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NGL Energy Partners LP

NGL Energy Partners LPNGL财报

NYSE · 公用事业 · 天然气传输

NGL Energy Partners LP is a U.S.-based midstream energy services firm. It offers transportation, storage, and logistics solutions for crude oil, natural gas liquids, and renewable fuels, plus water management services for upstream energy producers, operating primarily across North American markets.

What changed in NGL Energy Partners LP's 10-K — 2024 vs 2025

Top changes in NGL Energy Partners LP's 2025 10-K

475 paragraphs added · 510 removed · 375 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

110 edited+11 added−23 removed127 unchanged
Our activities in this segment are underpinned by long-term, fixed fee contracts and acreage dedications, some of which contain minimum volume commitments with leading oil and gas companies including large, investment grade producer customers. • Our Crude Oil Logistics segment purchases crude oil from producers and marketers and transports it to refineries or for resale at pipeline injection stations, storage terminals, barge loading facilities, rail facilities, refineries, and other trade hubs, and provides storage, terminaling and transportation services through its owned assets.
Our activities in this segment are underpinned by long-term, fixed fee contracts and acreage dedications, some of which contain minimum volume commitments with leading oil and gas companies including large, investment grade producer customers. • Our Crude Oil Logistics segment purchases crude oil from producers and marketers and transports it to refineries or for resale at pipeline injection stations, storage terminals, barge loading facilities, rail facilities and other trade hubs, and provides storage, terminaling and transportation services through its owned assets.
We seek to continue to increase cash flows that are supported by certain fixed fee, multi-year contracts, some of which include acreage dedications from producers or minimum volume commitments. • Achieving growth by utilizing our existing footprint of assets, investing in new assets, customers and ventures that increase volume and enhance our operations, and generate attractive rates of return .
We seek to continue to increase cash flows that are supported by certain fixed fee, multi-year contracts, some of which include acreage dedications or minimum volume commitments from producers. • Achieving growth by utilizing our existing footprint of assets, investing in new assets, customers and ventures that increase volume and enhance our operations, and generate attractive rates of return .
Our Crude Oil Logistics segment purchases crude oil from producers and marketers and transports it to refineries or for resale at pipeline injection stations, storage terminals, barge loading facilities, rail facilities, refineries, and other trade hubs, and provides storage, terminaling and transportation services through its owned assets.
Our Crude Oil Logistics segment purchases crude oil from producers and marketers and transports it to refineries or for resale at pipeline injection stations, storage terminals, barge loading facilities, rail facilities and other trade hubs, and provides storage, terminaling and transportation services through its owned assets.
We attempt to reduce our exposure to price fluctuations by using back-to-back physical contracts and pre-sale agreements that allow us to lock in a margin on a percentage of our winter volumes. We also enter into financially settled derivative contracts as economic hedges of our physical inventory, physical sales and physical purchase contracts.
We attempt to reduce our exposure to price fluctuations by using back-to-back physical contracts and pre-sale agreements that allow us to lock in a margin on a percentage of our winter volumes. We also enter into financially settled derivative contracts as economic hedges of our physical inventory, physical sales and physical purchase contracts.
Generally, these laws (i) regulate air and water quality, impose limitations on the discharge of pollutants and establish standards for the use, handling, storage, treatment, transport and disposal of solid and hazardous wastes; (ii) subject our operations to certain permitting and registration requirements; (iii) may result in the suspension or revocation of necessary permits, licenses and authorizations; (iv) impose substantial liabilities on us for pollution resulting from our operations; (v) require remedial measures to mitigate any violation of environmental laws and regulations or pollution from former or ongoing operations; and (vi) may result in the assessment of administrative, civil and criminal penalties for failure to comply with such laws.
Generally, these laws (i) regulate air and water quality, impose limitations on the discharge of pollutants and establish standards for the use, handling, storage, treatment, transport and disposal of solid and hazardous wastes; (ii) subject our operations to certain permitting, registration and reporting requirements; (iii) may result in the suspension or revocation of necessary permits, licenses and authorizations; (iv) impose substantial liabilities on us for pollution resulting from our operations; (v) require remedial measures to mitigate any violation of environmental laws and regulations or pollution from former or ongoing operations; and (vi) may result in the assessment of administrative, civil and criminal penalties for failure to comply with such laws.
On March 6, 2024, the Securities and Exchange Commission (“SEC”) adopted a new set of rules that require a wide range of climate-related disclosures, including material climate-related risks, information on any climate-related targets or goals that are material to the registrant’s business, results of operations, or financial condition, Scope 1 and Scope 2 GHG emissions 20 on a phased-in basis by certain larger registrants when those emissions are material and the filing of an attestation report covering the same, and disclosure of the financial statement effects of severe weather events and other natural conditions including costs and losses.
On March 6, 2024, the Securities and Exchange Commission (“SEC”) adopted a new set of rules that require a wide range of climate-related disclosures, including material climate-related risks, information on any climate-related targets or goals that are material to the registrant’s business, results of operations, or financial condition, Scope 1 and Scope 2 GHG emissions on a phased-in basis by certain larger registrants when those emissions are material and the filing of an attestation report covering the same, and disclosure of the financial statement effects of severe weather events and other natural conditions including costs and losses.
The law also provides for (i) additional pipeline damage prevention measures; (ii) allowing the Secretary of 21 Transportation to require automatic and remote-controlled shut-off valves on new pipelines; (iii) requiring the Secretary of Transportation to evaluate the effectiveness of expanding pipeline integrity management and leak detection requirements; (iv) improving the way the DOT and pipeline operators provide information to the public and emergency responders; and (v) reforming the process by which pipeline operators notify federal, state and local officials of pipeline accidents.
The law also provides for (i) additional pipeline damage prevention measures; (ii) allowing the Secretary of Transportation to require automatic and remote-controlled shut-off valves on new pipelines; (iii) requiring the Secretary of Transportation to evaluate the effectiveness of expanding pipeline integrity management and leak detection requirements; (iv) improving the way the DOT and pipeline operators provide information to the public and emergency responders; and (v) reforming the process by which pipeline operators notify federal, state and local officials of pipeline accidents.
The CAA and its implementing regulations on the federal and state level may require that we obtain permits prior to the construction, modification or operation of certain projects or facilities expected to emit or increase air emissions above certain threshold levels, that we obtain and strictly comply with air permits containing emissions and operational limitations, or utilize specific emission control technologies to limit emissions, any of which could impose significant costs on our business.
The CAA and its implementing regulations on the federal and state level may require that we obtain permits prior to the construction, modification or operation of certain projects or facilities expected to emit or increase air emissions above certain threshold levels, that we obtain and strictly comply with air permits containing emissions and operational limitations, or utilize specific emission control technologies to limit 17 emissions, any of which could impose significant costs on our business.
To the degree that species listed under the ESA or similar state laws, or are protected under the MBTA or BGEPA, live, breed or nest in or migrate through the areas where we or our oil and gas producing customers operate, our and our customers’ abilities to conduct or expand operations and construct facilities could be limited or be forced to incur material additional costs.
To the degree that species listed under the ESA or similar state laws, or are protected under the MBTA or BGEPA, live, breed or nest in or migrate through the areas where we or our oil and gas producing customers operate, our and our customers’ abilities to conduct or expand operations and construct 18 facilities could be limited or be forced to incur material additional costs.
We also entered into a new seven-year $700.0 million senior secured term loan “B” credit facility (“Term Loan B”). In addition, in connection with the closing of the refinancing, our $600.0 million asset-based revolving credit facility (“ABL Facility”) was amended to extend the maturity and to make certain other changes to the terms thereof.
We also entered into a new seven-year $700.0 million senior secured term loan “B” credit facility (“Term Loan B”). In addition, in connection with the closing of the refinancing, our asset-based revolving credit facility (“ABL Facility”) was amended to extend the maturity and to make certain other changes to the terms thereof.
The LEX II Expansion includes an incremental increase in committed acreage and volumes under dedication from the producer. Additionally, the LEX II Expansion is expandable up to 500,000 barrels per day. 8 As part of our operations, we also recycle water, which includes the sale of produced water and recycled water for use in our customers’ completion activities.
The LEX II Expansion includes an incremental increase in committed acreage and volumes under dedication from the producer. Additionally, the LEX II Expansion is expandable up to 500,000 barrels of water per day. As part of our operations, we also recycle water, which includes the sale of produced water and recycled water for use in our customers’ completion activities.
Our contractual agreements can consist of: (a) minimum volume commitments requiring the customer to deliver a specified minimum volume of produced water over a specified period of time; (b) acreage dedications requiring the customer to deliver all volumes produced from the dedicated acreage with us; and (c) produced water pipeline and trucked disposal agreements providing interruptible service in exchange for a fee per barrel of produced water received.
Our contractual agreements can consist of: (a) minimum volume commitments requiring the customer to deliver a specified minimum volume of produced water over a specified period of time; (b) acreage dedications requiring the customer to deliver all volumes produced from the 9 dedicated acreage with us; and (c) produced water pipeline and trucked disposal agreements providing interruptible service in exchange for a fee per barrel of produced water received.
We own and operate a crude oil pipeline and marine terminal in Houma, Louisiana with 288,000 barrels of storage capacity, two off-loading LACTs, a brown water barge dock and two 12-inch bi-directional pipelines each capable of moving 120,000 barrels per day with connectivity to Shell’s Zydeco System. 10 Operations.
We own and operate a crude oil pipeline and marine terminal in Houma, Louisiana with 288,000 barrels of storage capacity, two off-loading LACTs, a brown water barge dock and two 12-inch bi-directional pipelines each capable of moving 120,000 barrels per day with connectivity to Shell’s Zydeco System. Operations.
It is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the release of hazardous substances into the environment. RCRA, and comparable state statutes and their implementing regulations, regulate the generation, transportation, treatment, storage, disposal and cleanup of solid and hazardous wastes.
It is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the release of hazardous substances into the environment. 16 RCRA, and comparable state statutes and their implementing regulations, regulate the generation, transportation, treatment, storage, disposal and cleanup of solid and hazardous wastes.
Many of our facilities are strategically located near areas of high crude oil and natural gas production which provides us with a distinct advantage over a competitor that must build a system that can compete with our assets. 9 Pricing Policy. We charge customers a fee per barrel of produced water received.
Many of our facilities are strategically located near areas of high crude oil and natural gas production which provides us with a distinct advantage over a competitor that must build a system that can compete with our assets. Pricing Policy. We charge customers a fee per barrel of produced water received.
Federal agencies, including the EPA and the United States Department of the Interior, have asserted their regulatory authority to, for example, study the potential impacts of hydraulic fracturing on the environment, and initiate rulemakings to compel disclosure of the chemicals used in hydraulic fracturing operations, and establish pretreatment standards and effluent limitation guidelines for produced 19 water from hydraulic fracturing operations.
Federal agencies, including the EPA and the United States Department of the Interior, have asserted their regulatory authority to, for example, study the potential impacts of hydraulic fracturing on the environment, and initiate rulemakings to compel disclosure of the chemicals used in hydraulic fracturing operations, and establish pretreatment standards and effluent limitation guidelines for produced water from hydraulic fracturing operations.
To be in compliance, the facility’s SPCC plan must satisfy all of the applicable requirements for drainage, bulk storage tanks, tank car and truck loading and unloading, transfer operations (intra-facility piping), inspections and records, security, and training. Most importantly, the facility must fully implement the SPCC plan and train personnel in its execution.
To be in compliance, the facility’s plan must satisfy all of the applicable requirements for drainage, bulk storage tanks, tank car and truck loading and unloading, transfer operations (intra-facility piping), inspections and records, security, and training. Most importantly, the facility must fully implement the plan and train personnel in its execution.
In addition, the intrastate transportation and storage of crude oil and natural gas is subject to regulation by the state in which such facilities are located, and such regulation can affect the availability and price of our supply, and have both a direct and indirect effect on our business. 16 Anti-Market Manipulation.
In addition, the intrastate transportation and storage of crude oil and natural gas is subject to regulation by the state in which such facilities are located, and such regulation can affect the availability and price of our supply and have both a direct and indirect effect on our business. Anti-Market Manipulation.
Our Crude Oil Logistics segment benefits when the market is in contango, as increasing 11 prices result in inventory value gains during the time between when we purchase the inventory and when we sell it. In addition, we are able to better utilize our storage assets when contango markets justify storing barrels.
Our Crude Oil Logistics segment benefits when the market is in contango, as increasing prices result in inventory value gains during the time between when we purchase the inventory and when we sell it. In addition, we are able to better utilize our storage assets when contango markets justify storing barrels.
The Biden Administration announced its intention to review the revisions to the GHG NSPS in President Biden’s January 20, 2021 Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis . On November 15, 2021, the EPA issued a proposal to revise the GHG NSPS regulations.
The Biden Administration announced its intention to review the revisions to the GHG NSPS in former President Biden’s January 20, 2021 Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis . On November 15, 2021, the EPA issued a proposal to revise the GHG NSPS regulations.
NGL is an equal-opportunity employer, and our employee handbook underscores that commitment, with policies prohibiting discrimination, harassment, and retaliation. 15 We understand the importance of competitive benefits packages for the health and welfare of our employees and for our ability to recruit and retain the best talent.
NGL is an equal-opportunity employer, and our employee handbook underscores that commitment, with policies prohibiting discrimination, harassment, and retaliation. We understand the importance of competitive benefits packages for the health and welfare of our employees and for our ability to recruit and retain the best talent.
Our Liquids Logistics segment faces significant competition from other natural gas liquids wholesalers, trading companies and companies involved in the natural gas liquids midstream industry (such as terminal and refinery operations), some of which have greater financial resources than we do.
Our Liquids Logistics segment faces competition from other natural gas liquids wholesalers, trading companies and companies involved in the natural gas liquids midstream industry (such as terminal and refinery operations), some of which have greater financial resources than we do.
We maintain a number of discharge permits, some of which may require us to monitor and sample storm water runoff from such facilities. Some states also maintain groundwater protection programs that require permits for discharges or operations that may impact groundwater conditions.
We maintain a number of discharge permits, some of which may require us to monitor and sample storm water runoff or other discharges from such facilities. Some states also maintain groundwater protection programs that require permits for discharges or operations that may impact groundwater conditions.
SPCC requirements under the CWA require appropriate containment berms and similar structures to help prevent the discharge of pollutants into regulated waters in the event of a crude oil or other constituent tank spill, rupture or leak.
SPCC and FRP requirements under the CWA require appropriate containment berms and similar structures to help prevent the discharge of pollutants into regulated waters in the event of a crude oil or other constituent tank spill, rupture or leak.
Our environmental, health and safety team: • Advises on safety and industrial hygiene regulatory requirements and best practices; • Develops safety procedures and guidelines; • Conducts safety inspections; • Advises on strategies to improve health and safety performance; and • Designs and conducts safety and industrial hygiene training courses.
Our environmental, health and safety team: 14 • Advises on safety and industrial hygiene regulatory requirements and best practices; • Develops safety procedures and guidelines; • Conducts safety inspections; • Advises on strategies to improve health and safety performance; and • Designs and conducts safety and industrial hygiene training courses.
In addition, several states have already adopted legal measures to reduce emissions of GHGs, primarily through the planned development of GHG emission inventories and/or regional GHG cap-and-trade programs. For example, on October 7, 2023, California Governor Gavin Newsome signed SB 253, the Climate Corporate Data Accountability Act, and SB 261, the Climate-Related Financial Risk Act.
In addition, several states have already adopted legal measures to reduce emissions of GHGs, primarily through the planned development of GHG emission inventories and/or regional GHG cap-and-trade programs. For example, on October 7, 2023, California Governor Gavin Newsom signed SB 253, the Climate Corporate Data Accountability Act, and SB 261, the Climate-Related Financial Risk Act.
These operations are supported by certain long-term, fixed rate contracts with producers, refiners and marketers and include minimum volume commitments on our owned and leased pipelines and storage tanks. • Our network of natural gas liquids transportation, terminal, and storage assets, which allows us to provide multiple services across the United States and Canada.
These operations are supported by certain long-term, fixed rate contracts and acreage dedications with producers, refiners and marketers and include minimum volume commitments on our owned and leased pipelines and storage tanks. • Our network of natural gas liquids transportation, terminal, and storage assets, which allows us to provide multiple services across the United States and Canada.
These laws include, among others, the Resource Conservation and Recovery Act (“RCRA”), the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), the federal Clean Air Act (“CAA”), the Homeland Security Act of 2002, the 17 Emergency Planning and Community Right to Know Act, the Clean Water Act (“CWA”), the Safe Drinking Water Act, the Oil Spills Prevention and Preparedness Regulations, each as amended, and comparable state statutes.
These laws include, among others, the Resource Conservation and Recovery Act (“RCRA”), the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), the federal Clean Air Act (“CAA”), the Homeland Security Act of 2002, the Emergency Planning and Community Right to Know Act (“EPCRA”), the Clean Water Act (“CWA”), the Safe Drinking Water Act, the Oil Spills Prevention and Preparedness Regulations, each as amended, and comparable state statutes.
These operations are conducted through our 23 owned terminals, third-party storage and terminal facilities, nine common carrier pipelines and a fleet of leased railcars. We also provide services for marine exports of butane through our facility located in Chesapeake, Virginia, and we also own a propane pipeline in Michigan.
These operations are conducted through our five owned terminals, third-party storage and terminal facilities, nine common carrier pipelines and a fleet of leased railcars. We also provide services for marine exports of butane through our facility located in Chesapeake, Virginia and we also own a propane pipeline in Michigan.
Business Repositioning Over the past several years, we have undertaken a number of important strategic actions in an effort to leverage the Partnership’s core areas of competitive strength and focus on generating stable, growing and predictable cash flows, while improving our credit profile.
Business Repositioning Over the past several years, we have undertaken a number of important strategic actions in an effort to capitalize on the Partnership’s core areas of competitive strength and focus on generating stable, growing and predictable cash flows, while improving our credit profile.
We believe that our management’s knowledge of the industry, relationships within the industry, and experience provide us with the opportunities to optimize our existing assets. Our management team also has experience in identifying, evaluating and completing acquisitions and other ventures that provide us with additional opportunities to complement, grow and expand our existing operations. Our Businesses Water Solutions Overview.
We believe that our management’s knowledge of the industry, relationships within the industry, and experience provide us with the opportunities to optimize our existing assets. Our management team also has experience in identifying and evaluating other ventures that provide us with additional opportunities to complement, grow and expand our existing operations. Our Businesses Water Solutions Overview.
The Lucerne terminal has 950,000 barrels of storage and a 12 bay truck loading facility. The Riverside terminal has 20,000 barrels of storage and a four bay truck loading facility.
The Lucerne terminal has approximately 950,000 barrels of storage and a 12 bay truck loading facility. The Riverside terminal has approximately 20,000 barrels of storage and a four bay truck loading facility.
These two bills apply to companies doing business in California and require disclosure of, amongst certain other climate-related financial risk information, scope 1 and 2 GHG emissions, beginning in 2026 (on prior fiscal year information), and scope 3 GHG emissions, beginning in 2027 (on prior fiscal year information).
These two bills apply to companies doing business in California and require disclosure of, among certain other climate-related financial risk information, Scope 1 and 2 GHG emissions, beginning in 2026 (on prior fiscal year information), and Scope 3 GHG emissions, beginning in 2027 (on prior fiscal year information).
The construction of the 27-mile, 30-inch produced water pipeline will transport water to areas outside the core of the basin thereby further diversifying the geographic location of our disposal operations. The LEX II Expansion is fully underwritten by a recently executed minimum volume commitment contract that includes an acreage dedication extension with an investment grade oil and gas producer.
The 27-mile, 30-inch produced water pipeline will transport water to areas outside the core of the basin thereby further diversifying the geographic location of our disposal operations. The LEX II Expansion is fully underwritten by a minimum volume commitment contract that includes an acreage dedication extension with an investment grade oil and gas producer.
Additionally, certain key customers of the Water Solutions segment contribute significantly to the cash flows and profitability of the organization. Any loss of those customers or their contracts could have an adverse impact on our financial results. Competition.
Additionally, certain key customers of the Water Solutions segment contribute significantly to the cash flows and profitability of the Partnership. Any loss of those customers or their contracts could have an adverse impact on our financial results. Competition.
The owner or operator of an SPCC-regulated facility is required to prepare a written, site-specific SPCC plan, which details how a facility’s operations comply with the spill prevention and control requirements.
The owner or operator of an SPCC or FRP-regulated is required to prepare a written, site-specific plan, which details how a facility’s operations comply with the spill prevention and control requirements.
However, we are able to partially mitigate the effects of seasonality by preselling a portion of our wholesale volumes to retailers and wholesalers and requiring the customer to take delivery of the product regardless of the weather.
However, we are able to partially mitigate the effects of seasonality by preselling a portion of our wholesale volumes to retailers and wholesalers and requiring the customer to take delivery of the product regardless of the weather. 13 Competition.
Our operations are concentrated in and around four prolific crude oil producing regions in the United States, including the DJ Basin in Colorado, the Permian Basin in Texas and New Mexico, the Eagle Ford Basin in Texas and the United States Gulf Coast.
Our operations are concentrated in and around four prolific crude oil producing regions in the United States, including the DJ Basin in Colorado, the Delaware Basin in Texas and New Mexico, the Eagle Ford Basin in Texas and the United States Gulf Coast.
(2) These facilities are located on lands we lease. (3) Certain facilities can dispose of both produced water and solids such as tank bottoms, drilling fluids and drilling muds.
(2) These facilities are located on lands we own. (3) These facilities are located on lands we lease. (4) Certain facilities can dispose of both produced water and solids such as tank bottoms, drilling fluids and drilling muds.
Where applicable, we strive to maintain and implement SPCC 18 plans for our facilities. Violation of SPCC requirements could subject us to monetary penalties, injunctions, conditions or restrictions on operations and, potentially, criminal enforcement actions. Air Emissions .
Where applicable, we strive to maintain and implement SPCC plans and/or FRP plans for our facilities. Violation of SPCC and FRC requirements could subject us to monetary penalties, injunctions, conditions or restrictions on operations and, potentially, criminal enforcement actions. Air Emissions .
The primary factors on which we compete are: • price; 14 • availability of supply; • reliability of service; • available space on common carrier pipelines; • storage availability; • logistics capabilities, including the availability of railcars, and proprietary terminals; and • long-term customer relationships. Market Price Risk .
The primary factors on which we compete are: • price; • availability of supply; • available space on common carrier pipelines; • storage availability; • logistics capabilities, including the availability of railcars, and proprietary terminals; and • long-term customer relationships. Market Price Risk .
Certain state regulations and the general permits issued under the CWA’s National Pollutant Discharge Elimination System program prohibit the discharge of pollutants and chemicals. The CWA prohibits the placement of dredge or fill material in wetlands or other WOTUS unless authorized by a permit issued by the U.S.
Certain state regulations and the general permits issued under the CWA’s National Pollutant Discharge Elimination System program prohibit the discharge of pollutants and chemicals unless permitted to do so. The CWA prohibits the placement of dredge or fill material in wetlands or other WOTUS unless authorized by a permit issued by the U.S.
The primary customers of our operations consist mainly of large publicly traded, oil and gas companies with diversified acreage positions across multiple leading oil and gas plays. During the year ended March 31, 2024, 69% of the revenues of our Water Solutions segment were generated from our ten largest customers of the segment.
Customers. The primary customers of our operations consist mainly of large publicly traded, oil and gas companies with diversified acreage positions across multiple leading oil and gas plays. During the year ended March 31, 2025, 73% of the revenues of our Water Solutions segment were generated from our ten largest customers of the segment.
Our activities in this segment are supported by certain long-term, fixed rate contracts which include minimum volume commitments on our owned and leased pipelines and storage tanks.
Our activities in this segment are supported by certain long-term, fixed rate contracts with acreage dedications and which include minimum volume commitments on our storage tanks and owned and leased pipelines.
In that regard, at the end of fiscal year 2021, we implemented $20 per hour minimum wage for all regular, full-time employees. More than 95% of our eligible employees participated in the NGL 401(k) Plan in fiscal year 2024.
In that regard, at the end of fiscal year 2021, we implemented $20 per hour minimum wage for all regular, full-time employees. More than 96% of our eligible employees participated in the NGL 401(k) Plan in fiscal year 2025.
Although previous operators have utilized operating and disposal practices that were standard in the industry at the time, crude oil or other wastes may have been disposed of or released on or under the properties owned or leased by us or on or under the other locations where the crude oil and wastes have been transported for treatment or disposal.
Although previous operators have utilized operating and disposal practices that were standard in the industry at the time, crude oil or other wastes, including Per- and Polyfluoroalkyl Substances (“PFAS”), may have been disposed of or released on or under the properties owned or leased by us or on or under the other locations where the crude oil and wastes have been transported for treatment or disposal.
For additional information related to the 2029 Senior Secured Notes, 2032 Senior Secured Notes, Term Loan B and ABL Facility, see Note 7 to our consolidated financial statements included in this Annual Report. 4 Primary Service Areas The following map shows the primary service areas of our businesses at March 31, 2024: 5 Organizational Chart The following chart provides a summarized overview of our legal entity structure at March 31, 2024: (1) Includes (i) NGL Water Solutions, LLC, which includes the operations of our Water Solutions segment, (ii) NGL Crude Logistics, LLC, which includes the operations of our Crude Oil Logistics segment and certain of our businesses within our Liquids Logistics segment and (iii) NGL Liquids, LLC, which includes the operations of certain of our businesses within our Liquids Logistics segment. 6 Our Business Strategies Our principal business objectives are to maximize the profitability and stability of our businesses, grow our businesses in an accretive and prudent manner, and maintain a strong balance sheet.
For additional information related to the 2029 Senior Secured Notes, 2032 Senior Secured Notes, Term Loan B and ABL Facility, see Note 7 to our consolidated financial statements included in this Annual Report. 4 Primary Service Areas The following map shows the primary service areas of our businesses at May 29, 2025: 5 Organizational Chart The following chart provides a summarized overview of our legal entity structure at May 29, 2025: (1) Includes (i) NGL Water Solutions, LLC, which includes the operations of our Water Solutions segment, (ii) NGL Crude Assets and Marketing, LLC, which includes the operations of our Crude Oil Logistics segment and (iii) NGL Liquids, LLC, which includes the remaining operations of our Liquids Logistics segment. 6 Our Business Strategies Our principal business objectives are to maximize the profitability and stability of our businesses, grow our businesses in an accretive and prudent manner, and maintain a strong balance sheet.
Under a delegation of authority from the EPA, most states administer some or all of the provisions of RCRA, sometimes in conjunction with their own, more stringent requirements. Federal and state regulatory agencies can seek to impose administrative, civil and criminal penalties for alleged non-compliance with RCRA and analogous state requirements.
Under a delegation of authority from the United States Environmental Protection Agency (“EPA”), most states administer some or all of the provisions of RCRA, sometimes in conjunction with their own, more stringent requirements. Federal and state regulatory agencies can seek to impose administrative, civil and criminal penalties for alleged non-compliance with RCRA and analogous state requirements.
Our strategically located terminals, propane pipeline in Michigan, large leased railcar fleet, shipper status on common carrier pipelines, and substantial leased storage 7 enable us to be a preferred purchaser and seller of natural gas liquids.
Our strategically located natural gas liquid supply terminals, propane pipeline in Michigan, large leased railcar fleet, shipper status on common carrier pipelines, and 7 leased storage enable us to be a preferred purchaser and seller of butane and other natural gas liquids.
Cushing is one of the most liquid crude oil trading hubs in the world and is the delivery point for West Texas Intermediate futures contracts. We own and operate a crude oil marine terminal in Point Comfort, Texas with 355,000 barrels of storage capacity and six off-loading LACTs.
Cushing is one of the most liquid crude oil trading hubs in the world and is the delivery point for Light Sweet Crude Oil futures contracts. We own and operate a crude oil marine terminal in Point Comfort, Texas with 370,000 barrels of storage capacity and six off-loading LACTs.
These operations are conducted through our 23 owned terminals, third-party storage and terminal facilities, nine common carrier pipelines and a fleet of leased railcars. We also provide services for marine exports of butane through our facility located in Chesapeake, Virginia, and we also own a propane pipeline in Michigan.
These operations are conducted through our five owned terminals, third-party storage and terminal facilities, nine common carrier pipelines and a fleet of leased railcars (updated for the transactions discussed below). We also provide services for marine exports of butane through our facility located in Chesapeake, Virginia and we also own a propane pipeline in Michigan.
These oil pollution prevention regulations, as amended several times since their original adoption, require the preparation of a Spill Prevention Control and Countermeasure (“SPCC”) plan for facilities engaged in drilling, producing, gathering, storing, processing, refining, transferring, distributing, using, or consuming crude oil and oil products, and which due to their location, could reasonably be expected to discharge oil in harmful quantities into or upon the navigable waters of the United States.
These oil pollution prevention regulations, as amended several times since their original adoption, require the preparation of either a Spill Prevention Control and Countermeasure (“SPCC”) plan or Facility Response Plan (“FRP”), depending on the site specific substantial harm criteria, for facilities engaged in drilling, producing, gathering, storing, processing, refining, transferring, distributing, using, or consuming crude oil and oil products, and which due to their location, could reasonably be expected to discharge oil in harmful quantities into or upon the navigable waters of the United States.
During the year ended March 31, 2024, 86% of the revenues of our Crude Oil Logistics segment were generated from our ten largest customers of the segment. Additionally, certain key customers of the Crude Oil Logistics segment contribute significantly to the cash flows and profitability of the organization.
During the year ended March 31, 2025, 79% of the revenues of our Crude Oil Logistics segment were generated from our ten largest customers of the segment. Additionally, certain key customers of the Crude Oil Logistics segment contribute significantly to the cash flows and profitability of the Partnership.
We have a diverse base of long-standing customers and believe that our performance metrics allow us to reliably supply, store and transport products throughout the United States and Canada. • Our diversified operations allow us to generate more predictable and stable cash flows on a year-to-year basis.
We have a diverse base of long-standing customers and believe that our performance metrics allow us to reliably supply, store and transport products throughout the United States and Canada. • Our contracted operations allow us to generate more predictable and stable cash flows on a year-to-year basis. Our ability to provide multiple services to customers enhances our competitive position.
Our activities in this segment are supported by certain long-term, fixed rate contracts which include minimum volume commitments on our owned and leased pipelines and storage tanks. • Our Liquids Logistics segment conducts supply operations for natural gas liquids, refined petroleum products and biodiesel to a broad range of commercial, retail and industrial customers across the United States and Canada.
Our activities in this segment are supported by certain long-term, fixed rate contracts with acreage dedications and which include minimum volume commitments on our storage tanks and owned and leased pipelines. • Our Liquids Logistics segment conducts supply operations for natural gas liquids to commercial, retail and industrial customers across the United States and Canada.
The main line portion of this pipeline is comprised of an undivided interest with Saddlehorn Pipeline Company, LLC (“Saddlehorn”) in which we have ownership of 150,000 barrels per day of capacity of the pipeline. During the year ended March 31, 2024, approximately 25.6 million barrels of crude oil were transported on the Grand Mesa Pipeline.
The main line portion of this pipeline is comprised of a 34.09% undivided interest with Saddlehorn Pipeline Company, LLC (“Saddlehorn”) in which we have ownership of 150,000 barrels per day of capacity. During the year ended March 31, 2025, approximately 61,000 barrels per day of crude oil were transported on the Grand Mesa Pipeline.
The addition of a second large-diameter pipeline, disposal wells, and facilities will greatly expand the capabilities of our existing produced water super-system and create a significantly larger outlet for produced water disposal within the Delaware Basin.
The addition of a second large-diameter pipeline, disposal wells, and facilities has expanded the capabilities of our existing produced water super-system and created a significantly larger outlet for produced water disposal within the Delaware Basin.
The refinancing consisted of a private offering of $2.2 billion of senior secured notes, which includes $900.0 million of 8.125% senior secured notes due 2029 (“2029 Senior Secured Notes”) and $1.3 billion of 8.375% senior secured notes due 2032 (“2032 Senior Secured Notes”).
Debt Refinancing On February 2, 2024, we closed a debt refinancing transaction of $2.9 billion. The refinancing consisted of a private offering of $2.2 billion of senior secured notes, which includes $900.0 million of 8.125% senior secured notes due 2029 (“2029 Senior Secured Notes”) and $1.3 billion of 8.375% senior secured notes due 2032 (“2032 Senior Secured Notes”).
(4) Includes one facility with a permitted processing capacity of 40,000 barrels per day in which we own a 75% interest and one facility with a permitted processing capacity of 65,000 barrels per day in which we own a 50% interest.
(5) Includes one facility with a permitted processing capacity of 40,000 barrels per day in which we own a 75% interest and two facilities, one with a permitted processing capacity of 60,000 barrels per day and the other with a permitted processing capacity of 65,000 barrels per day, in which we own a 50% interest.
Our system located in the Northern Delaware Basin is an integrated network of large diameter produced water pipelines, recycling facilities and disposal wells that collectively provides reliable service to producer customers and would be difficult for competitors to replicate at this time. • Our network of crude oil transportation and storage assets, which allows us to serve customers over a wide geographic area and optimize sales.
Our system located in the Northern Delaware Basin is an integrated network of large diameter produced water pipelines, recycling facilities and disposal wells that collectively provides reliable service to producer customers and would be difficult for competitors to replicate at this time. • Our network of crude oil transportation and storage assets located in the DJ Basin and Cushing, Oklahoma.
Our system has over 750 miles of newly-built, in-service large diameter produced water pipelines connected to 56 active saltwater disposal facilities and 127 active disposal wells. We currently have approximately 664,000 acres dedicated to the Northern Delaware system providing a multi-decade drilling inventory and significant growth opportunity.
Our system has over 800 miles of newly-built, in-service large diameter produced water pipelines connected to 58 active saltwater disposal facilities and 132 active disposal wells. We currently have approximately 765,000 acres dedicated to our Northern Delaware system under long-term agreements providing a multi-decade drilling inventory and significant growth opportunity.
We believe our actions have substantially simplified our business mix and have allowed us to focus on what we believe are the core areas of our business and improved our overall financial position. These actions are expected to position us for sustained growth in the future.
We believe our actions have simplified our business mix and have allowed us to focus on what we believe are the core areas of our business and improved our overall financial position.
Our Crude Oil Logistics segment operates primarily under the NGL Crude Logistics, NGL Crude Transportation, NGL Crude Terminals and NGL Crude Cushing trade names. Liquids Logistics Overview . Our Liquids Logistics segment conducts supply operations for natural gas liquids, refined petroleum products and biodiesel to a broad range of commercial, retail and industrial customers across the United States and Canada.
Our Crude Oil Logistics segment operates primarily under the NGL Crude Assets and Marketing, NGL Crude Transportation, NGL Crude Terminals and NGL Crude Cushing trade names. 11 Liquids Logistics Overview . Our Liquids Logistics segment conducts supply operations for natural gas liquids to commercial, retail and industrial customers across the United States and Canada.
We employ a number of contractual and hedging strategies to minimize commodity exposure and maximize earnings stability of this segment. During the year ended March 31, 2024, we sold approximately 2.5 billion gallons of natural gas liquids, refined products and renewables products, or 6.97 million gallons (approximately 166,000 barrels) per day. Operations .
We employ a number of contractual and hedging strategies to minimize commodity exposure and maximize earnings stability of this segment. During the year ended March 31, 2025, we sold approximately 1.6 billion gallons of natural gas liquids or 4.26 million gallons (approximately 101,000 barrels) per day. Operations .
Texas and New Mexico have both enacted regulations governing the handling, treatment, storage and disposal of NORM. In addition, NORM handling and management activities are governed by regulations promulgated by the federal Occupational Safety and Health Act (“OSHA”).
NORM and TENORM are subject primarily to individual state radiation control regulations. Texas, New Mexico and Colorado have enacted regulations governing the handling, treatment, storage and disposal of NORM and TENORM. In addition, NORM and TENORM handling and management activities are governed by regulations promulgated by the federal Occupational Safety and Health Act (“OSHA”).
Our wholesale liquids business is largely seasonal as the primary users of propane as heating fuel generally purchase propane during the typical fall and winter heating season.
Our wholesale liquids business is largely seasonal as the primary users of propane as heating fuel generally purchase propane during the typical fall and winter heating season, while butane seasonality is driven primarily by winter gasoline blending.
Compliance dates under the final rule are phased in by registrant category. Multiple lawsuits have been filed challenging the SEC ’s new climate rules, which have been consolidated and will be heard in the U.S. Court of Appeals for the Eighth Circuit. On April 4, 2024, the SEC issued an order staying the final rules until judicial review is complete.
Compliance dates under the final rule are phased in by registrant category. Multiple lawsuits have been filed challenging the SEC ’s new climate rules, which have been consolidated and will be heard in the U.S. Court of Appeals for the Eighth Circuit.
Human Capital At March 31, 2024, we had 607 employees in 27 states and Canada. Of those employees, 226 provide work primarily for our Water Solutions segment, 58 provide work primarily for our Crude Oil Logistics segment, 151 provide work primarily for our Liquids Logistics segment, and 172 provide administrative services to the various business segments.
Human Capital At March 31, 2025, we had 569 employees in 27 states and Canada. Of those employees, 212 provide work primarily for our Water Solutions segment, 56 provide work primarily for our Crude Oil Logistics segment, 139 provide work primarily for our Liquids Logistics segment, and 162 provide administrative services to the various business segments.
The primary factors on which we compete are: • price; • availability of supply and refinery demand; • reliability of service; • open credit; • logistics capabilities, including the availability of railcars, proprietary terminals, and owned pipeline and railcars; and • long-term customer relationships. Supply.
The primary factors on which we compete are: • price; • availability of supply and refinery demand; • reliability of service; • open credit; • logistics capabilities, including the availability of railcars, proprietary terminals, and owned pipeline; and • long-term customer relationships. Supply. We obtain crude oil from a large base of suppliers, which consists primarily of crude oil producers.
The CFTC also has statutory authority to seek civil penalties of up to the greater of $1 million per day per violation or triple the monetary gain to the violator for violations of the anti-market manipulation sections of the Commodity Exchange Act. We are also subject to various reporting requirements that are designed to facilitate transparency and prevent market manipulation.
The CFTC also has statutory authority to seek civil penalties of up to the greater of $1 million per day per violation or triple the monetary gain to the violator for violations of the anti-market manipulation sections of the Commodity Exchange Act.
For discretionary inventory, and for those instances where physical transactions cannot be appropriately matched, we utilize financial derivatives to mitigate commodity price exposure. Specific exposure limits are mandated in our market risk policy.
