NGL Energy Partners LP: Form 10-Q for the period ended Dec 31, 2025

The following is a discussion of NGL Energy Partners LP’s (“we,” “us,” “our,” or the “Partnership”) financial condition and results of operations as of and for the three months and nine months ended December 31, 2025. The discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q (“Quarterly Report”), as well as Part II, Item 7–“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025 (“Annual Report”) filed with the Securities and Exchange Commission on May 29, 2025.

Recent Developments

Discontinued Operations

Sale of Refined Products Business and Exiting Biodiesel Business

As of March 31, 2025, we completed winding down our biodiesel business (see Note 1 to our unaudited condensed consolidated financial statements included in this Quarterly Report for a further discussion).

On April 30, 2025, we sold our refined products business, including certain working capital items, to a third-party (see Note 1 to our unaudited condensed consolidated financial statements included in this Quarterly Report for a further discussion).

The sale of our refined products business and winding down of our biodiesel business represent a strategic shift in our operations and will have a significant effect on our operations and financial results going forward. Accordingly, the results of operations and cash flows for our refined products and biodiesel businesses within our Liquids Logistics segment have been classified as discontinued operations for all periods presented and prior periods have been retrospectively adjusted in the unaudited condensed consolidated statements of operations and unaudited condensed consolidated statements of cash flows (see Note 16 to our unaudited condensed consolidated financial statements included in this Quarterly Report for a further discussion).

Other Dispositions

Sale of Certain Investments in Unconsolidated Entities and Related Assets

On April 14, 2025, we sold certain investments in unconsolidated entities, property, plant and equipment and intangible assets to a third-party (see Note 1 to our unaudited condensed consolidated financial statements included in this Quarterly Report for a further discussion).

Sale of Certain Natural Gas Liquids Terminals and Most of Our Wholesale Propane Business

On April 30, 2025, we sold most of our wholesale propane business, 17 of our natural gas liquids terminals, our interest in an unconsolidated entity and working capital (“Wholesale Propane Disposition”) to a third-party (see Note 1 to our unaudited condensed consolidated financial statements included in this Quarterly Report for a further discussion).

Sale of Certain Railcars

During the nine months ended December 31, 2025, we sold the remaining 203 railcars of our Crude Oil Logistics segment (see Note 15 to our unaudited condensed consolidated financial statements included in this Quarterly Report for a further discussion).

Consolidated Results of Operations

How We Evaluate Our Operations

We use a variety of financial and operating metrics to analyze our performance. Our consolidated financial metrics include operating income, income from continuing operations and Adjusted EBITDA. We evaluate segment operating results using operating income, Adjusted EBITDA and our operating metrics, which include various volume and rate statistics that are relevant for the respective segment. These operating metrics allow investors to analyze the various components of segment financial results in terms of volumes and rate/price. We use these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial results. For additional information on our operating metrics, see the respective segment discussions below.

The following table summarizes our unaudited condensed consolidated statements of operations for the periods indicated:

(in thousands)

(1) See Adjusted EBITDA definition and reconciliation in “Non-GAAP Financial Measures” section below.

Changes in commodity prices and sales volumes affect both revenues and cost of sales in our unaudited condensed consolidated statements of operations and, therefore, the impact is largely offset between these line items.

Operating income increased $25.0 million for the three months ended December 31, 2025, compared with the same period in 2024, primarily as a result of the following:

• Water Solutions – an increase of $32.8 million due primarily to higher water disposal revenues from an increase in produced water volumes processed and lower expenses mainly due to lower derivative losses, lower losses on disposal or impairment of assets and lower depreciation and amortization expense;
• Crude Oil Logistics – an increase of $1.6 million due primarily to increased volumes and derivative gains, partially offset by lower commodity prices and lower pipeline revenue due to the expiration of transportation contracts;
• Liquids Logistics – a decrease of $7.6 million due primarily to lower product margins for propane, due to the Wholesale Propane Disposition and butane, due to a weak blending market, partially offset by lower expenses due to the Wholesale Propane Disposition and derivative gains; and
• Corporate and Other – a decrease of $1.8 million due to increased legal expenses.

In addition to the items discussed above, other income was higher primarily due to gains on marketable securities, partially offset by lower equity in earnings of unconsolidated entities as we sold our equity method investments during fiscal year 2026 as well as higher interest expense (as discussed below).

Operating income increased $53.1 million for the nine months ended December 31, 2025, compared with the same period in 2024, primarily as a result of the following:

• Water Solutions – an increase of $52.9 million due primarily to higher water disposal revenues from an increase in produced water volumes processed and lower derivative losses, partially offset by increased expenses mainly due to losses on disposal or impairment of assets and higher depreciation and amortization expense;
• Crude Oil Logistics – a decrease of $18.4 million due primarily to lower pipeline revenue, as discussed above, and increased expenses due to a loss on the sale of assets, partially offset by increased revenues and volumes from higher production on acreage dedicated to us;
• Liquids Logistics – an increase of $24.3 million due primarily to lower expenses related to the Wholesale Propane Disposition, including a gain on the sale, partially offset by lower product margins, as discussed above; and
• Corporate and Other – a decrease of $5.7 million due primarily to increased legal expenses.

In addition to the items discussed above, interest expense was lower (as discussed below) and there were gains on marketable securities which were partially offset by a lower income tax benefit (see Note 2 to our unaudited condensed consolidated financial statements included in this Quarterly Report), lower equity in earnings of unconsolidated entities as we sold our equity method investments during fiscal year 2026 and a loss from a legal dispute.

