Executive Summary
NGL Energy Partners LP reported a Q1 2026 that was characterized by a strategically favorable mix shift, strong performance in Water Solutions, and active balance-sheet optimization through opportunistic capital allocation. GAAP EBITDA reached $161.7 million, while consolidated adjusted EBITDA was $144.0 million, up roughly 4% year over year, underscoring the resilience of the Water Solutions segment amid ongoing macro uncertainty. Revenue was $622.2 million, with a gross profit of $551.4 million and a robust gross margin of approximately 88.6%, reflecting favorable product mix and the impact of asset dispositions that narrowed the footprint and revenue base while preserving high-margin, fee-like activity within the Water Solutions business. Management reaffirmed 2026 adjusted EBITDA guidance of $615-$625 million and signaled a readiness to adjust guidance higher if quarterly results exceed projections, highlighting a disciplined, opportunistic approach to capital allocation.
The quarter featured meaningful asset moves—sale of Rack marketing, Limestone Ranch stake, and a majority of wholesale propane operations—used to de-risk the balance sheet, repay ABL debt, and fund selective share repurchases and note repurchases. Water Solutions volumes rose to 2.77 million barrels per day (mbpd) disposed and 3.1 mbpd total billed volumes, up about 18% versus the prior-year period, with cost-per-barrel improvements and steady demand from core producers. Crude Oil Logistics saw a modest downside on Grand Mesa volumes versus the prior year quarter, while Liquids Logistics benefited from the back-half heaviness of its butane blending contribution as anticipated. The company maintained a dividend of strategic importance, repurchasing common units and reducing leverage through opportunistic debt and equity actions, signaling a constructive path toward a stronger balance sheet while preserving liquidity to fund growth initiatives.
Looking ahead, the management tone is cautiously confident: volume ramp in Grand Mesa is expected to lift Crude Oil Logistics in the back half of the year, Water Solutions remains the primary earnings engine, and further asset rationalization could continue to improve leverage and cash generation. The near-term trajectory will hinge on commodity-price dynamics, producer activity in the core basins, and the company’s ability to monetize remaining assets without sacrificing core, contracted cash flows. Overall, NGL’s Q1 2026 results reinforce a measured, value-driven strategy with a credible upcycle path if the water-handling, crude logistics ramp, and butane blending themes materialize as projected.
Key Performance Indicators
QoQ: -59.84% | YoY:-61.82%
QoQ: 219.04% | YoY:244.00%
QoQ: 15.39% | YoY:205.89%
QoQ: 410.27% | YoY:129.11%
QoQ: 133.58% | YoY:102.25%
Key Insights
Revenue: $622.156 million (YoY -61.82%; QoQ -59.84%)
Gross Profit: $551.388 million (YoY +244.00%; QoQ +219.04%)
Gross Margin: 88.63%
Operating Income: $87.116 million (YoY +205.89%; QoQ +15.39%)
EBITDA (GAAP): $161.675 million; EBITDARatio: 0.2599
Consolidated Adjusted EBITDA: $144.0 million (vs. $138.6 million in Q1 prior year, ~+4%)
Operating Margin: 14.00%
Income Before Tax: $30.083 million; Tax Expense: -$0.182 million
Net Income: $68.922 million; Net Income Margin: 11.08%
EPS (Diluted): $0...
Financial Highlights
Revenue: $622.156 million (YoY -61.82%; QoQ -59.84%)
Gross Profit: $551.388 million (YoY +244.00%; QoQ +219.04%)
Gross Margin: 88.63%
Operating Income: $87.116 million (YoY +205.89%; QoQ +15.39%)
EBITDA (GAAP): $161.675 million; EBITDARatio: 0.2599
Consolidated Adjusted EBITDA: $144.0 million (vs. $138.6 million in Q1 prior year, ~+4%)
Operating Margin: 14.00%
Income Before Tax: $30.083 million; Tax Expense: -$0.182 million
Net Income: $68.922 million; Net Income Margin: 11.08%
EPS (Diluted): $0.0403; Weighted Avg Shares: 131.747 million
Cash Flow from Ops: $33.202 million
Net Cash Provided by Operating Activities: $33.202 million
Capital Expenditures: $(22.129) million
Free Cash Flow: $(4.873) million
Cash at End of Period: $5.441 million
Total Debt: $126.480 million; Net Debt: $121.039 million
Total Assets: $4,188.256 million; Total Liabilities: $4,045.802 million; Total Stockholders’ Equity: $142.454 million
Water Solutions Volumes: Physical disposal 2.77 mbpd; Total billed volumes 3.10 mbpd; % of volumes with investment-grade counterparties ~80%; % of volumes contracted through acreage dedications and MVCs ~90%
Grand Mesa Crude Transport: Q1 volumes ~55k bpd (vs 63k bpd in prior year); July volumes up ~25% vs June
Butane Blending: Back-half of fiscal year heavy EBITDA contributor for Liquids Logistics
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
622.16M |
-61.82% |
-59.84% |
| Gross Profit |
551.39M |
244.00% |
219.04% |
| Operating Income |
87.12M |
205.89% |
15.39% |
| Net Income |
68.92M |
129.11% |
410.27% |
| EPS |
0.04 |
102.25% |
133.58% |
Management Commentary
Strategy and portfolio rationalization
- Water Solutions EBITDA resilience and volume growth drove overall results: 'Water Solutions adjusted EBITDA was $142.9 million in the first quarter versus $125.6 million in the prior first quarter, a 13.8% increase.'
