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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 001-35172

NGL Energy Partners LP
(Exact Name of Registrant as Specified in Its Charter)
Delaware27-3427920
(State or Other Jurisdiction of Incorporation or Organization)(I.R.S. Employer Identification No.)
6120 South Yale Avenue, Suite 1300
Tulsa,Oklahoma74136
(Address of Principal Executive Offices)(Zip Code)
(918) 481-1119
(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common units representing Limited Partner InterestsNGLNew York Stock Exchange
Fixed-to-floating rate cumulative redeemable perpetual preferred unitsNGL-PBNew York Stock Exchange
Fixed-to-floating rate cumulative redeemable perpetual preferred unitsNGL-PCNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes    No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes    No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated fileroAccelerated filerx
Non-accelerated fileroSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes    No

At February 7, 2024, there were 132,512,766 common units issued and outstanding.


TABLE OF CONTENTS
Unaudited Condensed Consolidated Balance Sheets at December 31, 2023 and March 31, 2023
Unaudited Condensed Consolidated Statements of Operations for the three months and nine months ended December 31, 2023 and 2022
Unaudited Condensed Consolidated Statements of Comprehensive Income for the three months and nine months ended December 31, 2023 and 2022
Unaudited Condensed Consolidated Statements of Changes in Equity for the three months and nine months ended December 31, 2023 and 2022
Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2023 and 2022

i

Forward-Looking Statements

This Quarterly Report on Form 10-Q (“Quarterly Report”) contains various forward-looking statements and information that are based on NGL Energy Partners LP’s (“we,” “us,” “our,” or the “Partnership”) beliefs and those of our general partner (“GP”), as well as assumptions made by and information currently available to us. These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. Certain words in this Quarterly Report such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “plan,” “project,” “will,” and similar expressions and statements regarding our plans and objectives for future operations, identify forward-looking statements. Although we and our GP believe such forward-looking statements are reasonable, neither we nor our GP can assure they will prove to be correct. Forward-looking statements are subject to a variety of risks, uncertainties and assumptions. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may vary materially from those expected. Among the key risk factors that may affect our consolidated financial position and results of operations are:

the prices of crude oil, natural gas liquids, gasoline, diesel, biodiesel, and energy prices generally;
the general level of demand, and the availability of supply, for crude oil, natural gas liquids, gasoline, diesel, and biodiesel;
the level of crude oil and natural gas drilling and production in areas where we have operations and facilities;
the ability to obtain adequate supplies of products if an interruption in supply or transportation occurs and the availability of capacity to transport products to market areas;
the effect of weather conditions on supply and demand for crude oil, natural gas liquids, gasoline, diesel, and biodiesel;
the effect of natural disasters, earthquakes, hurricanes, tornados, lightning strikes, or other significant weather events;
the availability of local, intrastate, and interstate transportation infrastructure with respect to our transportation services;
the availability, price, and marketing of competing fuels;
the effect of energy conservation efforts on product demand;
energy efficiencies and technological trends;
the issuance of executive orders, changes in applicable laws, regulations and policies, including tax, environmental, transportation, and employment regulations, or new interpretations by regulatory agencies concerning such laws and regulations and the effect of such laws, regulations and policies (now existing or in the future) on our business operations;
the effect of executive orders and legislative and regulatory actions on hydraulic fracturing, water disposal and transportation, and the treatment of flowback and produced water;
hazards or operating risks related to transporting and distributing petroleum products that may not be fully covered by insurance;
the maturity of the crude oil, natural gas liquids, and refined products industries and competition from other markets;
loss of key personnel;
the ability to renew contracts with key customers;
the ability to maintain or increase the margins we realize for our services;
the ability to renew leases for our leased equipment and storage facilities;
inflation, interest rates, and general economic conditions (including recessions and other future disruptions and volatility in the global credit markets, as well as the impact of these events on customers and suppliers);
the nonpayment, nonperformance or bankruptcy by our counterparties;
the availability and cost of capital and our ability to access certain capital sources;
a deterioration of the credit and capital markets;
1

the ability to successfully identify and complete accretive acquisitions and organic growth projects, and integrate acquired assets and businesses;
the costs and effects of legal and administrative proceedings;
changes in general economic conditions, including market and macroeconomic disruptions resulting from global pandemics and related governmental responses, and international military conflicts (such as the war in Ukraine and the conflict between Israel and Hamas); and
political pressure and influence of environmental groups upon policies and decisions related to the production, gathering, refining, processing, fractionation, transportation and sale of crude oil, refined products, natural gas, natural gas liquids, gasoline, diesel or biodiesel.