Other Items

Seismic Activity

The subsurface injection of produced water for disposal has been associated with induced seismic events in Texas and New Mexico. While these events have been of relatively low magnitude, industry and relevant state regulators are, nevertheless, taking proactive measures to attempt to prevent similar induced seismic events. More specifically, we are engaged in various collaborative industry efforts with other disposal operators and relevant state regulatory agencies, working to collect and review data, enhance understanding of regional fault systems, and ultimately develop and implement appropriate longer-term mitigation strategies. As part of this effort, we have implemented reductions in injected volumes at certain facilities, and where appropriate have temporarily shut-in facilities. To date, due to the capacity of our integrated system in the affected areas, the diverse locations of our disposal facilities, and the connectivity of our system, our ability to dispose of produced water has not been materially impacted by these actions, and with our unique positioning outside of the affected areas, we have the ability to grow our asset base.

Segment Operating Results for the Three Months Ended December 31, 2025 and 2024

Water Solutions

The following table summarizes the operating results of our Water Solutions segment for the periods indicated:

(in thousands, except per barrel and per day amounts)

(1) Water disposal service fees and Other revenues in the table above differ from the amounts reported in Note 10 to our unaudited consolidated financial statements, as the amounts in Note 10 are disaggregated by the performance obligations with type of contract and service provided and the timing of the transfer of goods and services, while the amount above is presented based on how management reviews performance. In the table above, revenues from reimbursements from construction projects, booster operating fees and generator rentals and pipeline revenue are included in Other revenues, while in Note 10 the amounts are included in Water disposal service fees.

(2) Recycled water in the table above differs from the amount of Sale of Water reported in Note 10 to our unaudited consolidated financial statements, as the amounts in Note 10 are disaggregated by the performance obligations with type of contract and service provided and the timing of the transfer of goods and services, while the amount above is presented based on how management reviews performance. In Note 10, Sale of Water includes the sale of produced water, recycled water and brackish non-potable water, which in the table above, brackish non-potable water is included in Other revenues.

(3) See Adjusted EBITDA definition and reconciliation in “Non-GAAP Financial Measures” section below.

(4) Total produced water barrels processed during the three months ended December 31, 2025 and 2024 were 282,525,872 and 241,343,277, respectively. These amounts do not include 2,943,504 barrels and 16,410,749 barrels for the three months ended December 31, 2025 and 2024, respectively, related to payments made by certain producers for committed volumes not delivered, as discussed further below. In addition, water pipeline revenue, which is included in Other Revenues, includes payments from a producer for 2,198,757 and 9,938,582 committed barrels not delivered during the three months ended December 31, 2025 and 2024, respectively.

(5) Excluding payments made by certain producers for committed volumes not delivered, service fees for produced water processed ($/barrel) would have been $0.60/barrel and $0.60/barrel during the three months ended December 31, 2025 and 2024, respectively.

Water Disposal Service Fee Revenues. The increase was due primarily to an increase in produced water volumes processed from contracted customers.

Recovered Crude Oil Revenues. The decrease was due primarily to lower realized crude oil prices received from the sale of skim oil barrels, partially offset by an increase in skim oil barrels sold due to more skim oil recovered from receiving more produced water.

Recycled Water Revenues. Revenue from recycled water includes the sale of produced water and recycled water for use in our customers’ completion activities. The increase was due primarily to higher recycled water volumes related to timing of water to be used in completions, partially offset by lower pricing for recycled water.

Other Revenues. Other revenues primarily include reimbursements from construction projects, booster operating fees and generator rentals, water pipeline revenues, solids disposal revenues and brackish non-potable water revenues. The increase was due primarily to higher reimbursements from construction projects and booster operating fees as well as higher water pipeline revenue, including payments from a producer for committed volumes not delivered, due to our expanded Lea County Express Pipeline system (“LEX II”) commencing operations during the three months ended December 31, 2024.

Cost of Sales-Excluding Impact of Derivatives. The decrease was due primarily to lower costs incurred that will be reimbursed by producers for generator and fuel costs at various booster stations and lower recycling costs.

Operating and General and Administrative Expenses. The decrease was due primarily to lower incentive compensation expense and lower chemical expense due to purchasing fewer chemicals and using chemicals more efficiently, partially offset by higher utilities expense due to increased produced water volumes processed and higher royalty expense due to volumes related to the LEX II pipeline commencing operations and increased volumes at certain other saltwater disposal wells.

Depreciation and Amortization Expense. The decrease was due primarily to certain long-term assets being fully amortized, impaired or sold during the fiscal year ended March 31, 2025 and nine months ended December 31, 2025, partially offset by depreciation of newly developed facilities and infrastructure.

Loss on Disposal or Impairment of Assets, Net. During the three months ended December 31, 2025, we recorded:

• a net loss of $5.7 million primarily related to writing down the net book value of certain saltwater disposal wells and capital projects due to abandonment and the retirement of certain other assets; and
• a net gain of less than $0.1 million primarily related to the sale of certain assets.

During the three months ended December 31, 2024, we recorded:

• a net loss of $7.4 million primarily related to writing down the net book value of certain saltwater disposal wells and capital projects due to abandonment and the retirement of certain other assets;
• a loss of $3.4 million from the settlement of a dispute related to a force majeure event, which resulted in the plugging and abandoning of a disposal well in a prior period; and
• a gain of $0.2 million from insurance recoveries for certain saltwater disposal facilities and boosters damaged in a prior period.

Revaluation of Liabilities. During the three months ended December 31, 2024, there was a decrease in expense related to the write-off of a portion of our contingent consideration liability related to royalty agreements acquired as part of certain business combinations, as we no longer expect to make royalty payments for a certain saltwater disposal well that was plugged and abandoned.

Crude Oil Logistics

The following table summarizes the operating results of our Crude Oil Logistics segment for the periods indicated:

(in thousands, except per barrel amounts)

(1) See Adjusted EBITDA definition and reconciliation in “Non-GAAP Financial Measures” section below.

(2) Information is presented as of December 31, 2025 and December 31, 2024, respectively.

(3) Cost and product margin per barrel excludes the impact of derivatives.