Our philosophy is to maintain minimum commodity price exposure through a combination of purchase contracts, sales contracts and financial derivatives. For discretionary inventory, and for those instances where physical transactions cannot be appropriately matched, we utilize financial derivatives to mitigate commodity price exposure. Specific exposure limits are mandated in our market risk policy. Pricing Policy.
For more information regarding our dispositions and acquisitions transactions and the impact to our operations, see Note 17 to our consolidated financial statements included in this current Annual Report and our Annual Reports on Form 10-K for the years ended March 31, 2023 and 2022 . 3 Debt Refinancing On February 2, 2024, we closed a debt refinancing transaction of $2.9 billion.
For more information regarding our dispositions and acquisitions transactions and the impact to our operations, see Note 1 and Note 17 to our consolidated financial statements included in this current Annual Report and our Annual Reports on Form 10-K for the years ended March 31, 2024 and 2023 .
With the consent and participation of Saddlehorn, we and Saddlehorn may consider future opportunities using these easements, to the extent such easements remain in effect, for projects involving the transportation of crude oil and condensate. On December 6, 2023, we announced an open season for the Grand Mesa Pipeline.
With the consent and participation of Saddlehorn, we and Saddlehorn may consider future opportunities using these easements, to the extent such easements remain in effect, for projects involving the transportation of crude oil and condensate.
Our foundational asset in this segment is the Grand Mesa Pipeline, a 550-mile pipeline that transports crude oil from its origin in Weld County, Colorado to our terminal in Cushing, Oklahoma. The Grand Mesa Pipeline commenced operations on November 1, 2016 and has operated continuously since then.
Our foundational asset in this segment is the Grand Mesa Pipeline, a 550-mile pipeline that transports crude oil from its origin in Weld County, Colorado to our terminal in Cushing, Oklahoma.
To a lesser extent, we move crude oil from the wellhead to refineries, and natural gas liquids from processing plants and supply hubs to end users. • Operating in a safe and environmentally responsible manner.
We continue to enhance our ability to transport produced water from the wellhead to treatment for disposal, recycle, or discharge. To a lesser extent, we move crude oil from the wellhead to refineries, and natural gas liquids from processing plants and supply hubs to end users. • Operating in a safe and environmentally responsible manner.
Our customers bring produced and flowback water generated by crude oil and natural gas exploration and production operations to our facilities for treatment through pipeline gathering systems and by truck. During the year ended March 31, 2024, in the Delaware Basin, we received approximately 98% of produced and flowback water via pipelines.
During the year ended March 31, 2025, we sold approximately 42.4 million barrels of recycled water. 8 Operations. Our customers bring produced and flowback water generated by crude oil and natural gas exploration and production operations to our facilities for treatment through pipeline gathering systems and by truck.
Fish and Wildlife Service (“USFWS”) may make determinations on the listing of currently unlisted species as endangered or threatened under the ESA. For example, on July 3, 2023, the USFWS proposed that the dunes sagebrush lizard, which is found in areas where we operate, be listed as endangered under the ESA.
Fish and Wildlife Service (“USFWS”) may make determinations on the listing of currently unlisted species as endangered or threatened under the ESA. For example, in May 2024, the dunes sagebrush lizard, which is found in areas where we operate, was listed as endangered under the ESA which sparked allegations that the designation occurred to hinder fossil fuel production.
Wastes containing naturally occurring radioactive materials (“NORM”) may also be generated in connection with our operations. Certain processes used to produce oil and gas may enhance the radioactivity of NORM, which may be present in oilfield wastes. NORM is subject primarily to individual state radiation control regulations.
Wastes containing naturally occurring radioactive materials (“NORM”) and technologically enhanced naturally occurring radioactive material (“TENORM”) may also be generated or concentrated, respectively, in connection with our operations. Certain processes used to produce oil and gas may enhance the radioactivity of NORM or concentrations of TENORM, which may be present in oilfield wastes.
These state and OSHA regulations impose certain requirements concerning worker protection, the treatment, storage and disposal of NORM waste, the management of waste piles, containers and tanks containing NORM, as well as restrictions on the uses of land with NORM contamination. We currently own or lease properties where crude oil is being or has been handled for many years.
These state and OSHA regulations impose certain requirements concerning worker protection, the treatment, storage and disposal of NORM and TENORM waste, the management of waste piles, containers and tanks containing NORM and TENORM, as well as restrictions on the uses of land with NORM or TENORM contamination.
Our Liquids Logistics segment serves approximately 1,200 customers in 48 states, Mexico and Canada, including national, regional and independent retail, industrial, wholesale, petrochemical, refiner and natural gas liquids production customers. During the year ended March 31, 2024, 23% of the revenues of our Liquids Logistics segment were generated from our ten largest customers of the segment. Seasonality .
Our customers include national, regional and independent retail, industrial, wholesale, petrochemical, refiner and natural gas liquids production customers. During the year ended March 31, 2025, 36% of the revenues of our Liquids Logistics segment were generated from our ten largest customers of the segment.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Risk Factor Summary Risks Related to Liquidity and Financing • We may not have sufficient cash, which depends on cash flow rather than profitability, to enable us to fund our operations, repay indebtedness or pay distributions. • Our substantial indebtedness and restrictions contained in our debt and preferred unit agreements may limit our flexibility to obtain financing to pursue other business opportunities and restrict our current and future operations. 22 • Increasing interest rates could impact our financing costs, common unit price, distributions on our preferred units and our ability to issue equity and incur debt. • Failure of our banking institutions.
Risk Factor Summary Risks Related to Liquidity and Financing • We may not have sufficient cash, which depends on cash flow rather than profitability, to enable us to fund our operations, repay indebtedness or pay distributions. • Our substantial indebtedness and restrictions contained in our debt and preferred unit agreements may limit our flexibility to obtain financing to pursue other business opportunities and restrict our current and future operations. • Increasing interest rates could impact our financing costs, our common unit price, distributions on our preferred units and our ability to issue equity and incur debt. • Failure of our banking institutions.
The ABL Facility, Term Loan B and Indenture limit our ability to, among other things: • incur additional debt or issue letters of credit; • redeem or repurchase units; • make certain loans, investments and acquisitions; • incur certain liens or permit them to exist; • engage in sale and leaseback transactions; • enter into certain types of transactions with affiliates; • enter into agreements limiting subsidiary distributions; • change the nature of our business or enter into a substantially different business; • merge or consolidate with another company; and • transfer or otherwise dispose of assets.
The ABL Facility, Term Loan B and Indenture limit our ability to, among other things: • incur additional debt or issue letters of credit; • redeem or repurchase common units; • make certain loans, investments and acquisitions; • incur certain liens or permit them to exist; • engage in sale and leaseback transactions; • enter into certain types of transactions with affiliates; • enter into agreements limiting subsidiary distributions; • change the nature of our business or enter into a substantially different business; • merge or consolidate with another company; and • transfer or otherwise dispose of assets.
For example, repairing our pipelines often involves securing consent from individual landowners to access their property; one or more landowners may resist our efforts to make 32 needed repairs, which could lead to an interruption in the operation of the affected pipeline or facility for a period of time that is significantly longer than would have otherwise been the case.
For example, repairing our pipelines often involves securing consent from individual landowners to access their property; one or more landowners may resist our efforts to make needed repairs, which could lead to an interruption in the operation of the affected pipeline or facility for a period of time that is significantly longer than would have otherwise been the case.
For example, on January 27, 2021, President Biden issued an Executive Order that commits to substantial action on climate change, calling for, among other things, the increased use of zero-emissions vehicles by the federal government, the elimination of subsidies provided to the fossil fuel industry, and increased emphasis on climate-related risk across governmental agencies and economic sectors.
For example, on January 27, 2021, former President Biden issued an Executive Order that commits to substantial action on climate change, calling for, among other things, the increased use of zero-emissions vehicles by the federal government, the elimination of subsidies provided to the fossil fuel industry, and increased emphasis on climate-related risk across governmental agencies and economic sectors.
The Inflation Reduction Act of 2022 (“IRA”) could impact demand for hydrocarbon fuel products and impose new costs on certain customers. In August 2022, President Biden signed the IRA, which contains, among other things, numerous incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles and supporting infrastructure and carbon capture and sequestration.
The Inflation Reduction Act of 2022 (“IRA”) could impact demand for hydrocarbon fuel products and impose new costs on certain customers. In August 2022, former President Biden signed the IRA, which contains, among other things, numerous incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles and supporting infrastructure and carbon capture and sequestration.
It also could affect the amount of taxable gain from our unitholders’ sale of common units and could have a negative impact on the value of the common units or result in audit adjustments to our unitholders’ tax returns without the benefit of additional deductions. 46 There are limits on the deductibility of our losses that may adversely affect our unitholders.
It also could affect the amount of taxable gain from our unitholders’ sale of common units and could have a negative impact on the value of the common units or result in audit adjustments to our unitholders’ tax returns without the benefit of additional deductions. There are limits on the deductibility of our losses that may adversely affect our unitholders.
These cuts in spending may curtail drilling programs and other discretionary spending, which could result in a reduction in business opportunities and demand for our services, the rates we can charge and our utilization. In addition, certain of our customers could become unable to pay their suppliers, including us.
These cuts in spending may curtail drilling programs and other discretionary spending, which could result in a reduction in business 26 opportunities and demand for our services, the rates we can charge and our utilization. In addition, certain of our customers could become unable to pay their suppliers, including us.
As a result, our new facilities and infrastructure may not be able to attract enough product to achieve our expected investment return, which could materially and adversely affect our consolidated results of operations and financial position. We may face opposition to the operation of our pipelines and facilities from various groups.
As a result, our new facilities and infrastructure may not be able to attract enough product to achieve our expected investment return, which could materially and adversely affect our consolidated results of operations and financial position. 30 We may face opposition to the operation of our pipelines and facilities from various groups.
The Dodd-Frank Act provides for a potential 33 exemption from these clearing and cash collateral requirements for commercial end users and it includes a number of defined terms that will be used in determining how this exemption applies to particular derivative transactions and the parties to those transactions.
The Dodd-Frank Act provides for a potential exemption from these clearing and cash collateral requirements for commercial end users and it includes a number of defined terms that will be used in determining how this exemption applies to particular derivative transactions and the parties to those transactions.
New laws or regulations, changes to existing laws or regulations, such as more stringent pollution control requirements or additional safety requirements, or more stringent interpretation or enforcement of existing laws and regulations, may adversely impact us, and could result in increased operating 34 costs and have a material and adverse effect on our activities and profitability.
New laws or regulations, changes to existing laws or regulations, such as more stringent pollution control requirements or additional safety requirements, or more stringent interpretation or enforcement of existing laws and regulations, may adversely impact us, and could result in increased operating costs and have a material and adverse effect on our activities and profitability.
Any current or proposed restrictions on hydraulic fracturing could lead to operational delays or increased operating costs and regulatory burdens that could make it more difficult or costly to perform hydraulic fracturing which would negatively impact our customer base resulting in an adverse effect on our profitability.
Any current or proposed restrictions on hydraulic fracturing could lead to operational delays or increased operating costs and regulatory burdens that could make it more difficult or costly to perform hydraulic fracturing which would 34 negatively impact our customer base resulting in an adverse effect on our profitability.
Any position we take that is inconsistent with applicable Treasury Regulations may have to be disclosed on our federal income tax return. This disclosure increases the likelihood that the IRS will challenge our positions and propose adjustments to some or all of our 45 unitholders.
Any position we take that is inconsistent with applicable Treasury Regulations may have to be disclosed on our federal income tax return. This disclosure increases the likelihood that the IRS will challenge our positions and propose adjustments to some or all of our unitholders.
If you are a tax exempt entity or a non-United States person, you should consult your tax advisor before investing in our common units. We treat each purchaser of common units as having the same tax benefits without regard to the actual common units purchased.
If you are a tax exempt entity or a non-United States person, you should consult your tax advisor before investing in our common units. 43 We treat each purchaser of common units as having the same tax benefits without regard to the actual common units purchased.
Additionally, in order to conduct our operations, we must obtain and maintain numerous permits, approvals and other authorizations from various federal, state, provincial and local governmental authorities relating to produced water handling, discharge and disposal, air emissions, transportation and other environmental matters.
Additionally, in order to conduct our operations, we must obtain and maintain numerous permits, approvals and other authorizations from various federal, state, provincial and local governmental authorities relating to produced water handling, 32 discharge and disposal, air emissions, transportation and other environmental matters.
For example, on January 20, 2021, the Biden Administration placed a 60-day moratorium on new oil and gas leasing and drilling permits on federal lands, and on January 27, 2021, the DOI acting pursuant to an Executive Order from President Biden suspended the federal oil and gas leasing program indefinitely.
For example, on January 20, 2021, the Biden Administration placed a 60-day moratorium on new oil and gas leasing and drilling permits on federal lands, and on January 27, 2021, the DOI acting pursuant to an Executive Order from former President Biden suspended the federal oil and gas leasing program indefinitely.
Any interruption of service at the terminals, or on pipeline, railroad or lateral connections or adverse change in the terms and conditions of services could have a material adverse effect on our ability, and the ability of our customers, to transport product to and from our facilities and have a corresponding material adverse effect on our revenues.
Any interruption of service at the terminals, or on pipeline, railroad or lateral connections or adverse change in the terms and 28 conditions of services could have a material adverse effect on our ability, and the ability of our customers, to transport product to and from our facilities and have a corresponding material adverse effect on our revenues.
We may not have sufficient cash flow from operations and available borrowings under the ABL Facility to service 25 our indebtedness. A significant downturn in our business or other development adversely affecting our cash flow could materially impair our ability to service our indebtedness.
We may not have sufficient cash flow from operations and available borrowings under the ABL Facility to service our indebtedness. A significant downturn in our business or other development adversely affecting our cash flow could materially impair our ability to service our indebtedness.
The IRS may challenge our valuation methods, or our allocation of the Internal Revenue Code Section 743(b) adjustment attributable to our tangible and intangible assets, and allocations of taxable income, gain, loss and deduction between the GP and certain of our unitholders.
The IRS may challenge our valuation methods, or our allocation of the Internal Revenue Code Section 743(b) adjustment attributable to our 44 tangible and intangible assets, and allocations of taxable income, gain, loss and deduction between the GP and certain of our unitholders.
The number of common units to be issued to our GP will be equal to that number of common units that would have entitled their holder to an average aggregate quarterly cash distribution in the prior two quarters equal to the average of the distributions to 41 our GP on the IDRs in the prior two quarters.
The number of common units to be issued to our GP will be equal to that number of common units that would have entitled their holder to an average aggregate quarterly cash distribution in the prior two quarters equal to the average of the distributions to our GP on the IDRs in the prior two quarters.
Other actions that could be pursued by the Biden Administration may include the imposition of more restrictive requirements for the establishment of pipeline infrastructure or the permitting of liquified natural 35 gas export facilities.
Other actions that could be pursued by the Biden Administration may include the imposition of more restrictive requirements for the establishment of pipeline infrastructure or the permitting of liquified natural gas export facilities.
We also own and lease a fleet of railcars, the operation of which is subject to the regulatory jurisdiction of the Federal Railroad Administration of the DOT, as well as other federal and state regulatory agencies.
We also lease a fleet of railcars, the operation of which is subject to the regulatory jurisdiction of the Federal Railroad Administration of the DOT, as well as other federal and state regulatory agencies.
Because we expect to be treated as a partnership for federal income tax purposes, our unitholders will be treated as partners to whom we will allocate taxable income that could be different in amount than the cash we distribute, our unitholders will be required to pay any federal income taxes and, in some cases, state and local income taxes on their share of our taxable income even if they receive no cash distributions from us.
Because we expect to be treated as a partnership for federal income tax purposes, our unitholders will be treated as partners to whom we will allocate taxable income that could be different than the cash we distribute, therefore, our unitholders will be required to pay any federal income taxes and, in some cases, state and local income taxes on their share of our taxable income even if they receive no cash distributions from us.
These have included promises to limit emissions and curtail the production of oil and gas, such as through the cessation of leasing public land for hydrocarbon development.
These have included promises to limit emissions and curtail the production of oil and gas, such 33 as through the cessation of leasing public land for hydrocarbon development.
The amount realized generally will equal the sum of the cash and the fair market value of other property such holder receives in exchange for such Preferred Units.
The amount realized generally will equal the sum of the cash and the fair market value of other property such holder receives in exchange 45 for such Preferred Units.
Additionally, our loss of rights, through our inability to renew right-of-way contracts or otherwise, could materially and adversely affect our business, consolidated results of operations and financial position. Additionally, certain facilities and equipment (or parts thereof) used by us are leased from third parties for specific periods, including many of our railcars.
Additionally, our loss of rights, through our inability to renew right-of-way contracts or otherwise, could materially and adversely affect our business, consolidated results of operations and financial position. Additionally, certain facilities and equipment (or parts thereof) used by us are leased from third parties for specific periods, including most of our railcars.
Any exercise of these warrants would cause dilution to existing common unitholders and may place downward pressure on the trading price of our common units. All outstanding warrants are currently exercisable and any unexercised warrants will expire on the tenth anniversary of the date of issuance. The warrants will not participate in 42 cash distributions.
Any exercise of these warrants would cause dilution to existing common unitholders 40 and may place downward pressure on the trading price of our common units. All outstanding warrants are currently exercisable and any unexercised warrants will expire on the tenth anniversary of the date of issuance. The warrants will not participate in cash distributions.
Our operations, including those involving crude oil, condensate, natural gas liquids, refined products, renewables, and crude oil and natural gas produced water, are subject to stringent federal, state, provincial and local laws and regulations relating to the protection of natural resources and the environment, health and safety, waste management, and transportation and disposal of such products and materials.
Our operations, including those involving crude oil, condensate, natural gas liquids, crude oil and natural gas produced water, are subject to stringent federal, state, provincial and local laws and regulations relating to the protection of natural resources and the environment, health and safety, waste management, and transportation and disposal of such products and materials.
As a result of purchasing common units, our unitholders consent to some actions and conflicts of interest that might otherwise constitute a breach of fiduciary or other duties under applicable state law; 38 • permits our GP to make a number of decisions in its individual capacity, as opposed to in its capacity as our GP.
As a result of 36 purchasing common units, our unitholders consent to some actions and conflicts of interest that might otherwise constitute a breach of fiduciary or other duties under applicable state law; • permits our GP to make a number of decisions in its individual capacity, as opposed to in its capacity as our GP.
Tax Risks to Our Unitholders • Our tax treatment depends on our status as a partnership for federal income tax purposes. • Our unitholders may be subject to limitation on their ability to deduct interest expense incurred by us. 23 • Additional entity-level taxation by individual states. • The tax treatment of publicly traded partnerships could be subject to potential changes or interpretations. • The IRS (as defined herein) may challenge certain income tax positions, methodologies or treatments that we have taken, and pursuant to the Bipartisan Budget Act of 2015, may make audit adjustments to our income tax returns for tax years beginning after 2019. • Our unitholders will be required to pay taxes on their share of our income even if they do not receive any cash distributions from us. • Certain action we take, such as issuing additional units, may increase a unitholder’s tax liability. • Tax gain or loss on the disposition of our common units could be more or less than expected. • Tax exempt entities and non-United States persons owning our common units face unique tax issues. • We have subsidiaries that are treated as corporations for federal income tax purposes and subject to corporate level income taxes. • A unitholder whose common units are loaned to a “short seller” to effect a short sale of units may be considered as having disposed of those common units. • There are limits on the deductibility of our losses that may adversely affect our unitholders. • Purchasers of our common units may become subject to state and local taxes and return filing requirements in jurisdictions where we operate or own or acquire properties. • Treatment of distributions on our Preferred Units as guaranteed payments for the use of capital creates a different tax treatment for the holders of Preferred Units than the holders of our common units.
