What changed in this filing

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Item 7. Management’s Discussion and Analysis

2021-06-03 compared with 2020-06-01 · 587 added, 529 removed, 610 unchanged (65% of the section changed)

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NGL Energy Holdings LLC serves as our general partner.

Since late 2017, 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.

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.

These steps included sale of the following:

• Our 50% interest in the Glass Mountain Pipeline, LLC (“Glass Mountain”);

• Our Retail Propane segment;

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• Our gas blending business in the southeastern and eastern regions of the United States (“Gas Blending”).

We also acquired DCP Midstream LP’s (“DCP”) natural gas liquids business and strategic water infrastructure assets in acquiring the assets of Mesquite Disposals Unlimited, LLC (“Mesquite”) and the equity interests of Hillstone Environmental Partners, LLC (“Hillstone”).

We also acquired strategic water infrastructure assets including Mesquite Disposals Unlimited, LLC (“Mesquite”) and the equity interests of Hillstone Environmental Partners, LLC (“Hillstone”) as well as DCP Midstream LP’s natural gas liquids business.

For a further discussion of the dispositions and acquisitions transactions, see Part I, Item 1–“Business–Overview” and Note 4 , Note 18 and Note 19 to our consolidated financial statements included in this Annual Report on Form 10-K (“Annual Report”).

The sale of our former Retail Propane segment and the sale of TPSL, Mid-Con and Gas Blending, within our former Refined Products and Renewables segment, all represented strategic shifts in our operations and will have a significant effect on our operations and financial results going forward.

Accordingly, the results of operations and cash flows related to our former Retail Propane segment (including equity in earnings of Victory Propane, LLC (“Victory Propane”)), TPSL, Mid-Con and Gas Blending have been classified as discontinued operations for all periods presented and prior periods have been retrospectively adjusted in the consolidated statements of operations and consolidated statements of cash flows.

See Note 1 and Note 18 to our consolidated financial statements included in this Annual Report for a further discussion of these transactions.

As a result of the sale of a large part of the assets that constituted the former Refined Products and Renewables reportable segment, we decided during the fourth quarter of fiscal year 2020 that the remaining business within the former Refined Products and Renewables reportable segment will be aggregated with the prior Liquids reportable segment and form the current Liquids and Refined Products reportable segment.

Operating results for the reportable segments have been recast for the years ended March 31, 2019 and 2018 to reflect these changes.

Our Crude Oil Logistics and Water Solutions reportable segments remain unchanged from what has been previously reported.

Accordingly, the results of operations and cash flows related to our former Retail Propane segment, TPSL, Mid-Con and Gas Blending have been classified as discontinued operations for all periods presented.

See Note 19 to our consolidated financial statements included in this Annual Report for a further discussion of these transactions.

Recent Developments

Debt Refinancing

On February 4, 2021, we closed on a private offering of $2.05 billion of 7.5% senior secured notes due 2026 (“2026 Senior Secured Notes”) and a new credit agreement (the “New Credit Agreement”) which consists of a $500.0 million asset-based revolving credit facility (“ABL Facility”).

We used the net proceeds from the issuance of the 2026 Senior Secured Notes (along with borrowings under the ABL Facility) to (i) repay all outstanding borrowings under and terminate our existing revolving credit facility, (ii) repay all outstanding borrowings under and terminate our term credit agreement and (iii) pay fees and expenses in connection therewith as well as fees and expenses in connection with the issuance of the 2026 Senior Secured Notes and entering into the ABL Facility.

As part of this refinancing, we also agreed to certain restricted payment provision under the 2026 Senior Secured Notes and ABL Facility, one of which is the suspension of the quarterly common unit distributions, beginning with the quarter ended December 31, 2020, and all preferred unit distributions, beginning with the quarter ended March 31, 2021.

The cash savings from the suspension of the distributions should accelerate the deleveraging of our balance sheet and increase our liquidity, which should create more financial flexibility going forward.

Due to refinancing our old floating-rate debt with new fixed-rate debt at a higher interest rate, our interest expense is expected to increase going forward when compared to prior periods, as we work on deleveraging our balance sheet.

See Note 8 to our consolidated financial statements included in this Annual Report and “–Liquidity, Sources of Capital and Capital Resource Activities” for a discussion of these transactions.

Repurchases of Senior Unsecured Notes

During the three months ended March 31, 2021, we repurchased $47.9 million of the 7.5% Senior Unsecured Notes Due 2026 (“2026 Notes”).

Global Pandemic

Late in the fourth quarter of our 2020 fiscal year, the energy industry experienced historic events that led to a simultaneous demand and supply shock.

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As a result, the global supply of crude oil significantly exceeded demand and led to a collapse in global crude oil prices.

Despite recently announced production cuts from many oil producing countries, supply exceeds demand, crude oil storage is near capacity and prices remain volatile.

In addition, the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic and recommended containment and mitigation measures worldwide, which contributed to a massive economic slowdown and decreased demand for crude oil.

This recent period of unprecedented restrictions on travel and economic activity has significantly reduced demand for refined products.

The reduction in refined products demand, lower crude oil prices and limited storage capacity have combined to put significant downward pressure on domestic crude oil and natural gas producers as they assess their future drilling and production plans.

This period of unprecedented restrictions on travel and economic activity significantly reduced demand for refined products.

The reduction in refined products demand, lower crude oil prices and limited storage capacity combined to put significant downward pressure on domestic crude oil and natural gas producers as they assess their future

drilling and production plans.

All three of our segments were negatively impacted by the lower commodity price environment and reduced demand.

Also, commodity price declines have had an adverse impact on many participants in the energy markets, and the inherent risk of customer or counterparty nonperformance is higher when commodity prices are low or decline.

The potential future limitations and impact of COVID-19 are unknown at this time, and although we tend to experience less demand for certain of our services and products when commodity prices decrease significantly over extended periods of time, and given the uncertain timing of a return of refined product demand to historical levels and of a recovery in commodity prices, the extent of the impact these events will have on our results of operations is unclear.

In June 2020, Extraction Oil & Gas, Inc.

(“Extraction”), who is a significant shipper on our crude oil pipeline, filed a petition for bankruptcy under Chapter 11 of the bankruptcy code and in their filing requested that the court authorize it to reject its transportation contracts, for which we filed an objection.

On November 2, 2020, the bankruptcy court issued a bench ruling granting Extraction’s motion to reject the transportation contracts effective as of June 14, 2020.

We disputed the rejection motion and appealed the bankruptcy court’s approval of the rejection of the transportation contracts.

On December 21, 2020, we announced a global settlement agreement with Extraction, as it relates to Extraction’s emergence from bankruptcy, which occurred on January 21, 2021.

Among other consideration, the global settlement agreement provided for the following:

(i) a new long-term supply agreement, which includes a significant acreage dedication in the DJ Basin, and retains Extraction’s crude oil volumes for shipping on our Grand Mesa Pipeline;

(ii) a new rate structure under the supply agreement, which is based on calendar month average New York Mercantile Exchange (“NYMEX”) prices with an agreed upon differential plus an increase in the rate when those NYMEX prices exceed $50.00 per barrel;

and (iii) the receipt of $35.0 million from Extraction as a liquidated payment for our unsecured claims, which was received on January 21, 2021.

See Note 18 to our consolidated financial statements included in this Annual Report for a further discussion.

While some global and regional economies are beginning to reopen, the potential future limitations and impact of COVID-19 on our business are still unknown at this time and although we tend to experience less demand for certain of our services and products when commodity prices decrease significantly over extended periods of time, and given the uncertain timing of a return of refined product demand to historical levels, the extent of the impact these events will have on our results of operations is unclear.

Crude oil prices have increased but future drilling and production plans are continually being assessed.

Water Solutions

Our Water Solutions segment transports, treats, recycles and disposes of produced and flowback water generated from oil and natural gas production.

We also sell produced water for reuse and brackish non-potable water to our producer customers to be used in their crude oil exploration and production activities.

As part of processing water, we aggregate and sell recovered crude oil, also known as skim oil.

We also dispose of solids such as tank bottoms, drilling fluids and drilling muds and perform other ancillary services such as truck and frac tank washouts.

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.

We operate in a number of the most prolific crude oil and natural gas producing areas including the Delaware Basin in New Mexico and Texas, the Midland Basin in Texas, the DJ Basin in Colorado and the Eagle Ford Basin in Texas.

With a system that handled approximately 498.1 million barrels of produced water across its areas of operation during the year ended March 31, 2021, we believe that we are the largest independent produced water transportation and disposal company in the United States.

The opportunity to generate revenue in our Water Solutions business is driven in large part by the level of crude oil production in the areas where are facilities are located.

Prior to the pandemic, we saw the level of crude oil production increase, particularly in the Permian and DJ Basins, due to increasing or stable crude oil prices, which positively impacted our disposal volumes.

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.

Our Water Solutions segment generated an operating loss of $92.7 million during the year ended March 31, 2021, which included an impairment charge of $84.3 million to write down the value of an asset group due to a decline in producer activity, resulting in lower disposal volumes and to write down the value of certain inactive or underutilized saltwater disposal facilities (see Note 5 and Note 7 to our consolidated financial statements included in this Annual Report).

Our Water Solutions segment generated an operating loss of $173.1 million during the year ended March 31, 2020, which included a goodwill impairment charge of $250.0 million (see Note 6 to our consolidated financial statements included in this Annual Report).

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.

and provides storage, terminaling and transportation services through its owned assets.

Our activities in this segment are supported by certain long-term, fixed rate contracts which include minimum volume commitments on our 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.

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Crude Oil Spot Price Per Barrel

Year Ended March 31,

At Period End

Prior to the substantial decline in crude oil prices in March 2020, the crude oil markets were in backwardation, a condition in which forward crude oil prices are lower than spot prices.

As a result of the decline in prices, the crude oil markets are now in contango, a condition in which forward crude oil prices are greater than spot prices.

Year Ended March 31, Low High At Period End

2021 (1) $ (37.63) $ 66.09 $ 59.16

2020 $ 20.09 $ 66.30 $ 20.48

2019 $ 42.53 $ 76.41 $ 60.14

(1) On April 20, 2020, crude oil prices collapsed due to low demand as a result of the COVID-19 lockdowns and a lack of available storage.

Prior to the substantial decline in crude oil prices, the crude oil markets were in backwardation, a condition in which forward crude oil prices are lower than spot prices.

As a result of the decline in prices, the crude oil markets were in contango, from April 2020 to February 2021, a condition in which forward crude oil prices are greater than spot prices.

Starting in March 2021, we are now in backwardation.

Our Crude Oil Logistics business benefits when the market is in contango, as increasing prices result in inventory holding gains during the time between when we purchase inventory and when we sell it.

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We believe volatility in commodity prices will continue into the near term, our ability to adjust to and manage this volatility may impact our financial results.

Our Crude Oil Logistics segment generated an operating loss of $304.3 million during the year ended March 31, 2021, which included impairment charges of $383.6 million related to the Extraction bankruptcy.

Our Crude Oil Logistics segment generated operating income of $117.8 million during the year ended March 31, 2020.

Our Crude Oil Logistics segment generated an operating loss of $7.4 million during the year ended March 31, 2019 , which included losses on the disposal of assets of $107.4 million .

Water Solutions

Our Water Solutions segment transports, treats, recycles and disposes of produced and flowback water generated from crude oil and natural gas production.

We also dispose of solids such as tank bottoms, drilling fluids and drilling muds and perform other ancillary services such as truck and frac tank washouts.

As part of processing water, we are able to aggregate recovered crude oil, also known as skim oil, that was contained in the water and sell the crude oil.

We also sell brackish non-potable water to our producer customers to be used in their crude oil exploration and production activities.

Our activities in the Water Solutions 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.

With a system that handled approximately 485.1 million barrels of produced water across its areas of operation during the year ended March 31, 2020, we believe that we are the largest independent produced water transportation and disposal company in the United States.

The customers have contracts with us including minimum volume commitments, acreage dedications, water pipeline and trucked water disposal agreements.

Our Water Solutions segment generated an operating loss of $173.1 million during the year ended March 31, 2020 , which included a goodwill impairment charge of $250.0 million (see Note 6 to our consolidated financial statements included in this Annual Report).

Our Water Solutions segment generated operating income of $210.5 million during the year ended March 31, 2019 , which included a gain of $141.3 million on the sales of our Bakken water disposal business and our South

Pecos water disposal business (see Note 17 to our consolidated financial statements included in this Annual Report for a further discussion of both transactions).

The opportunity to generate revenue in our Water Solutions business is driven in large part by the level of crude oil production in the areas where are facilities are located.

Over the past couple of years, we saw the level of crude oil production increase, particularly in the Permian and DJ Basins, due to increasing or stable crude oil prices, which positively impacted our disposal volumes.

Lower crude oil prices provide the producers with less incentive to spend on capital expenditures, which results in fewer drilling rigs and lower amounts of production, which negatively impacts our disposal volumes.

Liquids and Refined Products

Our Liquids and Refined Products segment purchases gasoline, diesel, propane, butane, and other products from refiners, processing plants, producers, and other parties, and sells the products to retailers, wholesalers, refiners, and petrochemical plants throughout the United States and in Canada.

Our Liquids and Refined Products segment owns 28 terminals throughout the United States and a salt dome storage facility joint venture in Utah, operates a fleet of leased railcars, and leases underground storage capacity.

Liquids Logistics

Our Liquids Logistics segment (formerly named Liquids and Refined Products) 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.

These operations are conducted through our 28 company-owned terminals, third-party storage and terminal facilities, common carrier pipelines and a fleet of leased railcars.

We also provide marine exports of butane through our facility located in Chesapeake, Virginia.

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.

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Belvieu, Texas, two of our main pricing hubs, for the periods indicated and the prices at period end:

Conway, Kansas

Conway, Kansas Mt.

Belvieu, Texas

Propane Spot Price Per Gallon

Year Ended March 31,

At Period End

Propane Spot Price Per Gallon Propane Spot Price Per Gallon

Year Ended March 31, Low High At Period End Low High At Period End

2021 $ 0.23 $ 1.53 $ 0.86 $ 0.25 $ 1.07 $ 0.92

2020 $ 0.18 $ 0.60 $ 0.25 $ 0.19 $ 0.68 $ 0.28

2019 $ 0.50 $ 0.88 $ 0.55 $ 0.58 $ 1.11 $ 0.64

The following table summarizes the range of low and high butane spot prices per gallon at Mt.

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Butane Spot Price Per Gallon

Year Ended March 31,

At Period End

Year Ended March 31, Low High At Period End

2021 $ 0.28 $ 1.16 $ 0.98

2020 $ 0.19 $ 0.80 $ 0.29

2019 $ 0.71 $ 1.51 $ 0.75

The following table summarizes the range of low and high Gulf Coast gasoline spot prices per barrel using NYMEX gasoline prompt-month futures for the periods indicated and the prices at period end:

Gasoline Spot Price Per Barrel

Year Ended March 31,

At Period End

Gasoline Spot Price Per Gallon

Year Ended March 31, Low High At Period End

2021 $ 21.43 $ 90.30 $ 82.04

2020 $ 17.30 $ 89.55 $ 24.07

2019 $ 52.45 $ 95.35 $ 79.62

The following table summarizes the range of low and high diesel spot prices per barrel using NYMEX ULSD prompt-month futures for the periods indicated and the prices at period end:

Diesel Spot Price Per Barrel

Year Ended March 31,

At Period End

Diesel Spot Price Per Gallon

Year Ended March 31, Low High At Period End

2021 $ 25.64 $ 82.64 $ 74.39

2020 $ 40.08 $ 89.17 $ 42.51

2019 $ 69.81 $ 102.36 $ 82.88

We believe volatility in commodity prices will continue, and our ability to adjust to and manage this volatility may impact our financial results.

Our Liquids and Refined Products segment generated operating income of $142.4 million during the year ended March 31, 2020 .

Our Liquids and Refined Products segment generated operating income of $9.3 million during the year ended March 31, 2019 , which included a goodwill impairment charge of $66.2 million related to our salt dome storage facility joint venture in Utah (see Note 6 to our consolidated financial statements included in this Annual Report).

Our Liquids Logistics segment generated operating income of $70.4 million and $142.4 million during the years ended March 31, 2021 and March 31, 2020, respectively.