Crude Oil Sales and Cost of Sales-Excluding Impact of Derivatives. The increases in sales and cost of sales, excluding the impact of derivatives, were primarily due to higher production on acreage dedicated to us in the DJ Basin during the three months ended December 31, 2025, compared to the three months ended December 31, 2024, partially offset by lower commodity prices.

During the three months ended December 31, 2025, crude oil product margin increased compared to the three months ended December 31, 2024 due to higher crude oil barrels sold during the current quarter. Product margin per barrel decreased primarily due to lower price and quality differentials realized. There was also a decrease in commodity prices during the three months ended December 31, 2025, thus also contributing to a smaller margin per barrel for the quarter. Crude oil product margin calculations do not include gains and losses from derivatives that may offset the movement in the physical margin.

Crude Oil Transportation and Other Sales. The decrease was primarily due to lower pipeline revenue because of the expiration of certain transportation services contracts on third-party pipelines and lower rental revenue due to the sale of our railcars.

During the three months ended December 31, 2025, physical volumes on the Grand Mesa Pipeline averaged approximately 85,000 barrels per day, compared to approximately 61,000 barrels per day during the three months ended December 31, 2024. Higher contracted volumes were shipped on the Grand Mesa Pipeline due to higher production on acreage dedicated to us in the DJ Basin.

Operating and General and Administrative Expenses. Operating and general and administrative expenses during the three months ended December 31, 2025 were consistent with the three months ended December 31, 2024.

Depreciation and Amortization Expense. The decrease was primarily due to the sale of railcars during the year ended March 31, 2025 and the nine months ended December 31, 2025.

Loss on Disposal or Impairment of Assets, Net. During the three months ended December 31, 2025, we recorded a loss of $0.2 million primarily due to disposal or retirement of certain assets.

Liquids Logistics

The following table summarizes the operating results of our Liquids Logistics segment for the periods indicated. As discussed above, the operating results of our refined products and biodiesel businesses have been classified as discontinued operations and prior periods have been retrospectively adjusted.

(in thousands, except per gallon amounts)

47

(in thousands, except per gallon amounts)

(1) See Adjusted EBITDA definition and reconciliation in “Non-GAAP Financial Measures” section below.

(2) Information is presented as of December 31, 2025 and December 31, 2024, respectively.

(3) Cost and product margin per gallon excludes the impact of derivatives.

Butane Sales and Cost of Sales-Excluding Impact of Derivatives. The decreases in sales and cost of sales, excluding the impact of derivatives, during the three months ended December 31, 2025, compared to the three months ended December 31, 2024 were primarily due to lower butane prices and volumes during the three months ended December 31, 2025, compared to the three months ended December 31, 2024.

Butane product margins, excluding the impact of derivatives, decreased during the three months ended December 31, 2025, compared to the three months ended December 31, 2024 due to a weak gasoline blending season in certain markets and higher-priced inventory was sold into a declining market.

Propane Sales and Cost of Sales-Excluding Impact of Derivatives. The decreases in sales and cost of sales, excluding the impact of derivatives, were due primarily to the Wholesale Propane Disposition.

Propane product margins, excluding the impact of derivatives, decreased during the three months ended December 31, 2025 primarily due to the Wholesale Propane Disposition.

Other Products Sales and Cost of Sales-Excluding Impact of Derivatives. The decreases in sales and cost of sales, excluding the impact of derivatives, were primarily due to decreased commodity prices during the three months ended December 31, 2025, compared to the three months ended December 31, 2024.

Other products sales product margins, excluding the impact of derivatives, decreased during the three months ended December 31, 2025 primarily due to lower commodity prices and lower asphalt volumes and margins due to tighter supply.

Service Sales and Cost of Sales. The sales include storage, terminaling and transportation services income. Sales and cost of sales during the three months ended December 31, 2025 were consistent with the three months ended December 31, 2024.

Operating and General and Administrative Expenses. The decrease during the three months ended December 31, 2025 compared to the three months ended December 31, 2024 was due to the Wholesale Propane Disposition.

Depreciation and Amortization Expense. The decrease during the three months ended December 31, 2025 compared to the three months ended December 31, 2024 was due to the Wholesale Propane Disposition.

Loss (Gain) on Disposal or Impairment of Assets, Net. During the three months ended December 31, 2025, we recorded a net loss of $0.2 million due to the Wholesale Propane Disposition. During the three months ended December 31, 2024, we recorded a net gain of $0.6 million due to the sale of land.

Corporate and Other

The operating loss within “Corporate and Other” includes the following components for the periods indicated:

(in thousands)

(1) See Adjusted EBITDA definition and reconciliation in “Non-GAAP Financial Measures” section below.

Service Revenues. These revenues relate to billings to the noncontrolling interest holders for usage of the airplanes acquired in June and October 2024.

General and Administrative Expenses. The increase was primarily due to lower allocations of overhead expenses to the other business segments in the current year due to recent disposition transactions and increased legal expenses.

Depreciation and Amortization Expense. Depreciation and amortization expense during three months ended December 31, 2025 was consistent with the prior year period.

Loss on Disposal or Impairment of Assets, Net. During the three months ended December 31, 2024, we recorded a net loss of less than $0.1 million due to the write-off of information technology equipment.

Interest Expense

The following table summarizes the components of our consolidated interest expense for the periods indicated:

(in thousands)

The debt interest expense decreased $6.8 million during the three months ended December 31, 2025 primarily due to a lower weighted average daily balance on the ABL Facility and lower interest rates on the Term Loan B for the three months ended December 31, 2025 compared to our outstanding debt instruments in the prior year period.