Tax Risks to Our Unitholders • Our tax treatment depends on our status as a partnership for federal income tax purposes. • Our unitholders may be subject to limitation on their ability to deduct interest expense incurred by us. • Additional entity-level taxation by individual states. • The tax treatment of publicly traded partnerships could be subject to potential changes or interpretations. • The IRS (as defined herein) may challenge certain income tax positions, methodologies or treatments that we have taken, and pursuant to the Bipartisan Budget Act of 2015, may make audit adjustments to our income tax returns. 22 • Our unitholders will be required to pay taxes on their share of our income even if they do not receive any cash distributions from us. • Certain actions that we may take, such as issuing additional units, may increase a unitholder’s tax liability. • Tax gain or loss on the disposition of our common units could be more or less than expected. • Tax exempt entities and non-United States persons owning our common units face unique tax issues. • We have subsidiaries that are treated as corporations for federal income tax purposes and subject to corporate level income taxes. • A unitholder whose common units are loaned to a “short seller” to effect a short sale of units may be considered as having disposed of those common units. • There are limits on the deductibility of our losses that may adversely affect our unitholders. • Purchasers of our common units may become subject to state and local taxes and return filing requirements in jurisdictions where we operate or own or acquire properties. • Treatment of distributions on our Preferred Units as guaranteed payments for the use of capital creates a different tax treatment for the holders of Preferred Units than the holders of our common units.
The new owner of our GP would then be in a position to replace the board of directors and officers of our GP with its own designees and thereby exert significant control over the decisions made by the board of directors and officers. 40 The IDRs of our GP may be transferred to a third party.
The new 38 owner of our GP would then be in a position to replace the board of directors and officers of our GP with its own designees and thereby exert significant control over the decisions made by the board of directors and officers. The IDRs of our GP may be transferred to a third party.
Our unitholders may not receive cash distributions from us equal to their share of our taxable income or even equal to the actual tax liability that results from that income. 44 Certain actions that we may take, such as issuing additional units, may increase the federal income tax liability of unitholders.
Our unitholders may not receive cash 42 distributions from us equal to their share of our taxable income or even equal to the actual tax liability that results from that income. Certain actions that we may take, such as issuing additional units, may increase the federal income tax liability of unitholders.
If adverse impact to species or damages to wetlands, habitat or natural resources occur or may occur as result of our or our customers’ activities, government entities or, at times, private parties may act to prevent such activities or seek damages for harm to species, habitat or natural resources resulting from our activities or our customers’ drilling, construction or releases of oil, wastes, hazardous substances or other regulated materials, which could reduce the demand for our services.
If an adverse impact to species or damages to wetlands, habitat or natural resources occurs or may occur as a result of our or our customers’ activities, government entities or, at times, private parties may act to prevent such activities or seek damages for harm to species, habitat or natural resources resulting from our activities or our customers’ drilling, construction or releases of oil, wastes, hazardous substances or other regulated materials, which could reduce the demand for our services.
Risks Related to the Operations of Our Business Our business depends on the availability of crude oil, natural gas liquids, and refined products in the United States and Canada, which is dependent on the ability and willingness of other parties to explore for and produce crude oil and natural gas.
Risks Related to the Operations of Our Business Our business depends on the availability of crude oil and natural gas liquids in the United States and Canada, which is dependent on the ability and willingness of other parties to explore for and produce crude oil and natural gas.
The provisions of the ABL Facility, Term Loan B and Indenture may affect our ability to obtain future financing and pursue attractive business opportunities and our flexibility in planning for, and reacting to, changes in business conditions.
The provisions of the ABL Facility, Term Loan B and Indenture may affect our ability to obtain future financing and pursue attractive business opportunities and our flexibility in planning for, and responding to, changes in business conditions.
The fees charged to customers under our agreements with them for the transportation and sale of crude oil, condensate, natural gas liquids, gasoline , diesel, and biodiesel and the disposal of produced water may not escalate sufficiently to cover increases in costs and the agreements may be suspended in some circumstances, which would affect our profitability.
The fees charged to customers under our agreements with them for the transportation and sale of crude oil, condensate, natural gas liquids and the disposal of produced water may not escalate sufficiently to cover increases in costs and the agreements may be suspended in some circumstances, which would affect our profitability.
The Dodd-Frank Act provides for statutory and regulatory requirements for derivative transactions, including crude oil, refined and renewable products, and natural gas hedging transactions. Certain transactions will be required to be cleared on exchanges and cash collateral will have to be posted.
The Dodd-Frank Act provides for statutory and regulatory requirements for derivative transactions, including crude oil, and natural gas hedging transactions. Certain transactions will be required to be cleared on exchanges and cash collateral will have to be posted.
Risks Related to the Operations of Our Business • Our dependence on the ability and willingness of other parties to explore for and produce crude oil and natural gas. • Declining demand for hydrocarbons, commodity prices and production volumes, inventory risk, the availability of transportation and storage capacity, and increased transportation and leasing costs. • Competition from other midstream, transportation, and terminaling and storage companies. • Interruption of service at our principal storage facilities or on common carrier pipelines or railroads. • Fees charged to customers for products and services may not cover increases in costs. • Risk management procedures and the use of derivative financial instruments. • Reduced demand for our products due to energy efficiency, new technologies, alternative energy sources and new regulations. • Seasonal weather conditions, including warm winter weather and natural or man-made disasters. • Our ability to successfully complete, integrate and operate accretive acquisitions and organic growth projects. • Constructing new transportation systems and facilities subjects us to construction risks. • Opposition from various groups to the operation of our pipelines and facilities. • Our dependence on the leadership, involvement and retention of key and qualified personnel.
Risks Related to the Operations of Our Business • Our dependence on the ability and willingness of other parties to explore for and produce crude oil and natural gas. 21 • Declining demand for hydrocarbons, commodity prices and production volumes, inability to acquire new pore space or loss of existing pore space, inventory risk, the availability of transportation and storage capacity, and increased transportation and leasing costs. • Competition from other midstream, transportation, and terminaling and storage companies. • Interruption of service at our principal storage facilities, on common carrier pipelines or railroads. • Fees charged to customers for products and services may not cover increases in costs. • Risk management procedures and the use of financial derivative contracts. • Reduced demand for our products due to energy efficiency, new technologies, alternative energy sources and new regulations. • Seasonal weather conditions, including warm winter weather and natural or man-made disasters. • Our ability to successfully complete, integrate and operate organic growth projects. • Constructing new transportation systems and facilities subjects us to construction risks. • Opposition from various groups to the operation of our pipelines and facilities. • Our dependence on the leadership, involvement and retention of key and qualified personnel.
We use various modes of transportation to carry natural gas liquids, crude oil, refined and renewable products and produced water, including trucks, railcars, barges, and pipelines, each of which is subject to regulation.
We use various modes of transportation to carry natural gas liquids, crude oil and produced water, including trucks, railcars, barges, and pipelines, each of which is subject to regulation.
Terrorist attacks in the areas of our operations could negatively impact our ability to transport crude oil, natural gas liquids and 49 refined and renewables products to our locations. These risks could potentially negatively impact our consolidated results of operations. Product liability claims and litigation could adversely affect our business and results of operations.
Terrorist attacks in the areas of our operations could negatively impact our ability to transport crude oil and natural gas liquids to our locations. These risks could potentially negatively impact our consolidated results of operations. Product liability claims and litigation could adversely affect our business and results of operations.
Distributions to non-U.S. holders of Preferred Units will be subject to withholding taxes. If the amount of withholding exceeds the amount of U.S. federal income tax actually due, non-U.S. holders of Preferred Units may be required to file U.S. federal income tax returns in order to seek a refund of such excess.
If the amount of withholding exceeds the amount of U.S. federal income tax actually due, non-U.S. holders of Preferred Units may be required to file U.S. federal income tax returns in order to seek a refund of such excess.
Our substantial indebtedness may limit our flexibility to obtain financing and to pursue other business opportunities and our ability to service our debt could impact operations. At March 31, 2024, the face amount of our long-term debt was $2.9 billion.
Our substantial indebtedness may limit our flexibility to obtain financing and to pursue other business opportunities and our ability to service our debt could impact operations. At March 31, 2025, the face amount of our long-term debt was $3.0 billion.
Natural gas and natural gas liquids also compete with other forms of energy, including electricity, coal, fuel oil and renewable or alternative energy. Our Liquids Logistics segment is also seeing increased competition for supply from international markets.
Natural gas and natural gas liquids also compete with other forms of energy, including electricity, coal, fuel oil and renewable or alternative energy. Our Liquids Logistics segment is also seeing increased competition for supply from international markets. Our Crude Oil Logistics segment faces significant competition for crude oil supplies and customers for our services.
The issuance of common units upon exercise of certain warrants would cause dilution to existing common unitholders and may place downward pressure on the trading price of our common units. We currently have outstanding exercisable warrants to purchase 25,500,000 common units at exercise prices ranging from $13.56 per unit to $17.45 per unit.
The issuance of common units upon exercise of certain warrants would cause dilution to existing common unitholders and may place downward pressure on the trading price of our common units. We currently have outstanding exercisable warrants to purchase 2,125,000 common units at exercise prices ranging from $13.56 per unit to $16.28 per unit.
Governmental, scientific, and public concern over the threat of climate change arising from GHG emissions has resulted in increasing political risks in the United States, including climate change related pledges made by certain candidates recently elected to public office.
Such withdrawal is expected to take effect in 2026. Governmental, scientific, and public concern over the threat of climate change arising from GHG emissions has resulted in increasing political risks in the United States, including climate change related pledges made by certain candidates recently elected to public office.
Although the United States withdrew from the Paris Agreement on November 4, 2020, on January 20, 2021, President Biden signed executive orders recommitting the United States to the agreement and calling on the federal government to begin formulating the United States’ nationally determined emissions reduction targets under the agreement.
The United States withdrew from the Paris Agreement on November 4, 2020, and although former President Biden signed executive orders on January 20, 2021 recommitting the United States to the agreement and calling on the federal government to begin formulating the United States’ nationally determined emissions reduction targets under the agreement, on January 20, 2025, President Trump issued an Executive Order for the United States to again withdraw from the Paris Agreement.
The transportation services on the Grand Mesa Pipeline are subject to FERC regulation. Other of our transportation services could in the future become subject to the jurisdiction of the FERC, which could adversely affect the terms of service, rates and revenues of such services.
Other of our transportation services could in the future become subject to the jurisdiction of the FERC, which could adversely affect the terms of service, rates and revenues of such services.
We do not own or operate the railroads on which these railcars are transported. Any disruptions in the operations of these railroads would adversely impact our ability to deliver product to our customers. We lease certain facilities and equipment and therefore are subject to the possibility of increased costs to retain necessary land and equipment use.
Any disruptions in the operations of these railroads would adversely impact our ability to deliver product to our customers. We lease certain facilities and equipment and therefore are subject to the possibility of increased costs to retain necessary land and equipment use.
The potential impact of these types of events on our financial condition, results of operations and cash flows depends largely on developments outside our control, including the duration of and response to a public health crisis, the related impact on overall economic activity and the potential long-term impacts on demand for crude oil and other products, all of which cannot be predicted with certainty.
The potential impact of these types of events on our financial condition, results of operations and cash flows depends largely on developments outside our control, including the duration of and response to a public health crisis, the related impact on overall economic activity and the potential long-term impacts on demand for crude oil and other products, all of which cannot be predicted with certainty. 47 The risk of terrorism and political unrest in various energy producing regions may adversely affect the economy and the price and availability of products.
The intrastate transportation or storage of crude oil and refined products is subject to regulation by the state in which the facilities are located and transactions occur. Compliance with these state regulations could have a material and adverse effect on that portion of our business, consolidated results of operations and financial position.
Failure to comply with such regulations, as interpreted and enforced, could have a material and adverse effect on our business, consolidated results of operations and financial position. 31 The intrastate transportation or storage of crude oil is subject to regulation by the state in which the facilities are located and transactions occur.
Additionally, some of our operations are currently subject to FERC regulations obligating us to comply with the FERC’s regulations and policies applicable to those assets and operations.
Our sales may also be subject to certain reporting and other requirements. Additionally, some of our operations are currently subject to FERC regulations obligating us to comply with the FERC’s regulations and policies applicable to those assets and operations.
On April 12, 2024, the DOI finalized a comprehensive update to federal onshore oil and gas leasing regulations on Bureau of Land Management-managed public lands, which increased bonding requirements, royalty rates, and minimum bids.
On April 12, 2024, the DOI finalized a comprehensive update to federal onshore oil and gas leasing regulations on Bureau of Land Management-managed public lands, which increased bonding requirements, royalty rates, and minimum bids. Actions such as these could have a material adverse effect on us and our industry.
Following a reset election by our GP, the minimum quarterly distribution will be adjusted to equal the reset minimum quarterly distribution and the target distribution levels will be reset to correspondingly higher levels based on percentage increases above the reset minimum quarterly distribution.
Following a reset election by our GP, the minimum quarterly distribution will be adjusted to equal the reset minimum quarterly distribution and the target distribution levels will be reset to correspondingly higher levels based on percentage increases above the reset minimum quarterly distribution. 39 If our GP elects to reset the target distribution levels, it will be entitled to receive a number of common units.
We use third-party common carrier pipelines to transport our products and we use third-party facilities to store our products. Any significant interruption in the service at these storage facilities or on common carrier pipelines we use would adversely affect our ability to obtain and deliver products. We transport natural gas liquids and biodiesel by railcar.
Any significant interruption in the service at these storage facilities or on common carrier pipelines we use would adversely affect our ability to obtain and deliver products. We transport natural gas liquids by railcar. We do not own or operate the railroads on which these railcars are transported.
In addition, the multiple incentives offered for various clean energy industries referenced above could decrease demand for crude oil and natural gas, increase our compliance and operating costs and consequently adversely affect our business. 30 Reduced demand for refined products could have an adverse effect on our results of operations.
In addition, the multiple incentives offered for various clean energy industries referenced above could decrease demand for crude oil and natural gas, increase our compliance and operating costs and consequently adversely affect our business.
This determination can affect the amount of cash that is distributed to our unitholders and to our GP; • our GP determines which costs incurred by it are reimbursable by us; • our GP may cause us to borrow funds to permit the payment of cash distributions, even if the purpose or effect of the borrowing is to make incentive distributions; • our Partnership Agreement permits us to classify up to $20.0 million as operating surplus, even if it is generated from asset sales, non-working capital borrowings or other sources that would otherwise constitute capital surplus. 39 This cash may be used to fund distributions to our GP in respect of the GP interest or the incentive distribution rights (“IDRs”); • our Partnership Agreement does not restrict our GP from causing us to pay it or its affiliates for any services rendered to us or entering into additional contractual arrangements with any of these entities on our behalf; • our GP intends to limit its liability regarding our contractual and other obligations; • our GP may exercise its right to call and purchase all of the common units not owned by it and its affiliates if they own more than 80% of the common units; • our GP controls the enforcement of the obligations that it and its affiliates owe to us; • our GP decides whether to retain separate counsel, accountants or others to perform services for us; and • our GP may elect to cause us to issue common units to it in connection with a resetting of the target distribution levels related to our GP’s IDRs without the approval of the conflicts committee of the board of directors of our GP or our unitholders.
This cash may be used to fund distributions to our GP in respect of the GP interest or the incentive distribution rights (“IDRs”); • our Partnership Agreement does not restrict our GP from causing us to pay it or its affiliates for any services rendered to us or entering into additional contractual arrangements with any of these entities on our behalf; • our GP intends to limit its liability regarding our contractual and other obligations; • our GP may exercise its right to call and purchase all of the common units not owned by it and its affiliates if they own more than 80% of the common units; • our GP controls the enforcement of the obligations that it and its affiliates owe to us; • our GP decides whether to retain separate counsel, accountants or others to perform services for us; and • our GP may elect to cause us to issue common units to it in connection with a resetting of the target distribution levels related to our GP’s IDRs without the approval of the conflicts committee of the board of directors of our GP or our unitholders.
In addition, the lesser prairie-chicken, which can also be found in areas where we operate, was listed under the ESA effective March 27, 2023.
For example, in May 2024, the dunes sagebrush lizard, which is found in areas where we operate, was listed as endangered under the ESA. In addition, the lesser prairie-chicken, which can also be found in areas where we operate, was listed under the ESA effective March 27, 2023.
We cannot predict the effect that development of alternative energy sources, increased conservation or new technology may have on our operations, including whether subsidies of alternative energy sources by local, state, and federal governments might be expanded, or what impact this might have on the supply of or the demand for crude oil, natural gas, and natural gas liquids.
Future expansion of alternative energy sources, conservation measures or technological advances in appliance efficiency, power generation or other devices may reduce demand for propane and cause us to lose customers. 29 We cannot predict the effect that development of alternative energy sources, increased conservation or new technology may have on our operations, including whether subsidies of alternative energy sources by local, state, and federal governments might be expanded, or what impact this might have on the supply of or the demand for crude oil, natural gas, and natural gas liquids.
With regard to our physical sales of energy commodities, and any related transportation and/or hedging activities that we undertake, we are required to observe the market-related regulations enforced by these agencies, which hold substantial enforcement authority. Our sales may also be subject to certain reporting and other requirements.
The FTC, the FERC, and the CFTC hold statutory authority to monitor certain segments of the physical and financial energy commodity markets. With regard to our physical sales of energy commodities, and any related transportation and/or hedging activities that we undertake, we are required to observe the market-related regulations enforced by these agencies, which hold substantial enforcement authority.
If our cash flow and capital resources are insufficient to fund our debt service obligations, we may be forced to refinance all or a portion of our debt or sell assets. We cannot assure you that we would be able to refinance our existing indebtedness or sell assets on terms that are commercially reasonable.
If our cash flow and capital resources are insufficient to fund our debt service obligations, we may be forced to refinance all or a portion of our debt or sell assets.
Because holders of Preferred Units will generally not be allocated a share of our items of depreciation, depletion or amortization, it is not anticipated that such holders would be required to recharacterize any portion of their gain as ordinary income as a result of the recapture rules. 47 Investment in the Preferred Units by tax-exempt investors, such as employee benefit plans and IRAs, and non-U.S. persons raises issues unique to them.
Because holders of Preferred Units will generally not be allocated a share of our items of depreciation, depletion or amortization, it is not anticipated that such holders would be required to recharacterize any portion of their gain as ordinary income as a result of the recapture rules.
For instance, our Water Solutions segment carries with it environmental risks, including the risk of leakage from the treatment plants to surface or subsurface soils, surface water or groundwater, or accidental spills. Our Crude Oil Logistics and Liquids Logistics segments carry similar risks of leakage and sudden or accidental spills of crude oil, natural gas liquids, and hydrocarbons.
We face inherent risks of incurring significant environmental costs and liabilities due to handling of produced water and hydrocarbons, such as crude oil, condensate and natural gas liquids. For instance, our Water Solutions segment carries with it environmental risks, including the risk of leakage from the treatment plants to surface or subsurface soils, surface water or groundwater, or accidental spills.
However, under the Act signed into law by the President of the United States on December 22, 2017, beginning in tax year 2018, the deductibility of net interest expense is limited to 30% of our adjusted taxable income.
