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NGL Energy Partners Expands LEX II Water Capacity

The Tip Desk · August 4, 2026 · 4 min read

The partnership posted $186.22 million of Adjusted EBITDA from continuing operations in the three months ended June 30, 2026, as Water Solutions operating income reached $138.57 million.

NGL Energy Partners LP (NGL), a Delaware master limited partnership that transports, treats and disposes of produced water and moves crude oil and natural gas liquids, reported operating income of $145.32 million for the three months ended June 30, 2026, up $47.9 million from $97.45 million a year earlier. Adjusted EBITDA from continuing operations was $186.22 million, compared with $143.97 million.

The increase in operating income was concentrated in Water Solutions, where segment operating income rose $53.62 million to $138.57 million. The rise was primarily due to higher water disposal revenues from increased produced water volumes, higher recovered crude oil revenues and higher pipeline revenues.

Water Solutions total revenues were $254.36 million. Water disposal service fees were $182.08 million. Sales of recovered crude oil were $51.87 million. Other revenues, which include pipeline revenue, construction reimbursements and booster fees, were $18.69 million. The increase in other revenues was due primarily to higher water pipeline revenue from a new contract that began in February 2026, as well as higher construction reimbursements and booster operating fees.

Produced water processed averaged 3,315,055 barrels per day, up 543,441 barrels per day from 2,771,614 barrels per day. Delaware Basin volumes were 2,962,381 barrels per day, Eagle Ford volumes were 176,712 barrels per day and DJ Basin volumes were 175,962 barrels per day. Service fees for produced water processed were $0.60 a barrel. Recovered crude oil for produced water processed was $0.17 a barrel. Total produced water barrels processed during the quarter were 301,669,982.

Crude Oil Logistics operating income was $5.86 million, up $5.19 million from $0.67 million. The increase was due primarily to increased gains on derivatives and lower losses on the disposal of assets, partially offset by lower product margins. Segment revenues were $439.46 million. Crude oil sold averaged 4,359 barrels per day, and the price of crude oil sold was $98.810 a barrel. Crude oil product margin excluding derivatives was $1.482 a barrel. The margin decline reflected selling higher priced inventory into a declining market and the expiration of a crude oil purchase agreement with a certain producer during the three months ended March 31, 2026. Physical volumes on the Grand Mesa Pipeline averaged approximately 74,000 barrels per day.

Liquids Logistics operating income was $16.31 million. The decrease was primarily due to lower expenses in the prior year period, which included a gain on the sale of assets, partially offset by higher butane margins, service revenue and derivative gains. Butane sales were $144.43 million, with butane product margin of $14.99 million. Propane sales were $39.74 million, with propane product margin of $2.87 million. Butane product margins excluding derivatives increased due to strong export markets and gasoline blending. Propane sales and cost of sales decreased due primarily to the sale of most of the wholesale propane business and 17 natural gas liquids terminals in the prior year period. Service sales of $6.01 million increased due to a new terminaling contract.

Corporate and Other recorded an operating loss of $15.42 million, an increase in operating losses of $3.52 million due primarily to equity-based compensation expense related to grants under the 2025 Long-Term Incentive Plan.

Consolidated revenues were $989.99 million. Interest expense was $67.07 million. Debt interest expense increased primarily due to a higher weighted average loan balance for the 2026 Term Loan B compared with the 2024 Term Loan B a year earlier, and a higher average daily outstanding balance on the ABL Facility.

On May 7, 2026, the partnership announced a further expansion of the Lea County Express Pipeline System to increase capacity by 165,000 barrels of water per day, with a capability to transport approximately 560,000 barrels of water per day on the LEX II system. The expansion is underwritten by a newly executed long-term volume commitment contract that includes increased volume commitments and an additional four-township committed area in Eddy County, New Mexico. The LEX II expansion is expected to be in service by the end of calendar year 2026 and is expandable up to 650,000 barrels of water per day.

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