You should not put undue reliance on any forward-looking statements. All forward-looking statements speak only as of the date of this Quarterly Report. Except as may be required by state and federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements as a result of new information, future events, or otherwise. When considering forward-looking statements, please review the risks discussed under Part I, Item 1A–“Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023.
2

PART I - FINANCIAL INFORMATION

Item 1.    Financial Statements
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in Thousands, except unit amounts)
December 31, 2023March 31, 2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$738 $5,431 
Accounts receivable-trade, net of allowance for expected credit losses of $1,928 and $1,964, respectively
999,503 1,033,956 
Accounts receivable-affiliates15,459 12,362 
Inventories201,575 142,607 
Prepaid expenses and other current assets123,292 98,089 
Total current assets1,340,567 1,292,445 
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $945,414 and $898,184, respectively
2,137,386 2,223,380 
GOODWILL707,583 712,364 
INTANGIBLE ASSETS, net of accumulated amortization of $371,703 and $580,860, respectively
999,636 1,058,668 
INVESTMENTS IN UNCONSOLIDATED ENTITIES19,535 21,090 
OPERATING LEASE RIGHT-OF-USE ASSETS101,549 90,220 
OTHER NONCURRENT ASSETS56,231 57,977 
Total assets$5,362,487 $5,456,144 
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable-trade$831,991 $927,591 
Accounts payable-affiliates28 65 
Accrued expenses and other payables195,427 133,616 
Advance payments received from customers27,727 14,699 
Operating lease obligations32,839 34,166 
Total current liabilities1,088,012 1,110,137 
LONG-TERM DEBT, net of debt issuance costs of $21,729 and $30,117, respectively
2,683,918 2,857,805 
OPERATING LEASE OBLIGATIONS70,830 58,450 
OTHER NONCURRENT LIABILITIES107,806 111,226 
COMMITMENTS AND CONTINGENCIES (NOTE 8)
CLASS D 9.00% PREFERRED UNITS, 600,000 and 600,000 preferred units issued and outstanding, respectively
551,097 551,097 
EQUITY:
General partner, representing a 0.1% interest, 132,645 and 132,059 notional units, respectively
(52,562)(52,551)
Limited partners, representing a 99.9% interest, 132,512,766 and 131,927,343 common units issued and outstanding, respectively
549,600 455,564 
Class B preferred limited partners, 12,585,642 and 12,585,642 preferred units issued and outstanding, respectively
305,468 305,468 
Class C preferred limited partners, 1,800,000 and 1,800,000 preferred units issued and outstanding, respectively
42,891 42,891 
Accumulated other comprehensive loss(457)(450)
Noncontrolling interests15,884 16,507 
Total equity860,824 767,429 
Total liabilities and equity$5,362,487 $5,456,144 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3

NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(in Thousands, except unit and per unit amounts)
Three Months Ended December 31,Nine Months Ended December 31,
2023202220232022
REVENUES:
Water Solutions$179,301 $180,242 $557,847 $511,231 
Crude Oil Logistics425,294 531,613 1,379,397 1,971,767 
Liquids Logistics1,265,182 1,427,385 3,389,733 4,163,072 
Total Revenues1,869,777 2,139,240 5,326,977 6,646,070 
COST OF SALES:
Water Solutions(2,573)2,534 7,420 13,679 
Crude Oil Logistics386,418 471,891 1,266,644 1,808,460 
Liquids Logistics1,224,059 1,385,943 3,290,784 4,057,360 
Corporate and Other(1,772) (939) 
Total Cost of Sales1,606,132 1,860,368 4,563,909 5,879,499 
OPERATING COSTS AND EXPENSES:
Operating79,115 81,353 233,185 237,371 
General and administrative17,934 17,216 55,721 50,601 
Depreciation and amortization65,597 69,327 200,102 204,105 
(Gain) loss on disposal or impairment of assets, net(790)8,306 14,221 15,791 
Operating Income101,789 102,670 259,839 258,703 
OTHER INCOME (EXPENSE):  
Equity in earnings of unconsolidated entities838 1,213 1,780 3,094 
Interest expense(57,221)(75,920)(175,370)(211,528)
Gain on early extinguishment of liabilities, net 2,667 6,871 6,808 
Other income, net515 28,100 1,131 28,731 
Income Before Income Taxes45,921 58,730 94,251 85,808 
INCOME TAX (EXPENSE) BENEFIT(154)252 (636)(113)
Net Income45,767 58,982 93,615 85,695 
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS(85)(448)(604)(790)
NET INCOME ATTRIBUTABLE TO NGL ENERGY PARTNERS LP$45,682 $58,534 $93,011 $84,905 
NET INCOME (LOSS) ALLOCATED TO COMMON UNITHOLDERS - BASIC (NOTE 3)$10,244 $26,007 $(10,947)$(5,571)
NET INCOME (LOSS) ALLOCATED TO COMMON UNITHOLDERS - DILUTED (NOTE 3)$10,244 $26,123 $(10,947)$(5,571)
BASIC INCOME (LOSS) PER COMMON UNIT$0.08 $0.20 $(0.08)$(0.04)
DILUTED INCOME (LOSS) PER COMMON UNIT$0.08 $0.19 $(0.08)$(0.04)
BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING132,220,055 131,015,658 132,025,268 130,802,920 
DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING132,498,734 134,485,325 132,025,268 130,802,920 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4

NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Comprehensive Income
(in Thousands)
Three Months Ended December 31,Nine Months Ended December 31,
2023202220232022
Net income$45,767 $58,982 $93,615 $85,695 
Other comprehensive income (loss)16 1 (7)(131)
Comprehensive income$45,783 $58,983 $93,608 $85,564 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5

NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Statement of Changes in Equity
Nine Months Ended December 31, 2023
(in Thousands, except unit amounts)
Limited Partners
PreferredCommon
General
Partner
UnitsAmount
Units
AmountAccumulated
Other Comprehensive
Income (Loss)
Noncontrolling
Interests
Total
Equity
BALANCE AT MARCH 31, 2023$(52,551)14,385,642 $348,359 131,927,343 $455,564 $(450)$16,507 $767,429 
Distributions to noncontrolling interest owners— — — — — — (377)(377)
Equity issued pursuant to incentive compensation plan (Note 9)— — — — 474 — — 474 
Net (loss) income(14)— — — 19,315 — 262 19,563 
Other comprehensive income— — — — — 16 — 16 
BALANCE AT JUNE 30, 2023(52,565)14,385,642 348,359 131,927,343 475,353 (434)16,392 787,105 
Distributions to noncontrolling interest owners— — — — — — (572)(572)
Equity issued pursuant to incentive compensation plan (Note 9)— — — — 410 — — 410 
Net (loss) income(7)— — — 28,035 — 257 28,285 
Other comprehensive loss— — — — — (39)— (39)
BALANCE AT SEPTEMBER 30, 2023(52,572)14,385,642 348,359 131,927,343 503,798 (473)16,077 815,189 
Distributions to noncontrolling interest owners— — — — — — (278)(278)
Common unit repurchases and cancellations (Note 9)— — — (21,302)(84)— — (84)
Equity issued pursuant to incentive compensation plan (Note 9)— — — 606,725 214 — — 214 
Net income10 — — — 45,672 — 85 45,767 
Other comprehensive income— — — — — 16 — 16 
BALANCE AT DECEMBER 31, 2023$(52,562)14,385,642 $348,359 132,512,766 $549,600 $(457)$15,884 $860,824 

6

NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Statement of Changes in Equity
Nine Months Ended December 31, 2022
(in Thousands, except unit amounts)

Limited Partners
PreferredCommon
General
Partner
UnitsAmount
Units
AmountAccumulated
Other Comprehensive
Income (Loss)
Noncontrolling
Interests
Total
Equity
BALANCE AT MARCH 31, 2022$(52,478)14,385,642 $348,359 130,695,970 $401,486 $(308)$17,394 $714,453 
Distributions to noncontrolling interest owners— — — — — — (975)(975)
Equity issued pursuant to incentive compensation plan— — — — 497 — — 497 
Net (loss) income(5)— — — 22,866 — 245 23,106 
Other comprehensive loss— — — — — (50)— (50)
BALANCE AT JUNE 30, 2022(52,483)14,385,642 348,359 130,695,970 424,849 (358)16,664 737,031 
Distributions to noncontrolling interest owners— — — — — — (274)(274)
Equity issued pursuant to incentive compensation plan — — — — 479 — — 479 
Net (loss) income(27)— — — 3,537 — 97 3,607 
Other comprehensive loss— — — — — (82)— (82)
BALANCE AT SEPTEMBER 30, 2022(52,510)14,385,642 348,359 130,695,970 428,865 (440)16,487 740,761 
Distributions to noncontrolling interest owners— — — — — — (267)(267)
Common unit repurchases and cancellations— — — (31,828)(42)— — (42)
Equity issued pursuant to incentive compensation plan — — — 657,600 890 — — 890 
Net income26 — — — 58,508 — 448 58,982 
Other comprehensive income— — — — — 1 — 1 
BALANCE AT DECEMBER 31, 2022$(52,484)14,385,642 $348,359 131,321,742 $488,221 $(439)$16,668 $800,325 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7

NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(in Thousands)
Nine Months Ended December 31,
20232022
OPERATING ACTIVITIES:
Net income$93,615 $85,695 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including amortization of debt issuance costs212,893 217,028 
Gain on early extinguishment of liabilities, net(6,871)(6,808)
Equity-based compensation expense1,098 1,866 
Loss on disposal or impairment of assets, net14,221 15,791 
Change in provision for expected credit losses194 (485)
Net adjustments to fair value of commodity derivatives(13,287)13,879 
Equity in earnings of unconsolidated entities(1,780)(3,094)
Distributions of earnings from unconsolidated entities2,867 2,568 
Lower of cost or net realizable value adjustments6,496 3,050 
Other3,402 701 
Changes in operating assets and liabilities, exclusive of acquisitions:
Accounts receivable-trade and affiliates30,469 (4,778)
Inventories(65,464)(24,904)
Other current and noncurrent assets31,442 6,285 
Accounts payable-trade and affiliates(95,735)(131,086)
Other current and noncurrent liabilities10,381 31,157 
Net cash provided by operating activities223,941 206,865 
INVESTING ACTIVITIES:
Capital expenditures(119,896)(122,362)
Net settlements of commodity derivatives6,916 28,521 
Proceeds from sales of assets46,536 22,120 
Proceeds from divestitures of businesses and investments, net16,000  
Investments in unconsolidated entities(258)(346)
Distributions of capital from unconsolidated entities1,376  
Net cash used in investing activities(49,326)(72,067)
FINANCING ACTIVITIES:
Proceeds from borrowings under revolving credit facility1,411,000 1,432,000 
Payments on revolving credit facility(1,494,000)(1,392,000)
Repayment and repurchase of senior unsecured notes(91,982)(168,047)
Payments on other long-term debt (1,931)
Debt issuance costs(1,787)(1,340)
Distributions to noncontrolling interest owners(1,227)(1,516)
Common unit repurchases and cancellations(84)(42)
Payments to settle contingent consideration liabilities(1,216)(1,204)
Principal payments of finance lease(12)(6)
Net cash used in financing activities(179,308)(134,086)
Net (decrease) increase in cash and cash equivalents(4,693)712 
Cash and cash equivalents, beginning of period5,431 3,822 
Cash and cash equivalents, end of period$738 $4,534 
Supplemental cash flow information:
Cash interest paid$135,313 $163,203 
Income taxes paid (net of income tax refunds)$2,943 $3,088 
Supplemental non-cash investing and financing activities:
Accrued capital expenditures$10,167 $7,398 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8

NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements

Note 1—Organization and Operations

NGL Energy Partners LP (“we,” “us,” “our,” or the “Partnership”) is a Delaware limited partnership. NGL Energy Holdings LLC serves as our general partner (“GP”). At December 31, 2023, our operations included three segments:

Our Water Solutions segment transports, treats, recycles and disposes of produced and flowback water generated from crude oil and natural gas production. We also sell produced water for reuse and recycle and brackish non-potable water to our producer customers to be used in their crude oil exploration and production activities. As part of processing water, we aggregate and sell recovered crude oil, also known as skim oil. We also dispose of solids such as tank bottoms, drilling fluids and drilling muds and perform other ancillary services such as truck and frac tank washouts. Our activities in this segment are underpinned by long-term, fixed fee contracts and acreage dedications, some of which contain minimum volume commitments with leading oil and gas companies including large, investment grade producer customers.
Our Crude Oil Logistics segment purchases crude oil from producers and marketers and transports it to refineries or for resale at pipeline injection stations, storage terminals, barge loading facilities, rail facilities, refineries, and other trade hubs, and provides storage, terminaling, and transportation services through its owned assets. Our activities in this segment are supported by certain long-term, fixed rate contracts which include minimum volume commitments on our owned and leased pipelines.
Our Liquids Logistics segment conducts supply operations for natural gas liquids, refined petroleum products and biodiesel to a broad range of commercial, retail and industrial customers across the United States and Canada. These operations are conducted through our 22 owned terminals, third-party storage and terminal facilities, nine common carrier pipelines and a fleet of leased railcars. We also provide services for marine exports of butane through our facility located in Chesapeake, Virginia and we also own a propane pipeline in Michigan. We attempt to reduce our exposure to price fluctuations by using back-to-back physical contracts and pre-sale agreements that allow us to lock in a margin on a percentage of our winter volumes. We also enter into financially settled derivative contracts as economic hedges of our physical inventory, physical sales and physical purchase contracts.

Note 2—Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include our accounts and those of our controlled subsidiaries. Intercompany transactions and account balances have been eliminated in consolidation. Investments we do not control, but can exercise significant influence over, are accounted for using the equity method of accounting. We also own an undivided interest in a crude oil pipeline, and include our proportionate share of assets, liabilities, and expenses related to this pipeline in our unaudited condensed consolidated financial statements.

