Greetings. Welcome to the NGL Energy Partners LP 2025Q4 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. Please note, this conference is being recorded. I will now turn the conference over to your host, Brad Cooper, CFO. You may begin. Good afternoon. Thank you to everyone for joining us on the call today.

Our comments today will include plans, forecasts, and estimates. Forward-looking statements under U.S. securities law. These comments are subject to assumptions, risks, and uncertainties that could cause actual results to differ from the forward-looking statements. Please take note of the cautionary language and risk factors provided in our presentation materials and our other public disclosure materials. Before I start discussing our fourth quarter and full-year results, I would like to thank the NGL Energy Partners LP employees for executing on our strategic initiatives and executing on the non-core asset sales that have positioned the partnership quite well heading into fiscal 2026. As we announced in the May 5 press release, we closed on the sale of the 18 natural gas liquids terminals, including Green Bay. In addition to closing these previously announced asset sales, we monetized our Rack Marketing refined products business, our Limestone Ranch ownership, and most of our crude oil railcar fleet. The total asset sale proceeds, inclusive of working capital, were monetized for a double-digit multiple. Also, we completed the full wind-down of the biodiesel business, completing our final deliveries in the fiscal fourth quarter. These non-core asset sales will allow us to focus on our core assets. Additionally, these asset sales reduce our volatility and seasonality of our adjusted EBITDA. The wind-down and divesting of these businesses eliminate, on average, $75 million of working capital, and at the peak, over $100 million of working capital, based on the prior twelve months of activity. The elimination of this working capital and earnings volatility will allow us to be less leveraged as we continue to further address our capital structure and specifically the Class D preferred units. Proceeds from these sales have allowed us to pay off the entirety of the outstanding indebtedness on our ABL. Also, we purchased 20,000 units of the Class D preferreds in the open market. As discussed on previous earnings calls, we will continue to rightsize the portfolio and organization and will look for opportunities to further reduce the asset footprint within the liquids logistics segment. Let's get into the quarterly results. Consolidated adjusted EBITDA from continuing operations for the quarter came in at $176.8 million in the fourth quarter compared to $147.9 million in the prior year fourth quarter. Approximately 20% higher than the prior fourth quarter. The increase was primarily driven by the performance of our Water Solutions business segment. Our full-year adjusted EBITDA from continuing operations was $622.9 million, which exceeds our previous guidance of $620 million. Water Solutions adjusted EBITDA was $154.9 million in the fourth quarter, compared to $123.4 million in the prior fourth quarter. Physical water disposal volumes were 2.73 million barrels per day in the fourth quarter versus 2.39 million barrels per day in the prior year fourth quarter. Total volumes we were paid to dispose of, including deficiency volumes, were 2.89 million barrels per day in the fourth quarter versus 2.6 million barrels per day in the prior year fourth quarter. So total volumes we were paid to dispose of were up 11% in the fourth quarter of fiscal 2025 over the fourth quarter of fiscal 2024. The increased EBITDA in Water Solutions is due to overall higher disposal revenues, from higher disposal volumes as well as higher fees charged for interruptible spot volumes. We also received a full quarter of the Lex II pipeline contribution that was put in service during our third fiscal quarter. The Water Solutions team continues to drive operating expense per barrel lower. Operating cost per barrel was 22¢ for fiscal 2025 versus 24¢ per barrel for fiscal 2024. For the quarter ended March 31, 2025, the operating cost per barrel was 23¢. The Water Solutions segment is off to a good start for fiscal 2026 as volumes continue to exceed internal expectations. With the current market sentiment and oil price uncertainty, we have not seen any drop-off in activity from our customers in the core of the basin. We will continue to monitor activity levels and the impact that commodity prices and tariffs could have on our Water Solutions segment. We are well-positioned with 90% of our volumes committed through acreage dedications and MVCs. Recall, 80% of our total volumes are with investment-grade counterparties. Crude oil logistics adjusted EBITDA was $13.1 million in the fourth quarter of fiscal 2025, versus $15.3 million in the prior year's fourth quarter. During the quarter, volumes on the Grand Mesa pipeline averaged approximately 56,000 barrels per day compared to 67,000 barrels per day for the fourth quarter of 2024. The reduction in EBITDA for the quarter compared to the same quarter from the previous year is predominantly driven by lower volumes on Grand Mesa. As previously discussed, we signed a contract with Prairie Operating, where NGL Crude Marketing will ship their production. We anticipate our first tranche of new volumes on Grand Mesa in early July from this new contract. Liquids Logistics adjusted EBITDA was $17.7 million in the fourth quarter versus $22.2 million in the prior fourth quarter. Margins for product sales decreased by about $7.1 million as butane margins declined due to a weak gasoline blending season. Propane margins were essentially flat quarter over quarter. Expenses decreased in the fourth quarter of fiscal 2025 due to reduced compensation. For fiscal 2026, we are guiding EBITDA of $615 million to $625 million with total capital expenditures of $105 million. Of the $105 million in total capital expenditures, $60 million will be spent on growth projects in the Water Solutions segment. As I mentioned earlier, water disposal volumes are ahead of our internal expectations, and we are off to a nice start for fiscal 2026. With that, I would now like to turn the call over to our CEO, Mike Krimbill.