- Net volume growth and per-barrel cost discipline: 'Physical water disposal volumes were 2.77 million barrels per day... a 12.4% increase' and 'operating expenses for the quarter on a per barrel basis were lower by $0.02.'
Rightsizing and balance sheet optimization
- Asset sales and balance sheet strengthening: 'During the first quarter, we closed on the sale of our Rack marketing business, the interest in the Limestone Ranch and a majority of the wholesale propane business...' and 'We used a portion of the proceeds to completely pay down the ABL during the quarter.'
Capital allocation and guidance framework
- Opportunistic capital allocation: 'Cash is being used to purchase, repay debt and equity that provides the highest return and greatest benefit to the partnership while considering liquidity and leverage.'
- Shareholder returns and debt reduction: 'We repurchased 70,000 units (Class D) and purchased 4.7 million common units at an average price of $4.30 per unit' and 'purchased $19 million of our outstanding 2032 notes at a discount.'
Guidance and outlook
- Guidance reaffirmation with optional upside: 'We are reaffirming our full year adjusted EBITDA guidance of $615 million to $625 million. If our results continue to exceed expectations, we will consider raising guidance at the time of our second quarter earnings call in early November.'
Market dynamics and industry context
- Industry consolidation and Delaware water market: 'Ares acquisition by Western… consolidation has been positive in the Delaware… fewer parties at the table' (with favorable long-term structural implications for the midstream water business).
- Volume ramp and macro sensitivity: 'We expect strength in the back half of the year from our Crude Oil Logistics segment as volumes on Grand Mesa ramp up' and 'the core water volumes remain resilient despite macro uncertainty.'
Water Solutions experienced a strong quarter, continues to reduce its cost per barrel. We expect strength in the back half of the year from our Crude Oil Logistics segment as volumes on Grand Mesa ramp up.
— H. Michael Krimbill
Cash is being used to purchase, repay debt and equity that provides the highest return and greatest benefit to the partnership while considering liquidity and leverage.
— H. Michael Krimbill
Forward Guidance
Management reaffirmed full-year adjusted EBITDA guidance of $615 million to $625 million for 2026 and indicated a potential for an upside revision if quarterly results continue to exceed expectations. They highlighted Water Solutions as the primary earnings driver and signaled ongoing ramp of Grand Mesa volumes in Crude Oil Logistics for the back half of the year, with Liquids Logistics expected to contribute meaningfully through its butane blending initiatives in the latter part of the year. Key variables to monitor include:
- Water Solutions volumes and ASPs, particularly produced water processed and MVC-based revenue capture; track unit economics per barrel (cost per barrel) and the impact of long-term contracts with investment-grade counterparties.
- Grand Mesa volumes on Crude Oil Logistics and the pace of volume ramp; monitor realized pricing and production activity in DJ Basin-associated acreage.
- Liquids Logistics' back-half-weighted EBITDA from butane blending, along with any asset dispositions that may shift mix.
- Capital allocation cadence: unit repurchases, debt reduction (ABL and term debt), and note repurchases; maintain liquidity to support growth initiatives and potential acquisitions.
- Industry backdrop: Delaware water market consolidation, pipeline capacity, and regulatory or tariff developments that could influence disposal revenues and transport volumes.
Overall, the trajectory hinges on sustained water volumes, continued ramp in crude volumes, and disciplined capital deployment to de-lever while preserving optionality for future strategic assets.