Our unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim consolidated financial information in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, the unaudited condensed consolidated financial statements exclude certain information and notes required by GAAP for complete annual consolidated financial statements. However, we believe that the disclosures made are adequate to make the information presented not misleading. The unaudited condensed consolidated financial statements include all adjustments that we consider necessary for a fair presentation of our consolidated financial position, results of operations and cash flows for the interim periods presented. Such adjustments consist only of normal recurring items, unless otherwise disclosed in this Quarterly Report on Form 10-Q. The unaudited condensed consolidated balance sheet at March 31, 2023 was derived from our audited consolidated financial statements for the fiscal year ended March 31, 2023 included in our Annual Report on Form 10-K (“Annual Report”) filed with the SEC on May 31, 2023.

These interim unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report. Due to the seasonal nature of certain of our operations and other factors, the results of operations for interim periods are not necessarily indicative of the results of operations to be expected for future periods or for the full fiscal year ending March 31, 2024.

9

NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amount of assets and liabilities reported at the date of the consolidated financial statements and the amount of revenues and expenses reported during the periods presented.

Critical accounting estimates we make in the preparation of our unaudited condensed consolidated financial statements include, among others, determining the impairment of goodwill and long-lived assets, useful lives and recoverability of property, plant and equipment and amortizable intangible assets, the fair value of derivative instruments, estimating certain revenues, the fair value of asset retirement obligations, the fair value of assets and liabilities acquired in acquisitions, the recoverability of inventories, the collectability of accounts and notes receivable and accruals for environmental matters. Although we believe these estimates are reasonable, actual results could differ from those estimates.

Significant Accounting Policies

Our significant accounting policies are consistent with those disclosed in Note 2 of our audited consolidated financial statements included in our Annual Report.

Income Taxes

We qualify as a partnership for income tax purposes. As such, we generally do not pay federal income tax. Rather, each owner reports his or her share of our income or loss on his or her individual tax return. The aggregate difference in the basis of our net assets for financial and tax reporting purposes cannot be readily determined, as we do not have access to information regarding each partner’s basis in the Partnership.

We have a deferred tax liability of $40.2 million and $40.7 million at December 31, 2023 and March 31, 2023, respectively, as a result of acquiring corporations in connection with certain of our acquisitions, which is included within other noncurrent liabilities in our unaudited condensed consolidated balance sheets. The deferred tax liability is the tax effected cumulative temporary difference between the GAAP basis and tax basis of the acquired assets within the corporation. For GAAP purposes, certain of the acquired assets will be depreciated and amortized over time which will lower the GAAP basis. The deferred tax benefit recorded during the nine months ended December 31, 2023 was $0.5 million with an effective tax rate of 23.4%. The deferred tax benefit recorded during the nine months ended December 31, 2022 was $1.6 million with an effective tax rate of 25.1%.

We evaluate uncertain tax positions for recognition and measurement in the unaudited condensed consolidated financial statements. To recognize a tax position, we determine whether it is more likely than not that the tax position will be sustained upon examination, including resolution of any related appeals or litigation, based on the technical merits of the position. A tax position that meets the more likely than not threshold is measured to determine the amount of benefit to be recognized in the unaudited condensed consolidated financial statements. We had no uncertain tax positions that required recognition in our unaudited condensed consolidated financial statements at December 31, 2023 or March 31, 2023.

Inventories

Our inventories are valued at the lower of cost or net realizable value, with cost determined using either the weighted-average cost or the first in, first out (FIFO) methods, including the cost of transportation and storage, and with net realizable value defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. In performing this analysis, we consider fixed-price forward commitments.

10

NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Inventories consist of the following at the dates indicated:
December 31, 2023March 31, 2023
(in thousands)
Propane$74,480 $46,910 
Crude oil56,902 49,586 
Butane38,430 18,384 
Biodiesel16,444 19,778 
Diesel5,199 2,536 
Other10,120 5,413 
Total$201,575 $142,607 

Investments in Unconsolidated Entities

Investments we do not control, but can exercise significant influence over, are accounted for using the equity method of accounting. Investments in partnerships and limited liability companies, unless our investment is considered to be minor, and investments in unincorporated joint ventures are also accounted for using the equity method of accounting.

Our investments in unconsolidated entities consist of the following at the dates indicated:
EntitySegmentOwnership InterestDecember 31, 2023March 31, 2023
(in thousands)
Water services and land companyWater Solutions50%$14,456 $15,036 
Water services and land companyWater Solutions10%2,781 3,511 
Water services and land companyWater Solutions50%2,176 2,071 
Natural gas liquids terminal companyLiquids Logistics50%122 164 
Aircraft company (1)Corporate and Other50% 308 
Total$19,535 $21,090 
(1)    This is an investment with a related party. As the distributions we received exceeded our investment, the balance of $0.7 million has been recorded within other noncurrent liabilities in our unaudited condensed consolidated balance sheet.

