NGL Energy Partners LP

Previous wording

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, 2025. The discussion should be read in conjunction with the 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, 2025 (“Annual Report”) filed with the Securities and Exchange Commission (“SEC”) on May 29, 2025.

Current wording

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 and six months ended September 30, 2025. The discussion should be read in conjunction with the 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, 2025 (“Annual Report”) filed with the Securities and Exchange Commission on May 29, 2025.

Previous wording

Changes in commodity prices and sales volumes affect both revenues and cost of sales our unaudited condensed consolidated statements of operations and, therefore, the impact is largely offset between these line items.

Current wording

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.

Previous wording

Operating income increased $15.4 million for the three months ended June 30, 2025, compared with the same period in 2024, primarily as a result of the following:

Current wording

Operating income increased $12.8 million for the three months ended September 30, 2025, compared with the same period in 2024, primarily as a result of the following:

Previous wording

•Water Solutions– an increase of $0.6 million due primarily to higher water disposal revenues from increased produced water volumes processed, partially offset by increased expenses mainly due to losses on disposal or impairment of assets and higher depreciation and amortization expense;

Current wording

•Water Solutions– an increase of $19.5 million due primarily to higher water disposal revenues from an increase in produced water volumes processed, partially offset by increased expenses mainly due to losses on disposal or impairment of assets and higher depreciation and amortization expense;

Previous wording

•Crude Oil Logistics– a decrease of $13.4 million due primarily to lower sales volumes because of lower production on acreage dedicated to us and increased expenses due to a net loss on the sale of assets; and

Current wording

•Crude Oil Logistics– a decrease of $20.0 million due primarily to lower transportation revenue and increased expenses due to a net loss on the sale of assets;

Previous wording

•Liquids Logistics– an increase of $28.2 million due primarily to lower expenses related to the Wholesale Propane Disposition, including a gain on the sale, and increased margins from the sale of products.

Current wording

•Liquids Logistics– an increase of $31.9 million due primarily to lower expenses related to the Wholesale Propane Disposition, including a gain on the sale, and increased margins from the sale of products; and

Previous wording

(4) Total produced water barrels processed during the three months ended June 30, 2025 and 2024 were 252,216,853 and 224,348,310, respectively. These amounts do not include 16,367,740 barrels and 11,699,806 barrels for the three months ended June 30, 2025 and 2024, respectively, related to payments made by certain producers for committed volumes not delivered, as discussed further below. In addition, water pipeline revenue, which is included in Other Revenues, includes payments from a producer for 9,446,030 committed barrels not delivered during the three months ended June 30, 2025.

Current wording

(4) Total produced water barrels processed during the three months ended September 30, 2025 and 2024 were 257,913,208 and 246,700,755, respectively. These amounts do not include 23,670,072 barrels and 7,693,542 barrels for the three months ended September 30, 2025 and 2024, respectively, related to payments made by certain producers for committed volumes not delivered, as discussed further below. In addition, water pipeline revenue, which is included in Other Revenues, includes payments from a producer for 8,160,115 committed barrels not delivered during the three months ended September 30, 2025.

Previous wording

(5) Excluding payments made by certain producers for committed volumes not delivered, service fees for produced water processed ($/barrel) would have been $0.61/barrel and $0.61/barrel during the three months ended June 30, 2025 and 2024, respectively.

Current wording

(5) Excluding payments made by certain producers for committed volumes not delivered, service fees for produced water processed ($/barrel) would have been $0.61/barrel and $0.59/barrel during the three months ended September 30, 2025 and 2024, respectively.

Previous wording

Recycled Water Revenues. Revenue from recycled water includes the sale of produced water and recycled water for use in our customers’ completion activities. The decrease was due primarily to lower pricing for recycled water, partially offset by higher recycled water volumes related to timing of water to be used in completions.

Current wording

Recycled Water Revenues. Revenue from recycled water 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 and higher recycled water volumes related to timing of water to be used in completions.

Previous wording

Depreciation and Amortization Expense. The increase was due primarily to depreciation of newly developed facilities and infrastructure, partially offset by certain long-term assets being fully amortized, impaired or sold during the fiscal year ended March 31, 2025 and three months ended June 30, 2025.