Consolidated Results of Operations

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Year Ended March 31,

2021 2020 2019

(in thousands)

Total revenues

Total cost of sales

Revenues $ 5,227,023 $ 7,584,000 $ 8,689,157

Cost of sales 4,493,822 6,604,383 7,983,061

Operating expenses 254,562 332,993 231,065

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Depreciation and amortization 317,227 265,312 211,973

Loss (gain) on disposal or impairment of assets, net

Loss on disposal or impairment of assets, net 475,436 261,786 34,296

Revaluation of liabilities 6,261 9,194 (5,373)

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Interest expense (198,799) (181,184) (164,725)

Gain (loss) on early extinguishment of liabilities, net

Other income (expense), net

(Loss) gain on early extinguishment of liabilities, net (16,692) 1,341 (12,340)

Other (expense) income, net (36,503) 1,684 (30,418)

Loss from continuing operations before income taxes (640,809) (180,200) (78,222)

Income tax expense

Income tax benefit (expense) 3,391 (345) (1,233)

Loss from continuing operations (637,418) (180,545) (79,455)

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Net (loss) income (639,187) (398,780) 339,395

Net loss (income) attributable to noncontrolling interests

Net loss (income) attributable to redeemable noncontrolling interests

Net (income) loss attributable to noncontrolling interests (632) 1,773 20,206

Net loss attributable to redeemable noncontrolling interests — — 446

Net (loss) income attributable to NGL Energy Partners LP $ (639,819) $ (397,007) $ 360,047

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Our current and future results of operations may not be comparable to our historical results of operations for the periods presented due to business combinations, disposals and other transactions.

As discussed below, we completed numerous acquisitions during the years ended March 31, 2020 and 2019 .

These acquisitions impact the comparability of our results of operations between our current and prior fiscal years.

Acquisitions and Dispositions

In March 2021, we acquired the Ambassador pipeline, an approximately 225-mile natural gas liquids pipeline, which runs from the Kalkaska gas plant in Kalkaska County, Michigan to a termination point near Marysville in St.

Clair County, Michigan (see Note 4 to our consolidated financial statements included in this Annual Report).

During the year ended March 31, 2021, we sold certain permits, land and a saltwater disposal facility to a third-party (see Note 18 to our consolidated financial statements included in this Annual Report).

We also completed numerous acquisitions and dispositions during the years ended March 31, 2020 and 2019.

These transactions impact the comparability of our results of operations between our current and prior fiscal years.

During the year ended March 31, 2020, we completed the following acquisitions:

• On July 2, 2019, we acquired all of assets of Mesquite (including 34 saltwater disposal wells and approximately 175 miles of pipelines);

The assets consist of a fully interconnected produced water pipeline transportation and disposal system in Eddy and Lea Counties, New Mexico, and Loving County, Texas.

• On October 31, 2019, we acquired all of the equity interests of Hillstone (including 19 saltwater disposal wells);

The assets consist of a fully interconnected water pipeline transportation and disposal system in the state line area of southern Eddy and Lea Counties, New Mexico and northern Loving County, Texas in the Delaware Basin.

• On November 7, 2019, we acquired the exclusive rights to use certain land in Lea County, New Mexico for produced and treated water operations from one entity, certain membership interests in another entity and other assets;

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• During the year ended March 31, 2020, we acquired land and two saltwater disposal wells in Pecos County, Texas.

See Note 4 to our consolidated financial statements included in this Annual Report for a further discussion.

During the year ended March 31, 2019, in our Water Solutions segment, we acquired the remaining 18.375% interest in NGL Water Pipelines, LLC, six saltwater disposal facilities (including 22 saltwater disposal wells), two ranches and four brackish non-potable water facilities (including 45 brackish non-potable water wells).

In our Liquids and Refined Products segment, we acquired the natural gas liquids terminal business of DCP and we acquired two refined products terminals, which were included in the sale of TPSL on September 30, 2019, the operations of which have been classified as discontinued (see “Dispositions” below).

Sales of TPSL, Mid-Con and Gas Blending

During the year ended March 31, 2020, we completed the following dispositions which have been classified as discontinued operations (see “Overview” above):

• On September 30, 2019, we completed the sale of TPSL to Trajectory Acquisition Company, LLC;

On January 3, 2020, we completed the sale of Mid-Con to a third-party.

On March 30, 2020, we completed the sale of Gas Blending to another third-party.

See “Overview” above for a further discussion.

Sale of South Pecos Water Disposal Business

On February 28, 2019, we completed the sale of our South Pecos water disposal business to a subsidiary of WaterBridge Resources LLC for $232.2 million in net cash proceeds and recorded a gain on disposal of $107.9 million during the year ended March 31, 2019.

See Note 17 to our consolidated financial statements included in this Annual Report for a further discussion.

As this sale transaction did not represent a strategic shift that will have a major effect on our operations or financial results, operations related to this portion of our Water Solutions segment have not been classified as discontinued operations.

Sale of Bakken Saltwater Disposal Business

On November 30, 2018, we completed the sale of NGL Water Solutions Bakken, LLC to an affiliate of Tallgrass Energy, LP for $85.0 million in net cash proceeds and recorded a gain on disposal of $33.4 million during the year ended March 31, 2019.

See Note 17 to our consolidated financial statements included in this Annual Report for a further discussion.

Sale of Retail Propane Business

On March 30, 2018, we sold a portion of our former Retail Propane segment to DCC LPG.

• On January 3, 2020, we completed the sale of our Mid-Con refined products business to a third-party;

• On March 30, 2020, we completed the sale of our Gas Blending business to another third-party.

During the year ended March 31, 2019, we completed the following dispositions:

• On February 28, 2019, we completed the sale of our South Pecos water disposal business to a subsidiary of WaterBridge Resources LLC;

• On November 30, 2018, we completed the sale of NGL Water Solutions Bakken, LLC to an affiliate of Tallgrass Energy, LP;

• On July 10, 2018, we completed the sale of virtually all of our remaining Retail Propane segment to Superior Plus Corp.

and, finally, on August 14, 2018, we sold our interest in Victory Propane.

See “Overview” above for a further discussion.

Sawtooth Caverns, LLC (“Sawtooth”) Joint Venture

On March 30, 2018, we completed the transaction to form a joint venture with Magnum Liquids, LLC, a portfolio company of Haddington Ventures LLC, along with Magnum Development, LLC and other Haddington-sponsored investment entities (collectively “Magnum”) t o focus on the storage of natural gas liquids and refined products by combining our Sawtooth salt dome storage facility with Magnum’s refined products rights and adjacent leasehold.

Magnum acquired an approximately 28.5% interest in Sawtooth from us, in exchange for consideration consisting of a cash payment of approximately $37.6 million (excluding working capital) and the contribution of certain refined products rights and adjacent leasehold .

See Note 17 to our consolidated financial statements included in this Annual Report for a further discussion.

Sale of Interest in Glass Mountain

On December 22, 2017, we sold our 50% interest in Glass Mountain for net proceeds of $292.1 million and recorded a gain on disposal of $108.6 million during the three months ended December 31, 2017 .

See Note 17 to our consolidated financial statements included in this Annual Report for a further discussion.

As this sale transaction did not represent a strategic shift that will have a major effect on our operations or financial results, operations related to this portion of our Crude Oil Logistics segment have not been classified as discontinued operations.

Seasonality impacts our Liquids and Refined Products segment.

Consequently, for our Liquids and Refined Products business, revenues, operating profits and operating cash flows are generated mostly in the third and fourth quarters of our fiscal

and, finally, on August 14, 2018, we sold our interest in Victory Propane, LLC.

Seasonality impacts our Liquids Logistics segment.

Consequently, for our Liquids Logistics business, revenues, operating profits and operating cash flows are generated mostly in the third and fourth quarters of our fiscal year.

We borrow under the revolving credit 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–Cash Flows.”

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, 2020 .

Segment Operating Results for the Years Ended March 31, 2021 and 2020

Crude Oil Logistics

The following table summarizes the operating results of our Crude Oil Logistics segment for the periods indicated:

Year Ended March 31,

(in thousands, except per barrel amounts)

Crude oil sales

Crude oil transportation and other

Total revenues (1)

Cost of sales-excluding impact of derivatives

Cost of sales-derivative gain

Operating expenses

General and administrative expenses

Depreciation and amortization expense

(Gain) loss on disposal or impairment of assets

Total expenses

Segment operating income (loss)

Crude oil sold (barrels)

Crude oil transported on owned pipelines (barrels)

Crude oil storage capacity - owned and leased (barrels) (2)

Crude oil storage capacity leased to third parties (barrels) (2)

Crude oil inventory (barrels) (2)

Crude oil sold ($/barrel)

Cost per crude oil sold ($/barrel)

Crude oil product margin ($/barrel)

Revenues include $18.2 million and $36.1 million of intersegment sales during the years ended March 31, 2020 and 2019 , respectively, that are eliminated in our consolidated statements of operations.

Information is presented as of March 31, 2020 and March 31, 2019 , respectively.

Crude Oil Sales Revenues.

The decrease was due primarily to a decrease in crude oil prices and sales volumes during the year ended March 31, 2020, compared to the year ended March 31, 2019.

The volumes decreased due to changes in the method of delivery to the market in the Permian region, as a significant amount of production switched to long haul pipeline owned and controlled by others.

Crude Oil Transportation and Other Revenues.

The increase was partially due to our Grand Mesa Pipeline, which increased revenues by $7.3 million during the year ended March 31, 2020, compared to the year ended March 31, 2019, primarily due to increased production growth in the DJ Basin.

During the year ended March 31, 2020, approximately 45.9 million barrels of crude were transported on the Grand Mesa Pipeline, which averaged approximately 131,000 financial barrels per day.

In addition, we signed a new crude marketing contract in July 2019 which increased revenues by $7.7 million in the

current year when compared to the prior year.

This was partially offset by a reduction in railcar sublease revenue.

Also, crude transportation increased $5.8 million due to increased marine transportation activity.

Cost of Sales-Excluding Impact of Derivatives.

The decrease was due primarily to a decrease in crude oil prices and volumes during the year ended March 31, 2020 , compared to the year ended March 31, 2019 .

Cost of Sales-Derivatives .

Our cost of sales during the year ended March 31, 2020 included $24.4 million of net realized gains on derivatives and $11.3 million of net unrealized gains on derivatives.

In March 2020, we closed and realized derivative contracts that had scheduled settlement dates from May through June 2020 which accounted for $16.7 million of the realized gains.

Our cost of sales during the year ended March 31, 2019 included $0.6 million of net realized losses on derivatives and $1.7 million of net unrealized gains on derivatives.

Operating and General and Administrative Expenses .

The increase was due primarily to utilities related to the higher volumes transported on the Grand Mesa Pipeline.

Depreciation and Amortization Expense.

The decrease was due to the retirement of certain assets and other assets being fully depreciated or amortized during the year ended March 31, 2019 .

(Gain) Loss on Disposal or Impairment of Assets, Net .

During the year ended March 31, 2020 , we recorded a net gain of $1.1 million related to the disposal of certain assets.

During the year ended March 31, 2019, we recorded a net loss of $107.4 million , which included a loss of $105.0 million on our transaction with a third party in which they agreed to be fully responsible for our future minimum volume commitment in exchange for $67.7 million of deficiency credits on a contract with a crude oil pipeline operator and $35.3 million in cash (see Note 13 to our consolidated financial statements included in this Annual Report).

The loss also includes additional costs related to this transaction of $2.0 million .

In addition, we recorded a loss of $1.3 million related to the sale of two terminals during the year ended March 31, 2019.

Water Solutions

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Year Ended March 31,

2021 2020 Change

(in thousands, except per barrel and per day amounts)

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Cost of sales-excluding impact of derivatives 2,557 5,511 (2,954)

Cost of sales-derivative gain

Derivative loss (gain) 7,065 (39,381) 46,446

Operating expenses 142,371 192,987 (50,616)

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Depreciation and amortization expense 222,107 163,588 58,519

Loss (gain) on disposal or impairment of assets, net

Loss on disposal or impairment of assets, net 76,942 255,285 (178,343)

Revaluation of liabilities 6,261 9,194 (2,933)

Total expenses 463,706 595,123 (131,417)

Segment operating (loss) income

Segment operating loss $ (92,720) $ (173,064) $ 80,344

Produced water processed (barrels per day)

Northern Delaware Basin (1)

Permian Basin

Delaware Basin (1) 1,148,582 1,170,158 (21,576)

Eagle Ford Basin 78,397 246,784 (168,387)

DJ Basin 111,016 164,936 (53,920)

Other Basins 26,596 61,091 (34,495)

Total 1,364,591 1,642,969 (278,378)

Solids processed (barrels per day) 1,324 5,697 (4,373)

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Operating expenses for produced water processed ($/barrel) (2) $ 0.29 $ 0.40 $ (0.11)

Barrels per day of produced water processed by the assets acquired in the Mesquite and Hillstone transactions are calculated by the number of days in which we owned the assets during the period presented.

(1) During the year ended March 31, 2020, barrels per day of produced water processed by the assets acquired in the Mesquite and Hillstone transactions are calculated by the number of days in which we owned the assets.

(2) Total produced water barrels processed during the years ended March 31, 2021 and 2020 were 498,075,843 and 485,115,941, respectively.

Water Disposal Service Fee Revenues.

The increase was due primarily to an increase in the price we are receiving to dispose of a barrel of water and an increase in the volume of produced water processed at acquired (primarily Mesquite and Hillstone) and newly developed facilities, partially offset by produced water volume reductions as a result of the sale of our Bakken and South Pecos water disposal businesses during the fiscal year ended March 31, 2019.

The increase was due primarily to an increase in the volume of produced water processed primarily driven by our acquisitions of Mesquite and Hillstone as well as new produced water volumes received upon the completion and commencement of the Partnership’s Poker Lake pipeline.

The pipeline was successfully completed in October 2020 with a capacity of over 400,000 barrels per day and connects into our integrated Delaware Basin produced water pipeline infrastructure network.

These increases were partially offset by a decrease in the volume of other produced water processed resulting from lower crude oil prices, development activity and production volumes.

Recovered Crude Oil Revenues.

The decrease was due primarily to a decrease in the percentage of skim oil volumes recovered per produced water barrel processed, lower crude oil prices and lower skim oil volumes as a result of the sale of our Bakken and South Pecos water disposal businesses.

This decrease was partially offset by skim oil volumes recovered from assets acquired in the Mesquite and Hillstone acquisitions.

The lower percentage of skim oil volumes recovered was due

primarily to an increase in produced water transported through pipelines (which contains less oil per barrel of produced water), and the addition of contract structures that allow producers to keep the skim oil recovered from produced water.

The decrease was due primarily to a reduction in the number of producing wells completed in our area of operations, a decrease in the percentage of skim oil volumes recovered per produced water barrel processed and lower crude oil prices.

The lower percentage of skim oil volumes recovered was due primarily to an increase in produced water transported through pipelines (which contains less oil per barrel of produced water), and the addition of contract structures that allow producers to keep the skim oil recovered from produced water.

Other Service Revenues.

Other service revenues primarily include solids disposal revenues, water pipeline revenues, land surface use revenues and brackish non-potable water revenues.

The increase was due primarily to an increase in land surface use revenues and brackish non-potable water revenues in our New Mexico operations which began during the three months ended September 30, 2018 as well as brackish non-potable water revenues due to acquisitions and a new short-term agreement whereby we purchased brackish non-potable water and resold to a third party.

These increase s were partially offset by lower water pipeline revenues and volumes due to certain operators recycling rather than disposing of the produced water and lower production activity from certain operators.

In addition, solids disposal revenues and volumes were lower due to closure of a facility from April to October due to the working over of the well and reduced operations at another facility.

Other service revenues primarily include solids disposal revenues, water pipeline revenues, land surface use revenues, brackish non-potable water revenues and resale water revenues.

The decrease was due primarily to reduced customer development activity and needs for these services resulting from the decline in crude oil prices.

These decreases were partially offset by the sale of water to customers for use in their operations.

Cost of Sales-Excluding Impact of Derivatives .

The increase was due primarily to a new short-term agreement whereby we purchased brackish non-potable water and resold to a third party as well as operational changes in the Eagle Ford Basin during the three months ended September 30, 2019 .

Cost of Sales-Derivatives .

The decrease was due primarily to lower purchasing and transportation costs related to our brackish non-potable water and crude oil sales .

Derivative Loss (Gain) .

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 the produced water and selling the skim oil.

Our cost of sales during the year ended March 31, 2021 included $24.5 million of net unrealized losses on derivatives and $17.4 million of net realized gains on derivatives.

Our cost of sales during the year ended March 31, 2020 included $29.9 million of net unrealized gains on derivatives and $9.5 million of net realized gains on derivatives.

In June 2019, we settled derivative contracts that had scheduled settlement dates from April through December 2020 and recorded a gain of $1.9 million on those derivatives.

Our cost of sales during the year ended March 31, 2019 included $15.5 million of net unrealized gains on derivatives and $2.1 million of net realized losses on derivatives.

Operating and General and Administrative Expenses .

The increase was due primarily to the increase in the number of water disposal facilities and wells that we own and operate, both through acquisitions and development of new facilities, partially offset by the sale of our Bakken and South Pecos water disposal businesses during the fiscal year ended March 31, 2019.

Also contributing to the increase were acquisition expenses of $4.1 million related to the Hillstone acquisition during the year ended March 31, 2020 .

During the year ended March 31, 2019 , we incurred acquisition expenses of $3.5 million related to one of our ranch acquisitions.

The decrease was due primarily to the deployment of automation and subsequent reduction in employee headcount, reduced equipment rental (including generators) and associated diesel fuel and repairs and lower maintenance expense.