Other Noncurrent Assets

Other noncurrent assets consist of the following at the dates indicated:
December 31, 2023March 31, 2023
(in thousands)
Linefill (1)$37,861 $37,861 
Loan receivable (2)7,419 8,592 
Minimum shipping fees - pipeline commitments (3)1,424 4,628 
Other9,527 6,896 
Total$56,231 $57,977 
(1)    Represents minimum volumes of product we are required to leave on certain third-party owned pipelines under long-term shipment commitments. At December 31, 2023 and March 31, 2023, linefill consisted of 502,686 barrels of crude oil. Linefill held in pipelines we own is included within property, plant and equipment (see Note 4).
(2)    Represents the noncurrent portion of loan receivables, net of allowances for expected credit losses, primarily related to the sale of certain saltwater disposal assets. At December 31, 2023 and March 31, 2023, the loan receivable balance was $10.3 million and $8.6 million, respectively, of which $2.9 million is recorded within prepaid expenses and other current assets in our December 31, 2023 unaudited condensed consolidated balance sheet. See Note 16 for a discussion of activity during the current fiscal year.
(3)    Represents the noncurrent portion of minimum shipping fees paid in excess of volumes shipped, or deficiency credits, for a contract with a crude oil pipeline operator. This amount can be recovered when volumes shipped exceed the minimum monthly volume commitment (see Note 8). At December 31, 2023 and March 31, 2023, the deficiency credit was $5.7 million and $8.9 million, respectively, of which $4.3 million and $4.3 million, respectively, are recorded within prepaid expenses and other current assets in our unaudited condensed consolidated balance sheets.

11

NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Accrued Expenses and Other Payables

Accrued expenses and other payables consist of the following at the dates indicated:
December 31, 2023March 31, 2023
(in thousands)
Accrued interest$76,987 $49,362 
Derivative liabilities39,414 14,752 
Accrued compensation and benefits28,806 27,013 
Excise and other tax liabilities17,909 11,777 
Product exchange liabilities5,961 4,047 
Other26,350 26,665 
Total$195,427 $133,616 

Reclassifications

We have reclassified certain prior period financial statement information to be consistent with the classification methods used in the current fiscal year. These reclassifications did not impact previously reported amounts of assets, liabilities, equity, net income or cash flows.

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The ASU is effective for the Partnership’s fiscal year beginning April 1, 2025, with early adoption permitted, and should be applied either prospectively or retrospectively. We are currently evaluating the ASU to determine its impact on our financial statement disclosures.

In December 2023, the FASB issued ASU No. 2023-08, Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets, which includes amendments intended to improve the accounting for and disclosure of crypto assets. The ASU requires crypto assets to be measured at fair value each reporting period and for changes from remeasurement to be recognized in net income. The ASU also requires enhanced disclosures for both annual and interim reporting periods to provide investors with relevant information to analyze and assess the exposure and risk of significant individual crypto asset holdings. The ASU is effective for the Partnership’s fiscal year beginning April 1, 2025, including interim periods during that fiscal year, with early adoption permitted and requires a cumulative-effect adjustment upon adoption. This ASU does not currently impact our financial statements.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which includes amendments intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The ASU is effective for the Partnership’s fiscal year beginning April 1, 2024, and interim periods within our fiscal year beginning April 1, 2025, with early adoption permitted and requires retrospective application. We are currently evaluating the ASU to determine its impact on our financial statement disclosures.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) interest rate or another reference rate expected to be discontinued because of reference rate reform. In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which deferred the sunset date from December 31, 2022 to December 31, 2024 and left all other provisions of ASU No. 2020-04 unchanged. On April 13, 2022, the ABL Facility (as defined herein) was amended to replace the LIBOR benchmark with the SOFR (as defined herein) benchmark (as discussed further in Note 7). We are continuing to evaluate the effect that this guidance will have on our financial position, results of operations and cash flows.

12

NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Note 3—Income (Loss) Per Common Unit

The following table presents our calculation of basic and diluted weighted average common units outstanding for the periods indicated:
Three Months Ended December 31,Nine Months Ended December 31,
2023202220232022
Weighted average common units outstanding during the period:
Common units - Basic132,220,055 131,015,658 132,025,268 130,802,920 
Effect of Dilutive Securities:
Partial redemption of Class D Preferred Units (1) 3,469,667   
Service awards278,679    
Common units - Diluted132,498,734 134,485,325 132,025,268 130,802,920 
(1)    Under the if-converted method, this amount represents the number of common units that would be issued to partially redeem outstanding Class D Preferred Units. Per the amended and restated limited partnership agreement (“Partnership Agreement”), the Partnership can redeem up to 50% of the outstanding Class D Preferred Units, but is limited in the number of common units that can be used (the lower of 15% of the outstanding common units or 10 times the 30-day average daily trading volume) for the redemption.