Segment Operating Results for the Nine Months Ended December 31, 2025 and 2024

Water Solutions

The following table summarizes the operating results of our Water Solutions segment for the periods indicated:

(in thousands, except per barrel and per day amounts)

(1) Water disposal service fees and Other revenues in the table above differ from the amounts reported in Note 10 to our unaudited consolidated financial statements, as the amounts in Note 10 are disaggregated by the performance obligations with type of contract and service provided and the timing of the transfer of goods and services, while the amount above is presented based on how management reviews performance. In the table above, revenues from reimbursements from construction projects, booster operating fees and generator rentals and pipeline revenue are included in Other revenues, while in Note 10 the amounts are included in Water disposal service fees.

(2) Recycled water in the table above differs from the amount of Sale of Water reported in Note 10 to our unaudited consolidated financial statements, as the amounts in Note 10 are disaggregated by the performance obligations with type of contract and service provided and the timing of the transfer of goods and services, while the amount above is presented based on how management reviews performance. In Note 10, Sale of Water includes the sale of produced water, recycled water and brackish non-potable water, which in the table above, brackish non-potable water is included in Other revenues.

(3) See Adjusted EBITDA definition and reconciliation in “Non-GAAP Financial Measures” section below.

(4) Total produced water barrels processed during the nine months ended December 31, 2025 and 2024 were 792,655,933 and 712,392,342, respectively. These amounts do not include 42,981,316 barrels and 35,804,097 barrels for the nine months ended December 31, 2025 and 2024, respectively, related to payments made by certain producers for committed volumes not delivered, as discussed further below. In addition, water pipeline revenue, which is included in Other Revenues, includes payments from a producer for 19,804,902 and 9,938,582 committed barrels not delivered during the nine months ended December 31, 2025 and 2024, respectively.

(5) Excluding payments made by certain producers for committed volumes not delivered, service fees for produced water processed ($/barrel) would have been $0.61/barrel and $0.60/barrel during the nine months ended December 31, 2025 and 2024, respectively.

Water Disposal Service Fee Revenues. The increase was due primarily to an increase in produced water volumes processed from contracted customers.

Recovered Crude Oil Revenues. The decrease was due primarily to lower realized crude oil prices received from the sale of skim oil barrels, partially offset by an increase in skim oil barrels sold due to more skim oil recovered from receiving more produced water.

Recycled Water Revenues. The increase was due primarily to higher recycled water volumes related to timing of water to be used in completions, partially offset by lower pricing for recycled water.

Other Revenues. The increase was due primarily to higher water pipeline revenue, including payments from a producer for committed volumes not delivered, due to our LEX II commencing operations during the three months ended December 31, 2024, as well as higher reimbursements from construction projects and booster operating fees.

Cost of Sales-Excluding Impact of Derivatives. The decrease was due primarily to lower costs incurred that will be reimbursed by producers for generator and fuel costs at various booster stations and lower recycling costs.

Operating and General and Administrative Expenses. The increase was due primarily to higher utilities expense due to increased produced water volumes processed and higher royalty expense due to volumes related to the LEX II pipeline commencing operations and increased volumes at certain other saltwater disposal wells, partially offset by lower incentive compensation expense and lower chemical expense due to purchasing fewer chemicals and using chemicals more efficiently.

Depreciation and Amortization Expense. The increase was due primarily to depreciation of newly developed facilities and infrastructure, partially offset by certain long-term assets being fully amortized, impaired or sold during the fiscal year ended March 31, 2025 and nine months ended December 31, 2025.

Loss on Disposal or Impairment of Assets, Net. During the nine months ended December 31, 2025, we recorded:

• a net loss of $16.6 million primarily related to writing down the net book value of certain saltwater disposal wells and capital projects due to abandonment and the retirement of certain other assets;
• a gain of $2.2 million from insurance recoveries for certain saltwater disposal facilities and boosters damaged in a prior period; and
• a net loss of $0.6 million primarily related to the sale of certain assets.

During the nine months ended December 31, 2024, we recorded:

• a net loss of $11.0 million primarily related to writing down the net book value of certain saltwater disposal wells and capital projects due to abandonment and the retirement of certain other assets;
• a net gain of $10.5 million primarily related to the sale of certain assets;
• a loss of $3.4 million from the settlement of a dispute related to a force majeure event, which resulted in the plugging and abandoning of a disposal well in a prior period; and
• a gain of $2.0 million from insurance recoveries for certain saltwater disposal facilities and boosters damaged in a prior period.

Revaluation of Liabilities. During the nine months ended December 31, 2024, there was a decrease in expense related to the write-off of a portion of our contingent consideration liability related to royalty agreements acquired as part of certain business combinations, as we no longer expect to make royalty payments for a certain saltwater disposal well that was plugged and abandoned.

Crude Oil Logistics

The following table summarizes the operating results of our Crude Oil Logistics segment for the periods indicated:

(in thousands, except per barrel amounts)

(1) See Adjusted EBITDA definition and reconciliation in “Non-GAAP Financial Measures” section below.

(2) Information is presented as of December 31, 2025 and December 31, 2024, respectively.

(3) Cost and product margin per barrel excludes the impact of derivatives.

Crude Oil Sales and Cost of Sales-Excluding Impact of Derivatives. The increases in sales and cost of sales, excluding the impact of derivatives, were primarily due to higher production on acreage dedicated to us in the DJ Basin during the nine months ended December 31, 2025, compared to the nine months ended December 31, 2024, partially offset by lower commodity prices.

During the nine months ended December 31, 2025, crude oil product margin increased compared to the nine months ended December 31, 2024 due to higher crude oil barrels sold during the current quarter. Product margin per barrel also increased due to a more significant decrease in commodity prices during the nine months ended December 31, 2024 compared to the nine months ended December 31, 2025, thus contributing to a higher margin per barrel for the current period. Crude oil product margin calculations do not include gains and losses from derivatives that may offset the movement in the physical margin.

