Honestly, if you’ve been watching the midstream space lately, NGL Energy Partners LP (NGL) is probably giving you some serious whiplash. One minute it’s the "comeback kid" of the Permian Basin, and the next, it's missing earnings targets and making investors sweat.
But here is the thing. Most people looking at ngl energy partners stock right now are either hyper-focused on the old propane-and-butane narrative or they're terrified of the debt. They’re missing the actual story.
The reality? This isn't the same company it was three years ago. It has basically mutated into a water utility that happens to wear an oil and gas hat.
The Water Engine No One Predicted
You’ve got to look at the Water Solutions segment to understand why the stock has been so volatile yet strangely resilient. In their Q2 fiscal 2026 report (released in late 2025), this division alone was responsible for about 85% of their adjusted EBITDA. That is an insane concentration.
They aren't just moving water; they are running a massive, 800-mile underground highway for produced water in the Delaware Basin. When an oil company drills, they don't just get oil—they get a salty, messy flood of water. NGL has the "drainage" system for the biggest sandbox in the world.
The numbers are pretty startling. In 2024, they were processing around 2.3 million barrels per day. By late 2025, that jumped to over 3.4 million barrels. That’s not just growth; that’s a land grab. And because they've been cutting operating expenses per barrel—bringing them down from $0.28 to about $0.18—the margins are getting beefy.
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Why the Market is Still Grumpy
So, if the water business is printing money, why isn't the stock at $20?
Basically, the "old NGL" is still haunting the "new NGL." They’ve been aggressively hacking off limbs to save the body. They sold off 17 terminals, exited the wholesale propane game, and ditched the biodiesel marketing business. While that makes the company "cleaner," it also created some ugly headlines.
Their Q4 fiscal 2025 earnings (reported in May 2025) were... well, they were a mess. They reported a loss of $0.12 per share when the market was expecting a profit of $0.21. Revenue tanked relative to forecasts because they were in the middle of these massive divestitures.
It’s like someone cleaning out their garage. The house looks like a disaster while the junk is on the lawn, but once the truck hauls it away, you suddenly have a functional space. The market, however, hates seeing junk on the lawn.
The Debt Monster is Shrinking (Slowly)
Let’s talk about the elephant in the room: the balance sheet. For a long time, ngl energy partners stock was a "no-go" for conservative investors because of the leverage.
CEO Mike Krimbill hasn't been shy about the plan:
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- Sell non-core assets (they raised about $270 million doing this).
- Pay down the Asset-Based Lending (ABL) facility.
- Fix the Term Loan B interest rates.
They actually managed to nudge their Term Loan B margin down from 4.5% to 3.5% over the last year. That’s real money staying in the partnership instead of going to the banks. They’ve also been chipping away at the Class D preferred units, buying back about 15% of them.
But—and this is a big "but"—they still carry a B credit rating from S&P. They are firmly in "junk" territory, even if the trajectory is upward. If you’re looking for a safe, widow-and-orphan stock, this isn't it yet. It’s a turnaround play.
What to Watch in Early 2026
There is a huge date on the calendar: February 9, 2026.
NGL is holding a special meeting in Tulsa. They are asking unitholders to approve a new Long-Term Incentive Plan (LTIP). Now, normally, "incentive plan" is just corporate speak for "giving the bosses more shares," and yes, it could dilute common unitholders by about 8%.
However, the board argues they need this to keep the talent that’s actually executing this turnaround. It’s a classic tug-of-war between dilution and performance.
The Dividend Dilemma
If you’re hunting for a fat yield, you’re probably looking at the preferred units (NGL-PB or NGL-PC), which have been yielding north of 11%. But for the common units? Don't hold your breath for a massive payout just yet.
The partnership is restricted from paying distributions on common units if their leverage ratio is too high (specifically above 4.75 to 1.00). Plus, they have to pay back all the "arrearage" (back-pay) on the preferred units before the common units get a cent. They’ve made progress here, but the priority is clearly: Debt first, Preferreds second, Common units last.
Is the Stock "Cheap" or a Trap?
If you look at the Price-to-Sales (P/S) ratio, NGL looks like a steal. It’s trading at roughly 0.3x or 0.4x sales. Compare that to the industry average of 1.5x, and it looks like the market is literally giving the company away.
But wait. If you run a Discounted Cash Flow (DCF) model, some analysts suggest the "fair value" is actually way lower—somewhere in the $2 to $3 range—because of the debt load and the uncertainty of the non-water segments.
So you have this massive gap:
- The Bulls: Look at the massive water infrastructure and the $600M+ in annual Adjusted EBITDA.
- The Bears: Look at the $2B+ in total liabilities and the inconsistent net income.
Actionable Strategy for Investors
If you’re looking at ngl energy partners stock as a potential addition to your portfolio, you shouldn't just "buy and forget." This is a story that requires homework.
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1. Watch the ABL balance: The company’s goal is to have the ABL undrawn. Every dollar that moves from debt to equity is a win for the common units.
2. Monitor Delaware Basin activity: Since NGL is basically a water utility for the Permian, they need the "super-majors" (who make up about 25% of their clients) to keep drilling. If oil prices crash and rigs go home, the water stops flowing.
3. The "Pure Play" transition: Watch if they sell the remaining Liquids Logistics assets (like the butane terminals). If they do, they become a pure-play water company. Pure plays usually get higher valuation multiples from Wall Street.
Keep a close eye on the February 2026 meeting results. If the LTIP passes and they announce further debt reduction, the "valuation gap" between their sales and their share price might finally start to close. But keep your position size reasonable; turnaround stories are rarely a straight line up.
Next Steps for You:
Check the most recent 10-Q filing to see the "Total Leverage Ratio" specifically. If that number is trending toward 4.0x, the possibility of a common unit distribution becomes a much more realistic conversation for late 2026 or 2027. Also, compare the current yield of the NGL-PB preferred units against the common units to see if the "safer" 11% yield makes more sense for your risk tolerance than the speculative upside of the common stock.