For the three months ended December 31, 2023, the warrants and convertible securities were considered antidilutive and for the three months ended December 31, 2022, the service awards and warrants were considered antidilutive. For the nine months ended December 31, 2023 and 2022, all potential common units and convertible securities were considered antidilutive.

Our income (loss) per common unit is as follows for the periods indicated:
Three Months Ended December 31,Nine Months Ended December 31,
2023202220232022
(in thousands, except per unit amounts)
Net income$45,767 $58,982 $93,615 $85,695 
Less: Net income attributable to noncontrolling interests(85)(448)(604)(790)
Net income attributable to NGL Energy Partners LP45,682 58,534 93,011 84,905 
Less: Distributions to preferred unitholders (1)(35,428)(32,501)(103,969)(90,482)
Less: Net (income) loss allocated to GP (2)(10)(26)11 6 
Net income (loss) allocated to common unitholders - basic10,244 26,007 (10,947)(5,571)
Plus: Distributions to preferred unitholders (3) 116   
Net income (loss) allocated to common unitholders - diluted$10,244 $26,123 $(10,947)$(5,571)
Basic income (loss) per common unit$0.08 $0.20 $(0.08)$(0.04)
Diluted income (loss) per common unit$0.08 $0.19 $(0.08)$(0.04)
(1)    Includes cumulative distributions for the three months and nine months ended December 31, 2023 and 2022 which were earned but not declared or paid (see Note 9 for a further discussion of the suspension of common unit and preferred unit distributions).
(2)    Net (income) loss allocated to the GP includes distributions to which it is entitled as the holder of incentive distribution rights.
(3)    Under the if-converted method, this amount represents the Class D Preferred Unit distributions that would be eliminated due to the partial redemption of the Class D Preferred Units.

13

NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Note 4—Property, Plant and Equipment

Our property, plant and equipment consists of the following at the dates indicated:
DescriptionEstimated
Useful Lives
December 31, 2023March 31, 2023
(in years)(in thousands)
Natural gas liquids terminal and storage assets2-30$158,248 $160,939 
Pipeline and related facilities30-40266,129 265,253 
Vehicles and railcars (1)3-2592,197 92,640 
Water treatment facilities and equipment3-302,009,707 2,040,792 
Crude oil tanks and related equipment2-30223,262 221,881 
Information technology equipment3-735,700 35,884 
Buildings and leasehold improvements3-40122,421 130,119 
Land 80,729 89,474 
Tank bottoms and linefill (2)  35,072 40,001 
Other3-202,553 10,908 
Construction in progress56,782 33,673 
Gross property, plant and equipment3,082,800 3,121,564 
Accumulated depreciation(945,414)(898,184)
Net property, plant and equipment$2,137,386 $2,223,380 
(1)    Includes a finance lease right-of-use asset of $0.1 million at December 31, 2023 and March 31, 2023. The accumulated amortization related to this finance lease is included within accumulated depreciation.
(2)    Tank bottoms, which are product volumes required for the operation of storage tanks, are recorded at historical cost. We recover tank bottoms when the storage tanks are removed from service. Linefill, which represents our portion of the product volume required for the operation of the proportionate share of a pipeline we own, is recorded at historical cost.

The following table summarizes depreciation expense and capitalized interest expense for the periods indicated:
Three Months Ended December 31,Nine Months Ended December 31,
2023202220232022
(in thousands)
Depreciation expense$49,588 $50,005 $147,899 $145,862 
Capitalized interest expense$458 $250 $1,107 $740 

We record (gains) losses from the sales of property, plant and equipment and any write-downs in value due to impairment within (gain) loss on disposal or impairment of assets, net in our unaudited condensed consolidated statement of operations. The following table summarizes (gains) losses on the disposal or impairment of property, plant and equipment by segment for the periods indicated:
Three Months Ended December 31, 2023Nine Months Ended December 31, 2023
(in thousands)
Water Solutions (1)$(1,523)$11,884 
Crude Oil Logistics 2,101 2,436 
Liquids Logistics (2) (810)
Corporate and Other(715)(715)
Total$(137)$12,795 
(1)    Amounts do not include the loss recognized on the sale of certain saltwater disposal assets discussed in Note 16.
(2)    Amounts do not include the gain recognized on the sale of three natural gas liquids terminals discussed in Note 16.

14

NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
Note 5—Goodwill

The following table summarizes changes in goodwill by segment during the nine months ended December 31, 2023:
Water
Solutions
Crude Oil
Logistics
Liquids
Logistics
Total
(in thousands)
Balance at March 31, 2023$283,310 $309,971 $119,083 $712,364 
Disposal (1)  (4,781)(4,781)
Balance at December 31, 2023$283,310 $309,971 $114,302 $707,583 
(1)    Relates to the sale of two natural gas liquids terminals within our Liquids Logistics segment on July 24, 2023 (see Note 16).