Crude Oil Transportation and Other Sales. The decrease was primarily due to lower pipeline revenue because of the expiration of certain transportation services contracts on third-party pipelines and lower rental revenue due to the sale of our railcars.

During the nine months ended December 31, 2025, physical volumes on the Grand Mesa Pipeline averaged approximately 71,000 barrels per day, compared to approximately 62,000 barrels per day during the nine months ended December 31, 2024. Higher contracted volumes were shipped on the Grand Mesa Pipeline due to higher production on acreage dedicated to us in the DJ Basin.

Operating and General and Administrative Expenses. The decrease was primarily due to lower incentive compensation expense accrued during the nine months ended December 31, 2025, and lower repairs and maintenance expense, partially offset by higher utilities expense on the Grand Mesa Pipeline from higher volumes flowing through the system during the nine months ended December 31, 2025, compared to the nine months ended December 31, 2024.

Depreciation and Amortization Expense. The decrease was primarily due to the sale of railcars during the year ended March 31, 2025 and the nine months ended December 31, 2025.

Loss (Gain) on Disposal or Impairment of Assets, Net. During the nine months ended December 31, 2025, we recorded a loss from the sale of linefill held on third-party pipelines of $5.9 million, which includes a loss from derivatives of $1.8 million from hedging transactions relating to the sale of linefill barrels. We also recorded of loss of $0.3 million related to the retirement of certain assets. In addition, we recorded a gain of $2.0 million from the sale of railcars during the nine months ended December 31, 2025. During the nine months ended December 31, 2024, we recorded a net gain of $0.4 million primarily due to a gain on the sale of certain assets.

Liquids Logistics

The following table summarizes the operating results of our Liquids Logistics segment for the periods indicated. As discussed above, the operating results of our refined products and biodiesel businesses have been classified as discontinued operations and prior periods have been retrospectively adjusted.

(in thousands, except per gallon amounts)

54

(in thousands, except per gallon amounts)

(1) See Adjusted EBITDA definition and reconciliation in “Non-GAAP Financial Measures” section below.

(2) Information is presented as of December 31, 2025 and December 31, 2024, respectively.

(3) Cost and product margin per gallon excludes the impact of derivatives.

Butane Sales and Cost of Sales-Excluding Impact of Derivatives. The decreases in sales and cost of sales, excluding the impact of derivatives, during the nine months ended December 31, 2025, compared to the nine months ended December 31, 2024 were primarily due to lower butane prices and volumes during the nine months ended December 31, 2025, compared to the nine months ended December 31, 2024.

Butane product margins, excluding the impact of derivatives, decreased during the nine months ended December 31, 2025, compared to the nine months ended December 31, 2024 due to a weak gasoline blending season in certain markets.

Propane Sales and Cost of Sales-Excluding Impact of Derivatives. The decreases in sales and cost of sales, excluding the impact of derivatives, were due primarily to the Wholesale Propane Disposition.

Propane product margins, excluding the impact of derivatives, decreased during the nine months ended December 31, 2025 was primarily due the Wholesale Propane Disposition. In addition, margins were negatively impacted due to selling higher priced inventory into a declining market early in the current period.

Other Products Sales and Cost of Sales-Excluding Impact of Derivatives. The decreases in sales and cost of sales, excluding the impact of derivatives, were primarily due to decreased commodity prices during the nine months ended December 31, 2025, compared to the nine months ended December 31, 2024, partially offset by increased volumes.

Other products sales product margins, excluding the impact of derivatives, decreased during the nine months ended December 31, 2025 primarily due to lower commodity prices and lower asphalt volumes and margins due to tighter supply.

Service Sales and Cost of Sales. The sales include storage, terminaling and transportation services income. Sales and cost of sales decreased during the nine months ended December 31, 2025 due to the Wholesale Propane Disposition and the expiration of a throughput agreement in the prior fiscal year.

Operating and General and Administrative Expenses. The decrease during the nine months ended December 31, 2025 compared to the nine months ended December 31, 2024 was due to the Wholesale Propane Disposition.

Depreciation and Amortization Expense. The decrease during the nine months ended December 31, 2025 compared to the nine months ended December 31, 2024 was due to the Wholesale Propane Disposition.

Gain on Disposal or Impairment of Assets, Net. During the nine months ended December 31, 2025, we recorded a net gain of $17.1 million due to the Wholesale Propane Disposition. We also recorded a net loss of $1.6 million related to the impairment of certain right-of-use assets. During the nine months ended December 31, 2024, we recorded a net gain of $0.6 million due to the sale of land.

Corporate and Other

The operating loss within “Corporate and Other” includes the following components for the periods indicated:

(in thousands)

(1) See Adjusted EBITDA definition and reconciliation in “Non-GAAP Financial Measures” section below.

Service Revenues. These revenues relate to billings to the noncontrolling interest holders for usage of the airplanes acquired in June and October 2024.

General and Administrative Expenses. The increase was primarily due to lower legal expenses in the prior year due primarily to a reimbursement of legal expenses related to a dispute associated with commercial activities and lower allocations of overhead expenses to the other business segments in the current year due to recent disposition transactions.

Depreciation and Amortization Expense. The increase during the nine months ended December 31, 2025 was due to depreciation of the two airplanes put into service during the year ended March 31, 2025.

(Gain) Loss on Disposal or Impairment of Assets, Net. During the nine months ended December 31, 2024, we recorded a net loss of less than $0.1 million due to the write-off of information technology equipment.

Interest Expense

The following table summarizes the components of our consolidated interest expense for the periods indicated:

(in thousands)

The debt interest expense decreased $18.6 million during the nine months ended December 31, 2025 primarily due to a lower weighted average daily balance on the ABL Facility and lower interest rates on the Term Loan B for the nine months ended December 31, 2025 compared to our outstanding debt instruments in the prior year period.

