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NGL Energy Shares Rise 21% as It Seeks to Raise $2.05 Billion from Senior Secured Note Offering

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Shares of NGL Energy Partners LP traded higher after the firm made a series of announcements over the past three days regarding an update on financial operations, a settlement with a customer in bankruptcy, a quarterly Class D unit distribution and a $2.05 billion senior secured debt offering.

Diversified midstream energy firm NGL Energy Partners LP (NGL:NYSE) today announced that through its wholly owned subsidiaries NGL Energy Operating LLC and NGL Energy Finance Corp. that "it intends to offer, subject to market and other conditions, $2.05 billion in aggregate principal amount of senior secured notes due 2026."

NGL Energy Partners stated that it expects to utilize the proceeds from the secured debt offering along with funds that it plans to draw down from a new $500.0 million asset-based revolving credit facility to restructure existing debt on its balance sheet. Specifically, the company advised that its plans are to "(i) repay all outstanding borrowings under and terminate NGL's existing revolving credit facility, (ii) repay all outstanding borrowings under and terminate NGL's $250.0 million term credit agreement and (iii) to pay fees and expenses in connection therewith."

The company reported that the notes will only be offered and sold to qualified institutional buyers in the U.S. or to none U.S. persons outside the U.S. in accordance with the laws and regulations applicable under Regulation S of the Securities Act.

In addition to the proposed secured note issuance, NGL Energy Partners LP yesterday announced that the General Partner's Board of Directors has declared a quarterly Class D Distribution in what it indicated is the required amount of $15.6 million. The firm advised that the Class D Distribution will be paid to Class D Preferred Units shareholders for the quarter ended December 31, 2020 on February 12, 2021.

On Tuesday, January 19, 2021, NGL Energy Partners LP provided a detailed update concerning the global settlement it reached with Extraction Oil and Gas Inc. as that firm expects to emerge from bankruptcy. NGL Energy Partners noted that Extraction Oil and Gas had rejected both of its transportation service agreements with Grand Mesa Pipeline LLC, which is owned by NGL Energy.

The company stated that Grand Mesa disputed the rejection and appealed the bankruptcy court's ruling and has now reached a global settlement. The new settlement outlines the terms for a new, long-term supply agreement, a new rate structure and a payment in the amount of $35 million to NGL Energy as a as a liquidated payment for Grand Mesa's remaining claim.

The company's CEO Mike Krimbill commented on the court and settlement actions, "We are pleased to be able to complete the new Supply Agreement with Extraction and look forward to working with their management team as they develop their significant DJ Basin position and execute their business strategy...This new contract positions NGL to retain and transport significant crude oil volumes for Extraction and aligns the two companies for future success."

The company provided some forward guidance and stated that "its re-instating FY/21 Adjusted EBITDA guidance at $500 million." The firm added that "the Partnership is also initiating Adjusted EBITDA guidance for FY/22 with a range of $570 million to $600 million." NGL stated that it will release its complete fiscal third quarter-ended December 31, 2020, earnings on Tuesday, February 9, 2021.

NGL Energy Partners is a diversified midstream energy company with its main offices located in Tulsa, Okla. The company transports, stores, markets and provides logistics services for crude oil, natural gas liquids and other products. The firm also transports, treats and disposes of produced water generated as part of the oil and natural gas production process.

NGL Energy Partners has a market capitalization of around $336 million with approximately 129 million shares outstanding and a short interest of about 2.6%. NGL shares opened 3% higher today at $2.69 (+$0.08, +3.07%) over yesterday's $2.61 closing price. The stock has traded today between $2.67 and $4.09 per share and is presently trading at $3.16 (+$0.55, +21.07%).


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