Note 6—Intangible Assets

Our intangible assets consist of the following at the dates indicated:
December 31, 2023March 31, 2023
DescriptionWeighted-
Average
Remaining
Useful Life
Gross Carrying
Amount
Accumulated
Amortization
NetGross Carrying
Amount
Accumulated
Amortization
Net
(in years)(in thousands)
Amortizable:
Customer relationships18.6$928,468 $(265,833)$662,635 $1,196,468 $(492,002)$704,466 
Customer commitments20.5192,000 (34,560)157,440 192,000 (28,800)163,200 
Pipeline capacity rights19.97,799 (2,621)5,178 7,799 (2,427)5,372 
Rights-of-way and easements30.195,044 (17,407)77,637 94,875 (15,138)79,737 
Water rights15.999,869 (30,989)68,880 99,869 (26,453)73,416 
Executory contracts and other agreements24.821,054 (5,961)15,093 21,570 (5,037)16,533 
Non-compete agreements—    1,100 (1,082)18 
Debt issuance costs (1)
2.227,105 (14,332)12,773 25,592 (9,921)15,671 
Total amortizable1,371,339 (371,703)999,636 1,639,273 (580,860)1,058,413 
Non-amortizable:
Trade names (2)  255 255 
Total$1,371,339 $(371,703)$999,636 $1,639,528 $(580,860)$1,058,668 
(1)    Includes debt issuance costs related to the ABL Facility. Debt issuance costs related to the fixed-rate notes are reported as a reduction of the carrying amount of long-term debt.
(2)    As this item was considered impaired due to the sale of the assets in the Pinedale Anticline Basin, as discussed further in Note 16, the amount was written off during the three months ended September 30, 2023.

Amortization expense is as follows for the periods indicated:
Three Months Ended December 31,Nine Months Ended December 31,
Recorded In2023202220232022
(in thousands)
Depreciation and amortization$16,009 $19,322 $52,203 $58,243 
Cost of sales65 68 195 205 
Interest expense1,515 1,203 4,410 3,564 
Operating expenses62 62 185 185 
Total$17,651 $20,655 $56,993 $62,197 

15

NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
The following table summarizes expected amortization of our intangible assets at December 31, 2023 (in thousands):
Fiscal Year Ending March 31,
2024 (three months)$17,409 
202568,181 
202665,999 
202760,183 
202857,327 
202955,359 
Thereafter675,178 
Total$999,636 

Note 7—Long-Term Debt

Our long-term debt consists of the following at the dates indicated:
December 31, 2023March 31, 2023
Face
Amount
Unamortized
Debt Issuance
Costs (1)
Book
Value
Face
Amount
Unamortized
Debt Issuance
Costs (1)
Book
Value
(in thousands)
Senior secured notes:
7.500% Notes due 2026 (“2026 Senior Secured Notes”)
$2,050,000 $(19,124)$2,030,876 $2,050,000 $(26,009)$2,023,991 
Asset-based revolving credit facility (“ABL Facility”)55,000 55,000 138,000 138,000 
Senior unsecured notes:
6.125% Notes due 2025 (“2025 Notes”)
280,745 (725)280,020 380,020 (1,612)378,408 
7.5% Notes due 2026 (“2026 Notes”)
319,902 (1,880)318,022 319,902 (2,496)317,406 
Long-term debt$2,705,647 $(21,729)$2,683,918 $2,887,922 $(30,117)$2,857,805 
(1)    Debt issuance costs related to the ABL Facility are reported within intangible assets, rather than as a reduction of the carrying amount of long-term debt.

Recent Developments

On February 2, 2024, we closed a debt refinancing transaction of $2.9 billion consisting of a private offering of $2.2 billion of senior secured notes, which includes $900.0 million of 8.125% 2029 senior secured notes (“2029 Senior Secured Notes”) and $1.3 billion of 8.375% senior secured notes due 2032 (“2032 Senior Secured Notes” and, together with the 2029 Senior Secured Notes, the “New Senior Secured Notes”). We also entered into a new seven-year $700.0 million senior secured term loan “B” credit facility (“Term Loan B”). The net proceeds from these transactions are being used (i) to fund the redemption, and related discharge of the indentures governing our existing 2025 Notes, 2026 Notes and 2026 Senior Secured Notes, including any applicable premiums and accrued and unpaid interest (as discussed further below), (ii) to pay fees and expenses in connection therewith, (iii) to repay borrowings under the ABL Facility and (iv) to the extent of any remaining net proceeds, for general corporate purposes.

In addition, in connection with the closing of the refinancing transactions, the ABL Facility was amended to extend the maturity to February 2029 and to make certain other changes to the terms thereof. No changes were made to the aggregate amount of commitments u