Non-GAAP Financial Measures

In addition to financial results reported in accordance with accounting principles generally accepted in the United States (“GAAP”), we have provided the non-GAAP financial measures of EBITDA and Adjusted EBITDA. These non-GAAP financial measures are not intended to be a substitute for those reported in accordance with GAAP. These measures may be different from non-GAAP financial measures used by other entities, even when similar terms are used to identify such measures.

We define EBITDA as net income (loss) attributable to NGL Energy Partners LP, plus interest expense, income tax expense (benefit), and depreciation and amortization expense. We define Adjusted EBITDA as EBITDA excluding net unrealized gains and losses on derivatives, lower of cost or net realizable value adjustments, gains and losses on disposal or impairment of assets, gains and losses on early extinguishment of liabilities, revaluation of liabilities and other. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income, income from continuing operations before income taxes, cash flows from operating activities, or any other measure of financial performance calculated in accordance with GAAP, as those items are used to measure operating performance, liquidity or the ability to service debt obligations. We believe that EBITDA provides additional information to investors for evaluating our ability to make quarterly distributions to our unitholders and is presented solely as a supplemental measure. We believe that Adjusted EBITDA provides additional information to investors for evaluating our financial performance without regard to our financing methods, capital structure and historical cost basis. Further, EBITDA and Adjusted EBITDA, as we define them, may not be comparable to EBITDA, Adjusted EBITDA, or similarly titled measures used by other entities.

For purposes of our Adjusted EBITDA calculation, we make a distinction between realized and unrealized gains and losses on derivatives. During the period when a derivative contract is open, we record changes in the fair value of the derivative as an unrealized gain or loss. When a derivative contract matures or is settled, we reverse the previously recorded unrealized gain or loss and record a realized gain or loss.

The following table reconciles net income to EBITDA and Adjusted EBITDA for the periods indicated:

(in thousands)

(1) Lower of cost or net realizable value adjustments in the table above differ from lower of cost or net realizable value adjustments reported in our unaudited condensed consolidated statements of cash flows, as the amounts reported in the table above represent the change in lower of cost or net realizable value adjustments recorded in the unaudited condensed consolidated statements of operations, which includes reversals, whereas the amounts reported in our unaudited condensed consolidated statements of cash flows represent the lower of cost or net realizable value adjustments recorded at the balance sheet date.

(2) Excludes amounts related to unconsolidated entities and noncontrolling interests.

(3) Amounts represent accretion expense for asset retirement obligations, expenses incurred related to legal and advisory costs associated with acquisitions and dispositions, unrealized gains and losses on investments and marketable securities and a loss from a legal dispute.

(4) Amounts include our refined products and biodiesel businesses.

The following tables reconcile depreciation and amortization amounts per the EBITDA table above to depreciation and amortization amounts in our unaudited condensed consolidated statements of operations and unaudited condensed consolidated statements of cash flows for the periods indicated:

(in thousands)

(in thousands)

The following table summarizes additional amounts attributable to discontinued operations in the EBITDA and Adjusted EBITDA table above for the periods indicated:

(in thousands)

58

The following tables reconcile operating income (loss) to Adjusted EBITDA by segment for the periods indicated:

(in thousands)

(in thousands)

59

(in thousands)

(in thousands)

Liquidity, Sources of Capital and Capital Resource Activities

General

Our principal sources of liquidity and capital resource requirements are cash flows from our operations, borrowings under our ABL Facility, issuing long-term notes, common and/or preferred units, loans from financial institutions, asset securitizations or asset sales. We expect our primary cash outflows to be related to capital expenditures, interest, repayment of debt maturities and distributions.

We believe that our anticipated cash flows from operations and the borrowing capacity under the ABL Facility will be sufficient to meet our liquidity needs. Our borrowing needs vary during the year due in part to the seasonal nature of certain businesses within our Liquids Logistics segment. Our greatest working capital borrowing needs generally occur during the period of June through December, when we are building our natural gas liquids inventories in anticipation of the butane blending and propane heating seasons. Our working capital borrowing needs generally decline during the period of January through March, when the cash inflows from our Liquids Logistics segment are the greatest. In addition, our working capital borrowing needs vary with changes in commodity prices. A significant increase in commodity prices could drive up our working capital demands and limit our ability to continue to delever our balance sheet and restrict our financial flexibility. To protect our liquidity and leverage, we have in the past and may in the future enter into economic hedges that mitigate this exposure when we are building inventory. There were no open financial derivative contracts for the purpose of an economic hedge of our physical inventory volumes as of December 31, 2025.

Cash Management

We manage cash by utilizing a centralized cash management program that concentrates the cash assets of our operating subsidiaries in joint accounts for the purposes of providing financial flexibility and lowering the cost of borrowing, transaction costs and bank fees. Our centralized cash management program provides that funds in excess of the daily needs of our operating subsidiaries are concentrated, consolidated or otherwise made available for use within our consolidated group. All of our wholly-owned operating subsidiaries participate in this program. Under the cash management program, depending on whether a participating subsidiary has short-term cash surpluses or cash requirements, we provide cash to the subsidiary or the subsidiary provides cash to us.

Short-Term Liquidity

Our principal sources of short-term liquidity consist of cash flows from our operations and borrowings under the ABL Facility, which we believe will provide liquidity to operate our business, manage our working capital requirements and repay current maturities.

Total commitments under the ABL Facility are $475.0 million, subject to a borrowing base, and includes a sub-limit for letters of credit of $200.0 million. At December 31, 2025, $92.0 million was outstanding under the ABL Facility, letters of credit outstanding were $58.4 million and we had a borrowing base of $392.5 million. The ABL Facility is scheduled to mature at the earliest of (a) February 2, 2029 or (b) 91 days prior to the earliest maturity date in respect to any of our indebtedness in an aggregate principal amount of $50.0 million or greater, subject to certain exceptions.

For additional information related to the ABL Facility, see Note 6 to our unaudited condensed consolidated financial statements included in this Quarterly Report.

As of December 31, 2025, our current assets exceeded our current liabilities by approximately $74.6 million.

Long-Term Financing

We expect to fund our long-term financing requirements by issuing long-term notes, common units and/or preferred units, loans from financial institutions, asset securitizations or asset sales.

Senior Secured Notes

On February 2, 2024, we closed on our private offering of $900.0 million of 8.125% senior secured notes due 2029 (“2029 Senior Secured Notes”) that mature on February 15, 2029 and $1.3 billion of 8.375% senior secured notes due 2032 (“2032 Senior Secured Notes”) that mature on February 15, 2032. Interest on the 2029 Senior Secured Notes and 2032 Senior Secured Notes is payable on February 15, May 15, August 15 and November 15 of each year.

Term Loan B

On February 2, 2024, we entered into a new seven-year $700.0 million Term Loan B. The Term Loan B matures on February 2, 2031 and will amortize in equal quarterly installments in aggregate annual amounts equal to 1.0% of the original principal amount, with the balance payable on maturity. The amount outstanding at December 31, 2025 is $687.8 million.

For additional information related to our long-term debt, see Note 6 to our unaudited condensed consolidated financial statements included in this Quarterly Report.

Capital Expenditures, Acquisitions and Other Investments

The following table summarizes expansion, maintenance and other non-cash capital expenditures (which excludes additions for tank bottoms and linefill and has been prepared on the accrual basis), acquisitions and other investments for the periods indicated.

(in thousands)

(1) Amounts for the three months and nine months ended December 31, 2024 are related to a transaction classified as an acquisition of assets in a prior period.

(2) Amount for the nine months ended December 31, 2024 relates to contributions made to unconsolidated entities. There were no other investments during the three months ended December 31, 2024 and the three months and nine months ended December 31, 2025.

There were no acquisitions during the three months or nine months ended December 31, 2025 or 2024.

Capital expenditures for the fiscal year ending March 31, 2026 are expected to be approximately $220 million to $230 million.

Distributions Declared

On December 16, 2025, the board of directors of our GP declared a cash distribution for the quarter ended December 31, 2025 to the holders of the Class B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class B Preferred Units”), the Class C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class C Preferred Units”) and the 9.00% Class D Preferred Units (“Class D Preferred Units”). The total distribution of $24.9 million was made on January 15, 2026 to the holders of record at the close of trading on January 1, 2026.

The board of directors of our GP expects to evaluate the reinstatement of the common unit distributions in due course, taking into account a number of important factors, including our leverage, liquidity, the sustainability of cash flows, upcoming debt maturities, capital expenditures and the overall performance of our businesses.

For additional information related to the payment of distributions, see Note 8 to our unaudited condensed consolidated financial statements included in this Quarterly Report.

Contractual Obligations

Our contractual obligations primarily consist of purchase commitments, outstanding debt principal and interest obligations, lease obligations, asset retirement obligations and other commitments.

For a discussion of contractual obligations, see Note 6, Note 7 and Note 13 to our unaudited condensed consolidated financial statements included in this Quarterly Report.

Sources (Uses) of Cash

The following table summarizes the sources (uses) of cash and cash equivalents for the periods indicated related to continuing operations (see the footnotes to our unaudited condensed consolidated financial statements included in this Quarterly Report for the footnotes referenced in the table):

(in thousands)

Operating Activities-Continuing Operations. The increase in net cash provided by operating activities during the nine months ended December 31, 2025 was due primarily to higher earnings from operations as well as fluctuations in working capital, particularly accounts receivable and accounts payable, due to higher crude oil volumes and lower crude oil prices, lower purchases and sales of natural gas liquids due to the Wholesale Propane Disposition and the timing of invoices and payments on construction projects. Also, on June 13, 2024, we paid LCT Capital, LLC (“LCT”) $63.3 million related to the legal judgment against us, of which $27.2 million represented interest and $0.1 million of costs awarded to LCT.

Environmental Legislation

See our Annual Report for a discussion of proposed environmental legislation and regulations that, if enacted, could result in increased compliance and operating costs. However, at this time we cannot predict the structure or outcome of any future legislation or regulations or the eventual cost we could incur in compliance.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements that are applicable to us, see Note 2 to our unaudited condensed consolidated financial statements included in this Quarterly Report.

Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with GAAP requires the selection and application of appropriate accounting principles to the relevant facts and circumstances of our operations and the use of estimates made by management. We have identified certain more critical judgment areas in the application of our accounting policies that are most important to the portrayal of our consolidated financial position and results of operations. The application of these accounting policies, which requires subjective or complex judgments regarding estimates and projected outcomes of future events, and changes in these accounting policies, could have a material effect on our consolidated financial statements. There have been no material changes in the critical accounting estimates previously disclosed in our Annual Report.

Interest Rate Risk

Long-Term Debt

A portion of our long-term debt is variable-rate debt. Changes in interest rates impact the interest payments of our variable-rate debt but generally do not impact the fair value of the liability. Conversely, changes in interest rates impact the fair value of our fixed-rate debt but do not impact its cash flows.

The ABL Facility is variable-rate debt with interest rates that are generally indexed to the prime rate or a secured overnight financing rate (“SOFR”) plus an applicable margin. At December 31, 2025, $92.0 million was outstanding under the ABL Facility at a weighted average interest rate of 7.29%. A change in interest rates of 0.125% would result in an increase or decrease of our annual interest expense of $0.1 million, based on borrowings outstanding at December 31, 2025.

The Term Loan B is variable-rate debt with interest rates that are generally indexed to SOFR plus an applicable margin. At December 31, 2025, $687.8 million was outstanding under the Term Loan B with an interest rate of SOFR of 3.72% plus a margin of 3.50%. A change in interest rates of 0.125% would result in an increase or decrease of our annual interest expense of $0.9 million, based on borrowings outstanding at December 31, 2025.

