NGL Energy Partners LP: A Strategic Turnaround with Water as the Engine for 2026 Growth

NGL Energy Partners LP (NGL) is emerging as a poster child for strategic transformation in the energy sector, leveraging a dual focus on balance sheet discipline and water solutions dominance to position itself for robust 2026 growth. With a $2.9 billion debt refinancing, non-core asset sales generating $270 million in liquidity, and a Water Solutions segment posting record EBITDA growth, NGL is primed to deliver sustained cash flow and distribution stability. Here's why investors should take notice now.

Balance Sheet Strengthening: A Foundation for Long-Term Resilience

NGL's financial turnaround begins with its aggressive debt reduction and strategic asset sales. In February 2024, the company refinanced $2.9 billion of debt, pushing maturities out to 2029, eliminating near-term refinancing risks. By March 2025, total liquidity stood at $385.7 million, with no borrowings under its revolving credit facility—a stark improvement from $109 million in borrowings just a quarter earlier.

[text2img]A diagram showing NGL's debt maturity timeline post-refinancing, highlighting zero maturities until 2029[/text2img]

The company's non-core asset sales have been equally impactful. Divesting 17 natural gas liquids terminals, the refined products Rack Marketing business, and portions of its Water Solutions assets (e.g., Limestone Ranch) not only reduced volatility but also generated $270 million in proceeds. These funds were used to repay debt and repurchase preferred units, further fortifying its balance sheet.

This financial discipline has stabilized NGL's equity story. With $615–$625 million in guided 2026 Adjusted EBITDA (up from $622.9 million in 2025), the company is now positioned to reward investors through distributions and debt reduction, not speculative growth.

Water Solutions Dominance: The Growth Engine

While balance sheet improvements provide stability, NGL's Water Solutions segment is its true growth driver. The segment's Adjusted EBITDA surged 6.6% year-over-year to $542 million in 2025, with volumes hitting 2.63 million barrels per day—an 8.6% increase over 2024. This growth isn't just about scale; it's about operational excellence and strategic infrastructure.

[text2img]NGL's sprawling water disposal infrastructure, including the LEX II pipeline expansion[/text2img]

The LEX II pipeline, operational since October 2024, exemplifies NGL's strategy. Expanding capacity from 140,000 to 500,000 barrels per day by 2025, the pipeline is underpinned by a minimum volume commitment (MVC) from an investment-grade producer. This guarantees cash flow while enabling NGL to capture rising demand for water disposal in shale basins.

Crucially, operating efficiencies are compounding these gains. Water Solutions' costs per barrel dropped to $0.23 in Q4 2025, a 4% improvement over 2023 levels, thanks to optimized chemical use and lower repair expenses. With $550–$560 million in 2025 guidance already surpassed, management has raised its 2026 outlook, citing contracted volumes and spot pricing discipline as key levers.

Reduced Volatility and 2026 Buy Signals

NGL's sale of non-core assets—particularly in volatile propane and crude logistics—has dramatically reduced earnings volatility. The Liquids Logistics segment, once a drag, saw impairment losses drop from $69 million to $23 million in 2025, while Crude Oil Logistics improved margins through cost-cutting. This focus on core operations has made NGL's cash flow far more predictable, a critical factor for investors seeking stability in a commodity-driven sector.

The 2026 guidance is another bullish indicator. With $45 million in maintenance capex and $60 million in growth capex, NGL is prioritizing returns over expansion. This capital-light approach leaves room for debt paydown and distributions. Recall that NGL already eliminated $396 million in preferred unit arrears by April 2024, signaling a commitment to investor returns.

Why Act Now?

• Debt-Free Horizon: No major maturities until 2029 provide a five-year runway for growth.
• Water's Scalability: LEX II's MVC-backed expansion ensures NGL can grow EBITDA without over-leveraging.
• Valuation Attraction: At current levels, NGL trades at a discount to peers, with its Water Solutions multiple undervalued relative to its industry-leading position.

Conclusion: NGL Is a Buy for Income and Growth Investors

NGL Energy Partners LP has executed a textbook turnaround: debt reduction to remove tail risks, asset sales to focus on its crown jewel (Water Solutions), and operational excellence to drive EBITDA. With 2026 guidance already anchored by its water segment's dominance, now is the time to position in this undervalued name.

For investors seeking yield stability (via distributions) and capital appreciation (via EBITDA growth), NGL offers a rare blend of safety and upside. The question isn't whether to act—it's why you haven't yet.

Investors should always conduct their own due diligence. Past performance does not guarantee future results.