NGL Energy Partners LP Announces the Payment of All Outstanding Distribution Arrearages for Class B, Class C and Class D Preferred Units as of Payment Date April 25, 2024

Rhea-AI Summary

NGL Energy Partners LP (NYSE: NGL) announced the approval of distributions to fully pay remaining arrearages on Class B, C, and D Preferred Units. The arrearage payments will be made to holders of specific preferred units, with amounts detailed for each class. The total distribution amount will be $98,089,360, financed through recent asset sales and a draw on the ABL. CEO Mike Krimbill highlighted the company's progress and increased flexibility due to this development.

Insights

Financial Analyst

The announcement by NGL Energy Partners LP to clear the distribution arrearage on their preferred units represents a significant step towards strengthening their financial standing. This move not only eliminates the accrued liabilities associated with the preferred units but also sends a positive signal to the market regarding the company's liquidity and ability to manage debt. The fact that this payment is financed through asset sale proceeds and credit facilities highlights NGL's strategic financial management in addressing short-term obligations without diluting shareholder equity.

However, the reliance on asset sales and debt to cover these payments may raise questions about the company's long-term financial strategy and operational cash flow sufficiency. Investors should monitor NGL's future cash flow statements and balance sheets to assess the sustainability of their financial practices and the potential impact on the company's leverage ratios.

Energy Sector Analyst

Clearing arrearages on preferred units indicates that NGL Energy Partners is actively managing its capital structure to optimize its financial profile within the energy sector. Such actions can improve the company's appeal to investors by showcasing a commitment to honoring its financial obligations. Additionally, the preference for asset sales over equity financing to manage these payments suggests a tactical approach to preserve shareholder value and avoid dilution.

Given the volatile nature of the energy market, this decision may also reflect an underlying strategy to maintain financial flexibility against future market uncertainties. Stakeholders should consider the potential impact of these financial decisions on NGL's operational capabilities and whether the divestiture of assets could affect the company's long-term growth prospects within the energy industry.

TULSA, Okla.--(BUSINESS WIRE)-- NGL Energy Partners LP (NYSE: NGL) announced today that the Board of Directors of its general partner approved distributions to fully pay the remaining distribution arrearage on the Class B, Class C and Class D Preferred Units. The arrearage payment will be made to the holders of the Partnership’s 12.544% Class B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class B Preferred Units”) and the 9.625% Class C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class C Preferred Units”) in accordance with the terms outlined in NGL’s partnership agreement.

Each of the Class B Preferred Units will receive $2.475 to fully pay all outstanding distribution arrearages and interest as of April 25, 2024, which includes the distribution earned in the quarter ending March 31, 2024. The distribution will be paid on April 25, 2024, to the holders of record at the close of trading on April 19, 2024.

Each of the Class C Preferred Units will receive $2.186 to fully pay all outstanding distribution arrearages and interest as of April 25, 2024, which includes the distribution earned in the quarter ending March 31, 2024. The distribution will be paid on April 25, 2024, to the holders of record at the close of trading on April 19, 2024.

Additionally, the Board of Directors declared a cash distribution in the amount of $63,005,374 to fully pay all outstanding distribution arrearages and interest as of April 25, 2024, on the Class D Preferred units, which includes the distribution earned in the quarter ending March 31, 2024. The arrearage payment on the Class D Preferred units will be made on April 25, 2024.

The total amount of the distribution will be $98,089,360 which will be financed with recently announced North and South Ranch sale proceeds and a draw on the ABL.

“NGL has made tremendous progress this year and with the announcement of becoming current on all our preferred unit classes, NGL has more flexibility with respect to capital investment and equity,” commented Mike Krimbill, NGL’s CEO.

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/20240409329394/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 ticker symbol for NGL Energy Partners LP?

The ticker symbol for NGL Energy Partners LP is NGL.

What arrearages were fully paid by NGL Energy Partners LP?

NGL Energy Partners LP fully paid the remaining distribution arrearages on Class B, C, and D Preferred Units.

How will the arrearage payment be made to holders of Class B Preferred Units?

Each Class B Preferred Unit holder will receive $2.475 to fully pay all outstanding arrearages and interest as of April 25, 2024.

When will the arrearage payment be made to holders of Class C Preferred Units?

The arrearage payment for Class C Preferred Units will be made on April 25, 2024, to holders of record at the close of trading on April 19, 2024.

How much will be the total distribution amount for the Class D Preferred units?

The total distribution amount for the Class D Preferred units will be $98,089,360, financed with asset sales proceeds and a draw on the ABL.