NGL Energy Partners Q3 2025: Navigating Contradictions in Water Solutions and Liquid Logistics Strategies

These are the key contradictions discussed in NGL Energy Partners' latest 2025 Q3 earnings call, specifically including: Water Solutions EBITDA expectations, strategic focus on remaining assets in Liquid Logistics, Liquid Logistics asset divestitures and strategic alternatives, and Water Solutions' volume growth expectations:



Operational Initiatives and Asset Sales:
- NGL Energy Partners completed operational and strategic initiatives during Q3 and beyond, including long-term acreage dedication agreements to increase Grand Mesa pipeline volumes and the sale of 18 natural gas liquids terminals for approximately $95 million.
- The strategic initiatives aim to simplify the asset base, reduce working capital, and create a clearer pathway to reduce debt through attractive deleveraging multiples.

Water Solutions Segment Performance:
- Water Solutions adjusted EBITDA was $132.7 million in Q3, up from $121.3 million in the prior year, with physical water disposal volumes increasing to 2.62 million barrels per day.
- The increase in volumes and adjusted EBITDA was driven by effective cost management and operational efficiency, resulting in a 12% year-over-year increase in total volumes paid to dispose of.

Crude Oil Logistics Volume Growth:
- Crude Oil Logistics adjusted EBITDA was $17.4 million in Q3, with physical volumes on Grand Mesa averaging approximately 61,000 barrels per day.
- Growth in volumes and profitability is expected due to new customer contracts, such as the long-term dedication with Prairie Operating, which could increase Grand Mesa's volumes to 100,000 barrels per day, potentially doubling EBITDA.

Biodiesel and Propane Business Wind-down:
- The company wound down its biodiesel marketing business, resulting in a negative adjusted EBITDA of $10.3 million year-to-date and $12.1 million in Q3.
- The wind-down and sale of the wholesale propane business aim to eliminate approximately $100 million in annual working capital requirements, smoothing out seasonal EBITDA and cash flow fluctuations.