Current wording

Depreciation and Amortization Expense. The increase was due primarily to depreciation of newly developed facilities and infrastructure, partially offset by certain long-term assets being fully amortized, impaired or sold during the fiscal year ended March 31, 2025 and six months ended September 30, 2025.

Previous wording

Crude Oil 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 lower sales volumes because of lower production on acreage dedicated to us in the DJ Basin during the three months ended June 30, 2025, compared to the three months ended June 30, 2024. Lower crude oil prices also significantly contributed to the decrease.

Current wording

Crude Oil Sales and Cost of Sales-Excluding Impact of Derivatives. The decreases in sales and cost of sales, excluding the impact of derivatives, were primarily due to lower commodity prices partially offset by higher production on acreage dedicated to us in the DJ Basin during the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

Previous wording

During the three months ended June 30, 2025, the crude oil product margin decreased primarily due to lower volumes and lower prices as discussed further above. The increase in the crude oil product margin per barrel for the three months ended June 30, 2025 was favorably impacted from the sale of lower-priced inventory into a market of rising prices, compared to the opposite occurring in the prior period when higher-priced inventory was sold into a market of declining prices. Crude oil product margin calculations do not include gains and losses from derivatives that may offset the movement in the physical margin.

Current wording

During the three months ended September 30, 2025, the crude oil product margin and margin per barrel increased primarily due to higher price and quality differentials realized during the three months ended September 30, 2025, compared to the three months ended September 30, 2024. Additionally, there was a more significant decrease in market prices during the three months ended September 30, 2024, thus also contributing to a smaller margin per barrel for that period. Crude oil product margin calculations do not include gains and losses from derivatives that may offset the movement in the physical margin.

Previous wording

During the three months ended June 30, 2025, physical volumes on the Grand Mesa Pipeline averaged approximately 55,000 barrels per day, compared to approximately 63,000 barrels per day during the three months ended June 30, 2024. Lower contracted volumes were shipped on the Grand Mesa Pipeline due to lower production on acreage dedicated to us in the DJ Basin.

Current wording

During the three months ended September 30, 2025, physical volumes on the Grand Mesa Pipeline averaged approximately 72,000 barrels per day, compared to approximately 63,000 barrels per day during the three months ended September 30, 2024. Higher contracted volumes were shipped on the Grand Mesa Pipeline due to higher production on acreage dedicated to us in the DJ Basin.

Previous wording

Operating and General and Administrative Expenses. The decrease was primarily due to lower incentive compensation expense accrued during the three months ended June 30, 2025, lower repairs and maintenance expense and lower utilities expense on the Grand Mesa Pipeline from lower volumes flowing through the system during the three months ended June 30, 2025, compared to the three months ended June 30, 2024. These decreases were partially offset by higher ad valorem taxes.

Current wording

Operating and General and Administrative Expenses. The decrease was primarily due to lower incentive compensation expense accrued during the three months ended September 30, 2025, and lower ad valorem taxes due to lower assessed values on our Grand Mesa Pipeline assets in the State of Colorado, which were partially offset by higher utilities expense on the Grand Mesa Pipeline from higher volumes flowing through the system during the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

Previous wording

Depreciation and Amortization Expense. The decrease was primarily due to the sale of railcars during the year ended March 31, 2025 and the three months ended June 30, 2025.

Current wording

Depreciation and Amortization Expense. The decrease was primarily due to the sale of railcars during the year ended March 31, 2025 and the six months ended September 30, 2025.

Previous wording

Butane Sales and Cost of Sales-Excluding Impact of Derivatives. The increases in sales and cost of sales, excluding the impact of derivatives, during the three months ended June 30, 2025 compared to the three months ended June 30, 2024 were due primarily to a new contract to supply product to a third-party to export out of our Chesapeake terminal.

Current wording

Butane Sales and Cost of Sales-Excluding Impact of Derivatives. The decreases in sales and cost of sales, excluding the impact of derivatives, during the three months ended September 30, 2025, compared to the three months ended September 30, 2024 were primarily due to lower butane prices during the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

Previous wording

Other Products Sales and Cost of Sales-Excluding Impact of Derivatives. The decreases in sales and cost of sales, excluding the impact of derivatives, were due to a decrease in commodity prices during the three months ended June 30, 2025 compared with the three months ended June 30, 2024. Volumes increased due to strong spot markets for natural gasoline and isobutane and consistent supply of asphalt during the three months ended June 30, 2025.