Interest Rate Swaps

In March and April 2024, we entered into two $200.0 million interest rate swaps to reduce the variability of cash outflows associated with our floating-rate, SOFR-based borrowings, including borrowings on the Term Loan B. An increase of 10% in the value of the underlying interest rate swaps would result in a net change in the fair value of our interest rate swaps of $0.3 million at December 31, 2025.

Preferred Unit Distributions

The current distribution rate for the Class B Preferred Units is the three-month CME Term SOFR interest rate plus a tenor spread adjustment of 0.26161% plus a spread of 7.213% (see Note 8 to our unaudited condensed consolidated financial statements included in this Quarterly Report for a further discussion). A change in interest rates of 0.125% would result in an increase or decrease of our quarterly Class B Preferred Unit distribution of $0.1 million, based on the Class B Preferred Units outstanding at December 31, 2025.

The current distribution rate for the Class C Preferred Units is the three-month CME Term SOFR interest rate plus a spread of 7.384% (see Note 8 to our unaudited condensed consolidated financial statements included in this Quarterly Report for a further discussion). A change in interest rates of 0.125% would result in an increase or decrease of our quarterly Class C Preferred Unit distribution of less than $0.1 million, based on the Class C Preferred Units outstanding at December 31, 2025.

The current distribution rate for the Class D Preferred Units is the three-month CME Term SOFR interest rate plus a spread of 7.00% (see Note 8 to our unaudited condensed consolidated financial statements included in this Quarterly Report for a further discussion). A change in interest rates of 0.125% would result in an increase or decrease of our quarterly Class D Preferred Unit distribution of $0.2 million, based on the Class D Preferred Units outstanding at December 31, 2025.

Commodity Price Risk

Our operations are subject to certain business risks, including commodity price risk. Commodity price risk is the risk that the market value of crude oil or natural gas liquids will change, either favorably or unfavorably, in response to changing market conditions. Procedures and limits for managing commodity price risks are specified in our market risk policy. Open commodity positions and market price changes are monitored daily and are reported to senior management and to marketing operations personnel.

The crude oil and natural gas liquids industries are “margin-based” and “cost-plus” businesses in which our realized margins depend on the differential of sales prices over our supply costs. We have no control over market conditions. As a result, our profitability may be impacted by sudden and significant changes in the price of crude oil and natural gas liquids.

We engage in various types of forward contracts and financial derivative transactions to reduce the effect of price volatility on our product costs, to protect the value of our inventory positions, and to help ensure the availability of product during periods of short supply. We attempt to balance our contractual portfolio by purchasing volumes when we have a matching purchase commitment from our commercial, retail and industrial customers. We may experience net unbalanced positions from time to time. In addition to our ongoing policy to maintain a balanced position, for accounting purposes we are required, on an ongoing basis, to track and report the market value of our derivative portfolio.

Although we use financial derivative instruments to reduce the market price risk associated with forecasted transactions, we do not account for financial derivative transactions as hedges. All changes in the fair value of our physical contracts that do not qualify as normal purchases and normal sales and settlements (whether cash transactions or non-cash mark-to-market adjustments) are reported within cost of sales (for purchase contracts) in our unaudited condensed consolidated statements of operations, regardless of whether the contract is physically or financially settled, and within cash flows from operations in our unaudited condensed consolidated statements of cash flows.

The following table summarizes the hypothetical impact on the December 31, 2025 fair value of our commodity derivatives of an increase of 10% in the value of the underlying commodity.

(in thousands)

Changes in commodity prices may also impact the volumes that we are able to transport, dispose, store and market, which also impact our cash flows.

Credit Risk

Our operations are also subject to credit risk, which is the risk of loss from nonperformance by suppliers, customers or financial counterparties to a contract. Procedures and limits for managing credit risk are specified in our credit policy. Credit risk is monitored daily and we believe we minimize exposure through the following:

• requiring certain customers to prepay or place deposits for our products and services;
• requiring certain customers to post letters of credit or other forms of surety;
• monitoring individual customer receivables relative to previously-approved credit limits;
• requiring certain customers to take delivery of their contracted volume ratably rather than allow them to take delivery at their discretion;
• entering into master netting agreements that allow for offsetting counterparty receivable and payable balances for certain transactions;
• reviewing the receivable aging regularly to identify issues or trends that may develop; and
• requiring marketing personnel to manage their customers’ receivable position and suspend sales to customers that have not timely paid outstanding invoices.

At December 31, 2025, our primary counterparties were retailers, resellers, energy marketers, producers, refiners, and dealers.

Fair Value

We determine the fair value of our exchange traded derivative financial instruments utilizing publicly available prices, and for non-exchange traded derivative financial instruments, we utilize pricing models for similar instruments including publicly available prices and forward curves generated from a compilation of data gathered from third-parties.

We maintain disclosure controls and procedures, as defined in Rule 13(a)-15(e) and 15(d)-15(e) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), that are designed to ensure the information required to be disclosed in our filings and submissions under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission and that such information is accumulated and communicated to our management, including the principal executive officer and principal financial officer of our GP, as appropriate, to allow timely decisions regarding required disclosure.

We completed an evaluation under the supervision and with participation of our management, including the principal executive officer and principal financial officer of our GP, of the effectiveness of the design and operation of our disclosure controls and procedures at December 31, 2025. Based on this evaluation, the principal executive officer and principal financial officer of our GP have concluded that as of December 31, 2025, such disclosure controls and procedures were effective.

There have been no changes in our internal controls over financial reporting (as defined in Rule 13(a)-15(f) of the Exchange Act) during the three months ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

There have been no material changes in the risk factors previously disclosed in Part I, Item 1A–“Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025.