 75 miles

under development

~100 miles of water pipelines

owned by producers

Currently disposing of > 404,000

BPD of wastewater via pipelines

(both NGL and producer owned)

Our Water Solutions segment provides services for the treatment and disposal of wastewater generated from crude oil

and natural gas production and for the disposal of solids such as tank bottoms, drilling fluids and drilling muds and

performs truck and frac tank washouts. In addition, our Water Solutions segment sells the recovered hydrocarbons that

result from performing these services as well as freshwater

NGL saltwater disposal facility with solids processing capacity

Note: Includes FY2019 Q1 Acquisitions and South Pecos assets

13

South Pecos Water Disposal Divestiture Highlights

Represents continued progress towards NGL’s capital

allocation strategy

Cash proceeds of $238.8 million at closing plus

additional consideration upon meeting certain

criteria

Proceeds will be used to reduce outstanding

indebtedness, improve compliance leverage to

under 3.0x(1) by fiscal year-end and enhance liquidity

NGL continues to focus on a “self-funding” model for

growth opportunities as well as reducing overall

leverage

Supports NGL's ongoing strategy in the northern Delaware

Allows NGL to focus more fully on high return

opportunities around our consolidated and growing

position in the TX / NM state-line area

Recently acquired a large land position in the

northern Delaware, where NGL is developing

additional disposal facilities and significant pipeline

infrastructure

Continue to own and operate over 1MMBbls/d of

permitted disposal capacity in the Delaware Basin

following the transaction

REEVES COUNTY

WARD COUNTY

Ranger

Pecos 3

Highway 17S

Pecos

Central Reeves

PECOS

COUNTY

Barstow

Pyote

Toyah 8

Toyah 7

Pecos 2

Toyah 4

Toyah 6

Central Reeves 4 Central Reeves 3

Central Reeves 5

Legend

Approved Permit

In-Service

Pending Permit

Producer E to Pecos Pipeline

Central Reeves to Pecos Pipeline

Major Highways, Major Roads

County Line

Producer Pipeline

Pecos South

Asset Map Transaction Highlights

Note: Expected to close Q4 FY2019

(1) Assumes FY19 Public Guidance and all proceeds are utilized to repay compliance debt prior to 3/31/19

14

Delaware Basin – Characteristics

Note: Includes FY2019 Acquisitions and South Pecos assets

(1) Delaware Basin Production Statistics by County per DrillingInfo Data as of 11/8/18

Sample of Delaware Customers Salt Water

Disposal

Facilities &

Disposal Wells

NGL has 34 Salt Water Disposal Facilities & 50 Disposal Wells

in-service

31 Facilities in Texas and 3 in New Mexico

NGL has 1 Solids Disposal Facilities in-service at its Orla

Facility

Water

Pipelines

NGL has 45 pipeline tie-ins currently in-service

Pipelines (owned and third party) are moving ~265k bpd

in the basin

>50 miles of owned water pipelines in-service

~75 miles of water pipeline projects in progress at various

stages of development

Includes trunk line from Carlsbad, New Mexico to North

of Pecos, Texas (Western Express)

Crude

Production (1)

Crude Oil Production in the Delaware Basin reached 43.7

million BBLs (~1.5mm bpd) in April 2018

Market

Dynamics (1)

Produced Water to Crude Ratio of Approximately 4 to 1

Total Water Disposal Market of ~6.0mm bpd (based on

April 2018 crude production and water to crude ratio)

Water Disposal Market still very fragmented

Continue to see robust produced and flow back water demand

Demand expected to increase with production

Capital Focus NGL invested ~$235 million in acquisitions YTD thru 9/30/18

in Fiscal Year 2019

NGL invested ~$100 million in Delaware Basin organic

projects YTD thru 9/30/18 in Fiscal Year 2019

Expected return of 5x or better on acquisitions and organic

projects

15

Delaware Basin – SWD Facilities & Pipelines


Acquisition of ~122,000 acres through the purchase of the Beckham and McCloy ranches, including locations for over 20 saltwater disposal wells and 11.6 million barrels of annual fresh water rights in New Mexico

Expands service offerings to producers with capabilities to provide fresh water, recycling and treatment, cuttings landfill disposal, and produced water disposal in Eddy and Lea Counties

Total cost of the acquisitions was approximately $93 million with an estimated full year run-rate Adjusted EBITDA contribution of $18 million

0

100

200

300

400

500

12/31/2015 12/31/2016 12/31/2017 12/31/2018

Permian Basin Eagle Ford Basin DJ Basin

$68

$126

$72 $63

$117

$180-200

$-

$100

$200

$300

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019E

16

Segment Contribution Water Solutions

U.S Oil Rig Count(1) Area of Operation



(1) Baker Hughes as of December 2018.

Primary growth focused in Permian (Delaware) and DJ basins

Average skim oil percentage forecasted at 0.37% for each disposal volume

– Assumed Crude Price forward curve April 1, 2018 – March 31, 2019 ($64.56-$59.63), further adjusted for Differentials and Hedges

Pipelines, Solids disposal, Washouts, and other service revenues increase with volumes

Growth capital and planned acquisitions adds several new facilities and disposal wells to existing footprint

– ~$235 million in acquisitions

– ~$240 - 265 million in organic growth capex

Propane/Butane Wholesale

Office locations in Denver,

Chicago, Calgary, Houston, Tulsa

Fleet of ~4,300 railcars

28 transloading units

17

NGL Liquids Platform

NGL Terminals Sawtooth

400 Customers

Shipper on 5 common carrier

pipelines

Approximately 2.8 million barrels of

leased underground storage, 0.35

million barrels of above ground

storage

19 Terminals with throughput

capacity of ~11.3 million gallons

per day

10 terminals with rail

unloading capability

4 Multi-products terminals

9 Pipe-connected terminals

5 Caverns

~6.0 million barrels of butane and

propane storage capacity in Utah

Newly created JV structure to store

refined products

Our Liquids segment provides natural gas liquids procurement, storage, transportation, and supply services to

customers through assets owned by us and third parties. We also sell butanes and natural gasolines to refiners and

producers for use as blending stocks and diluent and assist refineries by managing their seasonal butane supply needs

Railcar Rack NGL Thackerville Liquids Terminal West Memphis NGL Wholesale Liquids Terminal

18

Segment Contribution Liquids

Heating Degree Days Area of Operation


$87 $93 $101

$64 $50

$60-75

$-

$50

$100

$150

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019E

Propane/Butane Wholesale

– Assumes a normal winter (5-year average of HDD)

– Assumes butane blending economics are better for refiners than FY 2018

NGL Terminals

– Results are determined by propane demand

Sawtooth

– Newly created JV structure with additional commercial development drive

– Additional rights to store refined products

19

Refined Products & Renewables Platform

Southeast Rack Marketing and Other Gas Blending

Line Space on Colonial and

Plantation pipelines

Long-term Lease of TLP SE

Terminals along Colonial and

Plantation Pipelines


storage capacity

Utilizing 3 major Pipelines

Magellan

NuStar

Explorer

Ethanol and Biodiesel Blending


storage capacity

Rack marketing services from over

180 terminals in 34 states

providing diesel and gasoline

products

Margins driven by normal

supply/demand activity as well as

disruption events such as weather

or refinery/pipeline issues

TLP-Collins Storage facility in

Collins, MS

1.15 million barrels capacity

Colonial Pipeline in/out

Nustar Storage Facility in Linden,

NJ

1.2 million barrels capacity

Our Refined Products and Renewables segment conducts gasoline, diesel, ethanol, and biodiesel marketing operations. In

addition, in certain storage locations, our Refined Products and Renewables segment may also purchase unfinished

gasoline blending components for subsequent blending into finished gasoline to supply our marketing business as well

as third parties

Collins, MS Refined Products Terminal

8,000

8,200

8,400

8,600

8,800

9,000

9,200

9,400

9,600

9,800

10,000

2011 to 2015 Range2011 to 2015 Average201620172018

20

Segment Contribution

DOE Total U.S. Gas Supplied(1) Area of Operation


Refined Products/Renewables

(1) Department of Energy EIA weekly data for 12/28/18.

Southeast (Colonial and Plantation pipelines)

– Average gross margin of $0.03 per gallon

– Renewables blending contributes ~$4.0 million of gross margin

Gas Blending

– Nymex delivery point allows for increased price protection for Southeast volumes

Rack Marketing and Other

– Diesel demand growth in the Permian basin

– Increased storage capacity to utilize for blending

– No significant legislative impact (Renewables)

$8

$79

$134 $125

$49 $55-80

$-

$50

$100

$150

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019E

21

Financial Overview

22

Financial Objectives

The Partnership has made significant strides with ~$1.5 billion in

asset sales and debt reduction in LTM 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

Crude and Water segments provide accretive 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


23

2nd Quarter Update

Segment Summary

– Crude Oil Logistics outperformed expectations primarily due to strong results from

Grand Mesa as the pipeline continues to benefit from increased production out of the

DJ Basin as well as improved margins in most basins.

– Water Solutions performed below expectations due to lower-than-expected skim oil

cut and basin differentials impacting the net price received for skim oil sales.

– Refined Products/Renewables performed below expectations due to significant price

volatility and minor supply disruptions, offset by stronger demand at our wholesale

locations, especially in the Southeast and West Texas. Second half of FY2019

should benefit from contango.

– Liquids performed above expectations as a result of higher margins due to increased

prices, improved railcar utilization and increased volumes attributable to an increase

in NGL volumes being transported via railcar due to increased production and third-

party pipeline infrastructure issues.

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 of projects in construction, recent acquisitions/divestitures and redemption of the

6.875% Senior Notes

(1)

(2)

(1)

Executed balance sheet and leverage improving transactions:

– Note Repurchases:

• Announced Redemption of all outstanding 6.875% Senior Notes due 2021

and subsequently redeemed in October

– Asset Sales:

• Sold Retail Propane sale for a gross consideration of $900 million in cash

Water growth initiated:

– Completed Water acquisitions of approximately $235 million, primarily in the

Delaware Basin

– Invested approximately $140 million on new SWD facilities, disposal wells, and

pipelines

Sep-18 Sep-17 % Variance

Total Volume (In Thousand's)

Refined Products/Renewables

Gasoline (BBL's) 47,067 26,459 78%

Diesel (BBL's) 12,057 14,990 -20%

Ethanol (BBL's) 621 978 -37%

Biodiesel (BBL's) 250 568 -56%

Crude Oil (BBL's) 11,891 8,562 39%

Crude Oil (Owned Pipelines) (BBL's) 9,578 8,182 17%

Liquids

Propane (GAL's) 266,654 257,775 3%

Butane (GAL's) 131,424 125,419 5%

Other NGL's (GAL's) 124,935 102,009 22%

Water Solutions

Permian Basin (BBL's) 489,861 273,290 79%

Eagle Ford Basin (BBL's) 271,059 209,792 29%

DJ Basin (BBL's) 166,152 108,952 53%

Other Basins (BBL's) 80,577 63,443 27%

Total Water Processed (BBL's) 1,007,649 655,477 54%

Total Revenue 6,654.6$ 3,876.7$ 72%

Total Cost of Sales 6,509.5$ 3,757.4$ 73%

Adjusted EBITDA 95.4$ 90.8$ 5%

Distributable Cash Flow 40.1$ 35.1$ 14%

Distribution to LP Unitholders 0.39$ 0.39$ 0%

TTM Distribution Coverage 0.95x 0.80x

Maintenance Capex 15.3$ 7.9$ 93%

Growth Capex with Investments 208.1$ 58.1$ 258%

Covenant Compliance Leverage 3.7x 5.4x

Total Debt (Excluding Working Capital Facility) 1,791.2$ 2,195.4$ -18%

Working Capital Facility 759.0$ 869.5$ -13%

Total Liquidity 775.0$ 696.8$ 11%

$169

$320

$274

$210 $180

>$250

$168

$266 $290

$182

$225 $235

FY 2014 FY 2015 FY2016 FY 2017 FY2018 FY2019E

Distributable Cash Flow Distributions

1.0x

1.2x

0.9x

1.2x

0.8x

1.1x

FY 2014 FY 2015 FY2016 FY 2017 FY2018 FY2019E

$24

$184

$271

$443 $424 $381

$408 $450

IPO FY 2013 FY 2014 FY 2015 FY2016 FY 2017 FY2018 FY2019E

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, and assumes the most recent quarterly distribution

annualized

(1)

(2)

$491

$1,269

$961

$138 $164 $50

$235 $59

$133 $160

$600

$334

$162

$270-295

$14 $32 $35 $30 $26 $38 $40-45

FY 2013 FY 2014 FY 2015 FY2016 FY 2017 FY 2018E FY 2019E

Acquisitions Growth Capital Maintenance Capital

2.9x 3.2x 3.2x

3.9x

4.7x 4.4x

3.25x or less

.00x

1.50x

3.00x

4.50x

6.00x

FY 2013 FY 2014 FY 2015 FY2016 FY 2017 FY 2018 FY 2019E

Credit Profile

Debt Maturities as of 9/30/18 (In Millions)

Covenant Compliance Leverage

3.25x

Target

Capitalization (In Thousands)

(1) 6.875% Senior Notes were called and retired as of October 16th, 2018

(2) 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 September 30, 2018 per the Partnership’s Credit Facility and used for covenant compliance totaled $1.4 billion as pro forma credit was given for the redemption of the 6.875% Senior Notes..

