NGL Energy Partners (NYSE:NGL) reported higher third-quarter fiscal 2026 results, driven by record produced-water disposal volumes in its Water Solutions segment and continued execution of its financial strategy, including preferred unit redemptions and common unit repurchases.
Quarterly results and full-year outlook
Chief Financial Officer Brad Cooper said adjusted EBITDA from continuing operations was $172.5 million for the quarter, up from $158 million in the prior-year period, representing a 9.2% increase. The partnership maintained its full-year fiscal 2026 adjusted EBITDA guidance range of $650 million to $660 million.
Water Solutions posts record volumes
The Water Solutions segment was the primary driver of the quarter’s performance. Cooper said segment adjusted EBITDA totaled $154.5 million, up from $132.7 million a year earlier, an increase of 16.5%. Physical produced-water disposal volumes averaged roughly 3.07 million barrels per day, compared with 2.6 million barrels per day in the prior-year quarter.
Total volumes the company was paid to dispose of, including deficiency volumes, were 3.13 million barrels per day versus 2.91 million barrels per day a year ago. Cooper said operating expenses were $0.18 per barrel during the quarter, attributing the figure to non-recurring expense reductions.
Management highlighted additional operating momentum after quarter-end. Cooper said the partnership eclipsed 3.5 million barrels per day of disposal volumes in early January, calling it a record. He noted several days of volumes below 3 million barrels per day due to extreme cold weather in mid-January but said the company does not expect the disruption to materially impact full-year guidance, citing contract structures. Cooper said more than 1.5 million barrels per day of water disposal volumes are under minimum volume commitments (MVC) or commitment volume contracts (CVC), which allow the company to be paid even if contracted volumes are not physically disposed.
Growth projects and operational initiatives
President Doug White said the partnership entered into multiple volume commitment contracts in the Delaware Basin that required substantial asset development. He said the development team executed the projects “ahead of schedule and under budget,” and that the associated water volumes are flowing “at or above our expectations.”
White highlighted the Western Express Pipeline expansion, describing it as a 27-mile buildout of 24-inch pipeline designed to extend reach in the customer footprint and to provide flexibility to transport water toward underutilized capacity and away from areas with seismicity and pore pressure constraints.
White said the company achieved an all-time daily record of approximately 3.3 million barrels of water during the quarter and received over 3.5 million barrels in a single day on January 16. He attributed those records to capacity increases resulting from the recent capital investment.
On efficiency efforts, White said the company is in its second year developing an AI and machine-learning project aimed at improving operations, with expected contributions to operational efficiencies in the current calendar year. He said the effort draws on “millions of data points” from the company’s SCADA system, automated electric power consumption meters, and system flow models, which are fed into a proprietary AI model to identify opportunities to increase revenue and reduce expenses. In response to an analyst question, management said it was not yet comfortable quantifying the project’s dollar impact, but noted the potential for both cost reductions and revenue benefits through improved utilization of existing assets.
Produced-water treatment and Natura MOU
Management also provided an update on its longer-term produced-water treatment strategy in the Delaware Basin. White said the company recently entered into a memorandum of understanding with Natura Resources, described as an advanced modular nuclear reactor developer. The partnership is pursuing a combination of nuclear power applied to thermal desalination technology in Reeves County, Texas, where its outfall for a TPDES discharge permit is located.
White said the company is progressing toward a final draft of that permit during the month and expects to receive an issued permit “early this year.” Chief Executive Officer Mike Krimbill said the company believes the long-term future of produced-water management requires treating water to a quality that can be released for surface use, including irrigation, industrial, and municipal applications, adding that the Natura agreement and the anticipated discharge permit represent steps toward that goal.
During the Q&A, management addressed investor concerns around near-term capital needs tied to the Natura-related initiative. Krimbill said the MOU “will have no CapEx demand to NGL on the nuclear side,” and added that the company’s CapEx forecast has not changed. He outlined a staged approach to treatment capacity, suggesting the company may start with a smaller plant—such as 50,000 barrels per day—that could be scaled over time, likely powered initially by natural gas. Krimbill also discussed how waste heat from nuclear generation could be used for thermal desalination and noted interest in recovering critical minerals from concentrated brine as part of a broader concept.
Other segments: Crude Oil and Liquids Logistics
Outside of Water Solutions, results were mixed. Crude Oil Logistics adjusted EBITDA was $15.4 million in the quarter, down from $17.3 million a year earlier. Cooper said physical volumes on the Grand Mesa Pipeline averaged approximately 85,000 barrels per day, up from 61,000 barrels per day in the prior-year quarter. However, he said margins were lower due to lower oil prices and reduced volumes from committed producers with higher contracted tariffs.
Liquids Logistics adjusted EBITDA was $15.2 million, compared with $18.6 million in the prior-year period. Cooper pointed to actions taken in April 2025 to reposition the segment, including the sale of the wholesale propane business and 17 NGL terminals, exiting the refined products business, and winding down the biodiesel marketing business. He said the current platform is more focused and anchored by the Centennial butane blending business, and that the streamlined footprint is performing as expected for the full year.
Capital allocation: preferred redemptions, unit repurchases, and leverage
Management emphasized capital allocation priorities, including funding internal growth projects, reducing preferred equity, and repurchasing common units when attractive. Cooper said the partnership redeemed an additional 18,506 Class D Preferred Units during the quarter, bringing total redemptions to 88,506, or about 15% of the original Class D outstanding.
On common units, Cooper said the company repurchased 1.6 million units during the quarter and has now repurchased approximately 8.7 million units since the program began—nearly 7% of outstanding units—at an average price of $5.70 per unit. Cooper said the company has “almost fully exhausted” the board-approved repurchase plan and that, at current unit prices, the company is primarily focused on eliminating the Class D Preferred Units.
Krimbill said leverage has declined to the “low 4.0x area,” and he indicated the company expects to redeem a significant portion of remaining Class D preferred units “in the very near future.” He also referenced the November 2024 purchase of 23.3 million long-term common unit warrants for $6.9 million, which he said eliminated approximately 18% of future dilution. Combined with unit repurchases, Krimbill said the company has eliminated potential common equity dilution by approximately 25%.
In response to questions about producer activity and oil price volatility, White said the recently completed Delaware Basin projects are supported by long-term volume commitments and are “very financially firm.” He added that even when oil prices dipped into the $55 range, the company did not see a major change from customers, and he cited consolidation in the basin as contributing to more level activity. Management also noted that changes in recycling activity can affect disposal demand, with White explaining that when recycling slows, more produced water may need to be disposed of through providers like NGL.
About NGL Energy Partners (NYSE:NGL)
NGL Energy Partners LP is a publicly traded master limited partnership that provides midstream infrastructure and marketing services for the energy industry. The company focuses on the transportation, storage, fractionation and marketing of natural gas liquids (NGLs) and refined petroleum products. Through its integrated operations, NGL Energy Partners serves producers, processors, refiners and industrial customers across key U.S. energy-producing regions.
The partnership’s asset base includes pipelines, storage terminals, fractionation plants, and distribution facilities.