However, under the Act signed into law by President Trump on December 22, 2017, beginning in tax year 2018, the deductibility of net interest expense is limited to 30% of our adjusted taxable income. For tax years beginning after December 31, 2017 and before January 1, 2022, the Act calculates adjusted taxable income using an EBITDA-based calculation.
The amount of cash we will have to fund our operations, repay indebtedness or pay distributions principally depends on the amount of cash we generate from our operations, not profitability, which will fluctuate from quarter to quarter based on, among other things: • the cost of crude oil, natural gas liquids, gasoline, diesel, and biodiesel that we buy for resale and whether we are able to pass along cost increases to our customers; • the volume of produced water delivered to our processing facilities; • disruptions in the availability of crude oil and/or natural gas liquids supply; • our ability to renew leases for storage and railcars; • the effectiveness of our commodity price hedging strategy; • weather conditions across the United States; • the level of competition from other energy providers; and • prevailing economic conditions. 24 In addition, the actual amount of cash we will have available to fund our operations, repay indebtedness or pay distributions also depends on other factors, some of which are beyond our control, including: • fluctuations in working capital needs; • the level of capital expenditures we make; • the cost of acquisitions, if any; • restrictions contained in the ABL Facility, Term Loan B and the indenture governing our 2029 Senior Secured Notes and 2032 Senior Secured Notes (collectively, the “Indenture”); • restrictions contained in the agreements relating to our 9.00% Class B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class B Preferred Units”), 9.625% Class C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class C Preferred Units”) and 9.00% Class D Preferred Units (“Class D Preferred Units”) (collectively, the “Preferred Units”); • our ability to borrow funds and access capital markets; • the amount, if any, of cash reserves established by our GP; and • other business risks discussed in this Annual Report that may affect our cash levels.
In addition, the actual amount of cash we will have available to fund our operations, repay indebtedness or pay distributions also depends on other factors, some of which are beyond our control, including: • fluctuations in working capital needs; • the level of capital expenditures we make; • the cost of acquisitions, if any; 23 • restrictions contained in the ABL Facility, Term Loan B and the indenture governing our 2029 Senior Secured Notes and 2032 Senior Secured Notes (collectively, the “Indenture”); • restrictions contained in the agreements relating to our 9.00% Class B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class B Preferred Units”), 9.625% Class C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class C Preferred Units”) and Class D Preferred Units (collectively, the “Preferred Units”); • our ability to borrow funds and access capital markets; • the amount, if any, of cash reserves established by our GP; and • other business risks discussed in this Annual Report that may affect our cash levels.
The USFWS may designate critical habitat and suitable habitat areas that it believes are necessary for survival of threatened or endangered species. A critical habitat or suitable habitat designation could result in further material restrictions to federal land use and private land use and could delay, restrict or prohibit our customers’ land access or oil and gas development.
A critical habitat or suitable habitat designation could result in further material restrictions to federal land use and private land use and could delay, restrict or prohibit our customers’ land access or oil and gas development.
Our operations depend on various forms of storage and transportation for receipt and delivery of crude oil, natural gas liquids and refined products. We own natural gas liquids and crude oil terminals and lease storage capacity from third-party natural gas liquids and refined product terminals.
Our operations depend on various forms of storage and transportation for receipt and delivery of crude oil and natural gas liquids. We own natural gas liquids and crude oil terminals and lease storage capacity from third-party natural gas liquids. The facilities depend on pipelines, railroads, truck transports, and storage systems that are owned and operated by third parties.
Our Partnership Agreement provides that, if a law is enacted or existing law is modified or interpreted in a manner that subjects us to entity-level taxation, the minimum quarterly distribution amount and the target distribution amounts may be adjusted to reflect the impact of that law on us. 43 The tax treatment of publicly traded partnerships or an investment in our common units could be subject to potential legislative, judicial or administrative changes and differing interpretations, possibly on a retroactive basis.
Our Partnership Agreement provides that, if a law is 41 enacted or existing law is modified or interpreted in a manner that subjects us to entity-level taxation, the minimum quarterly distribution amount and the target distribution amounts may be adjusted to reflect the impact of that law on us.
Any failure on our part to comply with the FERC’s regulations and policies at that time could result in the imposition of civil and criminal penalties. Failure to comply with such regulations, as interpreted and enforced, could have a material and adverse effect on our business, consolidated results of operations and financial position.
Any failure on our part to comply with the FERC’s regulations and policies at that time could result in the imposition of civil and criminal penalties.
Reduced discovery rates of new crude oil and natural gas reserves in our market areas also may have a negative long-term impact on our business, even in an environment of stronger crude oil and natural gas prices, to the extent existing production is not replaced. 27 The crude oil and natural gas production industry tends to run in cycles and may, at any time, cycle into a downturn; if that occurs, the rate at which it returns to former levels, if ever, will be uncertain.
Reduced discovery rates of new crude oil and natural gas reserves in our market areas also may have a negative long-term impact on our business, even in an environment of stronger crude oil and natural gas prices, to the extent existing production is not replaced.
Some of our operations are subject to the jurisdiction of the FERC and other operations may become subject in the future. The FERC regulates the transportation of crude oil and refined products on interstate pipelines, among other things.
Some of our operations are subject to the jurisdiction of the FERC and other operations may become subject in the future. The FERC regulates the transportation of crude oil on interstate pipelines, among other things. The FERC’s jurisdiction over oil pipelines derives from a 1906 amendment to the Interstate Commerce Act making oil pipelines common carriers subject to federal regulation.
The distinction between the FERC-regulated interstate pipeline transportation on the one hand and intrastate pipeline transportation on the other hand, is a fact-based determination. The Grand Mesa Pipeline became operational on November 1, 2016 and has several points of origin in Colorado, runs from those origin points through Kansas and terminates in Cushing, Oklahoma.
The Grand Mesa Pipeline became operational on November 1, 2016 and has several points of origin in Colorado, runs from those origin points through Kansas and terminates in Cushing, Oklahoma. The transportation services on the Grand Mesa Pipeline are subject to FERC regulation.
Interest rates may increase in the future. As a result, interest rates on our existing and future credit facilities and debt offerings could be higher than current levels, causing our financing costs to increase accordingly.
As a result, interest rates on our existing and future credit facilities and debt offerings could be higher than current levels, causing our financing costs to increase accordingly. We also have exposure to increases in interest rates through variable rate provisions of our Class B Preferred Units, Class C Preferred Units and Class D Preferred Units.
Generally, we attempt to maintain an inventory position that is substantially balanced between our purchases and sales, including our future delivery obligations. We attempt to obtain a certain margin for our purchases by selling our product to our customers, which include third-party consumers, other wholesalers and retailers, and others.
We attempt to obtain a certain margin for our purchases by selling our product to our 27 customers, which include third-party consumers, other wholesalers and retailers, and others.
The realization of any of these risks could have a material adverse effect on our consolidated financial position or results of operations. Growing our business by constructing new transportation systems and facilities subjects us to construction risks and risks that supplies for such systems and facilities will not be available upon completion thereof.
Growing our business by constructing new transportation systems and facilities subjects us to construction risks and risks that supplies for such systems and facilities will not be available upon completion thereof.
Because of widespread state budget deficits and other reasons, several states are evaluating ways to subject partnerships to entity-level taxation through the imposition of state income, franchise and other forms of taxation. Imposition of any such taxes may substantially reduce the cash available for distribution to our unitholders.
Changes in current state law may subject us to additional entity-level taxation by individual states. Because of widespread state budget deficits and other reasons, several states are evaluating ways to subject partnerships to entity-level taxation through the imposition of state income, franchise and other forms of taxation.
The agricultural demand for propane is affected by weather, as dry or warm weather during the harvest season may reduce the demand for propane used in some crop drying applications. Our future financial performance and growth may be limited by our ability to successfully complete accretive acquisitions on economically acceptable terms.
The agricultural demand for propane is affected by weather, as dry or warm weather during the harvest season may reduce the demand for propane used in some crop drying applications.
This could impair our ability to obtain supply to fulfill our sales delivery commitments or obtain supply at reasonable prices, which could result in decreased gross margins and profitability, thereby impairing our ability to make payments on our debt obligations or distributions to our unitholders. 48 If we fail to maintain an effective system of internal control, including internal control over financial reporting, we may be unable to report our financial results accurately or prevent fraud, which would likely have a negative impact on the market price of our common units.
If we fail to maintain an effective system of internal control, including internal control over financial reporting, we may be unable to report our financial results accurately or prevent fraud, which would likely have a negative impact on the market price of our common units.
In addition, we may seek to address the outstanding balances on the Class D Preferred Units prior to when they are required to be redeemed, which may impact our ability to service our indebtedness. 26 Increasing interest rates could impact our financing costs and our common unit price, our ability to issue equity or incur debt, and our ability to make cash distributions at our intended levels.
In addition, we may seek to address the outstanding balances on the Class D Preferred Units prior to when they are required to be redeemed, which may impact our ability to service our indebtedness.
The Crude Oil Logistics and Liquids Logistics segments are “margin-based” businesses in which our realized margins depend on the differential of sales prices over our supply costs. Our profitability is therefore sensitive to changes in product prices caused by changes in supply, pipeline transportation and storage capacity or other market conditions.
Our profitability could be negatively impacted by price and inventory risk related to our business. The Crude Oil Logistics and Liquids Logistics segments are “margin-based” businesses in which our realized margins depend on the differential of sales prices over our supply costs.
If the escalation of fees is insufficient to cover increased costs, or if any customer suspends or terminates its contracts with us, our profitability could be materially and adversely affected. 29 Risk management procedures, including the use of financial derivative contracts, cannot eliminate all commodity price risk, basis risk, or risk of adverse market conditions which can adversely affect our financial position and results of operations.
If the escalation of fees is insufficient to cover increased costs, or if any customer suspends or terminates its contracts with us, our profitability could be materially and adversely affected.
Actions such as these could have a material adverse effect on us and our industry. 36 Restrictions on drilling and related activities intended to protect certain species of wildlife or their habitat may adversely affect our customers’ ability to conduct drilling and related activities in some of the areas where we operate.
Restrictions on drilling and related activities intended to protect certain species of wildlife or their habitat may adversely affect our customers’ ability to conduct drilling and related activities in some of the areas where we operate. Various federal and state statutes prohibit certain actions that harm endangered or threatened species and their habitats, migratory birds, wetlands and natural resources.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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The cybersecurity training program includes: • An annual presentation overview of our cyber controls and related systems for a comprehensive understanding of our cybersecurity protection and resilience; • Quarterly cybersecurity training on topics such as ransomware, phishing, impersonation, social engineering, third-party security risks, and business email compromise to reinforce general security knowledge; and • Monthly cybersecurity newsletter distribution for current threat tactics and general security awareness.
The cybersecurity training program includes: • An annual presentation overview of our cyber controls and related systems for a comprehensive understanding of our cybersecurity protection and resilience; • Quarterly cybersecurity training on topics such as ransomware, phishing, impersonation, social engineering, third-party security risks, business email compromise, and artificial intelligence to reinforce general security knowledge; and • Monthly cybersecurity newsletter distribution for current threat tactics and general security awareness.
This risk management framework incorporates corporate and business segment SCADA (Supervisory Control and Data Acquisition) system risks for an integrated enterprise approach. • Various Cybersecurity Systems and Protocols for aggregated monitoring, detection and response, network protection and segmentation, layered security methods, vulnerability and patch management, backup and recovery, and asset management. • Employee Education for continual security awareness and threat diligence.
This risk management framework incorporates corporate and business segment SCADA (Supervisory Control and Data Acquisition) system risks for an integrated enterprise approach. • Various Cybersecurity Systems and Protocols for aggregated monitoring and behavior analytics, detection and response, network protection and segmentation, layered security methods for defense-in-depth, vulnerability and patch management, backup and recovery, and asset management. • Employee Education for continual security awareness and threat diligence.
Our cybersecurity governance and strategy program to prevent, detect, manage, mitigate, and remediate cyber threats is comprised of: • Controls based upon the NIST Cybersecurity Framework for enterprise governance, critical asset management, internal and third-party risk management, segregated access control management, data security and protection, 50 anomaly logging and general security monitoring, incident response, security training and awareness, and disaster recovery testing. • Security Policies and Procedures for cybersecurity, incident response, acceptable use, change control, disaster recovery, backup and recovery, business continuity, business operations recovery, third-party vendor security assessments, vulnerability and patch management, data privacy, and various regulatory compliance areas. • Enterprise Risk Management to identify, assess and mitigate internal and third-party risks in a continuous life cycle program which is also based on the NIST Cybersecurity Framework.
Our commitment to cybersecurity is reflected in our extensive program and related technology investments for continual cybersecurity posture enhancements. 48 Our cybersecurity governance and strategy program to prevent, detect, manage, mitigate, and remediate cyber threats is comprised of: • Controls based upon the NIST Cybersecurity Framework for enterprise governance, critical asset management, internal and third-party risk management, segregated access control management, data security and protection, anomaly logging and general security monitoring, incident response, security training and awareness, and disaster recovery testing. • Security Policies and Procedures for cybersecurity, incident response, acceptable use, change control, disaster recovery, backup and recovery, business continuity, business operations recovery, third-party vendor security assessments, vulnerability and patch management, data privacy, and various regulatory compliance areas. • Enterprise Risk Management to identify, assess and mitigate internal and third-party risks in a continuous life cycle program which is also based on the NIST Cybersecurity Framework.
Our security members are comprised of various industry technology skilled resources in cybersecurity, business continuity and system recovery, event management, system administration, network engineering, and regulatory compliance with a collective 100 plus years of experience.
Our security members are comprised of various industry technology skilled resources in cybersecurity, business continuity and 49 system recovery, event management, system administration, network engineering, and regulatory compliance with a collective 100 plus years of experience. Security operations partners are also leveraged for 24x7x365 managed detection and response support plus provide expert cybersecurity resources as an extension of our team.
Security operations partners are also leveraged for 24x7x365 managed detection and response support plus provide expert cybersecurity resources as an extension of our team. 51 Board of Director’s Cyber Oversight For cybersecurity oversight, the board of directors of our GP training program is designed to inform members of the current cyber threat tactics and provide relevant, periodic educational security technology information.
Board of Director’s Cyber Oversight For cybersecurity oversight, the board of directors of our GP training program is designed to inform members of the current cyber threat tactics and provide relevant, periodic educational security technology information.
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Our commitment to cybersecurity is reflected in our extensive program and related technology investments for continual cybersecurity posture enhancements.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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We believe that such threshold is reasonably designed to result in disclosure of environmental proceedings that are material to our business or financial condition. Applying this threshold, there are no environmental matters to disclose for the three years ended March 31, 2024. Item 4. Mine Safety Disclosures Not applicable. 52 PART II
We believe that such threshold is reasonably designed to result in disclosure of environmental proceedings that are material to our business or financial condition. Applying this threshold, there are no environmental matters to disclose for the three years ended March 31, 2025. Item 4. Mine Safety Disclosures Not applicable. 50 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Marginal Percentage Interest In Distributions Total Quarterly Distribution Per Unit Limited Partner Unitholders General Partner (1) Minimum quarterly distribution $ 0.337500 99.9 % 0.1 % First target distribution above $ 0.337500 up to $ 0.388125 99.9 % 0.1 % Second target distribution above $ 0.388125 up to $ 0.421875 86.9 % 13.1 % Third target distribution above $ 0.421875 up to $ 0.506250 76.9 % 23.1 % Thereafter above $ 0.506250 51.9 % 48.1 % (1) The maximum distribution of 48.1% does not include distributions that our GP may receive on common units that it owns. 53 Restrictions on the Payment of Distributions As described in Note 7 to our consolidated financial statements included in this Annual Report, the ABL Facility, Term Loan B and Indenture contain covenants limiting our ability to pay distributions if we are in default under these agreements.
Marginal Percentage Interest In Distributions Total Quarterly Distribution Per Unit Limited Partner Unitholders General Partner (1) Minimum quarterly distribution $ 0.337500 99.9 % 0.1 % First target distribution above $ 0.337500 up to $ 0.388125 99.9 % 0.1 % Second target distribution above $ 0.388125 up to $ 0.421875 86.9 % 13.1 % Third target distribution above $ 0.421875 up to $ 0.506250 76.9 % 23.1 % Thereafter above $ 0.506250 51.9 % 48.1 % (1) The maximum distribution of 48.1% does not include distributions that our GP may receive on common units that it owns. 51 Restrictions on the Payment of Distributions As described in Note 7 to our consolidated financial statements included in this Annual Report, the ABL Facility, Term Loan B and Indenture contain covenants limiting our ability to pay distributions if we are in default under these agreements.
In addition, quarterly distributions on the Preferred Units must be fully paid for all preceding fiscal quarters before we are permitted to declare or pay any distributions on our common units. Securities Authorized for Issuance Under Equity Compensation Plans In connection with the completion of our initial public offering, our GP adopted the NGL Energy Partners LP Long-Term Incentive Plan.
In addition, quarterly distributions on the Preferred Units must be fully paid for all preceding fiscal quarters before we are permitted to declare or pay any distributions on our common units. Securities Authorized for Issuance Under Equity Compensation Plan In connection with the completion of our initial public offering, our GP adopted the NGL Energy Partners LP Long-Term Incentive Plan.
As of March 31, 2024, we owned 8.69% of our GP. Incentive Distribution Rights The GP will also receive, in addition to distributions on its 0.1% GP interest, additional distributions based on the level of distributions to the limited partners.
As of March 31, 2025, we owned 8.69% of our GP. Incentive Distribution Rights The GP will also receive, in addition to distributions on its 0.1% GP interest, additional distributions based on the level of distributions to the limited partners.
Market for Registrant’s Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities Market Information Our common units are listed on the New York Stock Exchange (“NYSE”) under the symbol “NGL.” At June 4, 2024, there were approximately 90 common unitholders of record which does not include unitholders for whom common units may be held in “street name.” Cash Distribution Policy Available Cash Our Partnership Agreement requires that, within 45 days after the end of each quarter, we distribute all of our available cash (as defined in our Partnership Agreement) to unitholders as of the record date.
Market for Registrant’s Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities Market Information Our common units are listed on the New York Stock Exchange (“NYSE”) under the symbol “NGL.” At May 27, 2025, there were approximately 70 common unitholders of record which does not include unitholders for whom common units may be held in “street name.” Cash Distribution Policy Available Cash Our Partnership Agreement requires that, within 45 days after the end of each quarter, we distribute all of our available cash (as defined in our Partnership Agreement) to unitholders as of the record date.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Other Income, Net Other income, net of $2.8 million during the year ended March 31, 2024 consisted primarily of interest income on loan receivables (see Note 2 to our consolidated financial statements included in this Annual Report for a further discussion) and cash on hand, income from the settlement of a dispute and income from excess distributions received from an equity method investee (see Note 2 to our consolidated financial statements included in this Annual Report for a further discussion).
Other Income, Net Other income, net of $2.8 million during the year ended March 31, 2024 consisted primarily of interest income on loan receivables (see Note 2 to our consolidated financial statements included in this Annual Report for a further discussion) and cash on hand, income from the settlement of a dispute and income from excess distributions received from an equity method investee.
We enter into derivatives in our Water Solutions segment to protect against the risk of a decline in the market price of the crude oil we expect to recover when processing produced water and selling recovered skim oil.
We enter into derivatives in our Water Solutions segment to protect against the risk of a decline in the market price of the crude oil we expect to recover when processing produced water and selling recovered skim oil.