Current wording

Other Products Sales and Cost of Sales-Excluding Impact of Derivatives. The decreases in sales and cost of sales, excluding the impact of derivatives, were primarily due to decreased commodity prices during the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

Previous wording

Other products sales product margins, excluding the impact of derivatives, increased during the three months ended June 30, 2025 due to the increase in volumes, as discussed above, and more favorable supply contracts compared to the prior year period. This was partially offset by lower asphalt margins due to uncertainly in the market with regards to tariffs.

Current wording

Other products sales product margins, excluding the impact of derivatives, decreased during the three months ended September 30, 2025 primarily due to lower asphalt margins due to an increase in product costs.

Previous wording

Service Revenues. These revenues relate to billings to the noncontrolling interest holders for usage of the airplanes.

Current wording

Service Revenues. These revenues relate to billings to the noncontrolling interest holders for usage of the airplanes acquired in June and October 2024.

Previous wording

Operating and General and Administrative Expenses. The increase was due primarily to higher royalty expense due to volumes related to the LEX II pipeline commencing operations and increased volumes at certain other saltwater disposal wells and higher utilities expense due to increased produced water volumes processed, partially offset by lower bad debt expense.

Current wording

Operating and General and Administrative Expenses. The increase was due primarily to higher royalty expense due to volumes related to the LEX II pipeline commencing operations and increased volumes at certain other saltwater disposal wells, higher utilities expense due to increased produced water volumes processed and higher repairs and maintenance expense due to timing of repairs, partially offset by lower bad debt expense and lower legal expense.

Previous wording

Loss on Disposal or Impairment of Assets, Net. 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 the linefill barrels. The losses from the sale of linefill are partially offset by a gain of $1.7 million on the sale of railcars that were sold during the three months ended June 30, 2025.

Current wording

Loss (Gain) on Disposal or Impairment of Assets, Net. During the six months ended September 30, 2025, we recorded a loss from the sale of linefill held on third-party pipelines of $5.9 million, which includes a loss from derivatives of $1.8 million from hedging transactions relating to the sale of linefill barrels. We also recorded of loss of $0.3 million related to the retirement of certain assets. In addition, we recorded a gain of $2.2 million from the sale of railcars during the six months ended September 30, 2025. During the six months ended September 30, 2024, we recorded a net gain of $0.4 million primarily due to a gain on the sale of certain assets.

Previous wording

Propane product margins, excluding the impact of derivatives, decreased during the three months ended June 30, 2025 primarily due to a negative margin from our wholesale propane business, prior to the close of the Wholesale Propane Disposition on April 30, 2025, as we sold higher-priced inventory purchased during the three months ended March 31, 2025 into a declining market.

Current wording

Propane product margins, excluding the impact of derivatives, decreased during the six months ended September 30, 2025 primarily due to the negative margin from our wholesale propane business prior to the Wholesale Propane Disposition on April 30, 2025, as higher-priced inventory was sold into a declining market.

Previous wording

Service Sales and Cost of Sales. The sales includes storage, terminaling and transportation services income. Sales and cost of sales during the three months ended June 30, 2025 decreased due to the Wholesale Propane Disposition and the expiration of a throughput contract during the prior fiscal year.

Current wording

Service Sales and Cost of Sales. The sales include storage, terminaling and transportation services income. Sales and cost of sales decreased during the six months ended September 30, 2025 due to the Wholesale Propane Disposition and the expiration of a throughput agreement in the prior fiscal year.

Previous wording

Gain on Disposal or Impairment of Assets, Net. 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 the certain right-of-use assets.

Current wording

Gain on Disposal or Impairment of Assets, Net. During the six months ended September 30, 2025, we recorded a net gain of $17.3 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.

Previous wording

Depreciation and Amortization Expense. The increase during the three months ended June 30, 2025 was due to depreciation of the two airplanes put into service during the year ended March 31, 2025.

