NGL Energy Partners LP Announces $50 Million LP Common Unit Repurchase Program

Rhea-AI Summary

NGL Energy Partners LP (NYSE: NGL) has announced a common unit repurchase program authorized by its Board of Directors, allowing the repurchase of up to $50 million of its outstanding units.

The program does not have a fixed expiration date, enabling NGL to purchase shares discretionarily through open market transactions or privately negotiated deals.

Additionally, repurchases can be made under a Rule 10b5-1 plan, allowing purchases even during periods when insider trading laws or self-imposed trading restrictions apply.

The number and timing of repurchases will depend on market conditions, stock price, trading volume, general business conditions, and capital availability. The program is flexible and can be modified, suspended, or terminated at any time without notice.

Positive

• NGL Energy Partners LP authorized a $50 million common unit repurchase program.
• The repurchase program does not have a fixed expiration date, offering flexibility.
• Shares can be repurchased through open market or privately negotiated transactions.
• Repurchases may also occur under a Rule 10b5-1 plan, allowing flexibility during restricted trading periods.

Negative

• The repurchase program does not obligate NGL to acquire a specified number of units.
• The program may be modified, suspended, or discontinued at any time without notice.
• Discretionary nature of the repurchase may lead to uncertainty regarding the actual number of shares repurchased.

Insights

Financial Analyst

The announcement of a common unit repurchase program by NGL Energy Partners LP is a significant development for shareholders. This type of program can signal confidence from the management in the company's current financial health and future prospects. By spending up to $50 million on repurchasing units, NGL is effectively reducing the number of outstanding shares. This can have the effect of increasing the earnings per share (EPS), making the remaining shares more valuable.

From a financial perspective, share repurchases can also be seen as an alternative to paying dividends, providing a tax-efficient way to return capital to shareholders. However, it's essential to consider the opportunity cost; the $50 million allocated for repurchases could potentially be used for other investments, such as paying down debt or funding growth initiatives. Given that NGL operates in the energy sector, which is capital-intensive and susceptible to market volatility, the decision to use funds for repurchase should be carefully weighed against other financial needs.

This move can be viewed as a positive signal to the market, indicating that NGL's management believes the current unit price is undervalued and they have sufficient liquidity to carry out the repurchase without jeopardizing other operational needs.

Market Research Analyst

For investors, the flexibility of the repurchase program is worth noting. The absence of a fixed expiration date allows NGL to capitalize on favorable market conditions and insider buying windows, particularly through a Rule 10b5-1 plan. This can help the company avoid the restrictions that typically govern insider trades and make repurchases during periods that would otherwise be blackout windows, ensuring that they can act in the best interest of shareholders even during volatile periods.

However, it is also important for investors to monitor how the repurchase program is executed. If the market conditions deteriorate, or if NGL's financial position changes, the program can be suspended or discontinued. Thus, while the program is a positive indicator of the company's confidence, it does not guarantee a sustained boost in unit prices.

The discretionary nature of this program suggests that repurchases will be made opportunistically, which can potentially lead to favorable outcomes if timed well. Investors should keep an eye on the company's quarterly reports and announcements to gauge the progress and impact of this program.

TULSA, Okla.--(BUSINESS WIRE)-- NGL Energy Partners LP (NYSE: NGL) (“NGL,” or the “Partnership”) announced today that the Board of Directors of its general partner has authorized a common unit repurchase program, under which NGL may repurchase up to $50 million of its outstanding units representing limited partnership interests of NGL and does not have a fixed expiration date.

Under the common unit repurchase program, NGL may purchase shares of common units on a discretionary basis from time to time through open market transactions or privately negotiated transactions at prices deemed appropriate by NGL. In addition, at the discretion of NGL, open market repurchase of common units may also be made under a Rule 10b5-1 plan, which would permit common units to be repurchased when NGL might otherwise be precluded from doing so under insider trading laws or self-imposed trading restrictions.

The timing and number of shares repurchased will be determined based on an evaluation of market conditions and other factors, including stock price, trading volume, general business and market conditions, and capital availability. The stock repurchase program does not obligate NGL to acquire a specified number of units and may be modified, suspended, or discontinued at any time at NGL’s discretion without notice.

Forward-Looking Statements

Certain matters contained in this press release include “forward-looking statements.” All statements, other than statements of historical fact, included in this press release may constitute forwarding-looking statements. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that these expectations will prove correct. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. Factors that might cause actual results to differ include, but are not limited to, the risk factors discussed from time to time in each of our documents and reports filed with the SEC.

Readers are cautioned not to place undue reliance on any forward-looking statements contained in this press release, which reflect management’s opinions only as of the date hereof. Except as required by law, we undertake no obligation to revise or publicly release the results of any revision to any forward-looking statements.

About NGL Energy Partners LP

NGL Energy Partners LP, a Delaware limited partnership, is a diversified midstream energy company that transports, stores, markets and provides other logistics services for crude oil, natural gas liquids and other products and transports, treats and disposes of produced water generated as part of the oil and natural gas production process. For further information, visit the Partnership’s website at www.nglenergypartners.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240606142885/en/

Investor Contact:

NGL Energy Partners LP

David Sullivan, 918-495-4631

Vice President - Finance

David.Sullivan@nglep.com

Source: NGL Energy Partners LP

FAQ

What is the value of NGL Energy Partners' repurchase program?

NGL Energy Partners has authorized a repurchase program valued at up to $50 million.

Does NGL's repurchase program have an expiration date?

No, the repurchase program does not have a fixed expiration date.

How will NGL execute the repurchases?

NGL may repurchase shares through open market transactions or privately negotiated deals.

Can NGL repurchase shares during insider trading restrictions?

Yes, under the Rule 10b5-1 plan, NGL can repurchase shares even during periods when insider trading laws or self-imposed restrictions apply.

What factors will influence the timing and number of repurchased shares by NGL?

Factors include market conditions, stock price, trading volume, general business conditions, and capital availability.

Is NGL obligated to repurchase a specific number of units under this program?

No, the repurchase program does not obligate NGL to acquire a specified number of units.

Can NGL modify or suspend the repurchase program?

Yes, NGL can modify, suspend, or discontinue the program at any time without notice.