Year Ended March 31, 2024 2023 Change (in thousands, except per barrel and per day amounts) Revenues: Water disposal service fees $ 572,972 $ 524,689 $ 48,283 Sale of recovered crude oil 107,367 120,705 (13,338) Recycled water 9,785 13,841 (4,056) Other revenues 40,694 37,803 2,891 Total revenues 730,818 697,038 33,780 Expenses: Cost of sales-excluding impact of derivatives 10,146 9,737 409 Derivative loss 1,148 4,363 (3,215) Operating expenses 212,052 212,115 (63) General and administrative expenses 5,417 8,722 (3,305) Depreciation and amortization expense 214,480 207,081 7,399 Loss on disposal or impairment of assets, net 53,639 46,431 7,208 Revaluation of liabilities 2,680 9,665 (6,985) Total expenses 499,562 498,114 1,448 Segment operating income $ 231,256 $ 198,924 $ 32,332 Produced water processed (barrels per day) Delaware Basin 2,123,337 2,042,777 80,560 Eagle Ford Basin 142,374 119,458 22,916 DJ Basin 150,426 150,619 (193) Other Basins 740 14,483 (13,743) Total 2,416,877 2,327,337 89,540 Recycled water (barrels per day) 84,212 118,847 (34,635) Total (barrels per day) 2,501,089 2,446,184 54,905 Skim oil sold (barrels per day) (1) 3,992 3,764 228 Service fees for produced water processed ($/barrel) (2) $ 0.65 $ 0.62 $ 0.03 Recovered crude oil for produced water processed ($/barrel) (2) $ 0.12 $ 0.14 $ (0.02) Operating expenses for produced water processed ($/barrel) (2) $ 0.24 $ 0.25 $ (0.01) (1) During the three months ended March 31, 2023, 34,380 barrels of skim oil were stored and were sold during the year ended March 31, 2024.
Year Ended March 31, 2024 2023 Change (in thousands, except per barrel and per day amounts) Revenues: Water disposal service fees $ 572,972 $ 524,689 $ 48,283 Sale of recovered crude oil 107,367 120,705 (13,338) Recycled water 9,785 13,841 (4,056) Other revenues 40,694 37,803 2,891 Total revenues 730,818 697,038 33,780 Expenses: Cost of sales-excluding impact of derivatives 10,146 9,737 409 Derivative loss 1,148 4,363 (3,215) Operating expenses 212,052 212,115 (63) General and administrative expenses 5,417 8,722 (3,305) Depreciation and amortization expense 214,480 207,081 7,399 Loss on disposal or impairment of assets, net 53,639 46,431 7,208 Revaluation of liabilities 2,680 9,665 (6,985) Total expenses 499,562 498,114 1,448 Segment operating income $ 231,256 $ 198,924 $ 32,332 Produced water processed (barrels per day) Delaware Basin 2,123,337 2,042,777 80,560 Eagle Ford Basin 142,374 119,458 22,916 DJ Basin 150,426 150,619 (193) Other Basins 740 14,483 (13,743) Total 2,416,877 2,327,337 89,540 Recycled water (barrels per day) 84,212 118,847 (34,635) Total (barrels per day) 2,501,089 2,446,184 54,905 Skim oil sold (barrels per day) (1) 3,992 3,764 228 Service fees for produced water processed ($/barrel) (2)(3) $ 0.65 $ 0.62 $ 0.03 Recovered crude oil for produced water processed ($/barrel) (2) $ 0.12 $ 0.14 $ (0.02) Operating expenses for produced water processed ($/barrel) (2) $ 0.24 $ 0.25 $ (0.01) (1) As of March 31, 2023, approximately 34,380 barrels of skim oil were stored and were sold during the year ended March 31, 2024.
Environmental Legislation See Part I, Item 1–“Business–Government Regulation–Greenhouse Gas Regulation” for a discussion of proposed environmental legislation and regulations that, if enacted, could result in increased compliance and operating costs. However, at this time we cannot predict the structure or outcome of any future legislation or regulations or the eventual cost we could incur in compliance.
Environmental Legislation See Part I, Item 1–“Business–Government Regulation–Greenhouse Gas Regulation” for a discussion of proposed environmental legislation and regulations that, if enacted, could result in increased compliance and operating costs. However, at 79 this time we cannot predict the structure or outcome of any future legislation or regulations or the eventual cost we could incur in compliance.
Whereas during the year ended March 31, 2023, we were selling higher priced inventory into a market in which prices were generally declining throughout the fiscal year. Crude oil product margin calculations does not include gain and losses from derivatives that may offset the movement in the physical margin. Derivative Loss (Gain).
Whereas during the year ended March 31, 2023, we were selling higher priced inventory into a market in which prices were generally declining throughout the fiscal year. Crude oil product margin calculations does not include gains and losses from derivatives that may offset the movement in the physical margin. Derivative Loss (Gain).
In order to determine the fair value of such a liability, we must make certain estimates and assumptions including, among other things, projected cash flows, the estimated timing of retirement, a credit-adjusted risk-free interest rate, and an assessment of market conditions, which could significantly impact the estimated fair value of the asset retirement obligation.
In order to determine the fair value of such a liability, we must make certain estimates and assumptions including, among other things, projected cash flows, 81 the estimated timing of retirement, a credit-adjusted risk-free interest rate, and an assessment of market conditions, which could significantly impact the estimated fair value of the asset retirement obligation.
Our borrowing needs vary during the year due in part to the seasonal nature of certain businesses within our Liquids Logistics segment. Our greatest working capital borrowing needs generally occur during the period of June through December, when we are building our natural gas liquids inventories in anticipation of the butane blending and heating seasons.
Our borrowing needs vary during the year due in part to the seasonal nature of certain businesses within our Liquids Logistics segment. Our greatest working capital borrowing needs generally occur during the period of June through December, when we are building our natural gas liquids inventories in anticipation of the butane blending and propane heating seasons.
The amounts in the previous sentence for the year ended March 31, 2023 includes net realized losses of $13.1 million and net unrealized gains of $23.8 million associated with derivative instruments related to our hedge of the CMA Differential Roll. Crude Oil Transportation and Other Sales.
The amounts in the previous sentence for the year ended 66 March 31, 2023 includes net realized losses of $13.1 million and net unrealized gains of $23.8 million associated with derivative instruments related to our hedge of the CMA Differential Roll. Crude Oil Transportation and Other Sales.
The estimated performance obligation over the life of a contract includes significant judgments by management including volume and forecasted production information. Changes in these assumptions or a contract modification could have a material 86 effect on the amount of variable consideration recognized as revenue.
The estimated performance obligation over the life of a contract includes significant judgments by management including volume and forecasted production information. Changes in these assumptions or a contract modification could have a material effect on the amount of variable consideration recognized as revenue.
During the year ended March 31, 2023, we recorded a net loss of $10.1 million due to the impairment of several underperforming natural gas liquids terminals. In addition, during the year ended March 31, 2023, we recorded a net loss of $0.2 million related to the sale and retirement of other assets.
During the year ended March 31, 2023, we recorded a net loss of $10.1 million due to the impairment of several underperforming natural gas liquids terminals. In addition, during the year ended March 31, 2023, we recorded a net loss of $0.1 million related to the sale and retirement of other assets.
Recovered Crude Oil Revenues. The decrease was due primarily to lower realized crude oil prices received from the sale of skim oil barrels, partially offset by an increase in skim oil barrels sold as a result of higher skim oil recovered from increased produced water processed.
The decrease was due primarily to lower realized crude oil prices received from the sale of skim oil barrels, partially offset by an increase in skim oil barrels sold as a result of higher skim oil recovered from increased produced water processed.
We include this in Adjusted EBITDA because the unrealized gains and losses associated with derivative contracts associated with the inventory of this segment, which are intended primarily to hedge inventory holding risk and are included in net income, also affect Adjusted EBITDA.
We include this in Adjusted EBITDA because the unrealized gains and losses for derivative contracts associated with the inventory of this segment, which are intended primarily to hedge inventory holding risk and are included in net income, also affect Adjusted EBITDA.
Estimates of future net cash flows include estimating future volumes, future margins or tariff rates, future operating costs and other estimates and assumptions consistent with our business 85 plans as well as external factors such as industry and economic trends.
Estimates of future net cash flows include estimating future volumes, future margins or tariff rates, future operating costs and other estimates and assumptions consistent with our business plans as well as external factors such as industry and economic trends.
During the period when a 76 derivative contract is open, we record changes in the fair value of the derivative as an unrealized gain or loss. When a derivative contract matures or is settled, we reverse the previously recorded unrealized gain or loss and record a realized gain or loss.
During the period when a derivative contract is open, we record changes in the fair value of the derivative as an unrealized gain or loss. When a derivative contract matures or is settled, we reverse the previously recorded unrealized gain or loss and record a realized gain or loss.
New Senior Secured Notes On February 2, 2024, we closed on our private offering of $900.0 million of 2029 Senior Secured Notes that mature on February 15, 2029 and $1.3 billion of 2032 Senior Secured Notes that mature on February 15, 2032.
Senior Secured Notes On February 2, 2024, we closed on our private offering of $900.0 million of 2029 Senior Secured Notes that mature on February 15, 2029 and $1.3 billion of 2032 Senior Secured Notes that mature on February 15, 2032.
EBITDA and Adjusted EBITDA should not be considered as alternatives to net (loss) income, (loss) income before income taxes, cash flows from operating activities, or any other measure of financial performance calculated in accordance with GAAP, as those items are used to measure operating performance, liquidity or the ability to service debt obligations.
EBITDA and Adjusted EBITDA should not be considered as alternatives to net income (loss), income (loss) from continuing operations before income taxes, cash flows from operating activities, or any other measure of financial performance calculated in accordance with GAAP, as those items are used to measure operating performance, liquidity or the ability to service debt obligations.
There were no open hedge positions as of March 31, 2024. Cash Management We manage cash by utilizing a centralized cash management program that concentrates the cash assets of our operating subsidiaries in joint accounts for the purposes of providing financial flexibility and lowering the cost of borrowing, transaction costs and bank fees.
There were no open hedge positions as of March 31, 2025. Cash Management We manage cash by utilizing a centralized cash management program that concentrates the cash assets of our operating subsidiaries in joint accounts for the purposes of providing financial flexibility and lowering the cost of borrowing, transaction costs and bank fees.
Recently, our disposal volumes have been positively impacted by the increase in the level of crude oil production, particularly in the Delaware and Eagle Ford Basins, due to increasing or stable crude oil prices. Lower crude oil prices provide producers with less incentive to drill and complete new wells, which results in lower production and negatively impacts our disposal volumes.
Recently, our disposal volumes have been positively impacted by the increase in the level of crude oil production, particularly in the Delaware and Eagle Ford Basins, due to stable crude oil prices. Lower crude oil prices provide producers with less incentive to drill and complete new wells, which results in lower production and negatively impacts our disposal volumes.
During the year ended March 31, 2023, there was an increase in expense for the valuation of our contingent consideration liabilities related to royalty agreements acquired as part of certain business combinations due primarily to higher expected production from new customers, resulting in an increase to the expected future royalty payment.
During the year ended March 31, 2024, there was an increase in expense for the valuation of our contingent consideration liabilities related to royalty agreements acquired as part of certain business combinations due primarily to higher expected production from new customers, resulting in an increase to the expected future royalty payment.
Pursuant to GAAP, an entity is allowed a reasonable period of time (not to exceed one year) to obtain the information necessary to identify and measure the fair value of the assets acquired and liabilities assumed in a business combination. Inventories Our inventories consist of crude oil, natural gas liquids, diesel and biodiesel.
Pursuant to GAAP, an entity is allowed a reasonable period of time (not to exceed one year) to obtain the information necessary to identify and measure the fair value of the assets acquired and liabilities assumed in a business combination. Inventories Our inventories consist of crude oil and natural gas liquids.
Our activities in this segment are supported by certain long-term, fixed rate contracts which include minimum volume commitments on our owned and leased pipelines and storage tanks. Most of our contracts to purchase or sell crude oil are at floating prices that are indexed to published rates in active markets such as Cushing, Oklahoma, St.
Our activities in this segment are supported by certain long-term, fixed rate contracts with acreage dedications and which include minimum volume commitments on our storage tanks and owned and leased pipelines. Most of our contracts to purchase or sell crude oil are at floating prices that are indexed to published rates in active markets such as Cushing, Oklahoma, St.
See “Non-GAAP Financial Measures” section above for a further discussion. (2) Amounts represent the difference between the market value of the inventory at the balance sheet date and its cost. See “Non-GAAP Financial Measures” section above for a further discussion.
(4) Amounts represent the difference between the market value of the inventory at the balance sheet date and its cost. See “Non-GAAP Financial Measures” section above for a further discussion.
(4) Amounts represent accretion expense for asset retirement obligations, unrealized gains/losses on marketable securities and expenses incurred related to legal and advisory costs associated with acquisitions and dispositions, including the accrued judgment related to the LCT legal matter, excluding interest (see Note 8 to our consolidated financial statements included in this Annual Report), and the write-off of the legal costs related to the LCT legal matter that were originally allocated to the GP (see Note 12 to our consolidated financial statements included in this Annual Report).
(5) Amounts represent accretion expense for asset retirement obligations, unrealized gains and losses on investments and marketable securities and expenses incurred related to legal and advisory costs associated with acquisitions and dispositions, including the accrued judgment related to the LCT legal matter, excluding interest (see Note 8 to our consolidated financial statements included in this Annual Report), and the write-off of the legal costs related to the LCT legal matter that were originally allocated to the GP.
The change in the fair value of our interest rate swap is recorded as a net gain or loss within interest expense in our consolidated statement of operations and within cash flows from operations in our consolidated statements of cash flows.
The change in the fair value of our interest rate swaps is recorded as a net gain or loss within interest expense in our consolidated statement of operations and within cash flows from operations in our consolidated statements of cash flows.
Operating and General and Administrative Expenses . The decrease was primarily due to the sale of our marine assets on March 30, 2023. Additionally, the current year benefited from lower incentive compensation expense, as well as lower repairs and maintenance expense on leased rail cars returned to the lessor in the prior year. Depreciation and Amortization Expense.
Operating and General and Administrative Expenses . The decrease was primarily due to the sale of our marine assets on March 30, 2023. Additionally, the current year benefited from lower incentive compensation expense, as well as lower repairs and maintenance expense on leased railcars returned to the lessor in the prior year. Depreciation and Amortization Expense.
Our cost of propane sales included $4.6 million of net unrealized gains on derivatives and $7.0 million of net realized losses on derivatives during the year ended March 31, 2024.
Our cost of propane sales included $4.6 million of net unrealized gains on derivatives and $7.0 million of net realized losses on derivatives during the year ended March 31, 2024. During the year ended March 31, 2023, our cost of propane sales included $6.9 million of net unrealized losses on derivatives and $4.7 million of net realized losses on derivatives.
We are unable to control changes in the net realizable value of these commodities and are unable to determine whether write-downs will be required in future periods. 87
We are unable to control changes in the net realizable value of these commodities and are unable to determine whether write-downs will be required in future periods. 82
The increase during the year ended March 31, 2024 relates primarily to the increase in our accrual related to the LCT Capital, LLC (“LCT”) legal matter from $2.5 million to $36.0 million (see Note 8 to our consolidated financial statements included in this Annual Report), and the write-off of $14.2 million of legal costs related to the LCT legal matter that were originally allocated to the GP (see Note 12 to our consolidated financial statements included in this Annual Report).
The increase during the year ended March 31, 2024 relates primarily to the increase in our accrual related to the LCT legal matter from $2.5 million to $36.0 million (see Note 8 to our consolidated financial statements included in this Annual Report), and the write-off of $14.2 million of legal costs related to the LCT legal matter that were originally allocated to the GP.
Other income, net of $28.7 million during the year ended March 31, 2023 consisted primarily of a settlement of a dispute associated with commercial activities not occurring in the current reporting periods (see Note 17 to our consolidated financial statements included in this Annual Report for a further discussion).
Other income, net of $30.4 million during the year ended March 31, 2023 consisted primarily of a settlement of a dispute associated with commercial activities not occurring in the current reporting periods (see Note 17 to our consolidated financial statements included in this Annual Report for a further discussion).
Our consolidated balance sheet at March 31, 2024 includes a liability of $56.6 million related to asset retirement obligations, which is reported within other noncurrent liabilities. In addition to the obligations described above, we may be obligated to remove facilities or perform other remediation upon retirement of certain other assets.
Our consolidated balance sheet at March 31, 2025 includes a liability of $69.6 million related to asset retirement obligations, which is reported within other noncurrent liabilities. In addition to the obligations described above, we may be obligated to remove facilities or perform other remediation upon retirement of certain other assets.
During the years ended March 31, 2024 and 2023, there was an increase in expense for the valuation of our contingent consideration liabilities related to royalty agreements acquired as part of certain business combinations due primarily to higher expected production from new customers, resulting in an increase to the expected future royalty payment. 60 Crude Oil Logistics The following table summarizes the operating results of our Crude Oil Logistics segment for the periods indicated: Year Ended March 31, 2024 2023 Change (in thousands, except per barrel amounts) Revenues: Crude oil sales $ 1,597,238 $ 2,376,434 $ (779,196) Crude oil transportation and other sales 59,373 96,978 (37,605) Total revenues (1) 1,656,611 2,473,412 (816,801) Expenses: Cost of sales-excluding impact of derivatives 1,514,370 2,274,089 (759,719) Derivative loss (gain) 7,367 (14,565) 21,932 Operating expenses 39,004 50,154 (11,150) General and administrative expenses 3,780 4,547 (767) Depreciation and amortization expense 36,922 46,577 (9,655) Loss on disposal or impairment of assets, net 3,094 31,086 (27,992) Total expenses 1,604,537 2,391,888 (787,351) Segment operating income $ 52,074 $ 81,524 $ (29,450) Crude oil sold (barrels) 20,068 25,497 (5,429) Crude oil transported on owned pipelines (barrels) 25,611 27,714 (2,103) Crude oil storage capacity - owned and leased (barrels) (2) 5,232 5,232 — Crude oil storage capacity leased to third-parties (barrels) (2) 2,250 1,501 749 Crude oil inventory (barrels) (2) 573 684 (111) Crude oil sold ($/barrel) $ 79.591 $ 93.204 $ (13.613) Cost per crude oil sold ($/barrel) (3) $ 75.462 $ 89.190 $ (13.728) Crude oil product margin ($/barrel) (3) $ 4.129 $ 4.014 $ 0.115 (1) Revenues include $0.5 million and $8.6 million of intersegment sales during the years ended March 31, 2024 and 2023, respectively, that are eliminated in our consolidated statements of operations.
