NGL Energy Partners (NGL)·Q3 2026 Earnings Summary
NGL Energy Posts Record Water Volumes, Stock Drops 8.5% From 52-Week High
February 3, 2026 · by Fintool AI Agent
NGL Energy Partners LP (NYSE: NGL) delivered another strong quarter driven by its Water Solutions segment, reporting Adjusted EBITDA from continuing operations of $172.5 million versus $158.0 million in the prior year period . The partnership achieved record produced water volumes of approximately 3.07 million barrels per day, up 17.1% year-over-year . Despite the strong results, the stock opened at its 52-week high of $13.00 before selling off 8.5% to close at $11.89.
CEO Mike Krimbill reaffirmed full-year guidance and provided an upbeat outlook: "NGL posted another strong quarter driven by the Water Solutions segment. We are reaffirming our full year guide for Adjusted EBITDA of between $650 million to $660 million. We continue to see opportunities in the Water Solutions segment that continues to indicate Fiscal 2027 will be another strong year for the Partnership with Adjusted EBITDA eclipsing $700 million" .
Did NGL Energy Beat Earnings?
Yes—NGL beat on its key metric, Adjusted EBITDA, by approximately 14%:
The strong performance was driven primarily by the Water Solutions segment, which contributed $154.5 million of Adjusted EBITDA, up 16.4% from $132.7 million in the prior year period .
Ask Fintool AI AgentHow Did the Stock React?
NGL's stock exhibited significant intraday volatility on earnings day:
The stock had rallied significantly ahead of earnings—up from $6.28 (200-day moving average) to touch its 52-week high at the open. The selloff despite strong results suggests the beat was priced in, and some investors chose to take profits.
What Did Management Guide?
NGL reaffirmed its FY2026 guidance and provided a bullish FY2027 outlook:
This implies Q4 FY2026 Adjusted EBITDA of approximately $166-176 million to hit the midpoint, which appears achievable given Q3's strong run rate.
What Changed From Last Quarter?
Positive Developments
Water Solutions continues to accelerate:
- Produced water volumes grew 17.1% YoY to a record ~3.07 million bbl/day in Q3; eclipsed 3.5 million bbl/day in early January
- Operating expense per barrel processed declined to $0.18 from $0.21 YoY (includes non-recurring expense reductions)
- Western Express Pipeline expansion completed: 27 miles of 24-inch pipeline expanding reach and providing flexibility
- LEX II water pipeline (200,000 bbl/day initial capacity, expandable to 500,000 bbl/day) now contributing
- Recycled water volumes surged 203% YoY to 190,000 bbl/day
Capital allocation:
- Repurchased 88,506 Class D preferred units (~15% of outstanding)
- Repurchased 8.7 million common units at average price of $5.70 under $50M authorization
Grand Mesa Pipeline improvement:
- Volumes increased 39% YoY to 85,000 bbl/day from 61,000 bbl/day
Headwinds
Liquids Logistics weakness:
- Operating income declined $7.6 million YoY due to Wholesale Propane disposition and weak gasoline blending season
Segment Performance
Water Solutions now represents approximately 90% of NGL's total Adjusted EBITDA, demonstrating the partnership's successful transformation into a pure-play Delaware Basin water infrastructure company.
Ask Fintool AI AgentWater Solutions Deep Dive
NGL's Water Solutions business continues to benefit from structural tailwinds in the Delaware Basin:
Volume Growth:
Competitive Moat:
- Largest integrated water disposal system in the Delaware Basin
- Over 800 miles of large diameter water pipelines
- ~5,100 MBbl/d of permitted disposal capacity
- ~80% of volume from investment grade counterparties
- Weighted average MVC contract life of ~10 years
- ~765,000 dedicated acres
Balance Sheet & Liquidity
NGL continues to delever, with no upcoming debt maturities and full compliance with all debt covenants .
Strategic Initiatives: Natura MOU and AI/ML
Natura Resources MOU: NGL announced an MOU with Natura Resources, a modular nuclear reactor developer, to pursue nuclear-powered thermal desalination in Reeves County, Texas . The project would use nuclear waste heat (60% of energy output) for thermal desalination, creating new water for Texas while recovering critical minerals from concentrated brine . NGL can deliver 800,000 barrels per day to the TPDES outfall location, providing the economies of scale needed for an economic project . Management emphasized this requires no near-term CapEx from NGL—Natura handles nuclear capital—while NGL may start with a 50,000 bbl/day natural gas-powered pilot before scaling .
AI/Machine Learning Initiative: The partnership is in its second year of developing a proprietary AI/ML project using millions of data points from SCADA systems, automated electric power meters, and system flow models . The AI is identifying opportunities to increase revenues and decrease expenses by optimizing asset utilization—moving more water through existing infrastructure rather than drilling new disposal wells .
Capital Allocation Update: CEO Mike Krimbill noted NGL has eliminated approximately 25% of potential common equity dilution through (1) purchasing 23.3 million long-term warrants (strike prices $1.35-$1.75) for $6.9 million in November 2024, and (2) repurchasing nearly 7% of outstanding common units .
Q&A Highlights
On oil price volatility and growth project firmness (Derrick Whitfield, Texas Capital):
"The projects that we have completed, those came with volume commitments, and those were for long-term. So those are very financially firm. As we see the oil price fluctuate, even when it dipped down to $55 range, we really didn't see a big change from our customers... That consolidation has created more of a level activity level."
On recycling slowdowns benefiting NGL (Doug White, COO):
"When that recycling may slow down because it doesn't have frac crew to send water to, all of that produced water has to go somewhere, and that comes to us."
On mid-January cold weather impact (Brad Cooper, CFO):
"We experienced a few days in mid-January where volumes were under 3 million barrels a day due to the extreme cold weather... We do not expect this to have a material impact on our full-year guide for fiscal 2026 due to the nature of how we contract. Recall that over 1.5 million barrels per day of our water disposal volume is under MVC or CVC, which allows us to get paid on volumes even if they are not disposed of."
On Devon acquisition (Nevin, J.P. Morgan): Management noted they have not yet had conversations with Devon following the deal announcement earlier that week .
Key Catalysts to Watch
- Q4 FY2026 Results (May 2026) - Will NGL hit the $650-660M EBITDA guidance?
- FY2027 Guidance - Management targets >$700M EBITDA
- TPDES Discharge Permit - Expected to be issued early 2026
- Natura Nuclear Partnership - Long-term desalination opportunity; pilot could start with 50,000 bbl/day natural gas-powered plant
- Continued Unit Repurchases - $50M common unit program nearly exhausted; focus shifts to Class D preferreds
- Delaware Basin Volume Growth - Hit 3.5M bbl/day record in early January
Ask Fintool AI AgentBottom Line
NGL Energy Partners delivered a strong Q3 with record water volumes and reaffirmed guidance, but the stock sold off 8.5% from its 52-week high as the beat appeared to be priced in. The Water Solutions transformation is essentially complete—the segment now drives 90% of EBITDA with long-term contracted cash flows from investment grade customers. The FY2027 outlook of EBITDA "eclipsing $700 million" represents another meaningful step-up and should support continued deleveraging and capital returns.
Looking further ahead, the Natura Resources MOU positions NGL for a potential long-term pivot toward produced water treatment and surface discharge—reducing dependence on injection while creating new water resources for Texas. Combined with ongoing AI/ML initiatives to optimize existing infrastructure, management is laying groundwork for the next phase of value creation beyond volume growth.
Conference replay available by calling (877) 481-4010, passcode 53486.
Related Documents: