NGL Energy Partners LP (NGL): what the price assumes

In the published model solve dated 2026-Q2, anchored at $16.92, NGL Energy Partners LP (NGL) is priced for today's economics sustained for ~7.1 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/NGL

Headline

FieldValue
TickerNGL
CompanyNGL Energy Partners LP
Current price$16.92/sh
CompositionWater Solutions - Disposal service fees 23% / Water Solutions - Sale of recovered crude oil 4% / Water Solutions - Sale of water 0% / Water Solutions - Other service revenues 0% / Water Solutions - Non-Topic 606 revenues 0% / Crude Oil Logistics - Crude oil sales 32% / Crude Oil Logistics - Crude oil transportation and other sales 1% / Crude Oil Logistics - Non-Topic 606 revenues 0% / Liquids Logistics - Butane sales 18% / Liquids Logistics - Propane sales 11% / Liquids Logistics - Other products sales 11% / Liquids Logistics - Service revenues 0% / Liquids Logistics - Non-Topic 606 revenues 0% / Corporate and Other - Service revenues 0% / Corporate and Other - Elimination of intersegment sales 0%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Must persist for7.1y
Multiple paid58x operating income

Solve inputs: computed at a 7.5% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2.3 years.

Reconcile: at the x-ray's 9.3% required return this reads ~10.9 years; the models below use their own rates.

How unusual the bet is: elevated

ReferenceValue
vs own history+0.11σ
cohort percentile (of 72 peers)97
sustained it ~7.1 years at this level31%
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple; growth-DCF land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset—0—
Earnings—0—
Relative0.27x3justifies
Growth1.60x2expensive

Families that justify the price: Relative Families that call it expensive: Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 4.5%); the inversion above states its own rate.

Per-Model Detail (n=5)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$0.00—noFCF base $0.1B, growth -10% (input: historical growth), terminal g 0.5%, WACC 4.5%, 5yr projection
DCF Exit MultipleGrowth$16.281.04xyesExit EV/EBITDA: 13.0x / 15.0x / 17.0x (bear / base = today's held flat / bull), 5yr
Relative ValuationRelative$63.220.27xyesP/S fallback (negative EPS): Sector P/S 2.5x × TTM revenue — excluded from consensus
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset——no—
Two-Stage Excess ReturnAsset——no—
Discounted Future Market CapGrowth$7.842.16xyesRev $3.2B, growth -10% (input: historical growth; tapered), Terminal P/S: 0.6x / 0.7x / 0.8x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$0.00—noNegative/zero EPS — earnings-based value floored at $0
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$0.011692.00xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.18B × (1−21%) / WACC 4.5% → EPV (no growth) (excluded from median)
Residual IncomeAsset——no—
Graham NumberAsset——no—
EV/EBITDA RelativeRelative$10.991.54xyesEBITDA $0.36B × sector EV/EBITDA 13.0x
FCF YieldEarnings$0.011692.00xyesFCF $144.7M / Kₑ 9.3% — zero-growth perpetuity (excluded from median)
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings——no—
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative$63.220.27xyesRevenue $3.16B × sector P/S 2.5x
PEG Fair ValueRelative——no—
Earnings YieldEarnings——no—
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Economic-Unit Decomposition (Sum Of The Parts)

The disclosed units share an operating capital structure; consolidated cash-flow lenses remain coherent and the unit split is explanatory.

UnitRoleValuation basisRevenueReported profitValue evidenceStatus
Water Solutionsoperatingenterprise$838.9m—$9.3b indicative EV subtotalindicative enterprise value
Crude Oil Logisticsoperatingenterprise$1.1b—$908.0m indicative EV subtotalindicative enterprise value
Liquids Logisticsoperatingenterprise$1.3b—$700.0m indicative EV subtotalindicative enterprise value

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

FieldValue
Net debt$3.2b
Net debt / NOPAT (after-tax)43.10x
Net debt / operating income (pre-tax)34.05x
Interest coverage0.4x
Burning cashno

Bullet Takeaways

Bull Case

The bull case is a focusing story. NGL spent years as a sprawling collection of energy businesses, and management is now selling the rest to become one thing: the largest integrated produced-water disposal system in the Delaware Basin. The wholesale propane and rack marketing businesses are gone, and what remains is the water franchise, which delivered a record full-year adjusted earnings figure of about $603 million in fiscal 2026. A simpler business is easier to value, easier to finance, and easier to run, and the water segment is the part with the best economics and the longest contracts.

The water business is sturdier than its energy-services label suggests because the volumes are contracted, not spot. NGL's own filing describes acreage "dedicated to our Northern Delaware system under long-term agreements providing a multi-decade drilling inventory and significant growth opportunity", and notes minimum-volume commitments "with leading oil and gas companies including large, investment grade producer customers." More than 90% of water volumes are backed by contractual commitments or acreage dedications, which means the revenue does not swing with the oil price the way a marketing business does. Disposing of produced water is a necessary cost for every barrel a Delaware Basin producer pumps, so NGL sits in the path of drilling activity regardless of the commodity cycle, anchored by investment-grade counterparties.

The near-term lever is deleveraging plus growth, and both are in motion. The partnership completed a $950 million refinancing to extend and simplify its capital structure, and over the fiscal year it redeemed roughly 47% of its highest-cost Class D preferred units, cutting its most expensive financing. On top of that, management guided fiscal 2027 adjusted earnings to $715 million to $725 million, with the LEX2 expansion the main growth driver, while continuing to retire preferred units and repurchase common units. If the water cash flows fund a steady paydown of debt and preferreds, the equity value compounds simply by moving the capital structure from creditors and preferred holders toward common unitholders.

Bear Case

Capital allocation is the bear case, because the partnership's claims on its own cash run deep before a common unitholder sees anything. NGL's financing structure layers an asset-based facility, a term loan, and an indenture, and the filing acknowledges that those provisions "may affect our ability to obtain future financing and pursue attractive business opportunities and our flexib"ility. On top of the debt sit the Class D preferred units, which carry a senior claim and can be redeemed partly in common units, with the filing noting redemption "of cash and a number of common units not to exceed one-half of the aggregate then-applicable redemption price." Paying down preferreds in stock dilutes the common holders the bull case is counting on.

The arithmetic of the balance sheet is the spine. Net debt sits above $3.2 billion, more than thirty times trailing operating income, and after the heavy depreciation that a capital-intensive water and pipeline network carries, reported operating profit covers interest only a fraction of a time over. The company services its obligations out of adjusted earnings before depreciation, which is the right lens for an asset like this, but it means the entire equity thesis rests on that adjusted figure holding up and the deleveraging actually happening. If water volumes soften, or a refinancing window closes, the gap between reported earnings and the cash needed to service this structure becomes the whole story. The price is paying about 56 times operating income and asking the business to grow at its self-funding ceiling for roughly seven years, which the framework reads as elevated against what the fundamentals comfortably support.

The water franchise itself is not without cycle exposure, even with contracts. Minimum-volume commitments protect a floor, but the upside and the growth depend on Delaware Basin producers keeping the drilling pace that fills the system, and that pace ultimately tracks the oil price and producer capital budgets. A prolonged downturn in basin activity would test how firm those commitments are when counterparties slow down. NGL's transformation into a focused water company is the right strategic move, but the bear case is that the transformation is happening on top of a balance sheet that leaves little room for error, and the value created by deleveraging is partly handed to preferred holders before it reaches the common.

Valuation

The price is making a deleveraging-and-growth bet, and reading it backward shows how much it assumes. Today's level is paying about 56 times trailing operating income, which implies the business holds operating growth at its self-funding ceiling for roughly seven years. The near-term pace is within what NGL has recently delivered, so the stretch is in the persistence rather than the rate, but the framework still labels the embedded assumption elevated against the fundamentals. The reason the headline multiple looks so high is that reported operating profit is thin after heavy depreciation; the partnership is valued and financed on adjusted earnings before depreciation, where the water segment's roughly $603 million is the number that matters.

The methods disagree along exactly that fault line. The peer-multiple comparisons read the stock as cheap, with the price sitting around a quarter of where a sales-based peer multiple would put it, because NGL trades at a steep discount to the larger, investment-grade midstream names it is grouped with. The growth-based cash-flow methods read it as expensive, because they discount the same thin reported profit. That split is the whole valuation question: the relative methods say the assets are worth more than the market pays, while the cash-flow methods say the reported earnings do not yet justify the price. A buyer is betting the relative lens is right and the discount closes as the water transformation and deleveraging play out.

Solvency is not a footnote here; it is the central number. Net debt above $3.2 billion against barely positive reported operating income, with interest coverage well under one time on that reported basis, means the partnership lives or dies on adjusted earnings before depreciation and on continued access to refinancing. The recent $950 million refinancing and the redemption of nearly half the high-cost preferred units are real progress on that front, and fiscal 2027 adjusted earnings guidance of $715 million to $725 million points to a growing cash base to service it. But the structure leaves little cushion, and the preferred units sit ahead of the common in any distribution. The decisive question is whether the water cash flows deleverage the balance sheet faster than the preferred claims and dilution erode what reaches the common unitholder.

Catalysts

The transformation into a pure-play water company is the catalyst that frames everything else. NGL closed the sale of its wholesale propane and rack marketing businesses to focus on Water Solutions, which produced a record full-year adjusted earnings figure of about $603 million in fiscal 2026, with more than 90% of volumes supported by contracts or acreage dedications. The progress of further divestitures and the integration of the water franchise are the strategic milestones to track.

Deleveraging is the near-term value driver. The partnership completed a $950 million refinancing and redeemed roughly 47% of its highest-cost Class D preferred units over the fiscal year, directly cutting its most expensive capital. Each step that moves the capital structure away from debt and preferreds and toward common units is the mechanism through which the equity thesis works, so the pace of redemptions and refinancings is the number to watch quarter to quarter.

Growth and guidance set the forward shape. Management guided fiscal 2027 adjusted earnings to $715 million to $725 million, driven mainly by Water Solutions and the LEX2 expansion, with growth capital of about $200 million and maintenance capital of about $45 million. LEX2 coming online and the water volumes holding against Delaware Basin drilling activity are the operational catalysts that determine whether the partnership hits that range.

Peer Cohorts (Per Segment, With Filing Citations)

Water Solutions (reported)

Crude Oil Logistics / Liquids Logistics (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

NGL Energy Partners FY2026 results · company 10-K, fiscal 2025

View the full interactive NGL report on boothcheck