Current wording

Depreciation and Amortization Expense. The increase during the six months ended September 30, 2025 was due to depreciation of the two airplanes put into service during the year ended March 31, 2025.

Previous wording

Total commitments under the ABL Facility are $475.0 million, subject to a borrowing base, and includes a sub-limit for letters of credit of $200.0 million. At June 30, 2025, $37.0 million was outstanding under the ABL Facility, letters of credit outstanding were $51.8 million and we had a borrowing base of $313.6 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.

Current wording

Total commitments under the ABL Facility are $475.0 million, subject to a borrowing base, and includes a sub-limit for letters of credit of $200.0 million. At September 30, 2025, $71.0 million was outstanding under the ABL Facility, letters of credit outstanding were $53.6 million and we had a borrowing base of $399.6 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.

Previous wording

As of June 30, 2025, our current assets exceeded our current liabilities by approximately $116.8 million.

Current wording

As of September 30, 2025, our current assets exceeded our current liabilities by approximately $147.6 million.

Previous wording

On February 2, 2024, we entered into a new seven-year $700.0 million Term Loan B. The Term Loan B matures on February 2, 2031 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, 2025 is $691.3 million.

Current wording

On February 2, 2024, we entered into a new seven-year $700.0 million Term Loan B. The Term Loan B matures on February 2, 2031 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 September 30, 2025 is $689.5 million.

Previous wording

(1) Amount for the three months ended June 30, 2024 is related to a transaction classified as an acquisition of assets in a prior period.

Current wording

(1) Amount for the six months ended September 30, 2024 is related to a transaction classified as an acquisition of assets in a prior period.

Previous wording

There were no acquisitions or other investments during the three months ended June 30, 2025 or 2024.

Current wording

There were no acquisitions during the three months or six months ended September 30, 2025 or 2024.

Previous wording

Capital expenditures for the fiscal year ending March 31, 2026 are expected to be approximately $105 million.

Current wording

Capital expenditures for the fiscal year ending March 31, 2026 are expected to be approximately $205 million.

Previous wording

On June 18, 2025, the board of directors of our GP declared a cash distribution for the quarter ended June 30, 2025 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 $26.2 million was made on July 15, 2025 to the holders of record at the close of trading on July 1, 2025.

Current wording

On September 18, 2025, the board of directors of our GP declared a cash distribution for the quarter ended September 30, 2025 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 $26.1 million was made on October 15, 2025 to the holders of record at the close of trading on October 1, 2025.

Previous wording

Our contractual obligations primarily consist of purchase commitments, outstanding debt principal and interest obligations, operating lease obligations, asset retirement obligations and other commitments.

Current wording

Our contractual obligations primarily consist of purchase commitments, outstanding debt principal and interest obligations, lease obligations, asset retirement obligations and other commitments.

Previous wording

Operating Activities-Continuing Operations. The increase in net cash provided by operating activities during the three months ended June 30, 2025 was due primarily to higher earnings from operations as well as fluctuations in working capital, particularly accounts receivable and accounts payable, due to lower crude oil volumes and lower crude oil prices, lower purchases and sales of natural gas liquids due to the Wholesale Propane Disposition and the timing of invoices and payments on construction projects as well as fluctuations in inventory due to building our natural gas liquids inventories in anticipation of the butane blending and heating seasons. Also, on June 13, 2024, we paid LCT Capital, LLC (“LCT”) $63.3 million related to the legal judgment against us, of which $27.2 million represented interest and $0.1 million of costs awarded to LCT.

Current wording

Operating Activities-Continuing Operations. The increase in net cash provided by operating activities during the six months ended September 30, 2025 was due primarily to higher earnings from operations as well as fluctuations in working capital, particularly accounts receivable and accounts payable, due to lower crude oil volumes and lower crude oil prices, lower purchases and sales of natural gas liquids due to the Wholesale Propane Disposition and the timing of invoices and payments on construction projects as well as fluctuations in inventory due to building our natural gas liquids inventories in anticipation of the butane blending and heating seasons. Also, on June 13, 2024, we paid LCT Capital, LLC (“LCT”) $63.3 million related to the legal judgment against us, of which $27.2 million represented interest and $0.1 million of costs awarded to LCT.