Water Solutions Crude Oil Logistics Investor Presentation May 2025 NYSE: NGL Company Overview NGL Total EBITDA by Segment $661.7 MM(1) $542.0 MM 82% 10% 8% 82% 1. EBITDA values reflect full year Fiscal 2025 and does not include corporate or discontinued operations 2 $66.4 MM 82% 10% 8% Liquids Logistics $53.3 MM 10% 8% ▪ Provides water transportation, treating, recycling, and handling services for upstream customers ▪ Largest integrated water solutions network of injection wells and large diameter pipe in t ...

Core Insights - PrimeEnergy Resources Corporation (PNRG) reported a 1.6% increase in shares since Q1 2025 results, outperforming the S&P 500's 1.8% decline during the same period [1] - The company achieved Q1 revenues of $50.1 million, a 16.4% increase from $42.99 million in the prior year, driven by higher natural gas and NGL volumes despite a decline in oil revenues [2] - Net income decreased by 19.3% to $9.1 million, with diluted EPS falling 15.7% to $3.72 due to increased depreciation and interest expenses [2] Production and Revenue Growth - Oil production rose 6% year over year to 457,000 barrels, while natural gas output increased by 106.6% to 2.39 billion cubic feet, and NGL production surged 120.4% to 454,000 barrels [3] - Oil sales decreased by 1.9% to $32.7 million, but natural gas revenues more than quadrupled to $6 million, and NGL revenues increased by 95.4% to $8.5 million, leading to a total oil and gas revenue improvement of 21% year over year [4] Operating Expenses and Margins - Production costs rose 4.3% to $9.5 million, while depreciation, depletion, and amortization expenses nearly doubled to $20.4 million due to expanded asset base [5] - Interest expenses increased by 174.4% to $590,000, reflecting higher debt balances and interest rates [5] Management Commentary - The CFO described the quarter as showing "strong operational momentum," highlighting growth in gas and NGL volumes and ongoing capital returns through share repurchases [6] - Management emphasized the portfolio's resilience to commodity price volatility, supported by a mix of mature reserves and active development areas in Texas [6] Strategic Factors - Performance was influenced by robust development in West Texas, with participation in numerous new horizontal wells leading to production gains, particularly in natural gas and NGLs [7] - Weaker oil and NGL pricing partially offset revenue gains, while increased depreciation and interest costs impacted profitability [7] Guidance and Outlook - The company plans to invest $118 million in 38 horizontal wells in 2025, continuing aggressive capital deployment in the Midland Basin [8] - Management intends to fund capital needs primarily through operating cash flows and a $300 million credit facility, with $108.5 million remaining available [8] Shareholder Returns - In the quarter, PrimeEnergy repurchased 47,970 shares for $9.17 million, continuing its share repurchase program, with a total of $112.6 million returned to shareholders through buybacks [10] - A gain of $619,000 was recorded from the sale of a workover rig, reflecting ongoing portfolio optimization [10] Overall Assessment - Despite a decline in earnings due to increased investment and rising costs, underlying growth in production and revenues, along with continued capital returns, indicate confidence in the company's long-term strategy [11]

Core Insights - NGL Energy Partners LP (NGL) is expected to see significant increases in capacity due to the LEX II expansion, which is likely to enhance future free cash flow growth [1] - Recent debt refinancing is also a factor that may positively impact the company's financial outlook [1] Financial Analysis - The analysis focuses on cash flow statements and unlevered free cash flow figures, with assumptions based on historical financial data and forecasts regarding the business model [1] - Financial models may include various metrics such as cost of capital, cost of debt, WACC, share count, and net debt [1] - The study typically emphasizes trading multiples like EV/FCF, net income, and EV/EBITDA [1]

Group 1 - NGL's third-quarter earnings report fell short of expectations, with revenue reported at $1.55 billion compared to the anticipated $1.72 billion, and EBITDA at $147.5 million [1] - The article highlights the investment group's focus on asymmetric risk/reward opportunities and clear catalysts for investment [1] Group 2 - The article does not provide additional relevant information regarding the industry or company beyond the earnings report and investment strategy [2][3][4]

