NGL Energy Partners LP current report, 28 February 2019

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Business Context and Reporting Period

This Form 8-K filing by NGL Energy Partners LP covers events occurring on February 28, 2019, and March 1, 2019. The report details significant asset divestitures and acquisitions executed by the company to restructure its portfolio and manage liquidity.

Key Financial Metrics and Transactions

  • Asset Sale Proceeds: $238.8 million in cash from the sale of South Pecos Water Disposal Assets to a subsidiary of WaterBridge Resources LLC.
  • Acquisition Cost: $90 million (adjusted for working capital) for the wholesale propane and butane business from DCP Midstream, LP.
  • Asset Scope: The acquisition includes seven natural gas liquid terminals in the Eastern United States, including an import/export terminal in Chesapeake, Virginia.
  • Debt Management: Plans to use remaining proceeds from the asset sale to partially fund the redemption of 5.125% Senior Notes due 2019, expected to close on March 15, 2019.

Material Changes

The filing reports two material changes to the company's asset base within a 48-hour period:

  1. Divestiture: Exit from the South Pecos Water Disposal business, generating significant liquidity.
  2. Expansion: Entry into the wholesale propane and butane market in the Eastern U.S. through the DCP acquisition.

Outlook, Management Commentary, and Risks

Management indicated a strategic use of proceeds, allocating funds from the water disposal asset sale to finance the propane business acquisition and reduce upcoming debt obligations. The filing references press releases (Exhibits 99.1 and 99.2) for further details on these transactions. No specific forward-looking guidance, risk factors, or unusual items beyond the described transactions are detailed in the text of this filing.

Investor Verification Checklist

  • Verify the closing date and final terms of the 5.125% Senior Notes redemption scheduled for March 15, 2019.
  • Review the attached press releases (Exhibits 99.1 and 99.2) for detailed operational impacts of the asset sale and acquisition.
  • Confirm the working capital adjustments applied to the $90 million DCP acquisition price.
  • Assess the impact of the new Eastern U.S. terminals on the company's geographic diversification and revenue mix.