NGL Energy Partners attributes first quarter loss to energy collapse, customer's bankruptcy
TULSA — COVID-19’s impact on energy markets and a bankruptcy involving one of NGL Energy Partners’ customers pushed the company into the red for the first quarter of its 2021 fiscal year.
In a report it issued after markets closed Monday, the company stated it encountered a net loss involving continuing operations of $33.8 million on total revenues of about $844.4 million.
In its first quarter of 2020, it posted net earnings involving continuing operations of about $9 million on total revenues of about $1.87 billion.
On a per-unit basis, the company reported first quarter losses in both fiscal 2020 and this year.
In fiscal 2020, first quarter losses (including earnings attributable to non-controlling interests and NGL Energy Partners and to continuing and discontinued operations) shook out to about 96 cents per unit.
The company’s first quarter loss for fiscal 2021, meanwhile, was about 44 cents per unit.
The company’s adjusted first quarter 2021 earnings from continuing operations before interest, taxes, depreciation and amortization was $91 million, compared to about $103.7 million the same time a year ago.
Distributable cash flow for first quarter fiscal 2021 was about $26.7 million, compared to about $36.3 million in fiscal 2020.
NGL Energy Partners 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.
Officials stated results were hurt this year by significant commodity price volatility that caused a lower demand for crude oil, liquids and refined products.
That decreased demand translated into reduced production volumes and drilling activity, they observed.
As for the bankruptcy, NGL Energy Partners did not reveal the name of the company involved. Officials did note, however, that NGL is pursuing payment of what it is owed for its services to that client through the bankruptcy process.
Company officials stated NGL Energy Partners made progress during the period to prepare its business for the future by securing an extension of a current produced water transportation and disposal agreement with an existing customer in the Denver Basin through 2027.
They also noted it had made other extensions or new agreements with key producers in the Delaware Basin that it will service using its existing infrastructure.
The company, meanwhile, cut its operating expenses by about $2 million monthly, starting in June.
“Our first quarter results do not fully reflect the actions the partnership has taken to maximize earnings through this unique environment,” stated Mike Krimbill, NGL’s CEO. “We benefited significantly from our crude oil storage assets during the period; however, these benefits are not immediately evident as we have recognized hedge losses on inventory this quarter on product that will be sold with profits recognized in the second quarter.
"We also held most of the skim oil barrels recovered in inventory during the quarter due to the low crude prices and have been selling those barrels in the second quarter at much higher price levels. We believe May and June to be the low point in our water volumes as we have seen producers bring production back online and increase activity with crude prices now exceeding $40 per barrel."