(2)

25

This

is

tied

out

$961

$353 $367(1)

$611

$389

$-

$400

$800

$1,200

Apr-18 Apr-19 Apr-20 Apr-21 Apr-22 Apr-23 Apr-24 Apr-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

(1)

9/30/2018 6/30/2018 Variance

Cash and Equivalents 36,374$ 13,682$ 22,692$

Total Debt:

Senior Secured Revolving Credit Facilities

Working Capital Facility 759,000 1,060,500 (301,500)

Acquisition Facility 65,000 265,500 (200,500)

5.125% Senior Notes due 2019 353,424 353,424 -

6.875% Senior Notes due 2021 367,048 367,048 -

7.500% Senior Notes due 2023 610,947 610,947 -

6.125% Senior Notes due 2025 389,135 389,135 -

Other Long-Term Debt 5,654 5,815 (161)

Total Debt, Excluding Working Capital Facility 1,791,208$ 1,991,869$ (200,661)$

10.75% Class A Convertible Preferred Units 104,362$ 91,559$ 12,803$

Equity:

General Partner (50,613) (50,919) 306

Limited Partners 2,046,621 1,740,410 306,211

Class B preferred limited partners 202,731 202,731 -

Accumulated Other Comprehensive Loss (270) (257) (13)

Noncontrolling interests 78,945 79,463 (518)

Total Capitalization 4,172,984$ 4,054,856$ 118,128$

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 certain 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 distribution coverage over 1.3x on a TTM basis

Excess distribution coverage will be reinvested in growth opportunities and reduce indebtedness

Targeting a capital structure with compliance leverage of under 3.25x and total leverage under 5.0x

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 Refined

Products/Renewables (TransMontaigne LLC)

100%

100%

NGL Crude Logistics (NGL Crude Logistics, LLC) (1)

123,741,462 C.U. Outstanding

29

2Q’19 Adjusted EBITDA & DCF Walk

2018 2017 2018 2017

Net income (loss) 354,939$ (173,579)$ 185,650$ (237,286)$

Less: Net loss (income) attributable to noncontrolling interests 518 (80) 863 (132)

Less: Net loss attributable to redeemable noncontrolling interests 48 288 446 685

Net income (loss) attributable to NGL Energy Partners LP 355,505 (173,371) 186,959 (236,733)

Interest expense 41,367 50,288 87,779 99,566

Income tax expense 815 111 1,466 570

Depreciation and amortization 53,507 69,426 115,082 137,489

EBITDA 451,194 (53,546) 391,286 892

Net unrealized (gains) losses on derivatives (1,893) 18,077 17,060 16,076

Inventory valuation adjustment 25,770 (2,165) 1,168 (21,347)

Lower of cost or market adjustments - 5,333 (413) 9,411

(Gain) loss on disposal or impairment of assets, net (403,185) 111,451 (301,418) 100,238

(Gain) loss on early extinguishment of liabilities, net - (1,943) 137 1,338

Equity-based compensation expense 19,219 6,065 24,730 14,886

Acquisition expense 2,863 264 4,115 (54)

Revaluation of liabilities - 5,600 800 5,600

Gavilon legal matter settlement - - 35,000 -

Other 1,402 1,616 3,219 2,641

Adjusted EBITDA 95,370 90,752 175,684 129,681

Less: Cash interest expense 38,892 47,344 82,732 93,715

Less: Income tax expense 815 111 1,466 570

Less: Maintenance capital expenditures 15,299 7,994 27,689 14,521

Less: Other 309 233 309 233

Distributable Cash Flow 40,055$ 35,070$ 63,488$ 20,642$

Three Months Ended September 30,

(in thousands)

Six Months Ended September 30,

(in thousands)

30

2Q’19 & 2Q’18 Adjusted EBITDA by Segment

Crude Oil Logistics Water Solutions Liquids

Refined Products

and Renewables

Corporate and

Other

Discontinued

Operations Consolidated

Operating income (loss) 31,022$ 9,770$ 10,758$ (29,507)$ (35,352)$ -$ (13,309)$

Depreciation and amortization 18,870 26,342 6,459 320 759 - 52,750

Amortization recorded to cost of sales - - 36 1,348 - - 1,384

Net unrealized (gains) losses on derivatives (6,142) 1,788 2,476 - - - (1,878)

Inventory valuation adjustment - - - 25,770 - - 25,770

Loss on disposal or impairment of assets, net 3,367 730 1,004 - 887 - 5,988

Equity-based compensation expense - - - - 19,219 - 19,219

Acquisition expense - - 1 - 2,864 - 2,865

Other income (expense), net 9 (370) 9 263 1,560 - 1,471

Adjusted EBITDA attributable to unconsolidated entities - 423 - - - - 423

Adjusted EBITDA attributable to noncontrolling interest - 26 (229) - - - (203)