Financial Data and Key Metrics Changes - Consolidated adjusted EBITDA for Q3 2025 was $147.7 million, down from $151.7 million in Q3 2024, primarily due to the winding down of the biodiesel business which negatively impacted adjusted EBITDA by $12.1 million [14][15] - Excluding the impact of biodiesel, adjusted EBITDA was approximately $160 million for the quarter, representing a 5% increase compared to the prior year [14][15] - The company anticipates total proceeds of approximately $95 million from the sale of natural gas liquids terminals, expected to close by March 31, 2025 [6][13] Business Line Data and Key Metrics Changes - Water Solutions adjusted EBITDA increased to $132.7 million in Q3 2025 from $121.3 million in Q3 2024, with physical water disposal volumes rising to 2.62 million barrels per day from 2.38 million barrels per day [15][16] - Crude Oil Logistics adjusted EBITDA was $17.4 million in Q3 2025, slightly up from $17 million in the prior year, with average fiscal volumes on Grand Mesa at approximately 61,000 barrels per day compared to 70,000 barrels per day in Q3 2024 [17][18] - Liquids Logistics adjusted EBITDA decreased to $8.2 million from $26.3 million in the prior year, with the winding down of biodiesel significantly impacting results [18][19] Market Data and Key Metrics Changes - Total volumes paid for disposal in Water Solutions increased by 12% in Q3 2025 compared to Q3 2024, reaching 2.91 million barrels per day [15] - The company is experiencing a shift towards becoming a Water Solutions partnership with a focus on Crude Oil Logistics, aiming to improve cash flow repeatability and reduce seasonality [22][24] Company Strategy and Development Direction - The company is simplifying its asset base and reducing working capital needs by winding down non-core businesses, including biodiesel and wholesale propane, which is expected to reduce working capital by $60 million to $70 million annually [8][9] - The LEX II project commenced operations in October 2024 and is performing as expected, contributing to the company's strategic focus on enhancing profitability [10][24] - Future plans include further non-core asset sales to reduce debt and potentially redeem Class D preferred shares once leverage is reduced [24] Management's Comments on Operating Environment and Future Outlook - Management acknowledged performance volatility in Liquids Logistics and declining volumes on the Grand Mesa crude oil pipeline, but expressed optimism about new customer additions enhancing future volumes and profitability [22][24] - The company is adjusting its full-year EBITDA guidance to $620 million, reflecting additional weakness in the liquids segment [20] Other Important Information - The company expects to liquidate all biodiesel inventory by the end of February 2025 and sublease remaining railcars by March 31, 2025 [12] - Year-to-date, the biodiesel segment generated negative adjusted EBITDA of $10.3 million [12] Q&A Session Summary Question: Annual run rate EBITDA of remaining assets and Liquids Logistics post transactions - Management indicated it is too early to provide specific numbers as they are still exploring additional opportunities [30][31] Question: Growth trajectory for Crude Oil Logistics to achieve 100,000 barrel mark - Management suggested waiting for fiscal 2026 guidance to quantify growth, indicating a potential 50% volume increase [32][33] Question: Use of asset sale proceeds and addressing Series D preferreds - Management confirmed that proceeds would primarily go towards paying down the ABL balance, with no specific metrics set for addressing preferred shares [36][37] Question: Remaining assets in Liquids Logistics post divestitures - Remaining assets include Ambassador, Chesapeake, Port Hudson, and West Point terminals, with wholesale propane being the only unit with hard assets [39][40] Question: Updated guidance for Water Solutions EBITDA - Management indicated that Water Solutions EBITDA would be below previously guided ranges but did not provide specific numbers [41][42] Question: Profitability of LEX II compared to existing assets - Management stated that LEX II is performing as expected, with no additional contracts signed yet [46][51] Question: Seasonal factors affecting logistics volumes - Management noted a slowdown in logistics volumes during the holiday season but observed a quick recovery in the first quarter of the year [60]

