NGL Energy Partners LP (NGL)

NGL Energy Partners LP: A Comprehensive Overview

Company Profile:

History and Background:

NGL Energy Partners LP (NGL) is a publicly traded master limited partnership (MLP) formed in 2011. It is headquartered in Tulsa, Oklahoma, and focuses on gathering, processing, transporting, fractionating, and marketing natural gas liquids (NGLs), crude oil, and refined products. NGL's assets are primarily located in the Midcontinent and Rocky Mountain regions of the United States.

Core Business Areas:

• NGL Gathering and Processing: NGL operates natural gas processing plants and gathering systems to collect, process, and fractionate NGLs from natural gas production.
• Crude Oil and Refined Products Logistics: NGL provides transportation and terminalling services for crude oil and refined products through its network of pipelines, terminals, and storage facilities.
• Marketing and Distribution: NGL markets and distributes NGLs, crude oil, and refined products to refiners, petrochemical companies, and other end-users.

Leadership and Corporate Structure:

NGL is led by CEO Michael J. Hennigan and a team of experienced executives. The company is structured as an MLP, which means it issues two classes of securities: common units and incentive distribution rights (IDRs). The common units are publicly traded on the New York Stock Exchange (NYSE: NGL), and the IDRs are owned by the general partner of the MLP.

Top Products and Market Share:

Top Products:

• NGLs: NGL's primary product is natural gas liquids, which include propane, butane, ethane, and natural gasoline.
• Crude Oil: NGL also transports and markets crude oil from various production areas.
• Refined Products: NGL markets and distributes refined products such as gasoline, diesel, and jet fuel.

Market Share:

• NGLs: NGL is one of the largest NGL processors in the United States, with a total processing capacity of approximately 1.2 billion gallons per year.
• Crude Oil and Refined Products: NGL's crude oil and refined products pipeline network is approximately 4,000 miles long and has a capacity of approximately 700,000 barrels per day.

Product Performance and Competitive Landscape:

NGL's products are generally well-received in the market. The company has a strong reputation for reliability and operational efficiency. However, NGL faces competition from other NGL processors and midstream companies, such as Targa Resources (TRGP), DCP Midstream (DCP), and ONEOK (OKE).

Total Addressable Market:

The total addressable market for NGL's products and services is substantial. The global NGL market is expected to reach approximately $200 billion by 2027, and the US crude oil and refined products pipeline market is estimated at over $100 billion.

Financial Performance:

Recent Financial Statements:

For the fiscal year ended December 31, 2022, NGL reported the following financial results:

• Revenue: $2.2 billion
• Net Income: $230 million
• Profit Margin: 10%
• Earnings per Share (EPS): $2.07

Year-over-Year Comparison:

Compared to the previous year, NGL's revenue and net income both increased significantly. The company's profit margin and EPS also improved.

Cash Flow and Balance Sheet:

NGL has a strong cash flow position and a healthy balance sheet. The company's debt-to-equity ratio is approximately 0.5, which is considered a conservative level of leverage.

Dividends and Shareholder Returns:

Dividend History:

NGL has a history of paying dividends to its unitholders. The company has increased its dividend per unit every year since its IPO in 2011. The current annual dividend yield is approximately 7%.

Shareholder Returns:

Over the past 5 years, NGL's stock has generated a total return of approximately 50%. This includes both the price appreciation of the stock and the dividend payments.

Growth Trajectory:

Historical Growth:

NGL has experienced significant growth over the past 5 years. The company's revenue and earnings have more than doubled during this period.

Future Growth Projections:

Analysts expect NGL to continue to grow in the coming years. The company is well-positioned to benefit from the increasing demand for NGLs and the strong fundamentals of the crude oil and refined products markets.

Recent Growth Initiatives:

NGL is actively pursuing growth initiatives, including expanding its processing capacity, developing new pipeline projects, and entering new markets.

Market Dynamics:

Industry Overview:

The NGL, crude oil, and refined products midstream industry is characterized by consolidation, technological advancements, and increasing environmental regulations.

NGL's Positioning:

NGL is well-positioned within the industry due to its large-scale operations, diversified business model, and strong financial position. The company is also well-aligned with the growing demand for cleaner energy sources, as NGLs are a key feedstock for the production of petrochemicals and plastics.

Competitors:

Key Competitors:

• Targa Resources (TRGP)
• DCP Midstream (DCP)
• ONEOK (OKE)
• Enterprise Products Partners (EPD)
• Magellan Midstream Partners (MMP)

Market Share and Competitive Advantages:

NGL has a market share of approximately 10% in the US NGL processing market. The company's competitive advantages include its large-scale operations, diversified business model, strong financial position, and strategic partnerships.

Potential Challenges and Opportunities:

Challenges:

• Competition from other midstream companies
• Volatility in commodity prices
• Regulatory changes

Opportunities:

• Expanding into new markets
• Developing new and innovative services
• Partnerships and acquisitions

Recent Acquisitions:

2021:

• Acquired a 50% interest in the Red River Pipeline for $400 million. The Red River Pipeline is a 400-mile pipeline that transports crude oil from the Bakken shale formation in North Dakota to Cushing, Oklahoma.

2022:

• Acquired the remaining 50% interest in the Red River Pipeline for $400 million.
• Acquired a 50% interest in the Grand Prix Pipeline for $500 million. The Grand Prix Pipeline is a 200-mile pipeline that transports crude oil from the Permian Basin in Texas to the Gulf Coast.

AI-Based Fundamental Rating:

Rating: 8/10

Justification:

NGL has a strong financial foundation, a diversified business model, and a well-positioned within the growing NGL and midstream industries. The company is also well-managed and has a history of executing on its strategic initiatives. However, NGL faces competition from other midstream companies and is exposed to the volatility of commodity prices.

Sources and Disclaimers:

• NGL Energy Partners LP website: https://www.nglenergypartners.com/
• Annual report: https://www.nglenergypartners.com/investors/financial-reports
• Investor presentations: https://www.nglenergypartners.com/investors/presentations