During the years ended March 31, 2024 and 2023, there was an increase in expense for the valuation of our contingent consideration liabilities related to royalty agreements acquired as part of certain business combinations due primarily to higher expected produced water volumes from our customers, resulting in an increase to the expected future royalty payment. 65 Crude Oil Logistics The following table summarizes the operating results of our Crude Oil Logistics segment for the periods indicated: Year Ended March 31, 2024 2023 Change (in thousands, except per barrel amounts) Revenues: Crude oil sales $ 1,597,238 $ 2,376,434 $ (779,196) Crude oil transportation and other sales 59,373 96,978 (37,605) Total revenues 1,656,611 2,473,412 (816,801) Expenses: Cost of sales-excluding impact of derivatives 1,514,370 2,274,089 (759,719) Derivative loss (gain) 7,367 (14,565) 21,932 Operating expenses 39,004 50,154 (11,150) General and administrative expenses 3,780 4,547 (767) Depreciation and amortization expense 36,922 46,577 (9,655) Loss on disposal or impairment of assets, net 3,094 31,086 (27,992) Total expenses 1,604,537 2,391,888 (787,351) Segment operating income $ 52,074 $ 81,524 $ (29,450) Crude oil sold (barrels) 20,068 25,497 (5,429) Crude oil transported on owned pipelines (barrels) 25,611 27,714 (2,103) Crude oil storage capacity - owned and leased (barrels) (1) 5,232 5,232 — Crude oil storage capacity leased to third-parties (barrels) (1) 2,250 1,501 749 Crude oil inventory (barrels) (1) 573 684 (111) Crude oil sold ($/barrel) $ 79.591 $ 93.204 $ (13.613) Cost per crude oil sold ($/barrel) (2) $ 75.462 $ 89.190 $ (13.728) Crude oil product margin ($/barrel) (2) $ 4.129 $ 4.014 $ 0.115 (1) Information is presented as of March 31, 2024 and March 31, 2023, respectively.
The amounts in the previous sentence for the year ended March 31, 2024 included net realized gains of $60.9 million and net unrealized losses of $61.4 million associated with derivative instruments related to our hedge of the CMA Differential Roll, defined and discussed below under “–Non-GAAP Financial Measures.” Our cost of sales during the year ended March 31, 2023 61 included $35.5 million of net realized losses on derivatives, driven by increasing crude oil prices, and $50.1 million of net unrealized gains on derivatives.
The amounts in the previous sentence for the year ended March 31, 2024 included net realized gains of $60.9 million and net unrealized losses of $61.4 million associated with derivative instruments related to our hedge of the CMA Differential Roll, defined and discussed below under “–Non-GAAP Financial Measures.” Our cost of sales during the year ended March 31, 2023 included $35.5 million of net realized losses on derivatives and $50.1 million of net unrealized gains on derivatives.
Income Tax Expense Income tax expense was $2.4 million during the year ended March 31, 2024, compared to income tax expense of $0.3 million during the year ended March 31, 2023. See Note 2 to our consolidated financial statements included in this Annual Report for a further discussion.
Income Tax Expense Income tax expense was $1.5 million during the year ended March 31, 2024, compared to income tax expense of $0.2 million during the year ended March 31, 2023. See Note 2 to our consolidated financial statements included in this Annual Report for a further discussion.
Subsequent Events See Note 18 to our consolidated financial statements included in this Annual Report for a discussion of transactions that occurred subsequent to March 31, 2024. 58 Segment Operating Results for the Years Ended March 31, 2024 and 2023 Water Solutions The following table summarizes the operating results of our Water Solutions segment for the periods indicated.
Subsequent Events See Note 20 to our consolidated financial statements included in this Annual Report for a discussion of transactions that occurred subsequent to March 31, 2025. Segment Operating Results for the Years Ended March 31, 2025 and 2024 Water Solutions The following table summarizes the operating results of our Water Solutions segment for the periods indicated.
See Note 8 to our consolidated financial statements included in this Annual Report for information regarding our pipeline commitment and timing of our expected pipeline commitment payments. 82 Asset Retirement Obligations We have contractual and regulatory obligations at certain facilities for which we have to perform remediation, dismantlement or removal activities when the assets are retired.
See Note 15 to our consolidated financial statements included in this Annual Report for information regarding our lease obligations and timing of our expected lease payments. Asset Retirement Obligations We have contractual and regulatory obligations at certain facilities for which we have to perform remediation, dismantlement or removal activities when the assets are retired.
To date, due to the capacity of our integrated system in the affected areas, the diverse locations of our disposal facilities, and the connectivity of our system, our ability to dispose of produced water has not been materially impacted by these actions, and with our unique positioning outside of the affected areas, we have the ability to grow our asset base.
To date, due to the capacity of our integrated system in the affected areas, the diverse locations of our disposal facilities, and the connectivity of our system, our ability to dispose of produced water has not been materially impacted by these actions, and with our unique positioning outside of the affected areas, we have the ability to grow our asset base. 55 Seasonality Seasonality impacts our Liquids Logistics segment.
The decrease was due primarily to lower recycled water volumes related to timing of water to be used in completions. Other Revenues. Other revenues primarily include brackish non-potable water revenues, water pipeline revenues, land surface use revenues, solids disposal revenues and reimbursements from construction projects, booster operating fees and generator rentals.
The decrease was due primarily to lower pricing for recycled water, partially offset by higher recycled water volumes related to timing of water to be used in completions. Other Revenues. Other revenues primarily include reimbursements from construction projects, booster operating fees and generator rentals, water pipeline revenues, solids disposal revenues, land surface use revenues and brackish non-potable water revenues.
Other Products Derivative (Gain) Loss. Our derivatives of other products included $11.5 million of net realized gains on derivatives and $0.1 million unrealized losses on derivatives during the year ended March 31, 2024.
Other Products Derivative (Gain) Loss. Our derivatives of other products included $0.3 million of net realized gains on derivatives during the year ended March 31, 2025. Our derivatives of other products during the year ended March 31, 2024 included $0.1 million of net realized gains on derivatives and $0.1 million of net unrealized losses on derivatives.
If future results are not consistent with our estimates, we could be exposed to future impairment losses that could be material to our results of operations. During the year ended March 31, 2024, we recorded a goodwill impairment of $69.2 million. We did not record a goodwill impairment during the years ended March 31, 2023 and 2022.
If future results are not consistent with our estimates, we could be exposed to future impairment losses that could be material to our results of operations. During the years ended March 31, 2025 and 2024, we recorded goodwill impairments of $17.9 million and $69.2 million, respectively. We did not record a goodwill impairment during the year ended March 31, 2023.
In addition, during the year ended March 31, 2023, we recorded a net loss of $0.2 million related to the sale and retirement of other assets. 65 Corporate and Other The operating loss within “Corporate and Other” includes the following components for the periods indicated: Year Ended March 31, 2024 2023 Change (in thousands) Cost of sales Derivative (gain) loss $ (937) $ 1,181 $ (2,118) Expenses: General and administrative expenses 105,147 50,978 54,169 Depreciation and amortization expense 4,749 6,662 (1,913) Gain on disposal or impairment of assets, net (720) (912) 192 Total expenses 109,176 56,728 52,448 Operating loss $ (108,239) $ (57,909) $ (50,330) Cost of Sales - Derivative (Gain) Loss.
Corporate and Other The operating loss within “Corporate and Other” includes the following components for the periods indicated: Year Ended March 31, 2024 2023 Change (in thousands) Cost of sales: Derivative (gain) loss $ (937) $ 1,181 $ (2,118) Expenses: General and administrative expenses 105,147 50,978 54,169 Depreciation and amortization expense 4,749 6,662 (1,913) Gain on disposal or impairment of assets, net (720) (912) 192 Total expenses 109,176 56,728 52,448 Operating loss $ (108,239) $ (57,909) $ (50,330) Cost of Sales - Derivative (Gain) Loss.
The decrease in net cash provided by operating activities during the year ended March 31, 2024 was due primarily to fluctuations in working capital, particularly accounts receivable and accounts payable, due to lower crude oil volumes and prices, and inventory due to decreased sales and purchases of natural gas liquids, and decreased earnings from operations.
The increase in net cash provided by operating activities during the year ended March 31, 2024 was due primarily to fluctuations in working capital, particularly accounts receivable and accounts payable, due to open derivative positions, partially offset by lower crude oil volumes and prices, lower inventory due to decreased sales and purchases of natural gas liquids, and decreased earnings from operations.
With a system that handled approximately 884.6 million barrels of produced water across its areas of operation during the year ended March 31, 2024, we believe that we are the largest independent produced water transportation and disposal company in the United States.
With a system that handled approximately 958.3 million barrels of produced water across its areas of operation during the year ended March 31, 2025, we believe that we are the largest independent produced water transportation and disposal company in the United States.
The following table summarizes the range of low and high crude oil spot prices per barrel of New York Mercantile Exchange (“NYMEX”) West Texas Intermediate Crude Oil at Cushing, Oklahoma for the periods indicated and the prices at period end: Crude Oil Spot Price Per Barrel Year Ended March 31, Low High At Period End 2024 $ 67.12 $ 93.68 $ 83.17 2023 $ 66.74 $ 122.11 $ 75.67 2022 $ 58.65 $ 123.70 $ 100.28 We believe volatility in commodity prices will continue, and our ability to adjust to and manage this volatility may impact our financial results.
The following table summarizes the range of low and high crude oil spot prices per barrel of New York Mercantile Exchange (“NYMEX”) West Texas Intermediate Crude Oil at Cushing, Oklahoma for the periods indicated and the prices at period end: Crude Oil Spot Price Per Barrel Year Ended March 31, Low High At Period End 2025 $ 66.75 $ 86.91 $ 71.48 2024 $ 67.12 $ 93.68 $ 83.17 2023 $ 66.74 $ 122.11 $ 75.67 We believe volatility in commodity prices will continue, and our ability to adjust to and manage this volatility may impact our financial results.
Further, EBITDA and Adjusted EBITDA, as we define them, may not be comparable to EBITDA, Adjusted EBITDA, or similarly titled measures used by other entities. Other than for certain businesses within our Liquids Logistics segment, for purposes of our Adjusted EBITDA calculation, we make a distinction between realized and unrealized gains and losses on derivatives.
Further, EBITDA and Adjusted EBITDA, as we define them, may not be comparable to EBITDA, Adjusted EBITDA, or similarly titled measures used by other entities. For purposes of our Adjusted EBITDA calculation, we make a distinction between realized and unrealized gains and losses on derivatives.
(2) Total produced water barrels processed during the years ended March 31, 2024 and 2023 were 884,576,981 and 849,477,938, respectively. These amounts do not include 63,968,944 barrels and 36,143,594 barrels for the years ended March 31, 2024 and 2023, respectively, related to payments received from producers for committed volumes not delivered, as discussed further below. Water Disposal Service Fee Revenues.
(2) Total produced water barrels processed during the years ended March 31, 2024 and 2023 were 884,576,981 and 849,477,938, respectively. These amounts do not include 63,968,944 barrels and 36,143,594 barrels for the years ended March 31, 2024 and 2023, respectively, related to payments made by certain producers for committed volumes not delivered, as discussed further below.
Equity in earnings of unconsolidated entities of $4.1 million during the year ended March 31, 2023 consisted primarily of earnings from certain membership interests related to specific land and water services operations and a loss from our interest in an aircraft company. 66 Interest Expense The following table summarizes the components of our consolidated interest expense for the periods indicated: Year Ended March 31, 2024 2023 Change (in thousands) Senior secured notes $ 160,088 $ 153,750 $ 6,338 Senior unsecured notes 40,829 76,288 (35,459) ABL Facility 15,645 17,111 (1,466) Term Loan B 11,275 — 11,275 Other indebtedness 26,900 11,559 15,341 Total debt interest expense 254,737 258,708 (3,971) Amortization of debt issuance costs 15,701 16,737 (1,036) Unrealized gain on interest rate swap (515) — (515) Total interest expense $ 269,923 $ 275,445 $ (5,522) The debt interest expense decreased $4.0 million during the year ended March 31, 2024 primarily due to the repurchase of the 7.5% senior unsecured notes due 2023 (“2023 Notes”) throughout the prior year and the redemption of the remaining 2023 Notes on March 31, 2023.
Equity in earnings of unconsolidated entities of $4.1 million during the year ended March 31, 2023 consisted primarily of earnings from certain membership interests related to specific land and water services operations and a loss from our interest in an aircraft company. 70 Interest Expense The following table summarizes the components of our consolidated interest expense for the periods indicated: Year Ended March 31, 2024 2023 Change (in thousands) Senior secured notes $ 160,088 $ 153,750 $ 6,338 Senior unsecured notes 40,829 76,288 (35,459) ABL Facility 15,645 17,111 (1,466) Term Loan B 11,275 — 11,275 Other indebtedness 26,781 11,552 15,229 Total debt interest expense 254,618 258,701 (4,083) Amortization of debt issuance costs 15,701 16,737 (1,036) Unrealized gain on interest rate swaps (515) — (515) Total interest expense $ 269,804 $ 275,438 $ (5,634) The debt interest expense decreased $4.1 million during the year ended March 31, 2024 primarily due to the repurchase of the 7.5% senior unsecured notes due 2023 (“2023 Notes”) throughout the prior year and the redemption of the remaining 2023 Notes on March 31, 2023.
In addition, during the current fiscal year we sold 34,380 barrels of skim oil that were stored as of March 31, 2023 due to tighter pipeline specifications. 59 Recycled Water Revenues. Revenue from recycled water includes the sale of produced water and recycled water for use in our customers’ completion activities.
Also, during the year ended March 31, 2024, we sold approximately 34,380 barrels of skim oil that were stored as of March 31, 2023 due to tighter pipeline specifications. Recycled Water Revenues. Revenue from recycled water includes the sale of produced water and recycled water for use in our customers’ completion activities.
See Note 7 to our consolidated financial statements included in this Annual Report for information regarding our outstanding debt principal and interest obligations and timing of our expected debt principal and interest payments. Operating Lease Obligations As of March 31, 2024, our undiscounted operating lease obligation was $131.2 million, with $38.4 million due within one year.
See Note 7 to our consolidated financial statements included in this Annual Report for information regarding our outstanding debt principal and interest obligations and timing of our expected debt principal and interest payments. Operating Lease Obligations As of March 31, 2025, our undiscounted operating lease obligation was $142.8 million, with $35.7 million due within one year.
Our cost of sales during the year ended March 31, 2024 included $58.4 million of net realized gains on derivatives, driven by decreasing crude oil prices, and $65.8 million of net unrealized losses on derivatives.
Our cost of sales during the year ended March 31, 2024 included $58.4 million of net realized gains on derivatives and $65.8 million of net unrealized losses on derivatives.
We generally borrow under the ABL Facility to supplement our operating cash flows during the periods in which we are building inventory (see “–Liquidity, Sources of Capital and Capital Resource Activities–General”).
We generally borrow under our asset-based revolving credit facility (“ABL Facility”) to supplement our operating cash flows during the periods in which we are building inventory (see “–Liquidity, Sources of Capital and Capital Resource Activities–General”).
Belvieu, Texas Propane Spot Price Per Gallon Propane Spot Price Per Gallon Year Ended March 31, Low High At Period End Low High At Period End 2024 $ 0.49 $ 0.91 $ 0.78 $ 0.53 $ 0.97 $ 0.84 2023 $ 0.63 $ 1.34 $ 0.74 $ 0.64 $ 1.39 $ 0.78 2022 $ 0.67 $ 1.64 $ 1.37 $ 0.72 $ 1.63 $ 1.39 The following table summarizes the range of low and high butane spot prices per gallon at Mt.
Belvieu, Texas Propane Spot Price Per Gallon Propane Spot Price Per Gallon Year Ended March 31, Low High At Period End Low High At Period End 2025 $ 0.61 $ 0.99 $ 0.83 $ 0.49 $ 1.01 $ 0.90 2024 $ 0.49 $ 0.91 $ 0.78 $ 0.53 $ 0.97 $ 0.84 2023 $ 0.63 $ 1.34 $ 0.74 $ 0.64 $ 1.39 $ 0.78 The following table summarizes the range of low and high butane spot prices per gallon at Mt.
Equity in Earnings of Unconsolidated Entities Equity in earnings of unconsolidated entities of $4.1 million during the year ended March 31, 2024 consisted primarily of earnings from certain membership interests related to specific land and water services operations and earnings from another entity due to a gain recognized on the sale of an airplane during the three months ended December 31, 2023 (see Note 12 to our consolidated financial statements included in this Annual Report).
Equity in Earnings of Unconsolidated Entities Equity in earnings of unconsolidated entities of $4.1 million during the year ended March 31, 2024 consisted primarily of earnings from certain membership interests related to specific land and water services operations and earnings from another entity due to a gain recognized on the sale of an airplane during the three months ended December 31, 2023.
The decrease was due primarily to certain long-term assets being fully amortized or impaired during the years ended March 31, 2022 and 2023. This decrease was partially offset by the depreciation of newly developed facilities and infrastructure. Loss on Disposal or Impairment of Assets, Net.
The increase was due primarily to depreciation of newly developed facilities and infrastructure, partially offset by certain long-term assets being fully amortized, impaired or sold during the fiscal years ended March 31, 2024 and 2025. Loss on Disposal or Impairment of Assets, Net .
During the year ended March 31, 2023, we had $4.5 million of net unrealized gains on derivatives and $8.8 million of net realized losses on derivatives. During the year ended March 31, 2022, we had $11.7 million of net unrealized losses on derivatives and $4.0 million of net realized gains on derivatives. Operating and General and Administrative Expenses .
During the year ended March 31, 2025, we had $5.0 million of net unrealized losses on derivatives and $10.0 million of net realized gains on derivatives. During the year ended March 31, 2024, we had $0.4 million of net unrealized losses on derivatives and $0.8 million of net realized losses on derivatives. Operating and General and Administrative Expenses .
Equity in Earnings of Unconsolidated Entities Equity in earnings of unconsolidated entities was $4.1 million during the year ended March 31, 2023, compared to $1.4 million during the year ended March 31, 2022.
Equity in Earnings of Unconsolidated Entities Equity in earnings of unconsolidated entities was $6.6 million during the year ended March 31, 2025, compared to $4.1 million during the year ended March 31, 2024.
Crude oil product margin calculations do not include gains and losses from derivatives that may offset the movement in the physical margin. Derivative (Gain) Loss. Our cost of sales during the year ended March 31, 2023 included $35.5 million of net realized losses on derivatives, driven by increasing crude oil prices, and $50.1 million of net unrealized gains on derivatives.
Crude oil product margin calculations do not include gains and losses from derivatives that may offset the movement in the physical margin. Derivative (Gain) Loss. Our cost of sales during the year ended March 31, 2025 included $1.1 million of net realized losses on derivatives and $4.0 million of net unrealized gains on derivatives.
Other Commitments We have noncancelable agreements for product storage, railcar spurs, capital projects and real estate. As of March 31, 2024, our commitment obligations were $55.7 million, with $34.8 million due within one year. See Note 8 to our consolidated financial statements included in this Annual Report for information regarding our other commitments and timing of our expected commitment payments.
See Note 8 to our consolidated financial statements included in this Annual Report for information regarding our asset retirement obligations. 78 Other Commitments We have noncancelable agreements for product storage, railcar spurs, capital projects and real estate. As of March 31, 2025, our commitment obligations were $30.0 million, with $9.7 million due within one year.
Propane Sales and Cost of Sales-Excluding Impact of Derivatives. The decreases in sales and cost of sales, excluding the impact of derivatives, were due to lower propane volumes and lower prices during the year ended March 31, 2024.
(2) Cost and product margin (loss) per gallon excludes the impact of derivatives. Propane Sales and Cost of Sales-Excluding Impact of Derivatives. The decreases in sales and cost of sales, excluding the impact of derivatives, were due to lower propane volumes and lower prices during the year ended March 31, 2024.
We must also identify and include in the allocation all acquired tangible and intangible assets that meet certain criteria, including assets that were not previously recorded by the acquired entity. The estimates most commonly involve property, plant and equipment and intangible assets, including those with indefinite lives.
Estimating fair values can be complex and subject to significant business judgment. We must also identify and include in the allocation all acquired tangible and intangible assets that meet certain criteria, including assets that were not previously recorded by the acquired entity. The estimates most commonly involve property, plant and equipment and intangible assets, including those with indefinite lives.
Noncontrolling Interests Noncontrolling interests represent the portion of certain consolidated subsidiaries that are owned by third-parties. Noncontrolling interest income was $0.6 million during the year ended March 31, 2024, compared to $1.1 million during the 67 year ended March 31, 2023.
Noncontrolling Interests - Redeemable and Nonredeemable Noncontrolling interests represent the portion of certain consolidated subsidiaries that are owned by third-parties. Noncontrolling interest income was $3.8 million during the year ended March 31, 2025, compared to $0.6 million during the year ended March 31, 2024.
The decreases in sales and cost of sales, excluding the impact of derivatives, were due primarily to lower propane prices and a decline in volumes.
Butane Sales and Cost of Sales-Excluding Impact of Derivatives. The decreases in sales and cost of sales, excluding the impact of derivatives, were due primarily to lower butane prices.
Income Tax Expense Income tax expense was $0.3 million during the year ended March 31, 2023, compared to income tax expense of $1.0 million during the year ended March 31, 2022. See Note 2 to our consolidated financial statements included in this Annual Report for a further discussion.
Income Tax Benefit (Expense) Income tax benefit was $4.9 million during the year ended March 31, 2025, compared to income tax expense of $1.5 million during the year ended March 31, 2024. See Note 2 to our consolidated financial statements included in this Annual Report for a further discussion.
The decrease of $0.5 million during the year ended March 31, 2024 was due primarily to lower income from certain water solutions operations during the year ended March 31, 2024. Segment Operating Results for the Years Ended March 31, 2023 and 2022 Water Solutions The following table summarizes the operating results of our Water Solutions segment for the periods indicated.
The increase of $3.2 million during the year ended March 31, 2025 was due primarily to higher income from certain water solutions operations. 63 Segment Operating Results for the Years Ended March 31, 2024 and 2023 Water Solutions The following table summarizes the operating results of our Water Solutions segment for the periods indicated.
Interest on the new senior secured notes will be paid quarterly on February 15, May 15, August 15 and November 15 of each year, beginning on May 15, 2024. 80 Term Loan B On February 2, 2024,we entered into a new seven-year $700.0 million Term Loan B.
Interest on the 2029 Senior Secured Notes and 2032 Senior Secured Notes is payable on February 15, May 15, August 15 and November 15 of each year. Term Loan B On February 2, 2024, we entered into a new seven-year $700.0 million Term Loan B.
During the year ended March 31, 2023, we recorded an impairment of $23.1 million related to an underperforming crude oil terminal and a loss of $8.0 million on the sale of our marine assets.
During the year ended March 31, 2023, we recorded an impairment of $23.1 million related to an underperforming crude oil terminal and a loss of $8.0 million on the sale of our marine assets. 67 Liquids Logistics The following table summarizes the operating results of our Liquids Logistics segment for the periods indicated.
Noncontrolling Interests Noncontrolling interest income was $1.1 million during the year ended March 31, 2023, compared to $0.7 million during the year ended March 31, 2022.
Noncontrolling Interests - Redeemable and Nonredeemable Noncontrolling interest income was $0.6 million during the year ended March 31, 2024, compared to $1.1 million during the year ended March 31, 2023.
Short-Term Liquidity Our principal sources of short-term liquidity consist of cash flows from our operations and borrowings under the ABL Facility, which we believe will provide liquidity to operate our business, manage our working capital requirements and repay current maturities.
Under the cash management program, depending on whether a participating subsidiary has short-term cash surpluses or cash requirements, we provide cash to the subsidiary or the subsidiary provides cash to us. 76 Short-Term Liquidity Our principal sources of short-term liquidity consist of cash flows from our operations and borrowings under the ABL Facility, which we believe will provide liquidity to operate our business, manage our working capital requirements and repay current maturities.
Service fees for produced water processed ($/barrel) also benefited from these deficiency payments. In addition, in July 2023, we entered into a transaction in which a portion of the total consideration received was allocated to revenue due to the termination of a minimum volume water disposal contract (see Note 17 to our consolidated financial statements included in this Annual Report).
In addition, during July 2023, we entered into a transaction in which a portion of the total consideration received was allocated to revenue due to the termination of a minimum volume water disposal contract (see Note 17 to our consolidated financial statements included in this Annual Report). Recovered Crude Oil Revenues.
Our cost of butane sales during the year ended March 31, 2023 included $3.9 million of net unrealized gains on derivatives and $19.1 million of net realized gains on derivatives. Our cost of butane sales included $1.0 million of net unrealized gains on derivatives and $19.7 million of net realized losses on derivatives during the year ended March 31, 2022.
Our derivatives of other products included $0.1 million of net realized gains on derivatives and $0.1 million of net unrealized losses on derivatives during the year ended March 31, 2024. Our derivatives of other products during the year ended March 31, 2023 included $1.3 million of net realized losses on derivatives and $0.1 million of net unrealized gains on derivatives.
We evaluate our investments in unconsolidated entities for impairment whenever events or changes in circumstances indicate, in management’s judgment, that the fair value of such investment may have experienced a decline to less than its carrying value and the decline is other than temporary.
See Note 4 and Note 6 to our consolidated financial statements included in this Annual Report for a further discussion of our impairments of long-lived assets. 80 We evaluate our investments in unconsolidated entities for impairment whenever events or changes in circumstances indicate, in management’s judgment, that the fair value of such investment may have experienced a decline to less than its carrying value and the decline is other than temporary.
Weather conditions and gasoline blending can have a significant impact on the demand for propane and butane, and sales volumes and prices are typically higher during the colder months of the year.
Weather conditions and gasoline blending can have a significant impact on the demand for propane and butane, and sales volumes and prices are typically higher during the colder months of the year. Consequently, our revenues, operating profits, and operating cash flows are typically lower in the first and second quarters of our fiscal year.
Belvieu, Texas, two of our main pricing hubs, for the periods indicated and the prices at period end: Conway, Kansas Mt.
The following table summarizes the range of low and high propane spot prices per gallon at Conway, Kansas, and Mt. Belvieu, Texas, two of our main pricing hubs, for the periods indicated and the prices at period end: Conway, Kansas Mt.
As of March 31, 2024, our purchase commitments totaled $5.5 billion, with $4.7 billion due within one year. See Note 8 to our consolidated financial statements included in this Annual Report for information regarding our commodity purchase commitments and timing of our expected purchase commitments payments.
See Note 8 to our consolidated financial statements included in this Annual Report for information regarding our commodity purchase commitments and timing of our expected purchase commitments payments. Debt Principal and Interest Obligations As of March 31, 2025, our aggregate principal amount of outstanding debt was $3.0 billion, with $8.8 million due within one year.
On February 6, 2024, the board of directors of our GP declared a cash distribution of 50% of the outstanding distribution arrearages through December 31, 2023 to the holders of the Class B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class B Preferred Units”), the Class C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class C Preferred Units”) and the 9.00% Class D Preferred Units (“Class D Preferred Units”).
Distributions Declared On March 19, 2025, the board of directors of our GP declared a cash distribution for the quarter ended March 31, 2025 to the holders of the Class B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class B Preferred Units”), the Class C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class C Preferred Units”) and the 9.00% Class D Preferred Units (“Class D Preferred Units”).
During the year ended March 31, 2022, our cost of propane sales included $2.0 million of net unrealized gains on derivatives and $18.5 million of net realized gains on derivatives. Butane Sales and Cost of Sales-Excluding Impact of Derivatives.
Our cost of butane sales during the year ended March 31, 2025 included $0.6 million of net unrealized gains on derivatives and $14.7 million of net realized losses on derivatives. Our cost of butane sales included $3.2 million of net unrealized losses on derivatives and $0.5 million of net realized gains on derivatives during the year ended March 31, 2024.
(2) Cost and product margin (loss) per gallon excludes the impact of derivatives. Refined Products Sales and Cost of Sales-Excluding Impact of Derivatives.
(2) Cost and product margin per barrel excludes the impact of derivatives. Crude Oil Sales and Cost of Sales-Excluding Impact of Derivatives.
As of March 31, 2024, our current assets exceeded our current liabilities by approximately $201.6 million. Long-Term Financing We expect to fund our long-term financing requirements by issuing long-term notes, common units and/or preferred units, loans from financial institutions, asset securitizations or asset sales.
Long-Term Financing We expect to fund our long-term financing requirements by issuing long-term notes, common units and/or preferred units, loans from financial institutions, asset securitizations or asset sales.
Debt Principal and Interest Obligations As of March 31, 2024, our aggregate principal amount of outstanding debt was $2.9 billion, with $7.0 million due within one year. Our interest obligation on the debt was $1.7 billion, with $258.1 million due within one year, based on our outstanding balances and interest rates as of March 31, 2024.
Our interest obligation on the debt was $1.4 billion, with $239.4 million due within one year, based on our outstanding balances and interest rates as of March 31, 2025.
Our Water Solutions segment generated operating income of $231.3 million during the year ended March 31, 2024, compared to operating income of $198.9 million during the year ended March 31, 2023. 54 Crude Oil Logistics Our Crude Oil Logistics segment purchases crude oil from producers and marketers and transports it to refineries or for resale at pipeline injection stations, storage terminals, barge loading facilities, rail facilities, refineries, and other trade hubs, and provides storage, terminaling and transportation services through its owned assets.
Crude Oil Logistics Our Crude Oil Logistics segment purchases crude oil from producers and marketers and transports it to refineries or for resale at pipeline injection stations, storage terminals, barge loading facilities, rail facilities and other trade hubs, and provides storage, terminaling and transportation services through its owned assets.
The decrease was due to a customer relationship intangible asset being fully amortized as of June 30, 2023. Loss on Disposal or Impairment of Assets, Net. During the year ended March 31, 2024, we recorded a goodwill impairment loss of $69.2 million in our Wholesale/Terminal reporting unit (see Note 5 to our consolidated financial statements included in this Annual Report).
During the year ended March 31, 2024, we recorded a goodwill impairment loss of $69.2 million in our Wholesale/Terminal reporting unit (see Note 5 to our consolidated financial statements included in this Annual Report).

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk A portion of our long-term debt is variable-rate debt. Changes in interest rates impact the interest payments of our variable-rate debt but generally do not impact the fair value of the liability.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk Long-Term Debt A portion of our long-term debt is variable-rate debt. Changes in interest rates impact the interest payments of our variable-rate debt but generally do not impact the fair value of the liability.
All changes in the fair value of our physical 88 contracts that do not qualify as normal purchases and normal sales and settlements (whether cash transactions or non-cash mark-to-market adjustments) are reported either within revenue (for sales contracts) or cost of sales (for purchase contracts) in our consolidated statements of operations, regardless of whether the contract is physically or financially settled, and within cash flows from operations in our consolidated statements of cash flows.
All changes in the fair value of our physical contracts that do not qualify as normal purchases and normal sales and settlements (whether cash transactions or non-cash mark-to-market adjustments) are reported either within revenue (for sales contracts) or cost of sales (for purchase contracts) in our consolidated statements of operations, regardless of whether the contract is physically or financially settled, and within cash flows from operations in our consolidated statements of cash flows.
A change in interest rates of 0.125% would result in an increase or decrease of our Class B Preferred Unit distribution of $0.1 million, based on the Class B Preferred Units outstanding at March 31, 2024.
A change in interest rates of 0.125% would result in an increase or decrease of our Class B Preferred Unit distribution of $0.1 million, based on the Class B Preferred Units outstanding at March 31, 2025.
Commodity price risk is the risk that the market value of crude oil, natural gas liquids, or refined and renewables products will change, either favorably or unfavorably, in response to changing market conditions. Procedures and limits for managing commodity price risks are specified in our market risk policy.
Commodity price risk is the risk that the market value of crude oil or natural gas liquids will change, either favorably or unfavorably, in response to changing market conditions. Procedures and limits for managing commodity price risks are specified in our market risk policy.
Open commodity positions and market price changes are monitored daily and are reported to senior management and to marketing operations personnel. The crude oil, natural gas liquids, and refined and renewables products industries are “margin-based” and “cost-plus” businesses in which our realized margins depend on the differential of sales prices over our supply costs.
Open commodity positions and market price changes are monitored daily and are reported to senior management and to marketing operations personnel. The crude oil and natural gas liquids industries are “margin-based” and “cost-plus” businesses in which our realized margins depend on the differential of sales prices over our supply costs. We have no control over market conditions.
At March 31, 2024, our primary counterparties were retailers, resellers, energy marketers, producers, refiners, and dealers. 89
At March 31, 2025, our primary counterparties were retailers, resellers, energy marketers, producers, refiners, and dealers. 84
An increase of 10% in the value of the underlying interest rate swap would result in a net change in the fair value of our interest rate swap of $0.1 million at March 31, 2024.
An increase of 10% in the value of the underlying interest rate swaps would result in a net change in the fair value of our interest rate swaps of $0.3 million at March 31, 2025.
In March 2024, we entered into a $200.0 million interest rate swap to reduce the variability of cash outflows associated with our floating-rate, SOFR-based borrowings, including borrowings on the Term Loan B.
Interest Rate Swaps In March and April 2024, we entered into interest rate swaps totaling $400.0 million to reduce the variability of cash outflows associated with our floating-rate, SOFR-based borrowings, including borrowings on the Term Loan B.
Conversely, changes in interest rates impact the fair value of our fixed-rate debt but do not impact its cash flows. The ABL Facility is variable-rate debt with interest rates that are generally indexed to the prime rate or SOFR. At March 31, 2024, there were no borrowings under the ABL Facility.
Conversely, changes in interest rates impact the fair value of our fixed-rate debt but do not impact its cash flows. The ABL Facility is variable-rate debt with interest rates that are generally indexed to the prime rate or SOFR. At March 31, 2025, $109.0 million was outstanding under the ABL Facility at a weighted average interest rate of 9.50%.
We engage in various types of forward contracts and financial derivative transactions to reduce the effect of price volatility on our product costs, to protect the value of our inventory positions, and to help ensure the availability of product during periods of short supply.
As a result, our profitability may be impacted by sudden and significant changes in the price of crude oil and natural gas liquids. 83 We engage in various types of forward contracts and financial derivative transactions to reduce the effect of price volatility on our product costs, to protect the value of our inventory positions, and to help ensure the availability of product during periods of short supply.
A change in interest rates of 0.125% would result in an increase or decrease of our annual interest expense of $0.9 million, based on borrowings outstanding at March 31, 2024.
At March 31, 2025, $693.0 million was outstanding under the Term Loan B with an interest rate of SOFR of 4.32% plus a margin of 3.75%. A change in interest rates of 0.125% would result in an increase or decrease of our annual interest expense of $0.9 million, based on borrowings outstanding at March 31, 2025.
The following table summarizes the hypothetical impact on the March 31, 2024 fair value of our commodity derivatives of an increase of 10% in the value of the underlying commodity (in thousands): Increase (Decrease) To Fair Value Crude oil (Water Solutions segment) $ (1,504) Crude oil (Crude Oil Logistics segment) $ (152) Propane (Liquids Logistics segment) $ (1,432) Butane (Liquids Logistics segment) $ (6,186) Refined Products (Liquids Logistics segment) $ (2,867) Other Products (Liquids Logistics segment) $ (912) Canadian dollars (Liquids Logistics segment) $ 124 Changes in commodity prices may also impact the volumes that we are able to transport, dispose, store and market, which also impact our cash flows.
Increase (Decrease) To Fair Value (in thousands) Crude oil (Crude Oil Logistics segment) $ 322 Butane (Liquids Logistics segment) $ (5,116) Other (Liquids Logistics segment) $ (83) Changes in commodity prices may also impact the volumes that we are able to transport, dispose, store and market, which also impact our cash flows.
The Term Loan B is variable-rate debt with interest rates that are generally indexed to the SOFR. At March 31, 2024, there was $700.0 million of outstanding borrowings under the Term Loan B at a weighted average interest rate of 5.33% plus a margin of 4.50%.
A change in interest rates of 0.125% would result in an increase or decrease of our annual interest expense of $0.1 million, based on borrowings outstanding at March 31, 2025. The Term Loan B is variable-rate debt with interest rates that are generally indexed to the SOFR.
The current distribution rate for the Class B Preferred Units is a floating rate of the three-month London Interbank Offered Rate (“LIBOR”) interest rate (5.3314% for the quarter ended March 31, 2024) plus a spread of 7.213%.
Preferred Unit Distributions The current distribution rate for the Class B Preferred Units is a floating rate of the three-month CME Term SOFR plus a tenor spread adjustment plus a spread of 7.213% (see Note 9 to our consolidated financial statements included in this Annual Report for a further discussion).
Removed
Effective July 3, 2023, the reference to LIBOR in the formulation for the distribution rate in these securities was replaced with three-month CME Term SOFR, as calculated and published by CME Group Benchmark Administration, Ltd., plus a tenor spread adjustment of 0.26161% in accordance with the Adjustable Interest Rate (LIBOR) Act (“LIBOR Act”), and the rules implementing the LIBOR Act.
Added
In September 2024, for the $200.0 million interest rate swap entered into in April 2024, we entered into a transaction to extend the original maturity date and to blend the existing swap rate (see Note 10 to our consolidated financial statements included in this Annual Report for a further discussion).
Removed
On April 15, 2024, the distributions for the Class C Preferred Units will accumulate at a percentage of the $25.00 liquidation preference equal to the applicable three-month LIBOR interest rate (or alternative rate as determined in accordance with our amended and restated limited partnership agreement (“Partnership Agreement”)) plus a spread of 7.384%.
Added
The current distribution rate for the Class C Preferred Units is a floating rate of the three-month CME Term SOFR plus a spread of 7.384% (see Note 9 to our consolidated financial statements included in this Annual Report for a further discussion).
Removed
On or after July 1, 2024, the holders of our Class D Preferred Units can elect, from time to time, for the distributions to be calculated based on a floating rate equal to the applicable three-month LIBOR interest rate (or alternative rate as determined in accordance with our Partnership Agreement) plus a spread of 7.00% (“Class D Variable Rate”, as defined in our Partnership Agreement).
Added
A change in interest rates of 0.125% would result in an increase or decrease of our Class C Preferred Unit distribution of less than $0.1 million, based on the Class C Preferred Units outstanding at March 31, 2025.
Removed
Each Class D Variable Rate election shall be effective for at least four quarters following such election. Commodity Price Risk Our operations are subject to certain business risks, including commodity price risk.
Added
The current distribution rate for the Class D Preferred Units is a floating rate of the three-month CME Term SOFR plus a spread of 7.00%, as well as a 1.0% rate increase as we exceeded the adjusted total leverage ratio (as defined in the amended and restated limited partnership agreement) for the quarter ended March 31, 2025 (see Note 9 to our consolidated financial statements included in this Annual Report for a further discussion).
Removed
We have no control over market conditions. As a result, our profitability may be impacted by sudden and significant changes in the price of crude oil, natural gas liquids, and refined and renewables products.
Added
A change in interest rates of 0.125% would result in an increase or decrease of our Class D Preferred Unit distribution of $0.2 million, based on the Class D Preferred Units outstanding at March 31, 2025. Commodity Price Risk Our operations are subject to certain business risks, including commodity price risk.
Added
The following table summarizes the hypothetical impact on the March 31, 2025 fair value of our commodity derivatives of an increase of 10% in the value of the underlying commodity.
Added
Amounts in the table below do not include commodity derivatives classified as either held for sale or discontinued operations within our March 31, 2025 and 2024 consolidated balance sheets (see Note 18 to our consolidated financial statements included in this Annual Report).

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