Company Overview - NGL Energy Partners LP (NYSE: NGL) focuses on water solutions, crude oil logistics, and liquids logistics[1,43] - The company provides water transportation, treating, recycling, and handling services, particularly in the Delaware Basin[3,43] - NGL purchases crude oil from producers and marketers for resale and offers storage, terminaling, and transportation services[2,3,43] - The company supplies NGLs, refined products, and biodiesel across the United States and Canada[3,43] Water Solutions Business - NGL operates the largest integrated water disposal system in the Delaware Basin, supported by long-term contracts and acreage dedications[3,8] - The company has over 780 miles of large diameter water pipelines in the Northern Delaware Basin[7,11] - NGL's water handling facilities have a total permitted capacity of approximately 6.4 million barrels per day[7] - In FY2024, NGL sold 30.8 million barrels of recycled water[7] - Approximately 80% of total disposal volumes in FY 2024 came from investment grade counterparties[27] Crude Oil and Liquids Logistics - The Grand Mesa Pipeline has a capacity of 150,000 barrels per day[31] - NGL operates 23 owned terminals connected by pipelines for liquids logistics[3,36] - The company utilizes a fleet of approximately 3,900 leased railcars for propane/butane wholesale[37] Financial Performance and Market Data - As of February 5, 2025, NGL's market capitalization was $1.71 billion and enterprise value was $4.90 billion[58] - NGL's common unit price was $5.62 as of February 5, 2025[58]

Company Overview - Energy Transfer LP (NYSE: ET) is one of the largest midstream master limited partnerships in the United States, with operations spanning much of the Central and Eastern regions of the country [1] Investment Strategy - The company aims to generate a 7%+ income yield by investing in a portfolio of energy stocks while minimizing the risk of principal loss [1] - Subscribers gain access to exclusive investment ideas and in-depth research before they are released to the general public [1] Subscription Offer - A two-week free trial is currently available for the service [1]

Company Overview - Phillips 66 (NYSE: PSX) is a multinational energy company with a market value of nearly $50 billion [3] - The company recently announced a more than $2 billion acquisition to expand its midstream portfolio [3] Investment Strategy - The Value Portfolio specializes in building retirement portfolios using a fact-based research strategy [3] - The strategy includes extensive readings of 10Ks, analyst commentary, market reports, and investor presentations [3] - The portfolio manager invests real money in the stocks he recommends [3] Retirement Planning - The Retirement Forum provides actionable ideas, a high-yield safe retirement portfolio, and macroeconomic outlooks [1] - The forum aims to help individuals maximize their capital and income by searching the entire market for opportunities [1]

Acquisition Overview - Phillips 66 (PSX) has announced a $2.2 billion all-cash acquisition of EPIC Y-Grade GP, LLC and EPIC Y-Grade, LP, which is expected to be immediately accretive to its EPS and strengthen its presence in the NGL market [1] Strategic Benefits - The acquisition will expand Phillips 66's Permian Basin NGL value chain and provide extensive flow assurance to producers, connecting key fractionation sites near Corpus Christi, Sweeny, and Mont Belvieu, TX [3] - The deal is expected to generate returns exceeding the company's hurdle rates, indicating strong financial confidence [4] EPIC NGL's Assets - EPIC NGL owns two fractionators with a capacity of 170,000 bpd near Corpus Christi, 350 miles of purity distribution pipelines, and an 885-mile NGL pipeline with a capacity of 175,000 bpd [5] - The pipeline assets connect production from the Delaware, Midland, and Eagle Ford basins to fractionation facilities and PSX's Sweeny Hub [5] Future Expansion Plans - EPIC NGL is expanding its pipeline capacity to 225,000 bpd, with a second expansion approved to reach 350,000 bpd, though this will not impact Phillips 66's 2025 capital program [6] - A third fractionation facility is planned, which could increase fractionation capacity to 280,000 bpd, enhancing connectivity to Gulf Coast refiners, petrochemical firms, and global export markets [7] Industry Context - TechnipFMC plc (FTI) has a growing backlog of $14.7 million in Q3 2024, up 11.1% YoY, indicating strong revenue growth potential [9] - Sunoco LP (SUN) is a major motor fuel distributor in the U.S., offering a distribution yield higher than the industry average, ensuring consistent returns for unitholders [10] - Oceaneering International (OII) provides integrated offshore oilfield technology solutions, supporting client retention and new business opportunities for steady revenue growth [11]

Group 1 - NGL reported a second fiscal year quarter with EBITDA of approximately $147 million, which was below expectations due to weakness in the liquids business [1] - The performance of NGL's liquids business was a significant factor contributing to the underwhelming financial results [1] Group 2 - Catalyst Hedge Investing provides its members with early access to articles and a best ideas portfolio, focusing on asymmetric risk/reward investment opportunities [2] - The leader of Catalyst Hedge Investing has extensive experience in the markets, including a successful prediction of the Silicon Valley Bank's implosion [2]