Business Context and Reporting Period
Company: NGL Energy Partners LP
Filing Type: Form 8-K (Current Report)
Date of Report: November 17, 2015
Event: Acquisition of an undivided interest in a crude oil pipeline currently under construction.
Key Financial Metrics
This filing is a current report regarding a specific corporate event and does not contain financial statements. Consequently, the filing text does not provide clear values for revenue, profit, cash flow, margins, debt, or liquidity.
Material Changes and Transaction Details
- Transaction: NGL Energy Partners LP entered into an agreement with Saddlehorn Pipeline Company, LLC to acquire an undivided interest in a crude oil pipeline (the "Pipeline").
- Route: The Pipeline originates at several points in Colorado and terminates in Cushing, Oklahoma.
- Capacity: NGL will have the right to utilize 150,000 barrels per day of capacity.
- Operations: Magellan Midstream Partners, LP serves as the construction manager and operator. Post-service operating costs will be allocated based on NGL's proportionate ownership and throughput.
- Strategic Alignment: This acquisition provides sufficient capacity to service customer contracts from a successful open season completed in October 2014 for the Grand Mesa Pipeline project.
- Asset Retention: NGL retains ownership of previously acquired easements for potential future development of non-crude oil projects, with options to collaborate with Saddlehorn on future crude oil projects using these easements.
Guidance, Outlook, and Risks
Outlook: The transaction secures capacity for existing ship-or-pay volume commitments. Future opportunities may arise regarding the use of retained easements for additional transportation projects.
Risks/Contingencies: The filing does not explicitly detail specific risks or contingencies beyond the standard operational context of a pipeline under construction.
Key Facts for Investor Verification
- Verify the total capital expenditure required for NGL's undivided interest in the Saddlehorn Pipeline.
- Confirm the expected in-service date for the Pipeline to assess timing for revenue recognition.
- Review the specific terms of the ship-or-pay contracts secured in October 2014 to ensure alignment with the 150,000 barrels per day capacity.
- Assess the financial impact of operating cost allocations once the Pipeline is placed into service.