NGL Energy Partners LP (NYSE:NGL) today reported a net loss of $24.7 million and an Adjusted EBITDA loss of $6.5 million for the three months ended June 30, 2012. Net loss per limited partner common unit for the quarter was $0.76.
The net loss was impacted by the following items:
- General and administrative expenses during the quarter ended June 30, 2012, included $3.5 million of costs related to the merger with High Sierra Energy, LP and High Sierra Energy, GP (collectively, “High Sierra”).
- NGL recorded a loss of $5.8 million resulting from the accelerated amortization of previously capitalized debt issuance costs upon closing of its new $645 million revolving credit facility.
- Declining propane prices had an adverse impact on margins of NGL’s wholesale marketing and supply segment which NGL expects to recover when delivering future volumes. NGL has contracts whereby it has committed to purchase ratable volumes of propane at index prices. NGL seeks to manage the price risk associated with these contracts primarily by selling the inventory not stored immediately after it is received. When NGL sells product, it records the cost of sale at the average cost of all inventory at that location, which may include inventory purchased earlier at higher prices and stored for sale in the future. During periods of falling prices, this results in negative margins on these sales.
On June 19, 2012, NGL completed a merger with High Sierra. High Sierra is a Denver, Colorado based limited partnership with three core businesses: crude oil gathering, transportation and marketing; water treatment, disposal, recycling and transportation; and natural gas liquids transportation and marketing.
During April and May 2012, NGL completed three separate business combinations to acquire retail propane and distillate operations in Georgia, Kansas, Maine, and New Hampshire.
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