In addition, acquisition expenses were lower by $4.1 million as we did not close on any acquisitions during the year ended March 31, 2021.

Depreciation and Amortization Expense .

The increase was due primarily to acquisitions and newly developed facilities, partially offset by the sale of our Bakken and South Pecos water disposal businesses during the year ended March 31, 2019 .

Loss (Gain) on Disposal or Impairment of Assets, Net .

The increase was due primarily to Mesquite and Hillstone acquisitions completed in the prior year and newly developed facilities and infrastructure.

Loss on Disposal or Impairment of Assets, Net .

During the year ended March 31, 2021, we recorded:

• an impairment charge of $72.4 million to write down the value of an asset group and certain intangible assets due to a decline in producer activity, resulting in lower disposal volumes (see Note 5 and Note 7 to our consolidated financial statements included in this Annual Report);

• an impairment charge of $11.9 million to write down the value of certain inactive or underutilized saltwater disposal facilities (see Note 5 to our consolidated financial statements included in this Annual Report);

• a net loss of $6.7 million related to write-down or write off of certain assets, including facilities damaged by lightning strikes and abandoned projects, and the sale of certain other miscellaneous assets (see Note 5 to our consolidated financial statements included in this Annual Report);

• a gain of $14.0 million related to the sale of certain permits, land and a saltwater disposal facility (see Note 18 to our consolidated financial statements included in this Annual Report).

During the year ended March 31, 2020, we recorded:

• a goodwill impairment charge of $250.0 million related to the current macroeconomic conditions including the collapse of oil prices driven by both the decrease in demand caused by the COVID-19 pandemic and excess supply, as well as changing market conditions and expected lower crude oil production in certain regions, resulting in expected decreases in future cash flows for certain of our assets (see Note 6 to our consolidated financial statements included in this Annual Report);

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• a net loss of $9.2 million on the disposals of certain other assets;

a gain of $14.5 million for the sale of certain water permits;

• a gain of $14.5 million for the sale of certain water permits (see Note 18 to our consolidated financial statements included in this Annual Report);

• a gain of $1.0 million for cash received related to a loan receivable that was previously written off.

During the year ended March 31, 2019 , we completed the sales of our South Pecos and Bakken water disposal businesses and recorded gains on disposal of $107.9 million and $33.4 million , respectively (see Note 17 to our consolidated financial statements included in this Annual Report for a further discussion of both transactions).

In addition, we recorded a net loss of $3.1 million on the disposals of certain other assets during the year ended March 31, 2019 .

Revaluation of Liabilities.

During the year ended March 31, 2021, 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, 2020, a portion of the revaluation of liabilities represented the change in the valuation of our contingent consideration liability issued by us as part of a business combination.

Under the agreement, we were required to make additional payments to the seller based on the volume of produced water processed by the assets acquired.

During the year ended March 31, 2020 , the thresholds for the volume of produced water processed were

surpassed, thus triggering our obligation to pay the seller.

During the year ended March 31, 2020, the thresholds for the volume of produced water processed were surpassed, thus triggering our obligation to pay the seller.

See Note 2 to our consolidated financial statements included in this Annual Report for a further discussion of the contingent consideration liability.

During the years ended March 31, 2020 and 2019, there was a reduction in expense for the valuation of our contingent consideration liabilities related to royalty agreements acquired as part of certain business combinations due primarily to lower expected production from new customers and an increase in facilities due to acquisitions, resulting in a decrease to the expected future royalty payment.

Liquids and Refined Products

The following table summarizes the operating results of our Liquids and Refined Products segment for the periods indicated:

During the year ended March 31, 2020, there was a reduction in expense for the valuation of our contingent consideration liabilities related to royalty agreements acquired as part of certain business combinations due primarily to lower expected production from new customers and an increase in facilities due to acquisitions, resulting in a decrease to the expected future royalty payment.

Crude Oil Logistics

The following table summarizes the operating results of our Crude Oil Logistics segment for the periods indicated:

Year Ended March 31,

2021 2020 Change

(in thousands, except per barrel amounts)

Crude oil sales $ 1,574,699 $ 2,383,812 $ (809,113)

Crude oil transportation and other 153,588 184,129 (30,541)

Total revenues (1) 1,728,287 2,567,941 (839,654)

Cost of sales-excluding impact of derivatives 1,473,330 2,347,863 (874,533)

Derivative loss (gain) 49,314 (35,736) 85,050

Operating expenses 56,918 61,708 (4,790)

General and administrative expenses 8,038 6,723 1,315

Depreciation and amortization expense 60,874 70,759 (9,885)

Loss (gain) on disposal or impairment of assets, net 384,143 (1,144) 385,287

Total expenses 2,032,617 2,450,173 (417,556)

Segment operating (loss) income $ (304,330) $ 117,768 $ (422,098)

Crude oil sold (barrels) 38,349 42,799 (4,450)

Crude oil transported on owned pipelines (barrels) 32,797 45,884 (13,087)

Crude oil storage capacity - owned and leased (barrels) (2) 5,239 5,362 (123)

Crude oil storage capacity leased to third parties (barrels) (2) 1,501 2,062 (561)

Crude oil inventory (barrels) (2) 1,201 1,111 90

Crude oil sold ($/barrel) $ 41.062 $ 55.698 $ (14.636)

Cost per crude oil sold ($/barrel) (3) $ 38.419 $ 54.858 $ (16.439)

Crude oil product margin ($/barrel) (3) $ 2.643 $ 0.840 $ 1.803

(1) Revenues include $6.7 million and $18.2 million of intersegment sales during the years ended March 31, 2021 and 2020, respectively, that are eliminated in our consolidated statements of operations.

(2) Information is presented as of March 31, 2021 and March 31, 2020, respectively.

(3) Cost and product margin per barrel excludes the impact of derivatives.

Crude Oil Sales Revenues.

The decrease was due primarily to a decrease in crude oil prices and sales volumes during the year ended March 31, 2021, compared to the year ended March 31, 2020.

Crude Oil Transportation and Other Revenues.

The decrease was primarily due to our Grand Mesa Pipeline, which decreased revenues by $32.8 million during the year ended March 31, 2021, compared to the year ended March 31, 2020.

During the year ended March 31, 2021, financial volumes on the Grand Mesa Pipeline averaged approximately 94,000 barrels per day, compared to 131,000 barrels per day for the year ended March 31, 2020 (volume amounts are from both internal and

external parties) primarily due to the court approved rejection of the Extraction transportation agreement (see Note 18 to our consolidated financial statements included in this Annual Report).

Cost of Sales-Excluding Impact of Derivatives.

The decrease was due to a decrease in crude oil prices and reduced volumes during the year ended March 31, 2021, compared to the year ended March 31, 2020.

Derivative Loss (Gain) .

Our cost of sales during the year ended March 31, 2021 included $25.9 million of net realized losses on derivatives and $23.4 million of net unrealized losses on derivatives.

The losses are due to a very volatile pricing market during the year ended March 31, 2021.

Our cost of sales during the year ended March 31, 2020 included $24.4 million of net realized gains on derivatives and $11.3 million of net unrealized gains on derivatives.

In March 2020, we closed and realized derivative contracts that had scheduled settlement dates from May 2020 through June 2020, which accounted for $16.7 million of the realized gains for the prior year.

Crude Oil Product Margin.

The increase was due to inventory purchased during the three months ended June 30, 2020 at lower prices and held for sale during the three months ended September 30, 2020 and the three months ended December 31, 2020 when prices recovered.

Operating and General and Administrative Expenses .

Expenses decreased compared to the prior year due to a decrease of utilities, as lower volumes were being shipped on the Grand Mesa Pipeline and other cost cutting measures which were partially offset by the write off of a $5.7 million receivable from Extraction (see Note 18 to our consolidated financial statements included in this Annual Report).

Depreciation and Amortization Expense.

The decrease was due to the retirement of certain assets and other assets being fully depreciated or amortized during the year ended March 31, 2020.

Loss (Gain) on Disposal or Impairment of Assets, Net .

During the year ended March 31, 2021, we recorded a net loss of $145.8 million for the impairment of an intangible asset, related to a rejected transportation agreement with Extraction (see Note 18 to our consolidated financial statements included in this Annual Report), and a net loss of $237.8 million for the impairment of goodwill (see Note 6 to our consolidated financial statements included in this Annual Report).

During the year ended March 31, 2020, we recorded a net gain of $1.1 million related to the disposal of certain assets.

Liquids Logistics

The following table summarizes the operating results of our Liquids Logistics segment for the periods indicated:

Year Ended March 31,

2021 2020 Change

(in thousands, except per gallon amounts)

Refined products sales:

Revenues (1)(2)

Revenues-excluding impact of derivatives (1)(2) $ 1,124,087 $ 2,394,663 $ (1,270,576)

Cost of sales-excluding impact of derivatives (3) 1,108,493 2,367,850 (1,259,357)

Cost of sales-derivative (gain) loss

Derivative loss (gain) 930 (3,225) 4,155

Product margin 14,664 30,038 (15,374)

Propane sales:

Revenues (1) 1,027,582 846,756 180,826

Cost of sales-excluding impact of derivatives 949,402 766,521 182,881

Cost of sales-derivative loss

Derivative loss 10,994 3,536 7,458

Product margin 67,186 76,699 (9,513)

Butane sales:

Revenues (1) 517,857 564,016 (46,159)

Cost of sales-excluding impact of derivatives 469,394 486,777 (17,383)

Cost of sales-derivative gain

Derivative loss (gain) 22,353 (8,288) 30,641

Product margin 26,110 85,527 (59,417)

Other product sales:

Revenues-excluding impact of derivatives (1) 446,744 775,458 (328,714)

Cost of sales-excluding impact of derivatives 424,191 732,967 (308,776)

Cost of sales-derivative gain

Derivative gain (7,078) (2,846) (4,232)

Product margin 29,631 45,337 (15,706)

Service revenues:

Revenues (1) 33,915 40,216 (6,301)

Cost of sales 4,751 9,207 (4,456)

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Year Ended March 31,

2021 2020 Change

(in thousands, except per gallon amounts)

Liquids and Refined Products storage capacity - owned and leased (gallons) (4)

Natural gas liquids and refined products storage capacity - owned and leased (gallons) (4) 427,975 400,301 27,674

Refined products sold (gallons) 834,717 1,272,546 (437,829)

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(1) Revenues include $6.1 million and $5.0 million of intersegment sales during the years ended March 31, 2021 and 2020, respectively, that are eliminated in our consolidated statements of operations.

Revenues include $10.3 million and $64.8 million of intersegment sales during the years ended March 31, 2020 and 2019 , respectively, between certain businesses within the Liquids and Refined Products segment and TPSL, Mid-Con and Gas Blending that are eliminated in our consolidated statements of operations.

Cost of sales include $8.2 million and $62.9 million of intersegment cost of sales during the years ended March 31, 2020 and 2019 , respectively, between certain businesses within the Liquids and Refined Products segment and TPSL, Mid-Con and Gas Blending that are eliminated in our consolidated statements of operations.

(2) Revenues include $10.3 million of intersegment sales during the year ended March 31, 2020 between certain businesses within the Liquids Logistics segment and TPSL, Mid-Con and Gas Blending that are eliminated in our consolidated statement of operations.

(3) Cost of sales include $8.2 million of intersegment cost of sales during the year ended March 31, 2020 between certain businesses within the Liquids Logistics segment and TPSL, Mid-Con and Gas Blending that are eliminated in our consolidated statement of operations.

(4) Information is presented as of March 31, 2021 and March 31, 2020, respectively.

(5) Cost and product margin per gallon excludes the impact of derivatives.

Refined Products Revenues and Cost of Sales-Excluding Impact of Derivatives.

The decreases in revenues and cost of sales-excluding impact of derivatives were due to a decrease in refined products prices, offset by increased volumes.

The decrease in prices was due primarily to supply and demand for refined fuels at our wholesale locations.

The increased volumes were due primarily to the continued demand for motor fuels.

Refined Products- Derivative (Gain) Loss .

The decreases in revenues and cost of sales, excluding the impact of derivatives, were due to a decrease in refined products prices and volumes due to the sizable reduction in demand for both gasoline and diesel products due to the COVID -19 pandemic.

There was also a large decrease in volumes due to the elimination of our sales in the Northeast and Southeast due to our non-compete clause with the purchaser of our TPSL business.

Refined Products Derivative Loss (Gain).

Our margin during the year ended March 31, 2021 included a loss of $0.9 million from our risk management activities due primarily to NYMEX future prices increasing on our short future positions.

Our margin during the year ended March 31, 2020 included a gain of $3.2 million from our risk management activities due primarily to unrealized gains on our open forward physical positions and decreases in NYMEX futures prices on our short future positions.

Our margin during the year ended March 31, 2019 included a loss of $0.8 million from our risk management activities due primarily to NYMEX futures prices increasing on our short future positions.

Propane Sales and Cost of Sales-Excluding Impact of Derivatives.

The decreases in revenues and cost of sales-excluding impact of derivatives were due primarily to lower commodity prices which was partially offset by an increase in volumes sold.

Cost of Sales-Derivatives .

Our cost of wholesale propane sales included $1.5 million of net unrealized losses on derivatives and $2.0 million of net realized losses on derivatives during the year ended March 31, 2020 .

The increases in revenues and cost of sales-excluding impact of derivatives were due to increased commodity prices in the fourth quarter of the year ended March 31, 2021, as a result of winter storm Uri in February 2021.

These increases were partially offset by lower volumes as a result of lower commercial and industrial demand due to the COVID-19 pandemic.

Propane Derivative Loss .

Our cost of wholesale propane sales included $3.3 million of net unrealized gains on derivatives and $14.3 million of net realized losses on derivatives during the year ended March 31, 2021.

During the year ended March 31, 2020, our cost of wholesale propane sales included $1.5 million of net unrealized losses on derivatives and $2.0 million of net realized losses on derivatives.

Propane product margins per gallon of propane sold were higher during the year ended March 31, 2020 than during the year ended March 31, 2019 .

Propane product margins increased due to inventory values aligning with reduced commodity prices at index markets.

Meanwhile, regional spot prices saw significant increases in the fall due to supply constraints and strong crop drying demand.

Propane product margins per gallon of propane sold were higher during the year ended March 31, 2021 than during the year ended March 31, 2020 due primarily to inventory values aligning with reduced commodity prices at index markets as well as the extreme cold weather in February 2021.

Butane Sales and Cost of Sales-Excluding Impact of Derivatives.

The decreases in revenues and cost of sales-excluding impact of derivatives were due primarily to lower commodity prices.

Volumes increased due to strong demand from domestic and international markets.

Cost of Sales-Derivatives .

Our cost of butane sales during the year ended March 31, 2020 included $0.5 million of net unrealized losses on derivatives and $8.8 million of net realized gains on derivatives.

Our cost of butane sales included $1.5 million of net unrealized gains on derivatives and $0.3 million of net realized losses on derivatives during the year ended March 31, 2019 .

Butane product margins per gallon of butane sold were higher during the year ended March 31, 2020 than during the year ended March 31, 2019 due primarily to stronger domestic markets and international demand.

The decreases in revenues and cost of sales-excluding impact of derivatives in butane were due primarily to lower product demand which decreased due to lower gasoline blending volumes and decreased export sales related to the COVID-19 pandemic.

Butane Derivative Loss (Gain) .

Our cost of butane sales during the year ended March 31, 2021 included $3.2 million of net unrealized losses on derivatives and $19.1 million of net realized losses on derivatives.

Our cost of butane sales included $0.5 million of net unrealized losses on derivatives and $8.8 million of net realized gains on derivatives during the year ended March 31, 2020.

Butane product margins per gallon of butane sold were lower during the year ended March 31, 2021 than during the year ended March 31, 2020 due primarily to the weaker domestic market demand due to COVID-19.

Other Products Sales and Cost of Sales-Excluding Impact of Derivatives.

The decreases in revenues and cost of sales - excluding the impact of derivatives, were due to lower commodity prices, which were partially offset by an increase in renewable prices.

The increase in prices was due primarily to the sale of more ethanol renewable identification numbers during the year ended March 31, 2020 , compared to the year ended March 31, 2019 .

Cost of Sales-Derivatives .

Our cost of sales of other products during the year ended March 31, 2020 included $0.6 million of net unrealized losses on derivatives and $3.4 million of net realized gains on derivatives.

Our cost of sales of other products included less than $0.1 million of net unrealized gains on derivatives and $1.6 million of net realized gains on derivatives during the year ended March 31, 2019 .

Other product sales product margins during the year ended March 31, 2020 increased primarily due to the impact of the biodiesel tax credit being reinstated in December 2019 for calendar years 2018 and 2019 .

The total amount of the biodiesel tax credit we recorded as a credit to cost of sales in continuing operations was $13.8 million.

The biodiesel tax credit that was reinstated in December 2019 is effective from January 1, 2018 through December 31, 2022.

The decreases in revenues and cost of sales - excluding the impact of derivatives, were due to lower commodity prices and lower demand due to the lockdowns related to the COVID-19 pandemic.

Other Products Derivative Gain .

Our cost of sales of other products during the year ended March 31, 2021 included $0.5 million of net unrealized gains on derivatives and $17.5 million of net realized gains on derivatives.

Our cost of sales of other products included $0.6 million of net unrealized losses on derivatives and $3.4 million of net realized gains on derivatives during the year ended March 31, 2020.

Other product sales product margins during the year ended March 31, 2021 decreased primarily due to softer product demand during the COVID-19 pandemic and associated economic slowdown.

In addition, the margin for the year ended March 31, 2020, included a biodiesel tax credit of $13.8 million.

The impact of the biodiesel tax credit for the year March 31, 2021 was approximately $0.4 million.

Service Revenues.

This revenue includes storage, terminaling and transportation services income.

The increase during the year ended March 31, 2020 was primarily related to the addition of new terminals in the northeast from the March 2019 acquisition.

The decrease during the year ended March 31, 2021 was primarily to weaker demand as producers shut-in and curtailed production.

Operating and General and Administrative Expenses.

Expenses were higher due to the addition of the new terminals in the northeast from the March 2019 acquisition.

Also, the increase was due to lower environmental expense during the year ended March 31, 2019 , as a result of an insurance recovery we received related to a historical environmental indemnification agreement.

Expenses decreased for the year ended March 31, 2021 due to lower volumes and services rendered as well as reduced costs with lower incentive compensation and restricted travel due to COVID-19.

Depreciation and Amortization Expense.

Expense for the year was higher due to the addition of the new terminals in the northeast from the March 2019 acquisition.

Expense for the year ended March 31, 2021 was higher due to the acceleration of depreciation expense prior to the sale of a terminal facility.

Loss on Disposal or Impairment of Assets, Net.

During the year ended March 31, 2021, we recorded an impairment loss of approximately $3.3 million to the write down in value of a terminal we have ceased operating.

During the year ended March 31, 2020, we recorded an impairment of $7.7 million due to adjusting the cost basis of pipeline line fill to the market price of propane as of March 31, 2020.

During the year ended March 31, 2019 , we recorded a goodwill impairment charge of $66.2 million within our natural gas liquids salt cavern storage reporting unit due to the decreased demand for natural gas liquid storage and resulting decline in revenues and earnings as compared to actual and projected results of prior and future periods (see Note 6 to our consolidated financial statements included in this Annual Report).

Also, during the year ended March 31, 2019, we recorded a gain of $3.0 million on the sale of our approximately 20% interest in E Energy Adams, LLC (see Note 17 to our consolidated financial statements included in this Annual Report).

Corporate and Other

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Year Ended March 31,

2021 2020 Change

(in thousands)

Other revenues:

Revenues $ 1,255 $ 1,038 $ 217

Cost of sales 1,816 1,774 42

Loss (561) (736) 175

Operating expenses — 318 (318)

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General and Administrative Expenses.

The increase during the year ended March 31, 2020 was due primarily to higher acquisition expenses.

The decrease during the year ended March 31, 2021 was due primarily to lower equity-based compensation expense and acquisition expenses.

During the year ended March 31, 2021, equity-based compensation expense was $6.7 million, compared to $26.5 million during the year ended March 31, 2020.

During the year ended March 31, 2021, acquisition expenses were $1.7 million, compared to $15.6 million during the year ended March 31, 2020.

The driver behind the increase in acquisition expenses was primarily due to expenses incurred in connection with our acquisitions of both Mesquite and Hillstone.

In addition, incentive compensation expense for the year ended March 31, 2020 was $7.1 million, compared to $2.3 million during the year ended March 31, 2019.

These increases were partially offset by a decrease in equity-based compensation expense.

The largest driver behind the decrease in equity-based compensation expense was the cancellation of our performance awards during the year ended March 31, 2019.

This resulted in a $5.0 million decrease in expense in comparing the year ended March 31, 2020 to the year ended March 31, 2019.

The driver behind the decrease in acquisition expenses was primarily due to expenses incurred in connection with our acquisitions of both Mesquite and Hillstone in the year ended March 31, 2020.

Loss on Disposal or Impairment of Assets, Net.

During the year ended March 31, 2019, we sold our 50% interest in Victory Propane and as consideration we received a promissory note from Victory Propane.

We discounted the promissory note to its net present value and recorded a loss of $0.9 million (see Note 13 to our consolidated financial statements included in this Annual Report).

During the year ended March 31, 2021, we recorded a net loss of $11.0 million, which was primarily due to the write-off of a loan receivable related to the construction of a facility (see Note 18 to our consolidated financial statements included in this Annual Report for further discussion) and a loss from the write-off of installment payments made in connection with an option agreement to invest in a third party.

Equity in Earnings of Unconsolidated Entities

The decrease of $1.2 million during the year ended March 31, 2020 was due primarily to lower earnings from our 50% interest in a water services company that we acquired in August 2018, a loss from our 50% interest in an aircraft company during the year ended March 31, 2020 , the sale of our investment in an unincorporated joint venture on February 28, 2019 related to the sale of our South Pecos water disposal business and the sale of our investment in E Energy Adams, LLC on May 3, 2018, partially offset by the acquisition of certain membership interests in November 2019 related to specific land and water services operations.

The increase of $0.6 million during the year ended March 31, 2021 was due primarily to higher earnings from certain membership interests acquired in November 2019 related to specific land and water services operations, partially offset by a higher loss from our interest in an aircraft company during the year ended March 31, 2021.

Interest Expense

Interest expense includes interest charged on the revolving credit facilities, term loan credit facility and senior unsecured notes, as well as amortization of debt issuance costs, letter of credit fees, interest on equipment financing notes, and accretion of interest on non-interest bearing debt obligations.

The increase of $16.5 million during the year ended March 31, 2020 was due to the issuance of our 2026 Notes (as defined herein), our entering into the Term Credit Agreement (as defined herein) in connection with the Mesquite acquisition and higher than average outstanding balances on our Revolving Credit Facility.

These increases were offset by the redemption of our senior unsecured notes that were scheduled to mature in 2019 and 2021 during our prior fiscal year.

See Note 8 to our consolidated financial statements included in this Annual Report for a further discussion.

Gain (Loss) on Early Extinguishment of Liabilities, Net

During the year ended March 31, 2020 , the net gain (inclusive of debt issuance costs written off) relates to the early extinguishment of a portion of the outstanding 6.125% Senior Unsecured Notes Due 2025 (the “2025 Notes”).

During the year ended March 31, 2019 , the net loss (inclusive of debt issuance costs written off) relates to the early extinguishment of a portion of the outstanding senior unsecured notes and the redemption of the 5.125% Senior Unsecured Notes Due 2019 (the “2019 Notes”) and 6.875% Senior Unsecured Notes Due 2021 (the “2021 Notes”).

Interest expense includes interest charged on the revolving credit facilities, term loan credit facility, senior secured notes and senior unsecured notes, as well as amortization of debt issuance costs, letter of credit fees, interest on equipment financing notes, and accretion of interest on non-interest bearing debt obligations.

The increase of $17.6 million during the year ended March 31, 2021 was due to the issuance of the 2026 Senior Secured Notes, our entering into the bridge term loan facility in connection with the Mesquite acquisition in July 2019, which was replaced in June 2020 by the term credit agreement at a higher interest rate and increased debt issuance costs.

These increases were offset by repurchases of a portion of our senior unsecured notes to mature in 2023, 2025 and 2026.

See Note 8 to our consolidated financial statements included in this Annual Report for a further discussion.

Other Income (Expense), Net

The following table summarizes the components of other income (expense), net for the periods indicated:

Year Ended March 31,

(in thousands)

Interest income (1)

Gavilon legal matter settlement (2)

Other income (expense), net

Relates primarily to a loan receivable associated with our interest in the construction of a natural gas liquids loading/unloading facility that is utilized by a third party.

The third party filed for Chapter 11 bankruptcy protection during the three months ended September 30, 2019 (see Note 2 to our consolidated financial statements included in this Annual Report for a further discussion).

Also includes a loan receivable with Victory Propane (see Note 13 to our consolidated financial statements included in this Annual Report for a further discussion).

Represents the accrual for the estimated cost of the settlement of the Gavilon legal matter (see Note 9 to our consolidated financial statements included in this Annual Report for a further discussion).

During the year ended March 31, 2019, this relates primarily to unrealized losses on marketable securities.

Income Tax Expense

Income tax expense was $0.3 million during the year ended March 31, 2020 , compared to income tax expense of $1.2 million during the year ended March 31, 2019 .

(Loss) Gain on Early Extinguishment of Liabilities, Net

During the years ended March 31, 2021 and 2020, the net (loss) gain (inclusive of debt issuance costs written off) relates to the early extinguishment of a portion of the outstanding senior unsecured notes.

See Note 8 to our consolidated financial statements included in this Annual Report for a further discussion.

Noncontrolling Interests - Redeemable and Non-redeemable

Other (Expense) Income, Net

The increase in other (expense) income, net of $38.2 million during the year ended March 31, 2021 was due primarily to a $40.0 million fee paid to the holders of the Class D Preferred Units to obtain their consent in order to complete the issuance of the 2026 Senior Secured Notes and the ABL Facility (see Note 13 to our consolidated financial statements included in this Annual Report), partially offset by proceeds received from a litigation settlement during the year ended March 31, 2021.

Income Tax Benefit (Expense)

Income tax benefit was $3.4 million during the year ended March 31, 2021, compared to income tax expense of $0.3 million during the year ended March 31, 2020.

The increase in the income tax benefit during the year ended March 31, 2021 was primarily due to a full year of Hillstone operations during the year ended March 31, 2021 compared to five months of Hillstone operations during the year ended March 31, 2020.

See Note 2 to our consolidated financial statements included in this Annual Report for a further discussion of our income tax status.

Noncontrolling Interests

Noncontrolling interests represent the portion of certain consolidated subsidiaries that are owned by third parties.

The decrease in the noncontrolling interest loss of $18.9 million during the year ended March 31, 2020 was due primarily to a smaller loss from operations of the Sawtooth joint venture during the year ended March 31, 2020 .

The increase in noncontrolling interest income of $2.4 million during the year ended March 31, 2021 was due primarily to a lower loss from operations from certain water operations, income from operations from the Sawtooth Caverns, LLC (“Sawtooth”) joint venture and higher income from operations of certain assets we acquired in Mesquite acquisition in July 2019.

Segment Operating Results for the Years Ended March 31, 2020 and 2019

Crude Oil Logistics

The following table summarizes the operating results of our Crude Oil Logistics segment for the periods indicated:

Year Ended March 31,

(in thousands, except per barrel amounts)

Crude oil sales

Crude oil transportation and other

Total revenues (1)

Cost of sales-excluding impact of derivatives

Cost of sales-derivative (gain) loss

Operating expenses

General and administrative expenses

Depreciation and amortization expense

Loss (gain) on disposal or impairment of assets, net

Total expenses

Segment operating (loss) income

Crude oil sold (barrels)

Crude oil transported on owned pipelines (barrels)

Crude oil storage capacity - owned and leased (barrels) (2)

Crude oil storage capacity leased to third parties (barrels) (2)

Crude oil inventory (barrels) (2)

Crude oil sold ($/barrel)

Cost per crude oil sold ($/barrel)

Crude oil product margin ($/barrel)

Revenues include $36.1 million and $13.9 million of intersegment sales during the years ended March 31, 2019 and 2018 , respectively, that are eliminated in our consolidated statements of operations.

Information is presented as of March 31, 2019 and March 31, 2018 , respectively.

Crude Oil Sales Revenues.

The increase was due primarily to an increase in crude oil prices and sales volumes during the year ended March 31, 2019, compared to the year ended March 31, 2018.

The increase in crude oil prices throughout our fiscal year 2019 led to an increase in production volumes for us to market.

We continue to market crude oil volumes in the majority of the basins across the United States to support our various pipeline, terminal and transportation assets.

Crude Oil Transportation and Other Revenues.

The increase was due to our Grand Mesa Pipeline, which increased revenues by $17.0 million during the year ended March 31, 2019, compared to the year ended March 31, 2018, primarily due to increased production growth in the DJ Basin.

During the year ended March 31, 2019, approximately 42.6 million barrels of crude oil were transported on the Grand Mesa Pipeline, which averaged approximately 117,000 barrels per day, physically, and financial volumes averaged approximately 120,000 barrels per day (volume amounts are from both internal and external parties).

In addition, during the year ended March 31, 2019, a new crude marketing contract increased revenues by $23.4 million.

This was partially offset by a reduction in railcar sublease revenue.

Cost of Sales-Excluding Impact of Derivatives.

The increase was due primarily to an increase in crude oil prices and sales volumes during the year ended March 31, 2019, compared to the year ended March 31, 2018.

Cost of Sales-Derivatives .

Our cost of sales during the year ended March 31, 2019 included $0.6 million of net realized losses on derivatives and $1.7 million of net unrealized gains on derivatives.

Our cost of sales during the year ended March 31, 2018 included $4.2 million of net realized losses on derivatives and $2.8 million of net unrealized losses on derivatives.

Operating and General and Administrative Expenses .

The increase was due primarily to utilities related to the higher volumes transported on the Grand Mesa Pipeline.

Depreciation and Amortization Expense.

The decrease was due primarily to downsizing our fleet of crude transportation assets, which decreased depreciation and amortization expense by $4.3 million during the year ended March 31, 2019, compared to the year ended March 31, 2018.

The decrease was also due to certain intangible assets being fully amortized in prior periods.

Loss (Gain) on Disposal or Impairment of Assets, Net .

During the year ended March 31, 2019, we recorded a net loss of $107.4 million, which included a loss of $105.0 million on our transaction with a third party in which they agreed to be fully responsible for our future minimum volume commitment in exchange for $67.7 million of deficiency credits on a contract with a crude oil pipeline operator and $35.3 million in cash (see Note 2 and Note 13 to our consolidated financial statements included in this Annual Report).

The loss also includes additional costs related to this transaction of $2.0 million.

In addition, we recorded a loss of $1.3 million related to the sale of two terminals during the year ended March 31, 2019.

During the year ended March 31, 2018, we recorded a gain of $108.6 million on the sale of our previously held 50% interest in Glass Mountain (see Note 17 to our consolidated financial statements included in this Annual Report).

In addition, we recorded a net gain of $2.8 million on the sales of certain other assets.

Water Solutions

The following table summarizes the operating results of our Water Solutions segment for the periods indicated.

As previously reported, on July 2, 2019, we acquired all of the assets of Mesquite and on October 31, 2019, we acquired all of the equity interests of Hillstone, thus the fiscal year 2020 results only include a partial year of operations related to these transactions.

Year Ended March 31,

2020 2019 Change

(in thousands, except per barrel and per day amounts)

4 unchanged sentences

Cost of sales-excluding impact of derivatives 5,511 2,668 2,843

Cost of sales-derivative (gain) loss

Derivative gain (39,381) (13,455) (25,926)

Operating expenses 192,987 130,748 62,239

1 unchanged sentence

Depreciation and amortization expense 163,588 108,162 55,426

(Gain) loss on disposal or impairment of assets, net

Loss (gain) on disposal or impairment of assets, net 255,285 (138,204) 393,489

Revaluation of liabilities 9,194 (5,373) 14,567

Total expenses 595,123 91,161 503,962

Segment operating income (loss)

Segment operating (loss) income $ (173,064) $ 210,525 $ (383,589)

Produced water processed (barrels per day)

Northern Delaware Basin

Permian Basin

Delaware Basin (1) 1,170,158 388,827 781,331

Eagle Ford Basin 246,784 270,849 (24,065)

DJ Basin 164,936 161,010 3,926

Other Basins 61,091 126,428 (65,337)

Total 1,642,969 947,114 695,855

Solids processed (barrels per day) 5,697 6,957 (1,260)

3 unchanged sentences

Operating expenses for produced water processed ($/barrel) (2) $ 0.40 $ 0.38 $ 0.02

(2) Total produced water barrels processed during the years ended March 31, 2020 and 2019 were 485,115,941 and 345,696,444, respectively.

Water Disposal Service Fee Revenues.

The increase was due primarily to an increase in the volume of produced water processed at existing facilities as well as facilities acquired from acquisitions.

We continue to benefit from the increased oil and gas production and rig counts as compared to the prior year in the basins in which we operate, particularly in the Permian Basin.

Recovered Crude Oil Revenues.

The increase was due primarily to an increase in the volume of produced water processed at existing facilities as well as facilities acquired from acquisitions and an increase in crude oil prices;

however, these revenues were negatively impacted by a lower percentage of skim oil volumes recovered per produced water barrel processed.

This lower percentage was due primarily to an increase in produced water transported through pipelines (which contains less oil per barrel of produced water), as well as operational changes in the DJ Basin.

This decrease was partially offset by skim oil volumes recovered from assets acquired in the Mesquite and Hillstone acquisitions.

Other Service Revenues.

Other service revenues primarily include solids disposal revenues, water pipeline revenues and brackish non-potable water revenues, all of which increased during the year ended March 31, 2019 due to increased volumes as well as acquisitions.

Other service revenues primarily include solids disposal revenues, water pipeline revenues, land surface use revenues and brackish non-potable water revenues.

These increases were partially offset by lower water pipeline revenues and volumes due to certain operators recycling rather than disposing of the produced water and lower production activity from certain operators.

In addition, solids disposal revenues and volumes were lower due to closure of a facility from April to October due to the working over of the well and reduced operations at another facility.

Cost of Sales-Excluding Impact of Derivatives .

The increase was due primarily to an increase in expenses to bring produced water to certain of our water solutions facilities .

Cost of Sales-Derivatives .

Derivative Gain.

Our cost of sales during the year ended March 31, 2020 included $29.9 million of net unrealized gains on derivatives and $9.5 million of net realized gains on derivatives.

In June 2019, we settled derivative contracts that had scheduled settlement dates from April through December 2020 and recorded a gain of $1.9 million on those derivatives.

Our cost of sales during the year ended March 31, 2019 included $15.5 million of net unrealized gains on derivatives and $2.1 million of net realized losses on derivatives.

In December 2018, we settled derivative contracts that had scheduled settlement dates from January 2019 through December 2020 and recorded a gain of $8.4 million on those derivatives.

Our cost of sales during the year ended March 31, 2018 included $13.7 million of net unrealized losses on derivatives and $3.5 million of net realized losses on derivatives.

Operating and General and Administrative Expenses .

The increase was due primarily to the increase in the number of water disposal facilities and wells that we own and operated due to higher volumes processed at existing facilities and facilities acquired from acquisitions, partially offset by cost reduction efforts.

Due to the higher volumes processed, our cost per barrel has decreased, as shown in the table above.

Also contributing to the increase was an increase in acquisition expenses related to one of our ranch acquisitions.

Also contributing to the increase were acquisition expenses of $4.1 million related to the Hillstone acquisition during the year ended March 31, 2020.

During the year ended March 31, 2019, we incurred acquisition expenses of $3.5 million related to one of our ranch acquisitions.

Depreciation and Amortization Expense .

The increase was due primarily to acquisitions and developed facilities, partially offset by the disposition of our Bakken and South Pecos water disposal businesses and certain intangible assets being fully amortized during the years ended March 31, 2019 and 2018.

(Gain) Loss on Disposal or Impairment of Assets, Net.

Loss (Gain) on Disposal or Impairment of Assets, Net.

During the year ended March 31, 2020, we recorded:

• an impairment charge of $13.5 million related to certain inactive saltwater disposal facilities;

• a net loss of $9.2 million on the disposals of certain other assets;

• a gain of $14.5 million for the sale of certain water permits;

• a gain of $1.0 million for cash received related to a loan receivable that was previously written off.

During the year ended March 31, 2019, we completed the sales of our South Pecos and Bakken water disposal businesses and recorded gains on disposal of $107.9 million and $33.4 million, respectively (see Note 18 to our consolidated financial statements included in this Annual Report for a further discussion of both transactions).

In addition, we recorded a net loss of $3.1 million on the disposals of certain other assets during the year ended March 31, 2019.

During the year ended March 31, 2018, we recorded a loss of $8.2 million on the disposals of certain assets, partially offset by a gain of $1.3 million for the termination of a non-compete agreement, which included the carrying value of the non-compete agreement intangible asset that was written off (see Note 7 to our consolidated financial statements included in this Annual Report).

Revaluation of Liabilities.

The revaluation of liabilities represents the change in the valuation of our contingent consideration liabilities related to royalty agreements acquired as part of certain business combinations.

The reduction in expense during the year ended March 31, 2019 was due primarily to lower expected production from new customers and an increase in facilities due to acquisitions, resulting in a decrease to the expected future royalty payment.

The expense during the year ended March 31, 2018 was due primarily to higher actual and expected production from new customers, resulting in an increase to the expected future royalty payment.

Liquids and Refined Products

The following table summarizes the operating results of our Liquids and Refined Products segment for the periods indicated:

Under the agreement, we were required to make additional payments to the seller based on the volume of produced water processed by the assets acquired.

During the year ended March 31, 2020, the thresholds for the volume of produced water processed were surpassed, thus triggering our obligation to pay the seller.

See Note 2 to our consolidated financial statements included in this Annual Report for a further discussion of the contingent consideration liability.

expected production from new customers and an increase in facilities due to acquisitions, resulting in a decrease to the expected future royalty payment.

Crude Oil Logistics

The following table summarizes the operating results of our Crude Oil Logistics segment for the periods indicated:

Year Ended March 31,

2020 2019 Change

(in thousands, except per barrel amounts)

Crude oil sales $ 2,383,812 $ 3,011,355 $ (627,543)

Crude oil transportation and other 184,129 161,336 22,793

Total revenues (1) 2,567,941 3,172,691 (604,750)

Cost of sales-excluding impact of derivatives 2,347,863 2,939,702 (591,839)

Derivative gain (35,736) (1,085) (34,651)

Operating expenses 61,708 53,352 8,356

General and administrative expenses 6,723 6,512 211

Depreciation and amortization expense 70,759 74,165 (3,406)

(Gain) loss on disposal or impairment of assets, net (1,144) 107,424 (108,568)

Total expenses 2,450,173 3,180,070 (729,897)

Segment operating income (loss) $ 117,768 $ (7,379) $ 125,147

Crude oil sold (barrels) 42,799 48,366 (5,567)

Crude oil transported on owned pipelines (barrels) 45,884 42,564 3,320

Crude oil storage capacity - owned and leased (barrels) (2) 5,362 5,232 130

Crude oil storage capacity leased to third parties (barrels) (2) 2,062 2,564 (502)

Crude oil inventory (barrels) (2) 1,111 827 284

Crude oil sold ($/barrel) $ 55.698 $ 62.262 $ (6.564)

Cost per crude oil sold ($/barrel) (3) $ 54.858 $ 60.780 $ (5.922)

Crude oil product margin ($/barrel) (3) $ 0.840 $ 1.482 $ (0.642)

(1) Revenues include $18.2 million and $36.1 million of intersegment sales during the years ended March 31, 2020 and 2019, respectively, that are eliminated in our consolidated statements of operations.

(2) Information is presented as of March 31, 2020 and March 31, 2019, respectively.

(3) Cost and product margin per barrel excludes the impact of derivatives.

Crude Oil Sales Revenues.

The decrease was due primarily to a decrease in crude oil prices and sales volumes during the year ended March 31, 2020, compared to the year ended March 31, 2019.

Crude Oil Transportation and Other Revenues.

During the year ended March 31, 2020, approximately 45.9 million barrels of crude were transported on the Grand Mesa Pipeline, which averaged approximately 131,000 financial barrels per day.

In addition, we signed a new crude marketing contract in July 2019 which increased revenues by $7.7 million in the current year when compared to the prior year.

This was partially offset by a reduction in railcar sublease revenue.

Also, crude transportation increased $5.8 million due to increased marine transportation activity.

Cost of Sales-Excluding Impact of Derivatives.

The decrease was due primarily to a decrease in crude oil prices and volumes during the year ended March 31, 2020, compared to the year ended March 31, 2019.

Derivative Gain .

Our cost of sales during the year ended March 31, 2020 included $24.4 million of net realized gains on derivatives and $11.3 million of net unrealized gains on derivatives.

In March 2020, we closed and realized derivative contracts that had scheduled settlement dates from May through June 2020 which accounted for $16.7 million of the realized

Our cost of sales during the year ended March 31, 2019 included $0.6 million of net realized losses on derivatives and $1.7 million of net unrealized gains on derivatives.

Operating and General and Administrative Expenses .

The increase was due primarily to utilities related to the higher volumes transported on the Grand Mesa Pipeline.

Depreciation and Amortization Expense.

The decrease was due to the retirement of certain assets and other assets being fully depreciated or amortized during the year ended March 31, 2019.

(Gain) Loss on Disposal or Impairment of Assets, Net .

During the year ended March 31, 2020, we recorded a net gain of $1.1 million related to the disposal of certain assets.

During the year ended March 31, 2019, we recorded a net loss of $107.4 million, which included a loss of $105.0 million on our transaction with a third party in which they agreed to be fully responsible for our future minimum volume commitment in exchange for $67.7 million of deficiency credits on a contract with a crude oil pipeline operator and $35.3 million in cash (see Note 13 to our consolidated financial statements included in this Annual Report).

The loss also includes additional costs related to this transaction of $2.0 million.

In addition, we recorded a loss of $1.3 million related to the sale of two terminals during the year ended March 31, 2019.

Liquids Logistics

The following table summarizes the operating results of our Liquids Logistics segment for the periods indicated:

Year Ended March 31,

2020 2019 Change

(in thousands, except per gallon amounts)

Refined products sales:

Revenues (1)(2)

Revenues-excluding impact of derivatives (1)(2) $ 2,394,663 $ 2,557,753 $ (163,090)

Cost of sales-excluding impact of derivatives (3) 2,367,850 2,533,156 (165,306)

Cost of sales-derivative loss

Derivative (gain) loss (3,225) 791 (4,016)

Product margin 30,038 23,806 6,232

Propane sales:

Revenues (1) 846,756 1,179,087 (332,331)

Cost of sales-excluding impact of derivatives 766,521 1,111,678 (345,157)

Cost of sales-derivative loss (gain)

Derivative loss 3,536 5,856 (2,320)

Product margin 76,699 61,553 15,146

Butane sales:

Revenues (1) 564,016 637,076 (73,060)

Cost of sales-excluding impact of derivatives 486,777 609,833 (123,056)

Cost of sales-derivative (gain) loss

Derivative gain (8,288) (1,264) (7,024)

Product margin 85,527 28,507 57,020

Other product sales:

Revenues-excluding impact of derivatives (1) 775,458 869,468 (94,010)

Cost of sales-excluding impact of derivatives 732,967 846,960 (113,993)

Cost of sales-derivative (gain) loss

Derivative gain (2,846) (1,660) (1,186)

Product margin 45,337 24,168 21,169

Service revenues:

Revenues (1) 40,216 25,207 15,009

Cost of sales 9,207 3,030 6,177

7 unchanged sentences

Year Ended March 31,

2020 2019 Change

(in thousands, except per gallon amounts)

Liquids and Refined Products storage capacity - owned and leased (gallons) (4)

Natural gas liquids and refined products storage capacity - owned and leased (gallons) (4) 400,301 400,409 (108)

Refined products sold (gallons) 1,272,546 1,243,494 29,052

21 unchanged sentences

(1) Revenues include $5.0 million and $23.3 million of intersegment sales during the years ended March 31, 2020 and 2019, respectively, that are eliminated in our consolidated statements of operations.

Revenues include $64.8 million and $16.6 million of intersegment sales during the years ended March 31, 2019 and 2018 , respectively, related to transactions with TPSL, Mid-Con and Gas Blending that are eliminated in our consolidated statements of operations.

Cost of sales include $62.9 million and $229.0 million of intersegment cost of sales during the years ended March 31, 2019 and 2018 , respectively, related to transactions with TPSL, Mid-Con and Gas Blending that are eliminated in our consolidated statements of operations.

(2) Revenues include $10.3 million and $64.8 million of intersegment sales during the years ended March 31, 2020 and 2019, respectively, between certain businesses within the Liquids Logistics segment and TPSL, Mid-Con and Gas Blending that are eliminated in our consolidated statements of operations.

(3) Cost of sales include $8.2 million and $62.9 million of intersegment cost of sales during the years ended March 31, 2020 and 2019, respectively, between certain businesses within the Liquids Logistics segment and TPSL, Mid-Con and Gas Blending that are eliminated in our consolidated statements of operations.

(4) Information is presented as of March 31, 2020 and March 31, 2019, respectively.

(5) Cost and product margin per gallon excludes the impact of derivatives.

Refined Products Revenues and Cost of Sales-Excluding Impact of Derivatives.

The increases in revenues and cost of sales-excluding impact of derivatives were due to an increase in refined products prices and increased volumes.

The increase in prices was due primarily to supply and demand for refined fuels at our wholesale locations.

The increased volumes were due primarily to an expansion of our refined products operations and the continued demand for motor fuels.

During the year ended March 31, 2019, Gulf Coast prices increased less than during the year ended March 31, 2018, which negatively affected our margins-excluding impact of derivatives.

Refined Products-Derivative Loss.

Our margin during the year ended March 31, 2019 included a loss of $0.8 million from our risk management activities due primarily to NYMEX futures prices increasing on our short future positions.

The decreases in revenues and cost of sales-excluding impact of derivatives were due to a decrease in refined products prices, offset by increased volumes.

The decrease in prices was due primarily to supply and demand for refined fuels at our wholesale locations.

The increased volumes were due primarily to the continued demand for motor fuels.

Refined Products Derivative (Gain) Loss.

Our margin during the year ended March 31, 2019 included a loss of $0.8 million from our risk management activities due primarily to NYMEX futures prices increasing on our short future positions.

Propane Sales and Cost of Sales-Excluding Impact of Derivatives.

The decreases in revenues and cost of sales-excluding impact of derivatives were due primarily to a decline in product pricing and lower railcar costs.

Cost of Sales-Derivatives .

The decreases in revenues and cost of sales-excluding impact of derivatives were due primarily to lower commodity prices which was partially offset by an increase in volumes sold.

Propane Derivative Loss .

Our cost of wholesale propane sales included $1.5 million of net unrealized losses on derivatives and $2.0 million of net realized losses on derivatives during the year ended March 31, 2020.

During the year ended March 31, 2018, our cost of wholesale propane sales included $1.0 million of net unrealized gains on derivatives and $4.6 million of net realized gains on derivatives.

Propane product margins per gallon of propane sold were higher during the year ended March 31, 2019 than during the year ended March 31, 2018 due to favorable market conditions.

During the year ended March 31, 2019, our cost of wholesale propane sales included $1.4 million of net unrealized losses on derivatives and $4.4 million of net realized losses on derivatives.

Propane product margins per gallon of propane sold were higher during the year ended March 31, 2020 than during the year ended March 31, 2019.

Propane product margins increased due to inventory values aligning with reduced commodity prices at index markets.

Meanwhile, regional spot prices saw significant increases in the fall due to supply constraints and strong crop drying demand.

Butane Sales and Cost of Sales-Excluding Impact of Derivatives.

The increases in revenues and cost of sales-excluding impact of derivatives were due primarily to higher commodity prices in the first six months of the year, partially offset by declining commodity prices in the latter half of the year.

Volumes increased due to favorable market conditions.

Cost of Sales-Derivatives .

Our cost of butane sales during the year ended March 31, 2019 included $1.5 million of net unrealized gains on derivatives and $0.3 million of net realized losses on derivatives.

Our cost of butane sales included $0.5 million of net unrealized losses on derivatives and $19.1 million of net realized losses on derivatives during the year ended March 31, 2018.

Butane product margins per gallon of butane sold were higher during the year ended March 31, 2019 than during the year ended March 31, 2018 due primarily to a strong pricing market and generally strong demand.

The decreases in revenues and cost of sales-excluding impact of derivatives were due primarily to lower commodity prices.

Volumes increased due to strong demand from domestic and international markets.

Butane Derivative Gain .

Our cost of butane sales during the year ended March 31, 2020 included $0.5 million of net unrealized losses on derivatives and $8.8 million of net realized gains on derivatives.

Our cost of butane sales included $1.5 million of net unrealized gains on derivatives and $0.3 million of net realized losses on derivatives during the year ended March 31, 2019.

Other Products Sales and Cost of Sales-Excluding Impact of Derivatives.

Other product volumes increase was facilitated by a price arbitrage allowing for products to be sold across markets.

This was partially offset by a decrease in renewables revenues due to reduced volumes related to the loss of a marketing contract with E Energy Adams, LLC in December 2017.

Cost of Sales-Derivatives .

The decreases in revenues and cost of sales- excluding the impact of derivatives, were due to lower commodity prices, which were partially offset by an increase in renewable prices.

The increase in prices was due primarily to the sale of more ethanol renewable identification numbers during the year ended March 31, 2020, compared to the year ended March 31, 2019.

Other Products Derivative Gain .

Our cost of sales of other products during the year ended March 31, 2020 included $0.6 million of net unrealized losses on derivatives and $3.4 million of net realized gains on derivatives.

Our cost of sales of other products included less than $0.1 million of net unrealized gains on derivatives and $1.6 million of net realized gains on derivatives during the year ended March 31, 2019.

Our cost of sales of other products during the year ended March 31, 2018 included $0.1 million of net unrealized gains on derivatives and $1.4 million of net realized losses on derivatives.

Other product sales product margins during the year ended March 31, 2019 were higher primarily due to a strong pricing environment and higher than anticipated production.

This was partially offset by a favorable margin in renewables for the year ended March 31, 2018 for the impact of the biodiesel tax credit being reinstated in February 2018 related to calendar year 2017.

The total amount of the biodiesel tax credit we recorded as a credit to cost of sales in continuing operations was $13.8 million.

The biodiesel tax credit that was reinstated in December 2019 is effective from January 1, 2018 through December 31, 2022.

Service Revenues.

This revenue includes storage, terminaling and transportation services income.

The increase during the year ended March 31, 2019 was primarily related to an increase in revenues at our Port Hudson terminal as well as high railcar fleet utilization.

The increase during the year ended March 31, 2020 was primarily related to the addition of new terminals in the northeast from the March 2019 acquisition.

Operating and General and Administrative Expenses.

Expenses were higher due to an increase in employee commissions resulting from increased profit margins, increased expenses related to the Sawtooth joint venture, increased expenses in March related to our natural gas liquids terminal acquisition and a credit in the prior year for ad valorem taxes.

These increases were partially offset by lower environmental expense during the year ended March 31, 2019, as a result of an insurance recovery we received related to a historical environmental indemnification agreement.

Expenses were higher due to the addition of the new terminals in the northeast from the March 2019 acquisition.

Also, the increase was due to lower environmental expense during the year ended March 31, 2019, as a result of an insurance recovery we received related to a historical environmental indemnification agreement.

Depreciation and Amortization Expense.

Expense for the current year was consistent with the prior year.

Expense for the year was higher due to the addition of the new terminals in the northeast from the March 2019 acquisition.

Loss on Disposal or Impairment of Assets, Net.

During the years ended March 31, 2019 and 2018, we recorded goodwill impairment charges of $66.2 million and $116.9 million, respectively, within our natural gas liquids salt cavern storage reporting unit due to the decreased demand for natural gas liquid storage and resulting decline in revenues and earnings as compared to actual and projected results of prior and future periods.

Also, during the year ended March 31, 2019, we recorded a gain of $3.0 million on the sale of our approximately 20% interest in E Energy Adams, LLC.

During the year ended March 31, 2018, we recognized $30.1 million of the deferred gain from the sale of the general partner interest in TransMontaigne Partners L.P.

in February 2016.

During the year ended March 31, 2020, we recorded an impairment of $7.7 million due to adjusting the cost basis of pipeline line fill to the market price of propane as of March 31, 2020.

During the year ended March 31, 2019, we recorded a goodwill impairment charge of $66.2 million within our natural gas liquids salt cavern storage reporting unit due to the decreased demand for natural gas liquid storage and resulting decline in revenues and earnings as compared to actual and projected results of prior and future periods (see Note 6 to our consolidated financial statements included in this Annual Report).

Also, during the year ended March 31, 2019, we recorded a gain of $3.0 million on the sale of our approximately 20% interest in E Energy Adams, LLC (see Note 18 to our consolidated financial statements included in this Annual Report).

Corporate and Other

1 unchanged sentence

Year Ended March 31,

2020 2019 Change

(in thousands)

Other revenues:

Revenues $ 1,038 $ 1,362 $ (324)

Cost of sales 1,774 1,929 (155)

(Loss) margin

Loss (736) (567) (169)

Operating expenses 318 1,605 (1,287)

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General and Administrative Expenses.

The increase during the year ended March 31, 2019 was due primarily to higher equity-based compensation expense.

During the year ended March 31, 2019, equity-based compensation expense was $37.6 million, compared to $35.2 million during the year ended March 31, 2018.

The increase is primarily due to an increase in annual bonuses paid in common units of approximately $7.0 million and the cancellation of our performance awards during the year ended March 31, 2019.

This increase was partially offset by a decrease specifically related to our Service Awards of approximately $4.2 million, which was primarily due to the vesting of Service Awards with higher grant date fair values during the year ended March 31, 2018.

For further discussion of the Service Awards, see Note 10 to our consolidated financial statements included in this Annual Report.

The increase in equity-based compensation was primarily offset by a decrease in legal expenses.

Depreciation and Amortization Expense.

The decrease was due primarily to certain information technology equipment which was fully depreciated as of March 31, 2018.

The increase during the year ended March 31, 2020 was due primarily to higher acquisition expenses.

During the year ended March 31, 2020, acquisition expenses were $15.6 million, compared to $6.2 million during the year ended March 31, 2019.

The driver behind the increase in acquisition expenses was primarily due to expenses incurred in connection with our acquisitions of both Mesquite and Hillstone.

In addition, incentive compensation expense for the year ended March 31, 2020 was $7.1 million, compared to $2.3 million during the year ended March 31, 2019.

These increases were partially offset by a decrease in equity-based compensation expense.

The largest driver behind the decrease in equity-based compensation expense was the cancellation of our performance awards during the year ended March 31, 2019.

This resulted in a $5.0 million decrease in expense in comparing the year ended March 31, 2020 to the year ended March 31, 2019.

Loss on Disposal or Impairment of Assets, Net.

During the year ended March 31, 2019, we sold our 50% interest in Victory Propane and as consideration we received a promissory note from Victory Propane.

During the year ended March 31, 2019, we sold our 50% interest in Victory Propane, LLC and as consideration we received a promissory note from Victory Propane, LLC.

We discounted the promissory note to its net present value and recorded a loss of $0.9 million (see Note 13 to our consolidated financial statements included in this Annual Report).

Equity in Earnings of Unconsolidated Entities

The decrease of $5.0 million during the year ended March 31, 2019 was due primarily to the sale of our investments in Glass Mountain and E Energy Adams, LLC.

On December 22, 2017, we sold our 50% interest in Glass Mountain and on May 3, 2018, we sold our approximately 20% interest in E Energy Adams, LLC.

These decreases were partially offset by earnings from our 50% interest in a water services company that we acquired in August 2018.

See Note 2 and Note 17 to our consolidated financial statements included in this Annual Report for a further discussion.

The decrease of $1.2 million during the year ended March 31, 2020 was due primarily to lower earnings from our 50% interest in a water services company that we acquired in August 2018, a loss from our 50% interest in an aircraft company during the year ended March 31, 2020, the sale of our investment in an unincorporated joint venture on February 28, 2019 related to the sale of our South Pecos water disposal business and the sale of our investment in E Energy Adams, LLC on May 3, 2018, partially offset by the acquisition of certain membership interests in November 2019 related to specific land and water services operations.

Interest Expense

Interest expense includes interest charged on the revolving credit facilities, senior secured notes, and senior unsecured notes, as well as amortization of debt issuance costs, letter of credit fees, interest on equipment financing notes, and accretion of interest on non-interest bearing debt obligations.

The decrease of $34.4 million during the year ended March 31, 2019 was partially due to the repurchase of all senior secured notes on December 29, 2017.

We also repurchased $84.1 million of the 7.50% Senior Unsecured Notes Due 2023 and $110.9 million of the 2025 Notes during the year ended March 31, 2018.

Also contributing to the decrease is the October 16, 2018 redemption of the remaining outstanding 2021 Notes and the March 15, 2019 redemption of the remaining outstanding 2019 Notes.

The increase of $16.5 million during the year ended March 31, 2020 was due to the issuance of the 2026 Notes, our entering into the term credit agreement in connection with the Mesquite acquisition and higher than average outstanding balances on our Revolving Credit Facility.

These increases were offset by the redemption of our senior unsecured notes that were scheduled to mature in 2019 and 2021 during our prior fiscal year.

See Note 8 to our consolidated financial statements included in this Annual Report for a further discussion.

Loss on Early Extinguishment of Liabilities, Net

During the year ended March 31, 2018 , the net loss (inclusive of debt issuance costs written off) relates to the early extinguishment of all of the senior secured notes and a portion of the senior unsecured notes.

Gain (Loss) on Early Extinguishment of Liabilities, Net

During the year ended March 31, 2020, the net gain (inclusive of debt issuance costs written off) relates to the early extinguishment of a portion of the outstanding 6.125% Senior Unsecured Notes Due 2025 (“2025 Notes”).

During the year ended March 31, 2019, the net loss (inclusive of debt issuance costs written off) relates to the early extinguishment of a portion of the outstanding senior unsecured notes and the redemption of the 5.125% Senior Unsecured Notes Due 2019 (“2019 Notes”) and 6.875% Senior Unsecured Notes Due 2021 (“2021 Notes”).

See Note 8 to our consolidated financial statements included in this Annual Report for a further discussion.

Other (Expense) Income, Net

The following table summarizes the components of other (expense) income, net for the periods indicated:

Other Income (Expense), Net

The following table summarizes the components of other income (expense), net for the periods indicated:

Year Ended March 31,

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Gavilon legal matter settlement (2) — (34,788)

Other (expense) income, net

During the year ended March 31, 2019, this relates primarily to a loan receivable associated with our interest in the construction of a natural gas liquids loading/unloading facility that is utilized by a third party.

During the year ended March 31, 2018, this relates primarily to a loan receivable associated with our interest in the construction of a natural gas liquids loading/unloading facility that is utilized by a third party and a loan receivable with Victory Propane (see Note 13 to our consolidated financial statements included in this Annual Report for a further discussion).

Other (3) 167 (356)

Other income (expense), net $ 1,684 $ (30,418)

(1) Relates primarily to a loan receivable associated with our interest in the construction of a natural gas liquids loading/unloading facility that is utilized by a third party.

The third party filed for Chapter 11 bankruptcy protection during the three months ended September 30, 2019 (see Note 18 to our consolidated financial statements included in this Annual Report for a further discussion).

Also includes a loan receivable with a former related party (see Note 2 to our consolidated financial statements included in this Annual Report for a further discussion).

(2) Represents the accrual for the estimated cost of the settlement of the Gavilon legal matter (see Note 9 to our consolidated financial statements included in this Annual Report for a further discussion).

(3) During the year ended March 31, 2019, this relates primarily to unrealized losses on marketable securities.

During the year ended March 31, 2018, this relates primarily to proceeds from a litigation settlement.

Income Tax Expense

Income tax expense was $0.3 million during the year ended March 31, 2020, compared to income tax expense of $1.2 million during the year ended March 31, 2019.

See Note 2 to our consolidated financial statements included in this Annual Report for a further discussion.

Noncontrolling Interests - Redeemable and Non-redeemable

The increase in the noncontrolling interest loss of $21.9 million during the year ended March 31, 2019 was due primarily to a loss from operations of the Sawtooth joint venture, in which we sold a 28.5% interest in March 2018.

See Note 2 to our consolidated financial statements included in this Annual Report for a further discussion of our income tax status.

Noncontrolling Interests

Non-GAAP Financial Measures

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We define Adjusted EBITDA as EBITDA excluding net unrealized gains and losses on derivatives, lower of cost or net realizable value adjustments, gains and losses on disposal or impairment of assets, gains and losses on early extinguishment of liabilities, equity-based compensation expense, acquisition expense, revaluation of liabilities, certain legal settlements and other.

We also include in Adjusted EBITDA certain inventory valuation adjustments related to the TPSL, Mid-Con, and Gas Blending businesses, which are included in discontinued operations, and certain refined products businesses within our Liquids and Refined Products segment, as discussed below.

EBITDA and Adjusted EBITDA should not be considered alternatives to net (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.

We believe that EBITDA provides additional information to investors for evaluating our ability to make quarterly distributions to our unitholders and is presented solely as a supplemental measure.

We believe that

EBITDA provides additional information to investors for evaluating our ability to make quarterly distributions to our unitholders and is presented solely as a supplemental measure.

We believe that Adjusted EBITDA provides additional information to investors for evaluating our financial performance without regard to our financing methods, capital structure and historical cost basis.

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 the TPSL, Mid-Con, and Gas Blending businesses, which are included in discontinued operations, and certain businesses within our Liquids and Refined Products segment, for purposes of our Adjusted EBITDA calculation, we make a distinction between realized and unrealized gains and losses on derivatives.

Other than for the TPSL, Mid-Con, and Gas Blending businesses, which are included in discontinued operations, and 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.

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.

We do not draw such a distinction between realized and unrealized gains and losses on derivatives of the TPSL, Mid-Con, and Gas Blending businesses, which are included in discontinued operations, and certain businesses within our Liquids and Refined Products segment.

The primary hedging strategy of these businesses is to hedge against the risk of declines in the value of inventory over the course of the contract cycle, and many of the hedges are six months to one year in duration at inception.

The primary hedging strategy of these businesses is to hedge against the risk of declines in the value of inventory over the course of the contract cycle, and many of the hedges cover extended periods of time.

The “inventory valuation adjustment” row in the reconciliation table reflects the difference between the market value of the inventory of these businesses at the balance sheet date and its cost, adjusted for the impact of seasonal market movements related to our base inventory and the related hedge.

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.

The following table reconciles net (loss) income to EBITDA and Adjusted EBITDA:

The following table reconciles net (loss) income to EBITDA and Adjusted EBITDA for the periods indicated:

Year Ended March 31,

2021 2020 2019

(in thousands)

Net (loss) income $ (639,187) $ (398,780) $ 339,395

Net loss (income) attributable to noncontrolling interests

Net loss (income) attributable to redeemable noncontrolling interests

Net (income) loss attributable to noncontrolling interests (632) 1,773 20,206

Net loss attributable to redeemable noncontrolling interests — — 446

Net (loss) income attributable to NGL Energy Partners LP (639,819) (397,007) 360,047

Interest expense 198,823 181,357 164,879

Income tax expense

Income tax (benefit) expense (3,444) 365 2,222

Depreciation and amortization 314,476 265,147 224,547

Net unrealized (gains) losses on derivatives

EBITDA (129,964) 49,862 751,695

Net unrealized losses (gains) on derivatives 47,366 (38,557) (17,296)

Inventory valuation adjustment (1) 1,224 (29,676) (5,203)

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Loss (gain) on disposal or impairment of assets, net 476,601 464,483 (393,554)

(Gain) loss on early extinguishment of liabilities, net

Loss (gain) on early extinguishment of liabilities, net 16,692 (1,341) 12,340

Equity-based compensation expense (2) 6,727 26,510 41,367

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Revaluation of liabilities (4) 6,261 9,194 (5,373)

Class D Preferred Unitholder consent fee (5) 40,000 — —

Gavilon legal matter settlement (6) — — 34,788

Other (7) 11,135 15,788 9,203

Adjusted EBITDA $ 447,651 $ 547,187 $ 440,442

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Amounts reported in the table above include expense accruals for bonuses expected to be paid in common units, whereas the amounts reported in Note 10 to our consolidated financial statements only include expenses associated with equity-based awards that have been formally granted.

Amounts represent expenses we incurred related to legal and advisory costs associated with acquisitions, including Mesquite and Hillstone, along with amounts accrued related to the LCT Capital, LLC legal matter (see Note 9 to our consolidated financial statements included in this Annual Report), partially offset by reimbursement for certain legal costs incurred in prior periods.

Amount for the year ended March 31, 2020 represents the non-cash valuation adjustment of our contingent consideration liability issued by us as part of our acquisition of Mesquite (see Note 4 to our consolidated financial statements included in this Annual Report), partially offset by the non-cash valuation adjustment of contingent consideration liabilities, offset by the cash payments, related to royalty agreements acquired as part of acquisitions in our Water Solutions segment.

(3) Amounts represent expenses we incurred related to legal and advisory costs associated with acquisitions, including Mesquite and Hillstone, along with amounts accrued related to the LCT Capital, LLC legal matter (see Note 9 to our consolidated financial statements included in this Annual Report).

(4) Amounts for the years ended March 31, 2021 and 2019 represent the non-cash valuation adjustment of contingent consideration liabilities, offset by the cash payments, related to royalty agreements acquired as part of acquisitions in our Water Solutions segment.

Amount for the year ended March 31, 2020 represents the non-cash valuation adjustment of our contingent consideration liability issued by us as part of our acquisition of Mesquite (see Note 2 to our consolidated financial statements included in this Annual Report), partially offset by the non-cash valuation adjustment of contingent consideration liabilities, offset by the cash payments, related to royalty agreements acquired as part of acquisitions in our Water Solutions segment.

(5) Represents the fee paid to the holders of the Class D Preferred Units to obtain their consent in order to complete the issuance of the 2026 Senior Secured Notes and the ABL Facility (see Note 13 to our consolidated financial statements included in this Annual Report).

(6) Represents the accrual for the estimated cost of the settlement of the Gavilon legal matter (see Note 9 to our consolidated financial statements included in this Annual Report).

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(7) Amounts for the years ended March 31, 2021, 2020 and 2019 represent non-cash operating expenses related to our Grand Mesa Pipeline, unrealized losses on marketable securities and accretion expense for asset retirement obligations.

Amount for the year ended March 31, 2018 represents non-cash operating expenses related to our Grand Mesa Pipeline, an adjustment to inventory related to prior periods and accretion expense for asset retirement obligations.

(8) Amounts include the operations of TPSL, Gas Blending, Mid-Con and our former Retail Propane segment.