Thanks, Brad. Good afternoon, everyone. I think many analysts and investors seem to be focused on quarterly results and may overlook the progress that NGL Energy Partners LP is making. I'd like to look back over the last fourteen months to review our accomplishments. In February 2024, we began paying off the dividend arrearages on all three classes of our outstanding preferred units. It required three months and $475 million to complete this effort, such that we are now and have been current on our preferred equity financial obligations. At the same time, we continue to grow our Water Solutions business. We entered into a five-year 200,000 barrel per day MVC contract that allowed us to construct the LEX II water pipeline. This pipeline was placed into service in November of 2024, contributing five months of activity to fiscal 2025. We now have two large diameter pipelines with total capacity expandable to 500,000 barrels per day taking water east into Andrews County. Meanwhile, we continue to grow our Water Solutions business. In the fiscal year 2025 just ended, we achieved both record water disposal volumes and adjusted EBITDA. Through the first two months of this quarter, we are exceeding, as Brad said, the total water disposal volumes projected in our 2026 guidance. So we're off to a good start. Strategically, we have been streamlining our business over the last couple of years. During that time, we have experienced significant volatility in somewhat disappointing results in several of our liquids logistics businesses. Very recently, we sold those businesses as well as other non-core assets to raise $270 million. We are becoming more of a Water Solutions business, with approximately 85% of our adjusted EBITDA to be generated by this segment. And now, for the first time, we have purchased and retired Class D preferred equity. This is a significant milestone as it is necessary to achieve our goal of a simplified capital structure and increasing our free cash flow. Previously, we had purchased and retired over 23 million long-term warrants representing common units. Significantly reducing potential dilution of our common equity in the future. Earlier, Brad provided our adjusted EBITDA guidance for fiscal year 2026. At first glance, the $620 million midpoint approximates our actual results for fiscal year 2025 and appears to suggest no growth. In reality, our guidance makes up for a $20 million decline in skim oil revenues due to a lower crude price compared to the prior year actual, and the reduction of another $20 million in adjusted EBITDA associated with asset sales included in the prior year action. So going forward is now quite simple. We will continue lowering leverage. Continue to improve the capital structure by reducing the highest cost of capital with Class D preferreds, and increased adjusted EBITDA through growth in our Water Solutions segment. So with that, operator, please open up the line for Q&A.

Certainly. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. You may press 2 to remove your question from the queue. One moment please while we poll for questions. Once again, please press 1 if you have a question or a comment. Our first question comes from Derrick Whitfield with Texas Capital. Please proceed.

Good afternoon all, and congrats on a strong year-end and your progress with the asset sales. Mike, perhaps starting where you ended in your commentary, your guidance is quite strong when you think about the headwinds that you guys are overcoming. Both with asset sales and crude prices. With respect to your 2026 guidance, could you offer some more color on your expectations by business or maybe speak to some of the operating assumptions for the water and crude logistics segments?

Yeah. Brett, why don't you address the guidance on water? Yeah. So, Derrick, the water guide in that $620 million midpoint of water guides an implied number of about $560 million. Recall Mike's comments, you know, we do have a little bit of a pullback in oil prices for FY '26 relative to what we realized in FY '25 which accounts for about $20 million of EBITDA and then we had a little bit less than $10 million in asset sales. That we won't have in the EBITDA stream going forward that we're in FY '25.

Terrific. And then for my follow-up, maybe shifting over to water macro. It appears three larger pipeline projects are moving forward. Based on the Waterbridge, Western, and Eris announcements. While fundamentals remain tight, in the Delaware, to your point, I mean, we are seeing lower prices and would expect lower activity at some point. I guess, you guys offer some color around the conversations you're having with customers and if you see opportunities for growth beyond the current announced projects?

Yeah. I think we'll have Doug answer that question. He's on the line. What are the three projects with the Waterbridge? The Western and Eris?

Hey, Derrick. This is Doug. Yes, sir. So we've been busy recontracting our closest expiration long-term contracts, and there are only a couple. We have one of those fully executed with a new long extension, and then we're in the process of extending another. Our focus has been on our base wedge of business. And then when we look at growth, we've seen growth through our existing agreements, and, obviously, the new Lex II agreement comes with growth as well. When we look forward to these other options, you know, we were the first mover on the out-of-basin with Lex II. We have in this past year firmed up our further out-of-basin acreage to be able to develop for growth. But right now, in this fiscal year, while we see no slowdown in volumes, we are on forecast. And as Mike said, we're a little ahead of forecast in this first quarter. You know, we're really focused on preparing for future growth opportunities with our core customers. Of which we have had interest. Now that interest may be somewhat delayed until everyone gets a good firm feel on where oil prices land this year. But when you bring up these three pipelines, I know you know, we've seen what was public on those. I will be curious to see if those get off the ground. And if those actually develop and are constructed this year. Based on you know, maybe a little bit of trepidation by the producers to really grow. We have seen movement back to the core acreage. That's where our really, our large contracts are focused. Are the really good core acreage there in Central Lea County and somewhat into Eddy County. But, you know, when we talk we look at growth we're looking at opportunities of growth under our current long-term contracts, which average almost ten years. On our current long-term contracts and the growth within those. So then, I guess, to answer your question on, you know, hey. There's three pipeline spec. The Western pipeline is down in Loving County. Really not that's focused on long-term, obviously, with legacy. Anadarko, Oxy Water, which you know, that piece of pie has been with Western for a long time. That really does not impact anything around our business. And then if you go to the other two mentioned in Northern Lea County, you know, we'll I guess it's TBD to see you know, how much growth is there to support those projects actually getting off the ground in 2025.

Great color. One last, if I can only because we received several inbounds on it. Regarding the May 16 Railroad Commission announcement on enhanced guidelines for Permian water disposal, what level of impact will this have with your business as you guys see it today?

Well, fortunately for us, you know, we're always planning out you know, three to five years ahead. These new guidelines are focused on new permits and new permit applications. We have almost 30 legacy permits in the Reeves and Loving area. We still have opportunities there to go drill those permits. And then, you know, as you know, we've been focused on really out-of-basin Andrews County growth. That's really where our future growth will be. And we have procured almost 25 pre-guidelines valid permits, legacy permits of the 30 to 35,000 barrels per day, half PSI per foot. So we beat that timeline on any additional obligations within that new notice to operators that came out recently. So we really are in a great position for our future growth for the next several years. So to answer your question, you know, that really does not impact NGL Energy Partners LP from a new permit or permit opportunities perspective.

Great update. I'll turn it back to the operator.

Once again, if you have a question or a comment, please indicate so by pressing star 1. The next question comes from Tarek Hamed with JPMorgan. Please proceed.

Hi, this is Nevan on for Tarek. You had mentioned that there was some delay in terms of growth opportunities for people to get a feel where oil prices land in the context where there are projects pushed out of fiscal year 2026. How much lower could you flex capital spending down? I know it's already low, just a little above $100 million. Is there room to go lower? Or is there, if oil prices firm up, is there room for CapEx to go higher?

I mean, on The Grove, we're down to six. So you know, I'm not sure. Can you squeeze more out? Maybe, but it's not gonna make a difference. And I think on the maintenance capital, it's predominantly water. I think that's probably a pretty low number already. I really don't see us being able to take it down much.

Yeah. Definitely understand that. It's just was looking to see if there is room to go through lower, but it's already very low point, so understandable. Thank you.

The next question comes from Gregg Brody with Bank of America. Please proceed.

Good morning, guys. I'm sorry. Good afternoon. Know, as you give the guidance that you put out there, just help us think about how you think about your low and your high range there on volumes and what's what drives that variability?

It's definitely the water. Just having some feedback. Gregg, could you maybe speak a little louder and repeat the question?

Yeah. Hold on one second. Can you hear me now?

Yes. Thank you.

Yeah. That's better. Just trying to understand when you think about the water business sort of a low to the high side for this year, how are you thinking about volumes and help us think about how you're coming up with that?

Sure. You know, as I think everyone has learned over the last few years, with the recycling, you know, coming to be such a large part of the business, which is a real positive. The midstream water business is really the backstop to those peaks. And then the producers really benefit on the valleys when they get to recycle their own water. Meanwhile, you know, we're maintaining capacity as a backstop when the flowbacks happen. So that has continued. As I talked about earlier, you know, we have such a good wedge of base water within the portfolio. You know, our swings, you know, we might swing 500,000 barrels day to day. Based on whether the recycling is hitting or peak or the peaks are hitting us. So that will continue. That's a normal part of the business at this point. Where we see variation maybe in from a budget perspective, is that sometimes, you know, we will have forecasted, you know, directly from our customers. And if several of the customers for some reason push their completions into one quarter to the next, you know, we'll see those quarterly fluctuations. An example is this first physical quarter, you know, started in April. What do we look like through I guess, we're almost through May. You know, we're looking quite above budget for this first quarter on volumes. Why is that? Volumes have been very strong and actually in you know, they're outpacing forecast because there really has been, you know, a little bit less recycling based on timing. You know, we might come into July and, you know, be a little bit under budget. But we have a pretty good band and pretty good understanding of how to forecast that. And when those are gonna hit. But, you know, it's a base part of the business. We have a very strong wedge. You know, you look at our wedge and, you know, we're two and a half million barrels a day. You know, very consistently in the portfolio, and we've peaked and hit records, you know, in this fiscal quarter. Know, over 3 million. 3.1, 3.2 million some days. So it's just like I said, it's part of the business. And as our base wedge grows, and grows, that really that 500,000 barrel per day swing is pretty normal for us.

Just based on what you've heard from your customers and maybe what you've heard on the calls if they haven't communicated with you clearly. What do you think that means for volumes next year? Just based in this market today? Is it flat? Is it up slightly? How should we think about it? Just obviously, I know things can change. I'm just trying to get a sense of how to think about what happened.

Sure. So, you know, everyone's been asking, you know, what's gonna what's happening? Are we seeing changes? We're seeing some of the rigs, you know, being laid down. That we have not seen or been informed by our customers that the volumes are changing on the water side. You know, I think everyone has been hearing that production will be at least held flat. There may not be a lot of growth. You know, one of the positive things about recycling is when completions slow down from the growth side, that water doesn't go to recycle. It goes to disposal. A certain percentage of that does. So we expect we have some growth in this year in our forecast, and we expect that to be on. We've not heard anything different. That's the alternate aspect to the recycling. Is that there's in any one day, there are twenty to thirty million barrels of water sitting on the surface. If there are any completions that are pushed or delayed into the next would be a quarter or next year, you know, that water comes off the table and our core business is disposal. And, you know, we get the benefit of that in our volumes. So to answer the question, to answer the question is, you know, we have not been apprised of any volumetric changes from our customers. And, you know, with their endeavor to hold production at least flat, you know, we're still on pace. We're glad to have this be quite a bit ahead in this first fiscal quarter. You know, that obviously helps us throughout the full fiscal year.

Great. And just one more question for you unrelated to your volumes. Noticed in the 10-K, you had as part of your business strategy, you pointed out continuing to reduce the nines of the Class D preferred units. You also mentioned something about reinstating the common unit distribution. I think in the past, you've said that's also financing growth projects. In the past, you've said that's a possibility, but you may look at other things like instead just focusing on share repurchases. Is that still the case, or am I reading this too literally to say that now the call is to come reinstate the distributions?

I mean, near term, we don't see, you know, cognitive distribution. We're happy to start attacking these D, so that'll be our focus. Our focus. And at the same time, trying to reduce leverage. We'd like to get that under four times. So I wouldn't be looking for a distribution increase in the next few quarters. No. Or reinstatement.

Gotcha. And then in terms of buying back shares, is that a possibility, or is that it's now focused on the preferreds? Now you've focused on the warrants before.

Yeah. I think, Gregg, I think it's Class D's, and then, you know, we'll be opportunistic with the capital structure. There could be some common sprinkled in there, but Class D's are our priority. I think you've heard it in my comments. You heard it in Mike's comments. And you're in Q&A. That's the next piece of the capital structure we need to tackle and we'll get after it this fiscal year.

Alright. Thank you for your time, guys.

We have reached the end of the question and answer session. I will now turn the call over to Brad Cooper for closing remarks.

Thanks, everyone, for your interest in NGL Energy Partners LP. We are well-positioned heading into fiscal 2026. Look forward to catching up with everyone in August during our first quarter call for 2026. Thank you.

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.