Other 1,351 104 16 (70) - - 1,401

Discontinued operations - - - - - (511) (511)

Adjusted EBITDA 48,477$ 38,813$ 20,530$ (1,876)$ (10,063)$ (511)$ 95,370$


Refined Products

and Renewables

Corporate and

Other

Discontinued


Operating income (loss) 1,196$ (7,548)$ (118,107)$ 21,042$ (16,459)$ -$ (119,876)$

Depreciation and amortization 20,958 25,253 6,141 324 919 - 53,595

Amortization recorded to cost of sales 84 - 71 1,351 - - 1,506

Net unrealized gains on derivatives 2,170 3,022 12,682 - - - 17,874

Inventory valuation adjustment - - - (2,165) - - (2,165)

Lower of cost or market adjustments - - (2,476) 7,809 - - 5,333

(Gain) loss on disposal or impairment of assets, net (157) 915 117,729 (7,528) - - 110,959


Acquisition expense - - - - 264 - 264

Other income, net 50 2 3 167 1,415 - 1,637

Adjusted EBITDA attributable to unconsolidated entities 3,798 127 - 1,216 1 - 5,142

Adjusted EBITDA attributable to noncontrolling interest - (190) - - - - (190)

Revaluation of liabilities - 5,600 - - - - 5,600

Other 1,502 92 22 - - - 1,616

Discontinued operations - - - - - 3,392 3,392

Adjusted EBITDA 29,601$ 27,273$ 16,065$ 22,216$ (7,795)$ 3,392$ 90,752$

Three Months Ended September 30, 2018

(in thousands)

Three Months Ended September 30, 2017

(in thousands)

31

2Q’19 YTD & 2Q’18 YTD Adjusted EBITDA by Segment


Refined Products

and Renewables

Corporate and

Other

Discontinued


Operating (loss) income (68,716)$ 10,739$ 13,381$ (485)$ (52,782)$ -$ (97,863)$

Depreciation and amortization 38,099 51,651 12,927 641 1,477 - 104,795


Net unrealized losses on derivatives 1,270 10,898 4,813 - - - 16,981

Inventory valuation adjustment - - - 1,168 - - 1,168

Lower of cost or market adjustments - - (504) 91 - - (413)

Loss (gain) on disposal or impairment of assets, net 105,261 3,205 994 (3,026) 889 - 107,323


Acquisition expense - - 161 - 4,000 - 4,161

Other income (expense), net 23 (370) 44 246 (32,241) - (32,298)

Adjusted EBITDA attributable to unconsolidated entities - 369 - 476 - - 845

Adjusted EBITDA attributable to noncontrolling interest - (86) (551) - - - (637)

Revaluation of liabilities - 800 - - - - 800

Gavilon legal matter settlement - - - - 35,000 - 35,000

Other 2,901 204 33 80 - - 3,218


Adjusted EBITDA 78,918$ 77,410$ 31,371$ 1,887$ (18,927)$ 5,025$ 175,684$


Refined Products

and Renewables

Corporate and

Other

Discontinued


Operating income (loss) 5,553$ (8,702)$ (126,879)$ 35,538$ (34,185)$ -$ (128,675)$

Depreciation and amortization 41,793 49,261 12,471 648 1,839 - 106,012


Net unrealized losses on derivatives 1,511 3,022 11,313 - - - 15,846

Inventory valuation adjustment - - - (21,347) - - (21,347)

Lower of cost or market adjustments - - - 9,411 - - 9,411

(Gain) loss on disposal or impairment of assets, net (3,716) 185 117,729 (15,056) - - 99,142


Acquisition expense - - - - (54) - (54)

Other income, net 94 20 7 335 2,914 - 3,370

Adjusted EBITDA attributable to unconsolidated entities 7,620 281 - 2,107 - - 10,008

Adjusted EBITDA attributable to noncontrolling interest - (434) - - - - (434)

Revaluation of liabilities - 5,600 - - - - 5,600

Other 2,413 185 43 - - - 2,641


Adjusted EBITDA 55,437$ 49,418$ 14,825$ 14,417$ (14,600)$ 10,184$ 129,681$

Six Months Ended September 30, 2018

(in thousands)

Six Months Ended September 30, 2017

(in thousands)

Investor Presentation January 2019 - NGL Energy Partners LP … · This presentation includes “forward looking statements” within the meaning of federal securities laws. All statements,

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