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Year Ended March 31,

2021 2020 2019

(in thousands)

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Year Ended March 31,

2021 2020 2019

(in thousands)

Interest expense per EBITDA table $ 198,823 $ 181,357 $ 164,879

Interest expense attributable to noncontrolling interests 47 — —

Interest expense attributable to unconsolidated entities (71) (62) (14)

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Year Ended March 31,

2021 2020 2019

(in thousands)

Income tax expense

Income tax (benefit) expense $ (53) $ 20 $ 989

Net unrealized losses on derivatives $ — $ — $ 78

Inventory valuation adjustment $ 27 $ (27,526) $ (4,419)

Lower of cost or realizable value adjustments

Lower of cost or net realizable value adjustments $ (27) $ (991) $ 1,419

Loss (gain) on disposal or impairment of assets, net $ 1,174 $ 203,990 $ (408,964)

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Year Ended March 31, 2021

Liquids and Refined Products

Continuing Operations

Discontinued Operations (TPSL, Mid-Con, Gas Blending)

Solutions Crude Oil

Logistics Liquids Logistics Corporate

Other Continuing Operations Discontinued Operations (TPSL, Mid-Con, Gas Blending) Consolidated

(in thousands)

Operating income (loss)

Operating (loss) income $ (92,720) $ (304,330) $ 70,441 $ (64,144) $ (390,753) $ — $ (390,753)

Depreciation and amortization 222,107 60,874 29,184 5,062 317,227 — 317,227

Amortization recorded to cost of sales — — 307 — 307 — 307

Net unrealized (gains) losses on derivatives

Net unrealized losses (gains) on derivatives 24,500 23,432 (566) — 47,366 — 47,366

Inventory valuation adjustment — — 1,197 — 1,197 — 1,197

Lower of cost or net realizable value adjustments — (29,458) (617) — (30,075) — (30,075)

(Gain) loss on disposal or impairment of assets, net

Loss on disposal or impairment of assets, net 76,942 384,143 3,350 11,001 475,436 — 475,436

Equity-based compensation expense — — — 6,727 6,727 — 6,727

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Revaluation of liabilities 6,261 — — — 6,261 — 6,261

Class D Preferred Unitholder consent fee — — — 40,000 40,000 — 40,000

Intersegment transactions (1)

— — (27) — (27) — (27)

Other 2,751 8,317 100 — 11,168 — 11,168

Discontinued operations — — — — — (621) (621)

1 unchanged sentence

Year Ended March 31, 2020

Discontinued Operations

Liquids and Refined Products

Continuing Operations

TPSL, Mid-Con, Gas Blending

Retail Propane

Solutions Crude Oil

Logistics Liquids Logistics Corporate

Other Continuing Operations Discontinued Operations (TPSL, Mid-Con, Gas Blending) Consolidated

(in thousands)

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Amortization recorded to cost of sales — — 349 — 349 — 349

Net unrealized gains on derivatives

Net unrealized (gains) losses on derivatives (29,861) (11,315) 2,619 — (38,557) — (38,557)

Inventory valuation adjustment — — (2,150) — (2,150) — (2,150)

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Acquisition expense 4,079 — — 15,643 19,722 — 19,722

Other income (expense), net

Other (expense) income, net (448) 717 21 1,394 1,684 — 1,684

Adjusted EBITDA attributable to unconsolidated entities 2,152 — 24 (263) 1,913 — 1,913

1 unchanged sentence

Revaluation of liabilities 9,194 — — — 9,194 — 9,194

Gavilon legal matter settlement

Intersegment transactions (1) — — 2,099 — 2,099 — 2,099

Other 2,607 12,965 214 — 15,786 — 15,786

Discontinued operations — — — — — (42,270) (42,270)

2 unchanged sentences

Discontinued Operations

Liquids and Refined Products

Continuing Operations

TPSL, Mid-Con, Gas Blending

Retail Propane

Solutions Crude Oil

Logistics Liquids Logistics Corporate

Other Continuing Operations TPSL, Mid-Con, Gas Blending Retail Propane Consolidated

(in thousands)

2 unchanged sentences

Amortization recorded to cost of sales — 80 406 — 486 — — 486

Net unrealized losses (gains) on derivatives

Net unrealized gains on derivatives (15,521) (1,725) (129) — (17,375) — — (17,375)

Inventory valuation adjustment — — (784) — (784) — — (784)

3 unchanged sentences

Acquisition expense 3,490 — 161 6,176 9,827 — — 9,827

Other income, net

Other (expense) income, net (1) 21 (330) (30,108) (30,418) — — (30,418)

Adjusted EBITDA attributable to unconsolidated entities 2,396 — 481 — 2,877 — — 2,877

1 unchanged sentence

Revaluation of liabilities (5,373) — — — (5,373) — — (5,373)

Gavilon legal matter settlement — — — 34,788 34,788 — — 34,788

Intersegment transactions (1) — — 1,926 — 1,926 — — 1,926

Other 436 8,274 493 — 9,203 — — 9,203

Discontinued operations — — — — — 16,827 4,465 21,292

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Liquidity, Sources of Capital and Capital Resource Activities

Our principal sources of liquidity and capital resource requirements are the cash flows from our operations, borrowings under our Revolving Credit Facility, debt issuances and the issuance of common and preferred units.

We expect our primary cash outflows to be related to capital expenditures, interest and repayment of debt maturities and distributions paid to both preferred and common unitholders.

On April 27, 2020, we announced a decrease in our quarterly distributions paid to our common unitholders from $0.39 per common unit to $0.20 per common unit.

This approximately $100 million reduction, on an annualized basis, is expected to increase liquidity and de-lever the balance sheet.

We also announced a reduction in expected capital spending for growth and maintenance expenditures for fiscal year 2021.

We believe that our anticipated cash flows from operations and the borrowing capacity under the Revolving Credit Facility will be sufficient to meet our liquidity needs.

Our borrowing needs vary during the year due in part to the seasonal nature certain businesses within our Liquids and Refined Products 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 working capital borrowing needs generally decline during the period of January through March, when the cash inflows from our Liquids and Refined Products segment are the greatest.

Our principal sources of liquidity and capital resource requirements are the cash flows from our operations, borrowings under our revolving credit facilities, debt issuances and the issuance of common and preferred units.

We expect our primary cash outflows to be related to capital expenditures, interest and repayment of debt maturities.

On February 4, 2021, we closed on our $2.05 billion 2026 Senior Secured Notes offering and entered into a $500.0 million ABL Facility.

These transactions extended the maturity of our debt and provided us with improved liquidity.

In conjunction with the transaction, we agreed to certain restricted payment provisions, one of which requires us to temporarily suspend the quarterly common unit distribution beginning with the quarter ended December 31, 2020, as well as distributions on all of our preferred units, beginning with the quarter ended March 31, 2021, until our total leverage ratio (as defined in the indenture for the 2026 Senior Secured Notes) falls below 4.75 to 1.00.

The cash savings from the suspension of the distributions should accelerate the deleveraging of our balance sheet and increase our liquidity and should create more financial flexibility going forward.

See Note 8 to our consolidated financial statements included in this Annual Report for a further discussion of these transactions and a description of the 2026 Senior Secured Notes and ABL Facility.

We believe that our anticipated cash flows from operations and the borrowing capacity under the ABL Facility will be sufficient to meet our liquidity needs.

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 working capital borrowing needs generally decline during the period of January through March, when the cash inflows from our Liquids Logistics segment are the greatest.

Cash Management

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Short-Term Liquidity

Our principal sources of short-term liquidity consist of cash generated from operating activities and borrowings under our $1.915 billion credit agreement (“Credit Agreement”), which consisted of a revolving credit facility with a capacity of $641.5 million for cash borrowings and letters or credit, which is subject to a monthly borrowing base, (the “Working Capital Facility”) and a revolving credit facility to fund acquisitions and expansion projects, as well as general corporate requirements with a capacity of $1.273 billion (the “Expansion Capital Facility”).

On April 27, 2020, we amended our Credit Agreement to reallocate availability between the two revolving credit facilities.

We reduced the capacity of the Working Capital Facility to $350.0 million and increased the Expansion Capital Facility to $1.565 billion .

This change was due to reduced working capital borrowing needs going forward due to the sale of the TPSL, Mid-Con and Gas Blending refined products businesses.

The commitments under the Credit Agreement expire on October 5, 2021.

As of March 31, 2020 , we were in, and expect to remain in, compliance with all covenants of our Credit Agreement.

As of March 31, 2020, our current liabilities exceeded our current assets by approximately $71.7 million .

We expect to be able to finance this difference either through cash flows from operations or borrowings under our Revolving Credit Facility.

For additional information related to our Credit Agreement, see Note 8 to our consolidated financial statements included in this Annual Report.

On February 4, 2021, we closed on the $500.0 million ABL Facility, which will provide liquidity to operate our business and manage our working capital requirements.

The ABL Facility is scheduled to mature at the earliest of (a) February 4, 2026 or (b) 91 days prior to the earliest maturity date in respect to any of our indebtedness in an aggregate principal amount of $50.0 million or greater, if such indebtedness is outstanding at such time, subject to certain exceptions.

We currently anticipate to have minimal needs for acquisitions or expansion projects and expect to fund these items through cash flows from operations, acquisition specific financing transactions or borrowings under the ABL Facility.

As of March 31, 2021, our current assets exceeded our current liabilities by approximately $97.0 million.

We expect to generate positive cash flows from operations and utilize cash flows to repay existing indebtedness, fund capital expenditures and operate our business as we deleverage our balance sheet.

For additional information related to the ABL Facility, see Note 8 to our consolidated financial statements included in this Annual Report.

Long-Term Financing

In addition to our principal sources of short-term liquidity discussed above, we expect to fund our longer-term financing requirements by issuing long-term notes, loans from financial institutions, issuing common units, issuing preferred units, asset securitizations or the sale of assets.

Debt Issuances

On April 9, 2019, we issued $450.0 million of 7.50% Senior Unsecured Notes Due 2026 (the “2026 Notes”) in a private placement.

Interest is payable on April 15 and October 15 of each year, beginning on October 15, 2019.

We received net proceeds of $442.1 million, after the initial purchasers’ discount of $6.8 million and offering costs of $1.1 million.

On July 2, 2019, we entered into a term credit agreement (the “Term Credit Agreement”) with Toronto Dominion (Texas) LLC for a $250.0 million term loan facility, to assist in the financing of the acquisition of Mesquite.

Toronto Dominion (Texas) LLC and certain of its affiliates are also lenders under our Credit Agreement.

The commitments under the Term Credit Agreement expire on July 2, 2024, however, the cost associated with this facility increases if it remains in place beyond July 2, 2020.

On November 27, 2019, Sawtooth, a joint venture in which we own approximately a 71.5% interest, entered into a credit agreement with Zions Bancorporation (doing business as “Amegy Bank”).

The Sawtooth credit agreement has a capacity of $20.0 million.

The commitments under the Sawtooth credit agreement expire on November 27, 2022.

In addition to our principal sources of short-term liquidity discussed above, we expect to fund our longer-term financing requirements by issuing long-term notes, common units and/or preferred units, loans from financial institutions, asset securitizations or the sale of assets.

Senior Secured Notes

On February 4, 2021, we issued $2.05 billion of 2026 Senior Secured Notes in a private placement.

The 2026 Senior Secured Notes bear interest, which is payable on February 1 and August 1 of each year, beginning on August 1, 2021.

The 2026 Senior Secured Notes mature on February 1, 2026.

Senior Unsecured Notes

The senior unsecured notes include the 7.5% Senior Unsecured Notes Due 2023 (“2023 Notes”), 2025 Notes and 2026 Notes (collectively, the “Senior Unsecured Notes”).

Debt Repurchases

During the year ended March 31, 2020, we repurchased $1.8 million of our 2025 Notes.

See Note 8 to our consolidated financial statements included in this Annual Report for a detailed description of our long-term debt.

Equity Issuances

On April 2, 2019, we issued 1,800,000 of our 9.625% Class C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class C Preferred Units”) representing limited partner interests at a price of $25.00 per unit for net proceeds of $42.9 million.

On July 2, 2019, we completed a private placement of an aggregate of 400,000 preferred units (“Class D Preferred Units”) and warrants exercisable to purchase an aggregate of 17,000,000 common units for net proceeds of approximately $385.4 million.

Proceeds from this issuance of Class D Preferred Units were used to fund a portion of the purchase price for the Mesquite acquisition.

On October 31, 2019, we completed a private placement of an aggregate of 200,000 Class D Preferred Units and warrants exercisable to purchase an aggregate of 8,500,000 common units for net proceeds of approximately $194.7 million.

Proceeds from this issuance of Class D Preferred Units were used to fund a portion of the purchase price for the Hillstone acquisition.

For a further discussion of our preferred issuances, see Note 10 to our consolidated financial statements included in this Annual Report.

During the year ended March 31, 2021, we repurchased $52.1 million of the 2023 Notes, $7.3 million of the 2025 Notes and $111.6 million of the 2026 Notes at a cumulative cash cost of $115.8 million (excluding payment of accrued interest).

Equipment Loan

On October 29, 2020, we entered into an equipment loan for $45.0 million with Stonebriar Commercial Finance LLC which bears interest at a rate of 8.6% and is secured by certain of our barges and towboats.

Under this agreement, we are required to make monthly payments of $0.5 million (principal and interest) and a balloon payment of $23.9 million when this loan matures on November 1, 2027.

Capital Expenditures, Acquisitions and Other Investments

2 unchanged sentences

There are no capital expenditures or acquisitions related to Mid-Con and Gas Blending.

Capital Expenditures

Year Ended March 31,

Expansion (1)

Maintenance (2)

Acquisitions (3)

Investments (4)

Capital Expenditures Other

Year Ended March 31, Expansion (1) Maintenance (2) Acquisitions (3) Investments (4)

(in thousands)

2021 $ 90,920 $ 28,787 $ (901) $ 963

2020 $ 571,154 $ 61,353 $ 1,268,474 $ 21,218

2019 $ 418,920 $ 49,177 $ 348,836 $ 389

(1) Amounts for the years ended March 31, 2021, 2020 and 2019 include $18.2 million, $49.1 million and $63.6 million, respectively, of transactions classified as acquisitions of assets.

See Note 4 to our consolidated financial statements included in this Annual Report for a further discussion of the transactions classified as acquisitions of assets completed during the year ended March 31, 2020 .

Amount for the year ended March 31, 2018 includes intangible assets received as consideration as part of the Sawtooth joint venture transaction (see Note 17 to our consolidated financial statements included in this Annual Report).

Amounts for the years ended March 31, 2019 and 2018 include $0.4 million and $8.5 million, respectively, related to our former Retail Propane segment.

Amount for the year ended March 31, 2019 includes less than $0.1 million related to TPSL.

There were no amounts related to TPSL for the years ended March 31, 2020 and 2018.

Amounts for the years ended March 31, 2019 and 2018 include $3.8 million and $14.0 million, respectively, related to our former Retail Propane segment.

Amount for the year ended March 31, 2019 includes $0.4 million related to our former Retail Propane segment and less than $0.1 million related to TPSL.

There were no amounts related to TPSL for the year ended March 31, 2020.

(2) Amount for the year ended March 31, 2019 includes $3.8 million related to our former Retail Propane segment.

There were no amounts related to TPSL for the years ended March 31, 2020 or 2019.

Amounts for the years ended March 31, 2019 and 2018 include $31.9 million and $30.5 million, respectively, related to our former Retail Propane segment.

Amount for the year ended March 31, 2019 includes $16.3 million related to TPSL.

There were no amounts related to TPSL for the years ended March 31, 2020 and 2018.

Amounts for the years ended March 31, 2020 , 2019 and 2018 primarily related to contributions made to unconsolidated entities and the purchase of membership interests in a water services and land company as described in Note 4 to our consolidated financial statements included in this Annual Report.

(3) Amount for the year ended March 31, 2019 includes $31.9 million related to our former Retail Propane segment and $16.3 million related to TPSL.

There were no amounts related to TPSL for the year ended March 31, 2020.

(4) Amounts for the years ended March 31, 2021, 2020 and 2019 primarily related to contributions made to unconsolidated entities and the purchase of membership interests in a water services and land company in November 2019.

There were no amounts for the years ended March 31, 2020 or 2019 related to TPSL.

There were no amounts for the years ended March 31, 2019 or 2018 related to our former Retail Propane segment.

As mentioned above, we announced a reduction in expected capital spending for growth and maintenance expenditures for fiscal year 2021.

There were no amounts for the year ended March 31, 2019 related to our former Retail Propane segment.

The decrease in capital spending during the year ended March 31, 2021, was due to us largely completing the build out of our Delaware Basin produced water system during the years ended March 31, 2020 and 2019.

Capital expenditures for the year ending March 31, 2022 are expected to be between $100 million and $125 million, with about one-half allocated to maintenance capital expenditures and one-half allocated to growth capital expenditures.

Distributions Declared

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.

See further discussion of our cash distribution policy in Item 5.

Market for Registrant’s Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities included in this Annual Report.

On March 16, 2020 , the board of directors of our general partner declared a distribution on the 9.00% Class B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class B Preferred Units”) and the Class C Preferred Units for the three months ended March 31, 2020 of $7.1 million and $1.1 million , respectively.

The distributions were paid on April 15, 2020 .

On April 27, 2020 , the board of directors of our general partner declared a distribution on the common units and the Class D Preferred Units of $25.8 million and $6.9 million , respectively, for the holders of record on May 7, 2020 .

The distributions were paid on May 15, 2020 .

For a further discussion of our distributions, see Note 10 to our consolidated financial statements included in this Annual Report.

The board of directors of our general partner decided to temporarily suspend all distributions in order to deleverage our balance sheet until we meet the 4.75 to 1.00 total leverage ratio set forth within the indenture of the 2026 Senior Secured Notes.

This resulted in the suspension of the quarterly common unit distributions, beginning with the quarter ended December 31, 2020, and all preferred unit distributions, beginning with the quarter ended March 31, 2021.

The board of directors of our general partner expects to evaluate the reinstatement of the common unit and all preferred unit distributions in due course, taking into account a number of important factors, including our leverage, liquidity, the sustainability of cash flows, upcoming debt maturities, capital expenditures and the overall performance of our businesses.

See further discussion of our cash distribution policy in Part II, Item 5–“Market for Registrant’s Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities” included in this Annual Report.

For a further discussion of our distributions made during the current fiscal year, see Note 10 to our consolidated financial statements included in this Annual Report.

The following table summarizes the sources (uses) of our cash flows from continuing operations for the periods indicated:

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Cash Flows Provided by (Used in):

2021 2020 2019

(in thousands)

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Operating Activities-Continuing Operations.

The seasonality of our Liquids and Refined Products business has a significant effect on our cash flows from operating activities.

The seasonality of our Liquids Logistics business has a significant effect on our cash flows from operating activities.

Increases in natural gas liquids prices typically reduce our operating cash flows due to higher cash requirements to fund increases in inventories, and decreases in natural gas liquids prices typically increase our operating cash flows due to lower cash requirements to fund increases in inventories.

In our Liquids and Refined Products business, we typically experience operating losses or lower operating income during our first and second quarters, or the six months ending September 30, as a result of lower volumes of natural gas liquids sales and when we are building our inventory levels for the upcoming butane blending and heating seasons.

The heating season runs through the six months ending March 31.

In our Liquids Logistics business, we typically experience operating losses or lower operating income during our first and second quarters, or the six months ending September 30, as a result of lower volumes of natural gas liquids sales and when we are building our inventory levels for the upcoming butane blending and heating seasons, which generally begin in late fall, under normal demand conditions, and run through February or March.

We borrow under the revolving credit facility to supplement our operating cash flows during the periods in which we are building inventory.

Our operations, and as a result our cash flows, are also impacted by positive and negative movements in commodity prices, which cause fluctuations in the value of inventory, accounts receivable and payables, due to increases and decreases in revenues and cost of sales.

The decrease in net cash provided by operating activities during the year ended March 31, 2021 was due primarily to fluctuations in the value of accounts receivable, inventories and accounts payable during the year ended March 31, 2021.

The increase in net cash provided by operating activities during the year ended March 31, 2020 was due primarily to fluctuations in the value of accounts receivable and accounts payable during the year ended March 31, 2020.

The decrease in net cash provided by operating activities during the year ended March 31, 2019 was due primarily to fluctuations in the value of inventory, other current and noncurrent assets and accounts payable during the year ended March 31, 2019 .

Investing Activities-Continuing Operations .

Net cash used in investing activities was $221.5 million during the year ended March 31, 2021, compared to net cash used in investing activities of $1.7 billion during the year ended March 31, 2020.

The decrease in net cash used in investing activities was due primarily to:

• $1.3 billion in cash paid for acquisitions and investments in unconsolidated entities during the year ended March 31, 2020;

• a decrease in capital expenditures from $555.7 million (includes payment of amounts accrued as of March 31, 2019) during the year ended March 31, 2020 to $186.8 million (includes payment of amounts accrued as of March 31, 2020) during the year ended March 31, 2021 due primarily to expansion projects in our Delaware Basin system in our Water Solutions segment during the year ended March 31, 2020.

These decreases in net cash used in investing activities were partially offset by a $167.1 million increase in payments to settle derivatives.

Net cash used in investing activities was $1.7 billion during the year ended March 31, 2020, compared to net cash used in investing activities of $404.5 million during the year ended March 31, 2019.

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• $335.8 million in proceeds from the sales of our Bakken and South Pecos water disposal businesses and our approximately 20% interest in E Energy Adams, LLC during the year ended March 31, 2019;

an increase in capital expenditures from $455.6 million during the year ended March 31, 2019 to $555.7 million during the year ended March 31, 2020 due primarily to expansion projects in our Delaware Basin system in the Water Solutions segment.

These increase s in net cash used in investing activities were partially offset by a $96.9 million increase in cash flows to settle derivatives.

Net cash used in investing activities was $404.5 million during the year ended March 31, 2019, compared to net cash provided by investing activities of $166.6 million during the year ended March 31, 2018.

The increase in net cash used in investing activities was due primarily to:

an increase in capital expenditures from $133.8 million during the year ended March 31, 2018 to $455.6 million during the year ended March 31, 2019 due primarily to capital expenditures for expansion projects in our Water Solutions segment;

a $280.7 million increase in cash paid for acquisitions during the year ended March 31, 2019.

These increases in net cash used in investing activities were partially offset by a $28.9 million decrease in payments to settle derivatives.

• an increase in capital expenditures from $455.6 million (includes payment of amounts accrued as of March 31, 2018) during the year ended March 31, 2019 to $555.7 million (includes payment of amounts accrued as of March 31, 2019) during the year ended March 31, 2020 due primarily to expansion projects in our Delaware Basin system in the Water Solutions segment.

These increases in net cash used in investing activities were partially offset by a $96.9 million increase in cash flows to settle derivatives.

Financing Activities-Continuing Operations.

Net cash used in financing activities was $100.4 million during the year ended March 31, 2021, compared to net cash provided by financing activities of $978.8 million during the year ended March 31, 2020.

The decrease in net cash provided by financing activities was due primarily to:

• a decrease of $1.8 billion in borrowings on the revolving credit facilities (net of repayments) during the year ended March 31, 2021;

• $622.4 million in net proceeds from the issuance of the 9.625% 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, 2020;

• $450.0 million in proceeds from the issuance of the 2026 Notes during the year ended March 31, 2020;

• $115.8 million paid in cash to repurchase a portion of our Senior Unsecured Notes during the year ended March 31, 2021;

• a make-whole fee of $55.6 million related to the termination of our term credit agreement in February 2021;

• an increase of $50.6 million in debt issuance costs related to the termination of our term credit agreement and the issuance of the 2026 Senior Secured Notes in February 2021.

These decreases in net cash provided by financing activities were partially offset by:

• $2.05 billion in proceeds from the issuance of the 2026 Senior Secured Notes during the year ended March 31, 2021;

• $265.1 million in payments for the redemption of the 10.75% Class A Convertible Preferred Units during the year ended March 31, 2020;

• a decrease of $99.3 million in distributions paid to our general partners and common unitholders, preferred unitholders and noncontrolling interest owners during the year ended March 31, 2021 due primarily to the reduction and subsequent suspension of the quarterly common unit and preferred unit distributions.

Net cash provided by financing activities was $978.8 million during the year ended March 31, 2020, compared to net cash used in financing activities of $793.9 million during the year ended March 31, 2019.

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• $100.0 million in contingent consideration payments as part of the Mesquite acquisition during the year ended March 31, 2020.

Net cash used in financing activities was $793.9 million during the year ended March 31, 2019, compared to net cash used in financing activities of $390.4 million during the year ended March 31, 2018.

The increase in net cash used in financing activities was due primarily to:

an increase in repurchases and redemptions of our senior unsecured notes of $250.4 million during the year ended March 31, 2019;

a decrease of $202.7 million due to proceeds received from the sale of our preferred units during the year ended March 31, 2018.

These increases in net cash used in financing activities were partially offset by an increase of $46.5 million in borrowings on the Revolving Credit Facility (net of repayments) during the year ended March 31, 2019.

Guarantor Summarized Financial Information

NGL Energy Partners LP (parent) and NGL Energy Finance Corp.

are co-issuers of the Senior Unsecured Notes (see Note 8 to our consolidated financial statements included in this Annual Report).

Certain of our wholly owned subsidiaries (“Guarantor Subsidiaries”) have, jointly and severally, fully and unconditionally guaranteed the Senior Unsecured Notes.

The guarantees are senior unsecured obligations of each Guarantor Subsidiary and rank equally in right of payment with other existing and future senior indebtedness of such Guarantor Subsidiary, and senior in right of payment to all existing and future subordinated indebtedness of such Guarantor Subsidiary.

The guarantee of our Senior Unsecured Notes by each Guarantor Subsidiary is subject to certain automatic customary releases, including in connection with the sale, disposition or transfer of all of the capital stock, or of all or substantially all of the assets, of such Guarantor Subsidiary to one or more persons that are not us or a restricted subsidiary, the exercise of legal defeasance or covenant defeasance options, the satisfaction and discharge of the indentures governing our Senior Unsecured Notes, the designation of such Guarantor Subsidiary as a non-guarantor restricted subsidiary or as an unrestricted subsidiary in accordance with the indentures governing our Senior Unsecured Notes, the release of such Guarantor Subsidiary from its guarantee under our revolving credit facility, the liquidation or dissolution of such Guarantor Subsidiary or upon the consolidation, merger or transfer of all assets of the Guarantor Subsidiary to us or another Guarantor Subsidiary in which the Guarantor Subsidiary dissolves or ceases to exist (collectively, the “Releases”).

The obligations of each Guarantor Subsidiary under its note guarantee are limited as necessary to prevent such note guarantee from constituting a fraudulent conveyance under applicable law.

We are not restricted from making investments in the Guarantor Subsidiaries and there are no significant restrictions on the ability of the Guarantor Subsidiaries to make distributions to NGL Energy Partners LP (parent).

None of the assets of the Guarantor Subsidiaries (other than the investments in non-guarantor subsidiaries) are restricted net assets pursuant to Rule 4-08(e)(3) of Regulation S-X under the Securities Act of 1933, as amended.

The rights of holders of our Senior Unsecured Notes against the Guarantor Subsidiaries may be limited under the U.S.

Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law.

The following is the summarized financial information for NGL Energy Partners LP (parent) and the Guarantor Subsidiaries on a combined basis after elimination of intercompany transactions, which includes related receivable and payable balances, and the investment in and equity earnings from the non-guarantor subsidiaries.

This summarized financial information is provided in accordance with the reporting requirements of Rule 13-01 under Securities and Exchange Commission Regulation S-X.

Balance sheet information:

NGL Energy Partners LP (Parent) and Guarantor Subsidiaries

March 31, 2021

(in thousands)

Current assets $ 1,002,708

Noncurrent assets (1)(2) $ 4,743,874

LIABILITIES AND EQUITY (3):

Current liabilities $ 906,512

Noncurrent liabilities $ 3,524,664

Class D Preferred Units $ 551,097

(1) Excludes $50.9 million of net intercompany receivables due to NGL Energy Partners LP (parent) and the Guarantor Subsidiaries from the non-guarantor subsidiaries.

(2) Includes $1.9 billion of goodwill and intangible assets.

(3) There are no noncontrolling interests held at the co-issuers or Guarantor Subsidiaries.

Statement of operations information:

NGL Energy Partners LP (Parent) and Guarantor Subsidiaries

Twelve Months Ended

March 31, 2021

(in thousands)

Revenues $ 5,214,499

Operating loss $ (390,210)

Loss from continuing operations $ (636,626)

Net loss (1) $ (638,395)

Loss from continuing operations allocated to common unitholders $ (729,891)

(1) There are no noncontrolling interests held at the co-issuers or Guarantor Subsidiaries.

Contractual Obligations

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Years Ending March 31,

Total 2022 2023 2024 2025 2026 Thereafter

(in thousands)

Principal payments on long-term debt:

Expansion capital borrowings

Working capital borrowings

2026 Senior Secured Notes $ 2,050,000 $ — $ — $ — $ — $ 2,050,000 $ —

ABL Facility 4,000 — — — — 4,000 —

Senior Unsecured Notes 1,273,673 — — 555,251 380,020 — 338,402

Term credit agreement

Other long-term debt 49,095 2,184 7,585 2,816 3,068 3,343 30,099

Interest payments on long-term debt:

Revolving Credit Facility (1)

2026 Senior Secured Notes 767,896 152,896 153,750 153,750 153,750 153,750 —

ABL Facility (1) 1,018 210 210 210 210 178 —

Senior Unsecured Notes 357,627 90,300 90,300 90,300 48,656 25,380 12,691

Term credit agreement

Sawtooth credit agreement

Other long-term debt 20,049 3,528 3,582 3,273 3,021 2,746 3,899

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Future minimum lease payments under noncancelable operating leases 195,385 53,842 41,395 26,589 15,349 7,406 50,804

Construction commitments (3)

Fixed-price commodity purchase commitments:

Crude oil 93,285 93,285 — — — — —

Natural gas liquids 13,524 12,705 819 — — — —

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Total contractual obligations $ 15,050,338 $ 4,342,035 $ 2,175,938 $ 2,587,365 $ 2,167,219 $ 3,341,611 $ 436,170

The estimated interest payments on the Revolving Credit Facility are based on principal and letters of credit outstanding at March 31, 2020 .

See Note 8 to our consolidated financial statements included in this Annual Report for additional information on the Credit Agreement.

(1) The estimated interest payments on the ABL Facility are based on principal and letters of credit outstanding at March 31, 2021.

See Note 8 to our consolidated financial statements included in this Annual Report for additional information on the ABL Facility.

(2) We have noncancelable agreements with crude oil pipeline operators, which guarantee us minimum monthly shipping capacity on the pipelines.

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See Note 9 to our consolidated financial statements included in this Annual Report for further detail of the commitments.

At March 31, 2020 , the construction commitments relate to two new barges currently being built.

(3) Index prices are based on a forward price curve at March 31, 2021.

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We do not have any off balance sheet arrangements other than the letters of credit discussed in Note 8 to our consolidated financial statements included in this Annual Report and the short-term leases discussed in Note 16 to our consolidated financial statements included in this Annual Report.

See Note 2 to our consolidated financial statements included in this Annual Report for a discussion of the lease accounting standard we adopted effective April 1, 2019.

Environmental Legislation

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Any such write-down of the value and unfavorable change in the useful life of a long-lived asset would increase costs and expenses at that time.

See Note 5 and Note 7 to our consolidated financial statements included in this Annual Report) for a further discussion of our impairments of long-lived assets.

We evaluate our equity method investments for impairment when we believe the current fair value may be less than the carrying amount and record an impairment if we believe the decline in value is other than temporary.

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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.

We are required to recognize the fair value of a liability for an

asset retirement obligation if a reasonable estimate of fair value can be made.

We are required to recognize the fair value of a liability for an asset retirement obligation if a reasonable estimate of fair value can be made.

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.

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If substantially all of the relative fair value is concentrated in a single asset or group of similar assets, or if not but the transaction does not include a significant process (does not meet the definition of a business), we record the transaction as an acquisition of assets.

For acquisitions of assets, the purchase price is allocated based on the relative fair values.

For an acquisition of assets, goodwill is not recorded.

For acquisitions of assets, the purchase price is allocated based on the relative fair values and goodwill is not recorded.

All other transactions are recorded as business combinations.

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At the end of each fiscal year, we also perform a “lower of cost or net realizable value” analysis;

if the cost basis of the inventories would not be recoverable based on the net realizable value at the end of the year, we reduce the book value of the inventories to the recoverable amount.

if the cost basis of the inventories would not be recoverable based on the net realizable value at the

end of the year, we reduce the book value of the inventories to the recoverable amount.

When performing this analysis during interim periods within a fiscal year, accounting standards do not require us to record a lower of cost or net realizable value write-down if we expect the net realizable value to recover by our fiscal year end.

The net realizable values of

these commodities change on a daily basis as supply and demand conditions change.

The net realizable values of these commodities change on a daily basis as supply and demand conditions change.

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.

In addition, write-downs at interim periods could be required if we cannot conclude that net realizable values will recover sufficiently by our fiscal year end.

Equity-Based Compensation

Our general partner has granted certain restricted units to employees and directors under a long-term incentive plan.

The restricted units include awards that vest contingent on the continued service of the recipients through the vesting date (the “Service Awards”).

Our general partner has granted certain restricted units to employees and directors, under a long-term incentive plan, which vest in tranches, subject to the continued service of the recipients through the vesting date (the “Service Awards”).

The awards may also vest upon a change of control, at the discretion of the board of directors of our general partner.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis