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Item 9A. Controls and Procedures

2021-06-03 compared with 2020-06-01 · 1064 added, 1443 removed, 1876 unchanged (57% of the section changed)

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Changes in Internal Control Over Financial Reporting

Other than changes that have resulted or may result from our business combinations during the year ended March 31, 2020 , as discussed below, there have been no changes in our internal controls over financial reporting (as defined in Rule 13(a)-15(f) of the Exchange Act) during the three months ended March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

We closed several business combinations during the year ended March 31, 2020 , as described in Note 4 to our consolidated financial statements included in this Annual Report.

At this time, we continue to evaluate the business and internal controls and processes of these acquired businesses and are making various changes to their operating and organizational structure based on our business plan.

We are in the process of implementing our internal control structure over these acquired businesses.

We expect that our evaluation and integration efforts related to those combined operations will continue into future fiscal quarters.

There have been no changes in our internal controls over financial reporting (as defined in Rule 13(a)-15(f) of the Exchange Act) during the three months ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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The board of directors of our general partner has determined that Mr.

Collingsworth and Mr.

Reiners satisfy the New York Stock Exchange (“NYSE”) and SEC independence requirements.

Collingsworth, Mr.

Guderian and Mr.

Reiners satisfy the New York Stock Exchange (“NYSE”) and Securities and Exchange Commission (“SEC”) independence requirements.

The NYSE does not require a listed publicly traded limited partnership like NGL to have a majority of independent directors on the board of directors of its general partner.

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The following table summarizes information regarding the directors of our general partner and our named executive officers as of May 28, 2021.

Position with NGL Energy Holdings LLC

Michael Krimbill

Chief Executive Officer and Director

Karlovich III

Executive Vice President and Chief Financial Officer

Executive Vice President, Strategic Initiatives

Executive Vice President and General Counsel and Secretary

Chief Accounting Officer

Collingsworth

Name Age Position with NGL Energy Holdings LLC

Michael Krimbill 67 Chief Executive Officer and Director

Karlovich III 44 Executive Vice President and Chief Financial Officer

Ciolek 57 Executive Vice President, Strategic Initiatives

McMurray 49 Executive Vice President and General Counsel and Secretary

Thuillier 50 Chief Accounting Officer

Coady 59 Director

Collingsworth 66 Director

Cropper 71 Director

Guderian 61 Director

Raymond 50 Director

Reiners 50 Director

Wade 51 Director

Michael Krimbill .

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Thuillier served in various roles at Deloitte & Touche LLP, most recently as Audit Senior Manager.

Boland has served on the board of directors of our general partner since July 2019.

Boland serves as Managing Director and Co-head of Midstream at EIG Global Energy Partners where he leads the firm’s investment activities in the midstream sector on a global basis.

Prior to joining EIG in 2011, Mr.

Boland worked at Credit Suisse in New York where he was a member of the Global Energy and Leveraged Finance groups.

Boland also currently serves as a director of Limetree Bay Ventures, LLC, Elba Liquefaction Company, L.L.C., Midship Holdings, LLC, and is a board observer at Cheniere Corpus Christi Holdings, LLC.

Boland brings extensive financial and industry experience to the board.

As a director for other companies, Mr.

Boland also provides cross board experience.

Coady served as our President and Chief Operating Officer, Retail Division, from April 2012 to March 2018, when we sold a portion of our Retail Propane segment, and previously served as our Co-President and Chief Operating Officer, Retail Division from October 2010 through April 2012.

Coady served as our President and Chief Operating Officer, Retail Division, from April 2012 to March 2018, when we sold a portion of our Retail Propane segment to DCC LPG (“DCC”), and previously served as our Co-President and Chief Operating Officer, Retail Division from October 2010 through April 2012.

Coady served as an executive officer of DCC from April 2018 until his retirement in December 2020.

Coady served as a member of the board of directors of our general partner since its formation in September 2010.

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organization from 1973 to 1988 in various capacities, including customer service and business development manager of the Mid-America and Seminole pipelines.

Collingsworth served as a director of American Ethane Co.

Collingsworth currently serves on the board of directors of Martin Midstream Partners L.P.

and American Ethane Co.

Collingsworth brings a wealth of in-depth industry experience to the board.

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Cropper’s retirement from The Williams Companies, Inc.

in 1998, he has been a consultant and private investor and also served as a director of Sunoco Logistics Partners, L.P., NRG Energy, Inc., Berry Petroleum Company, and Rental Car Finance Corp., a subsidiary of Dollar Thrifty Automotive Group.

Cropper currently serves on the board of directors of QuikTrip Corporation and Wawa Inc.

in 1998, he has been a consultant and private investor and also served as a director of Sunoco Logistics Partners, L.P., NRG Energy, Inc., Berry Petroleum Company, Rental Car Finance Corp., a subsidiary of Dollar Thrifty Automotive Group and Wawa Inc.

Cropper currently serves on the board of directors of QuikTrip Corporation.

Cropper brings substantial experience in the energy business and in the marketing of energy products to the board.

With his significant management and governance experience, Mr.

Cropper provides important skills in identifying, assessing

and addressing various business issues.

Cropper provides important skills in identifying, assessing and addressing various business issues.

As a director for other public companies, Mr.

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Guderian joined the board of directors of our general partner in May 2012.

Guderian currently serves as a Principal of BKG Consulting LLC, an energy related consulting firm.

Guderian has served as Executive Vice President of Business Development of WPX Energy, Inc.

(“WPX”) since February 2018.

(“WPX”) from February 2018 until his retirement in January 2021.

Guderian served as Senior Vice President of Business Development of WPX from October 2014 to February 2018 and as Senior Vice President of Operations of WPX from August 2011 to October 2014.

Guderian previously served as Vice President of the Exploration & Production unit of The Williams Companies, Inc.

from 1998 until August 2011, where he had responsibility for overseeing international operations.

from 1998 until August 2011, where

he had responsibility for overseeing international operations.

Guderian served as a director of Apco Oil & Gas International Inc., from 2002 to 2015 and as a director of Petrolera Entre Lomas S.A.

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(the predecessor entity of Vulcan Energy Corporation), President and Chief Operating Officer of Plains Exploration and Production Company and was a Director of Plains All American Pipeline, LP.

Raymond also currently serves as a director of American Energy Ohio Holdings, LLC, Ferus Inc., Ferus Natural Gas Fuels Inc., Iron Ore Holdings, Lighthouse Oil & Gas GP, LLC, MarkWest Utica EMG, LLC, Medallion Midstream, LLC, Plains All American GP LLC, PAA GP Holdings LLC, Tallgrass MLP GP LLC and Tallgrass Management, LLC.

Raymond also currently serves as a director of Ferus Inc., Ferus Natural Gas Fuels Inc., MarkWest Utica EMG, LLC, Medallion Midstream, LLC and PAA GP Holdings LLC.

Raymond manages various private investments through personally held Lynx Holdings, LLC.

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Reiners provides valuable insight into our business and industry.

Wade has served on the board of directors of our general partner since February 2021.

Wade is the President of EIG Global Energy Partners (“EIG”) and a member of its Investment and Executive Committees.

He has broad involvement in the firm’s various activities including investments, investor relations, operations and strategic initiatives.

Since joining EIG in 1996, Mr.

Wade has filled various roles including Chief Operating Officer, head of the direct lending strategy, investment principal with coverage responsibility for Australia and an analyst for the oil and gas team.

Prior to joining EIG, Mr.

Wade was a Commercial Lending Officer for First Interstate Bank of Texas, where he was responsible for developing a middle-market loan portfolio.

Wade brings extensive financial and industry experience to the board.

Director Appointment Rights

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EMG NGL HC LLC has the right to designate one person to serve on the board of directors of our general partner, and has designated John T.

EIG Global Energy Partners has the right to designate one person to serve on the board of directors of our general partner, and has designated Brian P.

EIG has the right to designate one person to serve on the board of directors of our general partner, and has designated Randall S.

The Coady Group (which consists of certain entities controlled by Shawn W.

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• establishing the general partner’s compensation philosophy and objectives;

approving the compensation of the Chief Executive Officer;

making recommendations to the board of directors with respect to the compensation of other officers and directors;

• approving the compensation of the Chief Executive Officer and other officers;

• making recommendations to the board of directors with respect to the directors;

• reviewing and making recommendations to the board of directors with respect to incentive compensation and equity-based plans.

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The board of directors has determined that Mr.

Cropper and Mr.

Collingsworth are independent directors under applicable NYSE and Exchange Act rules.

The NYSE does not require a listed publicly traded limited partnership to have a compensation committee consisting entirely of independent directors.

Collingsworth and Mr.

Guderian are independent directors under applicable NYSE and Exchange Act rules.

Corporate Governance

The board of directors of our general partner has adopted a Code of Ethics for the Chief Executive Officer and Senior Financial Officers, or Code of Ethics, that applies to the chief executive officer, chief financial officer, chief accounting officer, controller and all other senior financial and accounting officers of our general partner.

The board of directors of our general partner has adopted a Code of Ethics for the Chief Executive Officer and Senior Financial Officers, or Code of Ethics, that applies to the Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Corporate Controller and all other senior financial and accounting officers of our general partner.

Amendments to or waivers from the Code of Ethics will be disclosed on our website.

The board of directors of our general partner has also adopted Corporate Governance Guidelines that outline important policies and practices regarding our governance and a Code of Business Conduct and Ethics that applies to the directors, officers and employees of our general partner and the Partnership.

We make available free of charge, within the “Governance” section of our website at http://www.nglenergypartners.com/governance, and in print to any unitholder who so requests, the Code of Ethics, the Corporate Governance Guidelines, the Code of Business Conduct and Ethics and the charters of the audit committee and the compensation committee of the board of directors of our general partner.

We make available free of charge, within the “Governance” section of our website at www.nglenergypartners.com/governance, and in print to any unitholder who so requests, the Code of Ethics, the Corporate Governance Guidelines, the Code of Business Conduct and Ethics and the charters of the audit committee and the compensation committee of the board of directors of our general partner.

Requests for print copies may be directed to Investor Relations at investorinfo@nglep.com or to Investor Relations, NGL Energy Partners LP, 6120 South Yale Avenue, Suite 805, Tulsa, Oklahoma 74136 or made by telephone at (918) 481-1119.

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The board of directors of our general partner has responsibility and authority for compensation-related decisions for our executive officers.

The board of directors has formed a compensation committee to develop our compensation program, to determine the compensation of our Chief Executive Officer, and to make recommendations to the board of directors regarding the compensation of our other executive officers.

Our executive officers are also officers of our operating companies and are compensated directly by our operating companies.

The board of directors has formed a compensation committee to develop our compensation program and to approve the compensation of the Chief Executive Officer and other officers.

Our executive officers are also officers of our operating companies.

While we reimburse our general partner and its affiliates for all expenses they incur on our behalf, our executive officers do not receive any additional compensation for the services they provide to our general partner.

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Karlovich III–Executive Vice President and Chief Financial Officer

• Lawrence J.

Thuillier–Chief Accounting Officer

McMurray–Executive Vice President and General Counsel and Secretary

Ciolek–Executive Vice President, Strategic Initiatives (Mr.

Ciolek commenced employment in December 2019 and was appointed Executive Vice President, Strategic Initiatives by the board of directors of our general partner in January 2020)

Ciolek–Executive Vice President, Strategic Initiatives

Compensation Philosophy

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Our achievements during the year ended March 31, 2021 included the following:

Issued 9.625% Class C Preferred Units for net proceeds of $42.9 million ;

Issued 9.00% Class D Preferred Units for net proceeds of $580.1 million ;

Issued 7.50% Senior Unsecured Notes Due 2026 for net proceeds of $442.1 million ;

On July 2, 2019, we acquired all of the assets of Mesquite Disposals Unlimited for total consideration of $895.3 million ;

On September 30, 2019, we sold TPSL for total consideration of $233.8 million ;

On October 31, 2019, we acquired all of the equity interests of Hillstone Environmental Partners, LLC for total consideration of $642.5 million .

• Issued $2.05 billion of 7.5% senior secured notes due 2026 (“2026 Senior Secured Notes”);

• Entered in a new $500.0 million asset-based revolving credit facility (“ABL Facility”) in February 2021.

Compensation Highlights

• We paid cash bonuses to Mr.

Krimbill , Mr.

Karlovich and Mr.

McMurray during fiscal year 2020 , primarily due to their work related to the acquisitions of Mesquite Disposals Unlimited and Hillstone Environmental Partners, LLC and for the sale of TPSL.

The salaries of most of our named executive officers remain below the median of our benchmark peer group.

This enables us to grant more performance-based compensation to maintain competitive total compensation packages and achieve a greater degree of alignment of pay and performance.

Thuillier during fiscal year 2021 primarily due to their work related to the issuance of the 2026 Senior Secured Notes and the ABL facility.

We paid cash bonuses to Mr.

McMurray during fiscal year 2021 primarily due to his work related to the issuance of the 2026 Senior Secured Notes, closing the ABL Facility and closing the transaction with WaterBridge Resources LLC.

Factors Enhancing Alignment with Unitholder Interests

Majority of named executive officer pay is at risk incentive compensation based on annual financial performance and growth in unitholder value;

Equity-based incentives are the largest single component of named executive officer compensation;

• At risk incentive compensation based on annual financial performance and growth in unitholder value;

• No excise tax gross-ups;

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During fiscal year 2021, the compensation committee received compensation advice and data from Pearl Meyer & Partners (“PM&P”).

PM&P conducted a competitive review of the principal components of compensation for our directors.

The compensation committee reviewed the services provided by PM&P and determined that they are

independent in providing executive compensation consulting services.

PM&P provided advice and guidance regarding the principal components of compensation for our directors.

The compensation committee reviewed the services provided by PM&P and determined that they are independent in providing executive compensation consulting services.

In making this determination, the compensation committee noted that during fiscal year 2021:

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Objective Supported

Primary Purpose

How Amount Determined

Fixed income to compensate executive officers for their level of responsibility, expertise and experience

Element Primary Purpose How Amount Determined Attract &

Retain Motivate &

Performance Unitholder

Base Salary Fixed income to compensate executive officers for their level of responsibility, expertise and experience

Based on competition in the marketplace for executive talent and abilities

Discretionary Cash Bonus Awards

Rewards achievement of specific annual financial and operational performance goals

Based on the named executive officer’s relative contribution to achieving or exceeding annual goals

Discretionary Cash Bonus Awards Rewards achievement of specific annual financial and operational performance goals

Based on the named executive officer’s relative contribution to the ongoing business of the Partnership

Recognizes individual contributions to our performance

Long-Term Equity Incentive Awards

Motivates and rewards the achievement of long-term performance goals, including increasing the market price of our common units and the quarterly distributions to our unitholders

Long-Term Equity Incentive Awards Motivates and rewards the achievement of long-term performance goals, including increasing the market price of our common units and the quarterly distributions to our unitholders

Based on the named executive officer’s expected contribution to long-term performance goals

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The compensation committee periodically reviews the base salaries of our named executive officers and may recommend adjustments as necessary.

We do not make automatic annual adjustments to base salary and none of our named executive officers received a base salary increase in fiscal year 2020.

We do not make automatic annual adjustments to base salary.

Krimbill’s initial base salary of $120,000 was originally determined as part of the negotiations for our formation transactions.

Effective July 1, 2014, the board of directors increased Mr.

Krimbill’s salary to $350,000, in consideration of the fact that his salary was low relative to the benchmark peer group (and remains below the 25th percentile of the peer group).

Krimbill’s salary to $350,000, in consideration of the fact that his salary was low relative to the benchmark peer group.

Effective April 1, 2018, Mr.

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On June 10, 2018, Mr.

Karlovich’s salary was increased to $500,000, in consideration of the fact that his salary was low relative to the benchmark peer group.

Karlovich’s base salary was increased to $500,000, in consideration of the fact that his salary was low relative to the benchmark peer group.

Thuillier’s base salary of $250,000 was negotiated prior to his joining our management team in January 2016.

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Thuillier’s base salary was increased to $268,000.

In March 2019, Mr.

Thuillier’s base salary was increased to $270,000.

Effective March 28, 2021, Mr.

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McMurray’s base salary was increased to $350,000.

In March 2019, Mr.

McMurray’s base salary was increased to $375,000.

Effective March 28, 2021, Mr.

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Discretionary Cash Bonus Awards

None of the named executive officers is subject to a formal cash bonus plan, and any cash bonuses are at the discretion of either the board of directors (in the case of Mr.

Krimbill) or the compensation committee of the board of directors (in the case of the other named executive officers).

Cash bonuses of $1.5 million , $0.5 million and $0.5 million were paid to Mr.

Krimbill , Mr.

None of the named executive officers is subject to a formal cash bonus plan, and any cash bonuses are at the discretion of the compensation committee of the board of directors.

Cash bonuses of less than $0.1 million were paid to both Mr.

Karlovich and Mr.

McMurray , respectively, during fiscal year 2020 , primarily due to their work related to the acquisitions of Mesquite Disposals Unlimited and Hillstone Environmental Partners, LLC and for the sale of TPSL.

Thuillier nor Mr.

McMurray in fiscal year 2021.

Cash bonuses of $0.6 million and $0.2 million were paid in April 2021 to Mr.

Karlovich and Mr.

Thuillier, respectively, for their work related to the issuance of the 2026 Senior Secured Notes and closing the ABL Facility.

A cash bonus of $0.6 million was paid to Mr.

McMurray in April 2021 primarily due to his work related to the issuance of the 2026 Senior Secured Notes, closing the ABL Facility and closing the transaction with WaterBridge Resources LLC.

Krimbill nor Mr.

Ciolek received a cash bonus in fiscal year 2021.

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Certain restricted units granted to the named executive officers vest in tranches, contingent only on the continued service of the recipient through the vesting date (the “Service Awards”).

The following table summarizes Service Award units granted, vested and/or forfeited during fiscal year 2020 with respect to the named executive officers:

Unvested Units at

March 31, 2019

Units Granted

March 31, 2020

The following table summarizes Service Award units activity during fiscal year 2021 with respect to the named executive officers:

Unvested Units at Unvested Units at

Name March 31, 2020 Units Vested March 31, 2021 (6)

Michael Krimbill (1) 225,000 (150,000) 75,000

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Thuillier (3) 15,000 (10,000) 5,000

Krimbill vested in 100,000 Service Awards on July 10, 2019 , 75,302 Service Awards on August 21, 2019 and 75,000 Service Awards on February 11, 2020 .

He was granted 75,302 Service Awards on August 21, 2019 .

Karlovich vested in 7,531 Service Awards on August 21, 2019 , 12,500 Service Awards on November 13, 2019 and 12,500 Service Awards on February 11, 2020 , respectively.

He was granted 7,531 Service Awards on August 21, 2019 .

Thuillier vested in Service Awards of 10,166 on August 21, 2019 , 5,000 on November 13, 2019 and 5,000 on February 11, 2020 .

He was granted 10,166 Service Awards on August 21, 2019 .

McMurray vested in 7,531 Service Awards on August 21, 2019 , 7,500 Service Awards on November 13, 2019 and 7,500 Service Awards on February 11, 2020 .

He was granted 7,531 Service Awards on August 21, 2019 .

Ciolek was granted 50,000 Service Awards on January 21, 2020 , of which 12,500 vested on February 11, 2020 .

The Service Award units granted on August 21, 2019 were intended as a discretionary bonus for performance during fiscal year ended March 31, 2019 .

The following table summarizes the vesting dates of the unvested Service Award units at March 31, 2020 :

Service Award Units Vesting by Fiscal Year Ending (1)

Unvested Units at

March 31, 2021

March 31, 2022

March 31, 2020

Michael Krimbill

Karlovich III

All of the Service Awards in the table above will vest as follows, with the exception of Mr.

For the fiscal year ending March 31, 2021 , half of the units will vest on November 10, 2020 and February 11, 2021 .

For the fiscal year ending March 31, 2022 , the units will vest on November 12, 2021 .

For the fiscal year ending March 31, 2021 7,500 of Mr.

McMurray’s outstanding units will vest on November 10, 2020 and 10,000 will vest on February 11, 2021 .

For the fiscal year ending March 31, 2022 , Mr.

McMurray’s units will vest on November 12, 2021 .

McMurray (4) 27,500 (17,500) 10,000

Ciolek (5) 37,500 (25,000) 12,500

Krimbill vested in 75,000 Service Awards on November 10, 2020 and 75,000 Service Awards on February 11, 2021.

Karlovich vested in 12,500 Service Awards on November 10, 2020 and 12,500 Service Awards on February 11, 2021.

Thuillier vested in 5,000 Service Awards on November 10, 2020 and 5,000 Service Awards on February 11, 2021.

McMurray vested in 7,500 Service Awards on November 10, 2020 and 10,000 Service Awards on February 11, 2021.

Ciolek vested in 12,500 Service Awards on November 10, 2020 and 12,500 Service Awards on February 11, 2021.

(6) All of the Service Awards in the table above will vest on November 12, 2021.

In May 2021, the compensation committee of the board of directors of our general partner granted 250,000 Service Awards to Mr.

Krimbill, 150,000 Service Awards each to Mr.

Karlovich, Mr.

McMurray and Mr.

Ciolek and 55,000 Service Awards to Mr.

For each individual, one-fourth of those grants will vest in each of February 10, 2022, November 14, 2022, February 13, 2023 and November 15, 2023.

Severance and Change in Control Benefits

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Our matching contributions vest over two years.

Effective January 1, 2020, for every dollar that employees contribute up to 4% of their eligible compensation (as defined in the plan), we contribute one dollar, plus 50 cents for every dollar employees contribute between 4% and 6% of their eligible compensation (as defined in the plan).

Other Benefits

We do not maintain a defined benefit or pension plan for our executive officers, because we believe such plans primarily reward longevity rather than performance.

We provide a basic benefits package available to substantially all full-time employees, which includes a 401(k) plan and medical, dental, vision, disability and life insurance.

We offer a benefits package available to substantially all full-time employees, which includes a 401(k) plan and medical, dental, vision, disability and life insurance.

Other Officers

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As described under Part I, Item 13–“Transactions with Related Persons,” Mr.

Guderian is an executive officer of WPX, and we entered into certain transactions with WPX during fiscal year 2020 .

Summary Compensation Table for 2020

Guderian was an executive officer of WPX, and we entered into certain transactions with WPX during fiscal year 2021.

Summary Compensation Table

The following table summarizes the compensation earned by our named executive officers for fiscal years 2019 through 2021.

Name and Position

Name and Position Fiscal

($) Restricted Unit

Awards (Service and Performance Awards) (1)

($) All Other

Compensation (2)

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Chief Executive Officer 2020 625,000 1,500,000 1,000,011 11,019 3,136,030

2019 614,423 1,000,000 1,928,520 13,886 3,556,829

Karlovich III 2021 500,000 600,000 — 12,759 1,112,759

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Chief Financial Officer 2019 483,846 650,000 142,405 7,695 1,283,946

Thuillier 2021 270,000 150,000 — 14,849 434,849

Chief Accounting Officer 2020 269,923 — 135,004 9,751 414,678

2019 267,693 — 191,964 9,639 469,296

McMurray 2021 375,000 600,000 — 9,210 984,210

Executive Vice President and 2020 374,039 500,000 100,012 8,857 982,908

General Counsel and Secretary 2019 348,077 650,000 113,924 9,199 1,121,200

Ciolek (3) 2021 500,000 — — 15,390 515,390

Executive Vice President, 2020 140,385 — 501,250 119 641,754

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McMurray will receive a base salary of no less than $250,000 per year and will be eligible to receive an annual bonus with respect to each fiscal year of the Partnership at a target of 100% of his base salary.

McMurray is also entitled to receive annual awards of unvested units under the Partnership’s LTIP.

McMurray is also entitled to receive annual awards of unvested units under the Partnership’s long-term incentive plan (“LTIP”).

In the event that Mr.

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McMurray from the position of Executive Vice President and General Counsel and Secretary without Mr.

McMurray’s written

consent, (3) any action by the Partnership that results in significant diminution of Mr.

McMurray’s written consent, (3) any action by the Partnership that results in significant diminution of Mr.

McMurray’s authority, power or responsibilities, or (4) the Partnership’s relocation of its principal place of business in Oklahoma to a location more than 50 miles from its current location.

McMurray is subject to non-disclosure and intellectual property rights assignment obligations, and an obligation not to solicit customers, employees or consultants lasting during his employment and for a period of 12 months thereafter.

McMurray is subject to non-disclosure and intellectual property rights assignment

obligations, and an obligation not to solicit customers, employees or consultants lasting during his employment and for a period of 12 months thereafter.

Restricted Unit Awards

During fiscal year 2020 , the compensation committee granted an award to Mr.

Ciolek for which units vest at specified dates, contingent only on the continued service of the recipient through the service date (the “Service Awards”).

The awards granted to the other named executive officers were intended as discretionary bonuses and vested immediately.

2020 Grants of Plan Based Awards Table

The following table summarizes the number of restricted Service Award units granted to our named executive officers, and their grant date fair values:

Total Number of Service Award

Grant Date Fair Value of

Service Award Units

Michael Krimbill

August 21, 2019

Karlovich III

August 21, 2019

January 21, 2020

The fair value of the restricted Service Award units shown in the table above was calculated based on the closing market price of our common units on the grant dates, with adjustments made to reflect the fact that restricted units are not entitled to distributions during the vesting period.

We record the expense for each Service Award on a straight-line basis over the requisite period for the entire award (that is, over the requisite service period of the last separately vesting portion of the award), ensuring that the amount of compensation cost recognized at any date at least equals the portion of the grant-date value of the award that is vested at that date.

The amounts reported in the table above for restricted units is the grant date fair value for financial reporting purposes under ASC 718 and does not represent the amount actually realized by the named executive officer at vesting, which may be more or less than the amount reported in the table above.

During fiscal year 2021, the compensation committee granted no units to the named executive officers.

Outstanding Equity Awards at March 31, 2021

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Number of Service Award Units

that Have Not Yet Vested

Market Value of Service Award Units

that Have Not Yet Vested Market Value of Service Award Units

that Have Not Yet Vested

Name (#)(1) ($)(2)

Michael Krimbill 75,000 153,000

Karlovich III 12,500 25,500

Thuillier 5,000 10,200

McMurray 10,000 20,400

Ciolek 12,500 25,500

(1) Reflects Service Awards that have not vested and are held by each named executive officer.

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The following table summarizes the value of the awards on the vesting date which was calculated based of the closing market price per common unit on the vesting dates.

Number of Service Award Units

Name Number of Service Award Units

Acquired on Vesting

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Thuillier (3) 10,000 25,300

Krimbill vested in 100,000 , 75,302 and 75,000 Service Awards on July 10, 2019 , August 21, 2019 and February 11, 2020 , respectively.

Karlovich vested in 7,531 , 12,500 and 12,500 Service Awards on August 21, 2019 , November 13, 2019 and February 11, 2020 , respectively.

Thuillier vested in 10,166 , 5,000 and 5,000 Service Awards on August 21, 2019 , November 13, 2019 and February 11, 2020 , respectively.

McMurray vested in 7,531 , 7,500 and 7,500 Service Awards on August 21, 2019 , November 13, 2019 and February 11, 2020 , respectively.

Ciolek vested in 12,500 Service Awards on February 11, 2020 .

McMurray (4) 17,500 43,925

Ciolek (5) 25,000 63,250

Krimbill vested in 75,000 Service Awards on November 10, 2020 and 75,000 Service Awards on February 11, 2021.

Karlovich vested in 12,500 Service Awards on November 10, 2020 and 12,500 Service Awards on February 11, 2021.

Thuillier vested in 5,000 Service Awards on November 10, 2020 and 5,000 Service Awards on February 11, 2021.

McMurray vested in 7,500 Service Awards on November 10, 2020 and 10,000 Service Awards on February 11, 2021.

Ciolek vested in 12,500 Service Awards on November 10, 2020 and 12,500 Service Awards on February 11, 2021.

Upon vesting, certain of the named executive officers elected for us to remit payments to taxing authorities in lieu of issuing common units.

The following table summarizes the number of common units issued and the number of common units withheld for taxes:

Number of Units

Name Number of Units

Issued Number of Units

Withheld Total

Michael Krimbill 116,737 33,263 150,000

Karlovich III 13,749 11,251 25,000

Thuillier 5,699 4,301 10,000

McMurray 9,558 7,942 17,500

Ciolek 11,531 13,469 25,000

Potential Payments Upon Termination or Change in Control

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McMurray would have been entitled to receive the following amounts:

Cash Severance

Value of Guaranteed Unit Awards

Target Annual Bonus

Cash Severance Value of Guaranteed Unit Awards Target Annual Bonus Total

$ 500,000 $ 20,400 $ 500,000 $ 1,020,400

The board of directors has the option to accelerate the vesting of the restricted units in the event of a change in control of the Partnership, although it is not under any obligation to do so.

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We identified the median employee by examining only base pay plus overtime for the period from January 1, 2020 through December 31, 2020.

We included all employees, with the exception of three employees that work in Canada, whether employed on a full-time or part-time basis, and did not make any estimates, assumptions or adjustments to any base pay plus overtime amounts.

We included all employees, with the exception of four employees that work in Canada, whether employed on a full-time or part-time basis, and did not make any estimates, assumptions or adjustments to any base pay plus overtime amounts.

After identifying the median employee, we calculated the annual total compensation for the median employee using the same methodology we use to calculate total annual compensation for our named executive officers, as set forth in the Summary Compensation Table above.

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The following table summarizes the compensation earned during fiscal year 2021 by each director who is not an officer or employee of our general partner or its affiliates:

Fees Earned or

Restricted Unit

Collingsworth 104,000

Cropper 119,000

Guderian 90,000

Reiners 114,000

(1) Amount represents fees paid in cash.

No restricted units were granted to any of the directors during fiscal year 2021.

Long-Term Equity Incentive Awards

The following table summarizes Service Award units granted and vested during fiscal year 2020 with respect to each director who is not an officer or employee of our general partner or its affiliates:

Unvested Units at

March 31, 2019

Units Granted

March 31, 2020

The following table summarizes Service Award units activity during fiscal year 2021 with respect to each director who is not an officer or employee of our general partner or its affiliates:

Unvested Units at Unvested Units at

Name March 31, 2020 Units Vested March 31, 2021 (2)

Coady (1) 12,000 (8,000) 4,000

Collingsworth (1) 12,000 (8,000) 4,000

Coady vested in 20,000 Service Awards on July 10, 2019 .

These units were granted to Dr.

Coady while in his role as our President and Chief Operating Officer, Retail Division.

Coady was allowed to retain his unvested units when we sold a portion of our Retail Propane segment to DCC LPG (“DCC”).

Coady did not receive any Service Awards in fiscal year 2019 prior to the termination of his employment.

Coady was granted 24,000 Service Awards on August 13, 2019, of which 8,000 vested on November 13, 2019, 4,000 vested on February 11, 2020 and 4,000 vests each on November 10, 2020, February 11, 2021 and November 12, 2021 , respectively.

Cropper (1) 12,000 (8,000) 4,000

Guderian (1) 12,000 (8,000) 4,000

Reiners (1) 12,000 (8,000) 4,000

Collingsworth, Mr.

Cropper and Mr.

Guderian each vested in 8,000 Service Awards on July 10, 2019 and 4,000 Service Awards on February 11, 2020.

Reiners was granted 16,000 Service Awards on January 21, 2020, of which 4,000 vested on February 11, 2020 and 4,000 vests each on November 10, 2020, February 11, 2021 and November 12, 2021 , respectively.

The following table summarizes the vesting dates of the unvested Service Award units at March 31, 2020 :

Service Award Units Vesting by Fiscal Year Ending

Unvested Units at

March 31, 2021

March 31, 2022

March 31, 2020

Collingsworth

Guderian and Mr.

Reiners each vested in 4,000 Service Awards on November 10, 2020 and February 11, 2021.

(2) All of the Service Awards in the table above will vest on November 12, 2021.

In May 2021, the board of directors of our general partner granted 50,000 Service Awards to each of Dr.

Collingsworth, Mr.

Guderian and Mr.

For each individual, one-fourth of those grants will vest in each of February 10, 2022, November 14, 2022, February 13, 2023 and November 15, 2023.

Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters

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• all directors and executive officers of our general partner as a group.

Beneficial Owners

Percentage of

Beneficial Owners Common Units

Owned Percentage of

5% or greater unitholders (other than officers and directors):

ALPS Advisors, Inc.

(2) 19,923,209 15.37 %

EIG Neptune Equity Aggregator, L.P.

(3) 16,734,375 11.44 %

Directors and named executive officers:

Ciolek (4) 49,764 *

Coady (5) 2,598,195 2.00 %

Collingsworth (6) 310,870 *

Cropper (7) 71,000 *

Guderian 68,500 *

Karlovich III (8) 101,631 *

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McMurray (10) 53,742 *

Raymond 50,000 *

Reiners 22,000 *

Thuillier (11) 49,830 *

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is based upon its Schedule 13G filed with the SEC for the quarter ended December 31, 2020.

The mailing address for ALPS Advisors, Inc.

is 1290 Broadway, Suite 1000, Denver, CO 80203.

ALPS Advisors, Inc.

reported shared voting and dispositive power with respect to all common units beneficially owned.

The information related to ALPS Advisors, Inc.

is based upon its Schedule 13G filed with the SEC for the quarter ended December 31, 2019.

The mailing address for EIG Neptune Equity Aggregator, L.

(“EIG”) is 600 New Hampshire Ave.

NW, Suite 1200, Washington, DC 20037.

EIG reported shared voting and dispositive power with respect to all common units beneficially owned.

The information related to EIG is based upon its Schedule 13D filed with the SEC for the quarter ended December 31, 2019.

The common units beneficially owned relate to warrants that become exercisable on July 2, 2020.

For purposes of calculating ownership percentages, the units underlying the warrants are only deemed outstanding for purposes of calculating EIG’s percentage.

Does not include 12,500 unvested units that will vest on November 10, 2020 , 12,500 unvested units that will vest on February 11, 2021 and 12,500 unvested units that will vest on November 12, 2021 .

(3) The mailing address for EIG Neptune Equity Aggregator, L.P.

(“EIG Neptune”) is 600 New Hampshire Ave NW, Suite 1200, Washington, DC 20037.

EIG Neptune reported shared voting and dispositive power with respect to all common units beneficially owned.

The information related to EIG Neptune is based upon its Schedule 13D filed with the SEC for the quarter ended September 30, 2020.

The common units beneficially owned relate to warrants that were exercisable on July 2, 2020.

For purposes of calculating ownership percentages, the units underlying the warrants are only deemed outstanding for purposes of calculating EIG Neptune’s percentage.

(4) Does not include 12,500 unvested units that will vest on November 12, 2021, 37,500 unvested units that will vest on February 10, 2022, 37,500 unvested units that will vest on November 14, 2022, 37,500 unvested units that will vest on February 13, 2023 and 37,500 unvested units that will vest on November 15, 2023.

Coady owns 118,304 of these common units.

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Coady may be deemed to have sole voting and investment power over these units, but disclaims such beneficial ownership except to the extent of his pecuniary interest therein.

The Tara Nicole Coady Trust II, of which the reporting person is the trustee, owns 12,250 common units.

The Colleen Blair Coady Trust, of which the reporting person is the trustee, owns 12,250 common units.

The Tara Nicole Coady Trust II, of which the reporting person is the trustee, owns 12,250 of these common units.

The Colleen Blair Coady Trust, of which the reporting person is the trustee, owns 12,250 of these common units.

Coady also owns a 12.27% interest in our general partner through Coady Enterprises, LLC, of which he owns 100% of the membership interests.

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Cropper owns 46,000 of these common units.

Cropper Living Trust, of which Mr.

Cropper Revocable Living Trust, of which Mr.

Cropper and his spouse, Donna L.

Cropper, are the trustees, owns 25,000 of these common units.

Does not include 12,500 unvested units that will vest on November 10, 2020 , 12,500 unvested units that will vest on February 11, 2021 and 12,500 unvested units that will vest on November 12, 2021 .

Krimbill owns 1,261,878 of these common units, which includes 75,000 unvested units that will vest on November 10, 2020 , 75,000 unvested units that will vest on February 11, 2021 and 75,000 unvested units that will vest on November 12, 2021 .

(8) Does not include 12,500 unvested units that will vest on November 12, 2021, 37,500 unvested units that will vest on February 10, 2022, 37,500 unvested units that will vest on November 14, 2022, 37,500 unvested units that will vest on February 13, 2023 and 37,500 unvested units that will vest on November 15, 2023.

Karlovich owns a 0.3% interest in our general partner through TK3 Investment Holdings, LLC.

of which he own 100% of the membership interests.

Krimbill owns 1,153,615 of these common units, which does not include 75,000 unvested units that will vest on November 12, 2021, 62,500 unvested units that will vest on February 10, 2022, 62,500 unvested units that will vest on November 14, 2022, 62,500 unvested units that will vest on February 13, 2023 and 62,500 unvested units that will vest on November 15, 2023.

All of the unvested units noted above were reported on Mr.

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Michael Krimbill.

Michael Krimbill may be deemed to have sole voting and investment power over these units.

Michael Krimbill also owns a 14.81% interest in our general partner through KrimGP2010, LLC, of which he owns 100% of the membership interests and Krimbill Capital Group, LLC, which is owned 100% by the H.

Michael Krimbill Revocable Trust, of which Mr.

Krimbill is the trustee.

Michael Krimbill may be deemed to have sole voting and investment power over these units, but disclaims such beneficial ownership except to the extent of his pecuniary interest therein.

Krimbill Enterprises LP, II also owns 130,000 of these common units.

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Michael Krimbill may be deemed to have sole voting and investment power over these units, but disclaims such beneficial ownership except to the extent of his pecuniary interest therein.

Does not include 7,500 unvested units that will vest on November 10, 2020 , 10,000 unvested units that will vest on February 11, 2021 and 10,000 unvested units that will vest on November 12, 2021 .

Does not include 5,000 unvested units that will vest on November 10, 2020 , 5,000 unvested units that will vest on February 11, 2021 and 5,000 unvested units that will vest on November 12, 2021 .

Michael Krimbill Revocable Trust, of which Mr.

Krimbill is the trustee.

(10) Does not include 10,000 unvested units that will vest on November 12, 2021, 37,500 unvested units that will vest on February 10, 2022, 37,500 unvested units that will vest on November 14, 2022, 37,500 unvested units that will vest on February 13, 2023 and 37,500 unvested units that will vest on November 15, 2023.

McMurray owns a 0.25% interest in our general partner through MCM Investments, LLC, of which he owns 100% of the membership interests.

(11) Does not include 5,000 unvested units that will vest on November 12, 2021, 13,750 unvested units that will vest on February 10, 2022, 13,750 unvested units that will vest on November 14, 2022, 13,750 unvested units that will vest on February 13, 2023 and 13,750 unvested units that will vest on November 15, 2023.

(12) The directors and executive officers of our general partner also collectively own a 33.00% interest in our general partner.

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Outstanding Options,

Warrants and Rights

Weighted-Average

Warrants and Rights Weighted-Average

Exercise Price of

Outstanding Options,

Warrants and Rights

Number of Securities

Warrants and Rights Number of Securities

Remaining Available for

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Reflected in Column (a))

Plan Category

Plan Category (a) (b) (c)

Equity Compensation Plans Approved by Security Holders — — —

Equity Compensation Plans Not Approved by Security Holders (1) 446,975 — —

The number of common units that may be delivered pursuant to awards under the LTIP is limited to 10% of our issued and outstanding common units.

The maximum number of common units deliverable under the LTIP automatically increases to 10% of the issued and outstanding common units immediately after each issuance of common units, unless the plan administrator determines to increase the maximum number of units deliverable by a lesser amount.

Our general partner adopted the LTIP in connection with the completion of our initial public offering (“IPO”) in May 2011.

The adoption of the LTIP did not require the approval of our unitholders.

Total 446,975 — —

(1) Our general partner adopted the LTIP in connection with the completion of our initial public offering (“IPO”) in May 2011, which did not require the approval of our unitholders.

Prior to the expiration of the LTIP on May 10, 2021, we granted approximately 3.3 million common units as Service Awards, which will vest in our 2022 and 2023 fiscal years.

Due to the LTIP expiring, we have no common units available for grant and any current unvested Service Awards that are forfeited, canceled or expire will not be available for future grants.

Certain Relationships and Related Transactions, and Director Independence

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Our general partner is entitled to receive incentive distributions if the amount we distribute with respect to any quarter exceeds levels specified in our partnership agreement.

The following table summarizes the distributions and payments to be made by us to our directors, officers, and greater than 5% owners and our general partner in connection with our ongoing operation and any liquidation.

The following table summarizes the distributions and payments to be made by us to our directors, executive officers, and greater than 5% unitholders and our general partner in connection with our ongoing operation and any liquidation.

These distributions and payments were determined by and among affiliated entities before our IPO and, consequently, are not the result of arm’s length negotiations.

Operation Stage

Distributions of available cash to our directors, officers, and greater than 5% owners and our general partner

We generally make cash distributions 99.9% to our unitholders pro rata, including our directors, officers, and greater than 5% owners as the holders of an aggregate 41,750,074 common units, and 0.1% to our general partner.

In addition, when distributions exceed the minimum quarterly distribution and other higher target distribution levels, our general partner is entitled to increasing percentages of the distributions, up to 48.1% of the distributions above the highest target distribution level.

Assuming we have sufficient available cash to pay the same quarterly distribution on all of our outstanding units for four quarters that we paid in May 2020 ($0.20 per unit), our general partner would receive an annual distribution of $0.1 million on its general partner interest and incentive distribution rights, and our directors, officers, and greater than 5% owners would receive an aggregate annual distribution of $33.4 million on their common units.

Distributions of available cash to our directors, executive officers, and greater than 5% unitholders and our general partner We generally make cash distributions 99.9% to our unitholders pro rata, including our directors, executive officers, and greater than 5% unitholders as the holders of an aggregate 42,973,134 common units, and 0.1% to our general partner.

In addition, when distributions exceed the minimum quarterly distribution and other higher target distributions levels, our general partner is entitled to increasing percentages of the distributions, up to 48.1% of the distributions above the highest target distribution level.

If our general partner elects to reset the target distribution levels, it will be entitled to receive common units and to maintain its general partner interest.

Payments to our general partner and its affiliates

Our general partner and its affiliates do not receive any management fee or other compensation for the management of our business and affairs, but they are reimbursed for all expenses that they incur on our behalf, including general and administrative expenses.

As described in Note 8 to our consolidated financial statements included in this Annual Report, the indenture to the 2026 Senior Secured Notes restricts us from paying distributions until our total leverage ratio (as defined in the indenture) for the most recently ended four full fiscal quarters at the time of the distribution is not greater than 4.75 to 1.00.

In addition, quarterly distributions on the preferred units must be fully paid for all preceding fiscal quarters before we are permitted to declare or pay any distributions on our common units.

Payments to our general partner and its affiliates Our general partner and its affiliates do not receive any management fee or other compensation for the management of our business and affairs, but they are reimbursed for all expenses that they incur on our behalf, including general and administrative expenses.

As the sole purpose of the general partner is to act as our general partner, substantially all of the expenses of our general partner are incurred on our behalf and reimbursed by us or our subsidiaries.

Our general partner determines the amount of these expenses.

Withdrawal or removal of our general partner

If our general partner withdraws or is removed, its general partner interest and its IDRs will either be sold to the new general partner for cash or converted into common units, in each case for an amount equal to the fair market value of those interests.

Withdrawal or removal of our general partner If our general partner withdraws or is removed, its general partner interest and its IDRs will either be sold to the new general partner for cash or converted into common units, in each case for an amount equal to the fair market value of those interests.

Liquidation Stage

Upon our liquidation, our partners, including our general partner, will be entitled to receive liquidating distributions according to their respective capital account balances.

Liquidation Upon our liquidation, our partners, including our general partner, will be entitled to receive liquidating distributions according to their respective capital account balances.

Transactions with Related Persons

Guderian is a member of our board of directors and an executive officer of WPX.

Guderian is a member of our board of directors and was an executive officer of WPX.

We purchase crude oil from and sell crude oil to WPX (certain of the purchases and sales that were entered into in contemplation of each other are recorded on a net basis within revenues in our consolidated statement of operations).

We also treat and dispose of produced water and solids received from WPX.

On January 7, 2021, Devon Energy Corporation (“Devon”) acquired WPX and Mr.

Guderian has since retired from WPX/Devon.

Due to his retirement, we will no longer be classifying transactions with WPX or Devon as related party transactions after December 31, 2020.

The following table summarizes transactions with WPX for the year ended March 31, 2021 (in thousands):

Sales to WPX $ 39,129

Purchases from WPX $ 216,487

Coady is a member of our board of directors and an executive officer of DCC.

Coady is a member of our board of directors and retired from being an executive officer of DCC effective December 31, 2020.

We sell propane to and purchase propane from DCC.

We also lease trucks from DCC.

The following table summarizes transactions with DCC for the year ended March 31, 2021 (in thousands):

Sales to DCC $ 18,402

Purchases from DCC $ 428

Raymond is a member of our board of directors and the Managing Partner and Chief Executive Officer of EMG.

During the three months ended September 30, 2019, we purchased a 5.73% interest in our general partner, NGL Energy Holdings LLC, for $11.5 million in cash.

This interest was purchased from a fund controlled by EMG.

To complete the issuance of the 2026 Senior Secured Notes and the ABL Facility (see Note 8 to our consolidated financial statements included in this Annual Report), we were required to receive the consent of EIG which are holders of our Class D Preferred Units and are represented on the board of directors of our general partner.

For their consent, we paid to EIG $40.0 million.

Other Transactions

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The following table summarizes these transactions for the year ended March 31, 2021:

Nature of Purchases

Ownership Interest

Entity Nature of Purchases Amount

Purchased Ownership Interest

(in thousands)

Michael Krimbill

KAIR2014 LLC Aircraft $ 760 50 %

Travis Krimbill, an employee of the Partnership, is the son of H.

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We have entered into a registration rights agreement (as amended, the “Registration Rights Agreement”) with certain third parties (the “registration rights parties”) pursuant to which we agreed to register for resale under the Securities Act of 1933, as amended (“Securities Act”) common units owned by the parties to the Registration Rights Agreement.

In connection with our IPO, we granted registration rights to the NGL Energy LP Investor Group, and subsequently, we have granted registration rights in connection with several acquisitions.

In connection with our IPO, we granted registration rights to the NGL Energy GP Investor Group, and subsequently, we have granted registration rights in connection with several acquisitions.

We will not be required to register such common units if an exemption from the registration requirements of the Securities Act is available with respect to the number of common units desired to be sold.

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• Piggyback Registration Rights.

If we propose to file a registration statement under the Securities Act to register our common units, the registration rights parties are entitled to notice of such registration and have the right to include their common units in the registration, subject to limitations that the underwriters relating to a potential

offering may impose on the number of common units included in the registration.

These counterparties also have the right to include their units in our future registrations, including secondary offerings of our common units.

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Director Independence

The NYSE does not require a listed publicly traded partnership like us to have a majority of independent directors on the board of directors of our general partner.

The NYSE does not require a listed publicly traded limited partnership like NGL to have a majority of independent directors on the board of directors of its general partner.

For a discussion of the independence of the board of directors of our general partner, see Part III, Item 10–“Directors, Executive Officers and Corporate Governance–Board of Directors of our General Partner.”

Principal Accounting Fees and Services

Principal Accountant Fees and Services

We have engaged Grant Thornton LLP as our independent registered public accounting firm.

The following table summarizes fees we have paid Grant Thornton LLP to audit our annual consolidated financial statements and for other services for the periods indicated (in thousands):

The following table summarizes fees we have paid Grant Thornton LLP to audit our annual consolidated financial statements and for other services for the periods indicated:

(in thousands)

Audit fees (1) $ 2,149 $ 2,735

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All other fees — —

Total $ 2,156 $ 2,783

(1) Includes fees for audits of the Partnership’s financial statements, reviews of the related quarterly financial statements, and services that are normally provided by the independent accountants in connection with statutory and regulatory filings or engagements, including reviews of documents filed with the SEC and the preparation of letters to underwriters and other requesting parties.

Includes fees in fiscal year 2020 for a review of financial statements for one of our subsidiaries and fees for fiscal year 2019 for audits of financial statements for businesses divested during the fiscal year.

(2) Includes fees in fiscal years 2021 and 2020 for review services for one of our subsidiaries.

Audit Committee Approval of Audit and Non-Audit Services

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Exhibits, Financial Statement Schedules

The following documents are filed as part of this Annual Report:

(a) The following documents are filed as part of this Annual Report:

Financial Statements .

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All schedules have been omitted because they are either not applicable, not required or the information required in such schedules appears in the financial statements or the related notes.

Exhibit Number

Exhibit Number Description

2.1 LLC Interest Transfer Agreement, dated as of August 1, 2013, by and among Oilfield Water Lines, LP, as the Representative, OWL Pearsall SWD, LLC, OWL Pearsall Holdings, LLC, NGL Energy Partners, LP and High Sierra Water-Eagle Ford, LLC (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K (File No.

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001-35172) filed with the SEC on August 7, 2013)

Exhibit Number

3.7 Amendment No.

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001-35172) filed with the SEC on July 3, 2014)

Exhibit Number Description

3.8 Amendment No.

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001-35172) filed with the SEC on November 1, 2019)

3.14 First Amendment to Seventh Amended and Restated Agreement of Limited Partnership of NGL Energy Partners LP, dated as of February 4, 2021 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No.

001-35172) filed with the SEC on February 8, 2021)

4.1 First Amended and Restated Registration Rights Agreement, dated October 3, 2011, by and among the Partnership, Hicks Oils & Hicksgas, Incorporated, NGL Holdings, Inc., Krim2010, LLC, Infrastructure Capital Management, LLC, Atkinson Investors, LLC, E.

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001-35172) filed with the SEC on October 24, 2016)

Exhibit Number

Exhibit Number Description

4.14 Registration Rights Agreement, dated as of October 24, 2016, by and among NGL Energy Partners LP, NGL Energy Finance Corp., the guarantors listed therein on Exhibit A and Barclays Capital Inc.

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001-35172) for the quarter ended December 31, 2019 filed with the SEC on February 6, 2020)

4.20 Sixth Supplemental Indenture, dated as of June 30, 2020, among NGL Energy Partners LP, NGL Energy Finance Corp., the Guaranteeing Subsidiaries party thereto, the Guarantors party thereto and U.S.

Bank National Association, as Trustee (incorporated by reference to Exhibit 4.1 to the Quarterly Report on Form 10-Q (File No.

001-35172) for the quarter ended June 30, 2020 filed with the SEC on August 10, 2020)

4.21* Seventh Supplemental Indenture, dated as of February 18, 2021, among NGL Energy Partners LP, NGL Energy Finance Corp., the Guaranteeing Subsidiaries party thereto, the Guarantors party thereto and U.S.

Bank National Association, as Trustee

4.22 Indenture, dated as of February 22, 2017, by and among NGL Energy Partners LP, NGL Energy Finance Corp., the guarantors party thereto and U.S.

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001-35172) for the quarter ended December 31, 2019 filed with the SEC on February 6, 2020)

4.29 Fifth Supplemental Indenture, dated as of June 30, 2020, among NGL Energy Partners LP, NGL Energy Finance Corp., the Guaranteeing Subsidiaries party thereto, the Guarantors party thereto and U.S.

Bank National Association, as Trustee (incorporated by reference to Exhibit 4.2 to the Quarterly Report on Form 10-Q (File No.

001-35172) for the quarter ended June 30, 2020 filed with the SEC on August 10, 2020)

4.30* Sixth Supplemental Indenture, dated as of February 18, 2021, among NGL Energy Partners LP, NGL Energy Finance Corp., the Guaranteeing Subsidiaries party thereto, the Guarantors party thereto and U.S.

Bank National Association, as Trustee

4.31 Indenture, dated as of April 9, 2019, by and among NGL Energy Partners LP, NGL Energy Finance Corp., the guarantors party thereto and U.S.

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001-35172) filed with the SEC on April 9, 2019)

Exhibit Number Description

4.33 Registration Rights Agreement, dated as of April 9, 2019, by and among NGL Energy Partners LP, NGL Energy Finance Corp., the guarantors listed therein on Exhibit A and RBC Capital Markets, LLC and Mizuho Securities USA LLC, as representatives of the several initial purchasers (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K (File No.

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001-35172) for the quarter ended December 31, 2019 filed with the SEC on February 6, 2020)

Exhibit Number

4.36 Third Supplemental Indenture, dated as of June 30, 2020, among NGL Energy Partners LP, NGL Energy Finance Corp., the Guaranteeing Subsidiaries party thereto, the Guarantors party thereto and U.S.

Bank National Association, as Trustee (incorporated by reference to Exhibit 4.

3 to the Quarterly Report on Form 10-Q (File No.

001-35172) for the quarter ended June 30, 2020 filed with the SEC on August 10, 2020)

4.37* Fourth Supplemental Indenture, dated as of February 18, 2021, among NGL Energy Partners LP, NGL Energy Finance Corp., the Guaranteeing Subsidiaries party thereto, the Guarantors party thereto and U.S.

Bank National Association, as Trustee

4.38 Indenture, dated as of February 4, 2021, by and among NGL Energy Operating LLC, NGL Energy Finance Corp., the guarantors party thereto and U.S.

Bank National Association, as trustee and notes collateral agent (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No.

001-35172) filed with the SEC on February 8, 2021)

4.39 Form of 7.500% Senior Secured Notes due 2026 (incorporated by reference to Exhibit 4.1 and included as Exhibit A to Exhibit 4.1 to the Current Report on Form 8-K (File No.

001-35172) filed with the SEC on February 8, 2021)

4.40 Amended and Restated Guaranty Agreement, dated as of March 31, 2017 and effective as of December 31, 2016, among NGL Energy Partners LP and the purchasers named therein (incorporated by reference to Exhibit 4.1 to the Quarterly Report on Form 10-Q (File No.

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4.43* Description of NGL Energy Partners LP’s securities

Amended and Restated Credit Agreement, dated as of February 14, 2017, by and among NGL Energy Partners LP, NGL Energy Operating LLC, the subsidiary guarantors party thereto, Deutsche Bank Trust Company Americas, Deutsche Bank AG, New York Branch, and the other financial institutions party thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No.

10.1 Credit Agreement, dated as of February 4, 2021, by and among NGL Energy Operating LLC, NGL Energy Partners LP, JPMorgan Chase Bank, N.A.

and certain other financial institutions (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No.

001-35172) filed with the SEC on February 8, 2021)

Amendment No.

1 to Amended and Restated Credit Agreement, dated as of March 31, 2017, among the NGL Energy Partners LP, NGL Energy Operating LLC, the other subsidiary borrowers party thereto, Deutsche Bank Trust Company Americas, and the other financial institutions party thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No.

001-35172) filed with the SEC on April 5, 2017)

Amendment No.

2 to Amended and Restated Credit Agreement, dated as of June 2, 2017, among the NGL Energy Partners LP, NGL Energy Operating LLC, the other subsidiary borrowers party thereto, Deutsche Bank Trust Company Americas, and the other financial institutions party thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No.

001-35172) filed with the SEC on June 5, 2017)

Amendment No.

3 to Amended and Restated Credit Agreement, dated as of February 5, 2018, among NGL Energy Partners LP, NGL Energy Operating LLC, the other subsidiary borrowers party thereto, Deutsche Bank Trust Company Americas, and the other financial institutions party thereto (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No.

001-35172) for the quarter ended December 31, 2017 filed with the SEC on February 9, 2018)

Amendment No.

4 to Amended and Restated Credit Agreement, dated as of March 6, 2018, among the Partnership, NGL Energy Operating LLC, the other subsidiary borrowers party thereto, Deutsche Bank Trust Company Americas, and the other financial institutions party thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No.

001-35172) filed with the SEC on March 8, 2018)

Amendment No.

5 to Amended and Restated Credit Agreement, dated as of May 24, 2018, among the Partnership, NGL Energy Operating LLC, the other subsidiary borrowers party thereto, Deutsche Bank Trust Company Americas, and the other financial institutions party thereto (incorporated by reference to Exhibit 10.6 to the Annual Report on Form 10-K (File No.

001-35172) for the year ended March 31, 2018 filed with the SEC on May 30, 2018)

Amendment No.

6 to Amended and Restated Credit Agreement, dated as of July 5, 2018, among the Partnership, NGL Energy Operating LLC, the other subsidiary borrowers party thereto, Deutsche Bank Trust Company Americas, and the other financial institutions party thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No.

001-35172) filed with the SEC on July 10, 2018)

Amendment No.

7 to Amended and Restated Credit Agreement, dated as of February 6, 2019, among the Partnership, NGL Energy Operating LLC, the other subsidiary borrowers party thereto, Deutsche Bank Trust Company Americas, and the other financial institutions party thereto (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No.

001-35172) for the quarter ended December 31, 2018 filed with the SEC on February 11, 2019)

Amendment No.

8 to Amended and Restated Credit Agreement, dated as of June 26, 2019, among the Partnership, NGL Energy Operating LLC, the other subsidiary borrowers party thereto, Deutsche Bank Trust Company Americas, and the other financial institutions party thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No.

001-35172) filed with the SEC on July 2, 2019)

Amendment No.

9 to Credit Agreement, dated October 30, 2019, by and among the NGL Energy Partners LP, NGL Energy Operating LLC, the other subsidiary borrowers party thereto, Deutsche Bank AG, New York Branch, Deutsche Bank Trust Company Americas, and the other financial institutions party thereto (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K (File No.

001-35172) filed with the SEC on November 1, 2019)

Amendment No.

10 to Credit Agreement, dated April 27, 2020, by and among the NGL Energy Partners LP, NGL Energy Operating LLC, the other subsidiary borrowers party thereto, Deutsche Bank AG, New York Branch, Deutsche Bank Trust Company Americas, and the other financial institutions party thereto

Term Credit Agreement, dated July 2, 2019, by and among NGL Energy Operating LLC, as Borrower, NGL Energy Partner LP, the lenders thereto and TD Dominion (Texas LLC), as the administrative agent (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K (File No.

001-35172) filed with the SEC on July 8, 2019)

Amendment No.

1 to Term Credit Agreement, dated October 30, 2019, by and among NGL Energy Partners LP, NGL Energy Operating LLC, the other subsidiary borrowers party thereto, Toronto-Dominion Bank, New York Branch, Toronto Dominion (Texas) LLC and the other financial institutions party thereto (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K (File No.

001-35172) filed with the SEC on November 1, 2019)

Facility Increase Agreement, dated December 30, 2019, among NGL Energy Operating LLC, Deutsche Bank Trust Company Americas and the other financial institutions party thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No.

001-35172) filed with the SEC on January 6, 2020)

Exhibit Number

10.2 Common Unit Purchase Agreement, dated November 5, 2013, by and among NGL Energy Partners LP and the purchasers listed on Schedule A thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No.

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001-35172) filed with the SEC on September 30, 2019)

Exhibit Number Description

10.12 Form of Par Warrant (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No.

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21.1* List of Subsidiaries of NGL Energy Partners LP

22.1* List of Issuers and Guarantor Subsidiaries of NGL Energy Partners LP

23.1* Consent of Grant Thornton LLP

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Michael Krimbill

Chief Executive Officer and Director

Michael Krimbill

(Principal Executive Officer)

Signature Title Date

Michael Krimbill Chief Executive Officer and Director June 3, 2021

Michael Krimbill (Principal Executive Officer)

/s/ Robert W.

Karlovich III

Chief Financial Officer

Karlovich III

(Principal Financial Officer)

Karlovich III Chief Financial Officer June 3, 2021

Karlovich III (Principal Financial Officer)

/s/ Lawrence J.

Chief Accounting Officer

(Principal Accounting Officer)

Collingsworth

Thuillier Chief Accounting Officer June 3, 2021

Thuillier (Principal Accounting Officer)

Coady Director June 3, 2021

Collingsworth Director June 3, 2021

Collingsworth

/s/ Stephen L.

Cropper Director June 3, 2021

Guderian Director June 3, 2021

Raymond Director June 3, 2021

Reiners Director June 3, 2021

/s/ Randall S.

Wade Director June 3, 2021

INDEX TO FINANCIAL STATEMENTS

NGL ENERGY PARTNERS LP

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets at March 31, 2020 and 2019

Consolidated Statements of Operations for the years ended March 31, 2020, 2019, and 2018

Consolidated Statements of Comprehensive (Loss) Income for the years ended March 31, 2020, 2019, and 2018

Consolidated Statements of Changes in Equity for the years ended March 31, 2020, 2019, and 2018

Consolidated Statements of Cash Flows for the years ended March 31, 2020, 2019, and 2018

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm F- 2

Consolidated Balance Sheets at March 31, 2021 and 2020 F- 4

Consolidated Statements of Operations for the years ended March 31, 2021, 2020, and 2019 F- 5

Consolidated Statements of Comprehensive (Loss) Income for the years ended March 31, 2021, 2020, and 2019 F- 6

Consolidated Statements of Changes in Equity for the years ended March 31, 2021, 2020, and 2019 F- 7

Consolidated Statements of Cash Flows for the years ended March 31, 2021, 2020, and 2019 F- 8

Notes to Consolidated Financial Statements F- 9

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Partnership’s internal control over financial reporting as of March 31, 2021, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated June 3, 2021 expressed an unqualified opinion.

Change in accounting principle

As discussed in Note 2 to the consolidated financial statements, the Partnership has changed its method of accounting for leases in the year ended March 31, 2020 due to the adoption of FASB Accounting Standards Codification Topic 842, Leases.

Basis for opinion

Basis for opinio n

These financial statements are the responsibility of the Partnership’s management.

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We believe that our audits provide a reasonable basis for our opinion.

Critical audit matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Fair value of assets acquired and liabilities assumed in significant non-routine acquisitions

As described further in Note 4 to the consolidated financial statements, the Partnership acquired all of the assets of Mesquite Disposals Unlimited, LLC (“Mesquite”) and all of the equity interests of Hillstone Environmental Partners, LLC (“Hillstone”), two water disposal companies, during the year ended March 31, 2020 and the assets acquired and liabilities assumed were required to be recorded at fair value as of the respective transaction dates, for which the Partnership utilized a third party valuation firm.

We identified the estimation of the fair value of the assets acquired and liabilities assumed in these significant non-routine acquisitions as a critical audit matter.

The principal considerations for our determination that the estimation of the fair value of the assets acquired and liabilities assumed in these significant non-routine acquisitions is a critical audit matter are that there was a high estimation uncertainty due to significant judgments with respect to assumptions used to estimate the future revenues and cash flows, including revenue growth rates, operating margins, weighted average costs of capital and future market conditions, the valuation methodologies applied by the third party valuation firm for the fair value of the intangible customer commitments, customer relationships, and

right-of ways as well as the real property and the estimated replacement costs of the personal property acquired and the valuation methodologies applied by the third party valuation firm.

This in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence related to management’s forecasted future revenues and cash flows.

In addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.

Our audit procedures related to the estimation of the fair value of the assets acquired and liabilities assumed in the significant non-routine acquisitions included the following, among others.

We tested the effectiveness of controls relating to management’s review of the assumptions used to develop the future revenues and cash flows, the reconciliation of future revenues and cash flows prepared by management to the data used in the third party valuation report, the estimated replacement cost of property, plant and equipment, and the valuation methodologies applied by the third party valuation firm.

In addition to testing the effectiveness of controls, we also performed the following:

Utilized a valuation specialist to evaluate:

The methodologies used and whether they were acceptable for the underlying assets or operations and being applied correctly by performing an independent calculation,

The methodologies and assumptions used in the valuation of the real property,

The appropriateness of the replacement cost of the personal property, by performing an independent calculation and inspecting the estimated remaining years of service for the underlying assets based on the original acquisition dates and condition of assets,

The appropriateness of the discount rate by recalculating the weighted average costs of capital and evaluating future market conditions, and

The qualifications of the third party valuation firm engaged by the Partnership based on their credentials and experience.

Tested the revenue growth rate and operating margins by comparing such items to the industry projections and conditions found in industry reports as well as historical operating results of the entity acquired.

Critical audit matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill impairment assessment

As described further in Note 6 to the consolidated financial statements, the Partnership’s consolidated goodwill balance was $993.6 million as of March 31, 2020.

As described further in Note 6 to the financial statements, the Partnership’s consolidated goodwill balance was $744.4 million as of March 31, 2021.

Management evaluates goodwill for impairment on January 1 of each year, or more frequently to the extent events or conditions indicate a risk of possible impairment.

Based on events occurring during the three months ended March 31, 2020, management performed a quantitative impairment assessment for each reporting unit to test goodwill for impairment.

As a result of the assessment performed for the reporting units, and as described further in Note 6 to the consolidated financial statements, the Partnership recognized a goodwill impairment charge of $250.0 million related to its Water Solutions reporting unit within the Partnership’s Water Solutions reportable segment primarily due to changes in assumptions related to the projected future revenues and cash flows from the dates the goodwill was originally recorded.

Based on events occurring during the three months ended December 31, 2020, management performed a quantitative impairment assessment for the Crude Oil Logistics reporting unit to test goodwill for impairment.

Further, management performed a quantitative impairment assessment for the Water Solutions reporting unit to test goodwill for impairment as of January 1, 2021.

As a result of the assessments performed for the reporting units, and as described further in Note 6 to the financial statements, the Partnership recognized a goodwill impairment charge of $ 237.8 million as of December 31, 2020 related to its Crude Oil Logistics reporting unit within the Partnership’s Crude Oil Logistics reportable segment primarily due to changes in assumptions related to the projected future revenues and cash flows from the dates the goodwill was originally recorded.

We identified the goodwill impairment assessment as a critical audit matter.

The principal considerations for our determination that the goodwill impairment assessment was a critical audit matter are that there was a high estimation uncertainty due to significant judgments with respect to assumptions used to estimate the future revenues and cash flows, including revenue growth rates, operating expenses and cash outflows necessary to support the cash flows, weighted average costs of capital and future market conditions as well as the valuation methodologies applied by the Partnership.

This in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and

evaluating audit evidence related to management’s forecasted future revenues and cash flows.

In addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.

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◦ Other significant assumptions, including the terminal growth rate.

Tested the reasonableness of management’s process for determining the fair value of the reporting units, including the revenue growth rate, forecasted costs and operating margins by comparing such items to the industry projections and

conditions found in industry reports as well as historical operating results of the reporting units and by assessing the likelihood or capability of the reporting unit to undertake activities or initiatives underpinning significant drivers of growth in the forecasted period.

• Tested the reasonableness of management’s process for determining the fair value of the reporting units, including the revenue growth rate, forecasted costs and operating margins by comparing such items to the industry projections and conditions found in industry reports as well as historical operating results of the reporting units and by assessing the likelihood or capability of the reporting unit to undertake activities or initiatives underpinning significant drivers of growth in the forecasted period.

/s/ GRANT THORNTON LLP

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Cash and cash equivalents $ 4,829 $ 22,704

Accounts receivable-trade, net of allowance for doubtful accounts of $4,540 and $4,016, respectively

Accounts receivable-trade, net of allowance for expected credit losses of $ 2,192 and $ 4,540 , respectively

725,943 566,834

Accounts receivable-affiliates 9,435 12,934

Inventories 158,467 69,634

Prepaid expenses and other current assets 109,164 101,981

Assets held for sale

Total current assets 1,007,838 774,087

PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $ 776,279 and $ 529,068 , respectively

2,706,853 2,851,555

GOODWILL 744,439 993,587

INTANGIBLE ASSETS, net of accumulated amortization of $ 517,518 and $ 631,449 , respectively

1,262,613 1,612,480

INVESTMENTS IN UNCONSOLIDATED ENTITIES 22,719 23,182

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OTHER NONCURRENT ASSETS 50,733 63,137

ASSETS HELD FOR SALE

Total assets $ 5,947,341 $ 6,498,736

LIABILITIES AND EQUITY

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Operating lease obligations 47,070 56,776

Liabilities held for sale

Total current liabilities 910,803 845,823

LONG-TERM DEBT, net of debt issuance costs of $ 55,555 and $ 19,795 , respectively, and current maturities

3,319,030 3,144,848

OPERATING LEASE OBLIGATIONS 103,637 121,013

OTHER NONCURRENT LIABILITIES 114,615 114,079

NONCURRENT LIABILITIES HELD FOR SALE

COMMITMENTS AND CONTINGENCIES (NOTE 9)

CLASS A 10.75% CONVERTIBLE PREFERRED UNITS, 0 and 19,942,169 preferred units issued and outstanding, respectively

CLASS D 9.00 % PREFERRED UNITS, 600,000 and 600,000 preferred units issued and outstanding, respectively

551,097 537,283

General partner, representing a 0.1 % interest, 129,724 and 128,901 notional units, respectively

( 52,189 ) ( 51,390 )

Limited partners, representing a 99.9 % interest, 129,593,939 and 128,771,715 common units issued and outstanding, respectively

582,784 1,366,152

Class B preferred limited partners, 12,585,642 and 12,585,642 preferred units issued and outstanding, respectively

305,468 305,468

Class C preferred limited partners, 1,800,000 and 1,800,000 preferred units issued and outstanding, respectively

42,891 42,891

Accumulated other comprehensive loss ( 266 ) ( 385 )

Noncontrolling interests 69,471 72,954

Total equity 948,159 1,735,690

Total liabilities and equity $ 5,947,341 $ 6,498,736

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Year Ended March 31,

Crude Oil Logistics

2021 2020 2019

Water Solutions $ 370,986 $ 422,059 $ 301,686

Liquids and Refined Products

Crude Oil Logistics 1,721,636 2,549,767 3,136,635

Liquids Logistics 3,133,146 4,611,136 5,249,474

Other 1,255 1,038 1,362

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

COST OF SALES:

Crude Oil Logistics

Water Solutions 9,622 ( 33,870 ) ( 10,787 )

Liquids and Refined Products

Crude Oil Logistics 1,515,993 2,293,953 2,902,656

Liquids Logistics 2,966,391 4,342,526 5,089,263

Other 1,816 1,774 1,929

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

OPERATING COSTS AND EXPENSES:

Operating 254,562 332,993 231,065

General and administrative 70,468 113,664 107,407

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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NET (LOSS) INCOME FROM DISCONTINUED OPERATIONS ALLOCATED TO COMMON UNITHOLDERS (NOTE 3) $ ( 1,767 ) $ ( 218,017 ) $ 418,877

NET (LOSS) INCOME ALLOCATED TO COMMON UNITHOLDERS

NET (LOSS) INCOME ALLOCATED TO COMMON UNITHOLDERS (NOTE 3) $ ( 732,450 ) $ ( 585,263 ) $ 247,724

BASIC (LOSS) INCOME PER COMMON UNIT

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Year Ended March 31,

2021 2020 2019

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

Other comprehensive (loss) income

Other comprehensive income (loss) 119 ( 130 ) ( 9 )

Comprehensive (loss) income $ ( 639,068 ) $ ( 398,910 ) $ 339,386

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Limited Partners

Accumulated Other Comprehensive Income (Loss)

Noncontrolling

BALANCES AT MARCH 31, 2017

Distributions to general and common unit partners and preferred unitholders (Note 10)

Distributions to noncontrolling interest owners

Contributions

Sawtooth joint venture (Note 17)

Purchase of noncontrolling interest

Redeemable noncontrolling interest valuation adjustment

Repurchase of warrants (Note 10)

Equity issued pursuant to incentive compensation plan (Note 10)

Common unit repurchases and cancellations (Note 10)

Warrants exercised (Note 10)

Accretion of beneficial conversion feature of Class A convertible preferred units (Note 10)

Issuance of Class B preferred units, net of offering costs (Note 10)

Net income (loss)

Other comprehensive income

Preferred Common

Partner Units Amount

Units Amount Accumulated Other Comprehensive Income (Loss) Noncontrolling

Interests Total

BALANCES AT MARCH 31, 2018 $ ( 50,819 ) 8,400,000 $ 202,731 121,472,725 $ 1,852,495 $ ( 1,815 ) $ 83,503 $ 2,086,095

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Repurchase of warrants (Note 10) — — — — ( 14,988 ) — — ( 14,988 )

Common unit repurchases and cancellations (Note 10)

Common unit repurchases and cancellations — — — ( 26,993 ) ( 297 ) — — ( 297 )

Equity issued pursuant to incentive compensation plan (Note 10) 22 — — 2,833,968 39,712 — — 39,734

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Accretion of beneficial conversion feature of 10.75 % Class A convertible preferred units (Note 10)

— — — — ( 67,239 ) — — ( 67,239 )

Net income (loss) 387 — — — 359,660 — ( 20,206 ) 339,841

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Accretion of beneficial conversion feature of 10.75 % Class A convertible preferred units (Note 10)

— — — — ( 36,517 ) — — ( 36,517 )

10.75 % Class A convertible preferred units redemption - amount paid in excess of carrying value (Note 10)

— — — — ( 78,797 ) — — ( 78,797 )

Equity issued pursuant to incentive compensation plan (Note 10) 33 — — 2,938,481 32,931 — — 32,964

Common unit repurchases and cancellations (Note 10)

Mesquite acquisition (Note 4)

Common unit repurchases and cancellations — — — ( 133,634 ) ( 1,644 ) — — ( 1,644 )

Mesquite Disposals Unlimited, LLC ("Mesquite") acquisition — — — — — — 17,124 17,124

Investment in NGL Energy Holdings LLC (Note 13) — — — — ( 15,226 ) — — ( 15,226 )

Net loss ( 478 ) — — — ( 396,529 ) — ( 1,773 ) ( 398,780 )

Other comprehensive loss — — — — — ( 130 ) — ( 130 )

BALANCES AT MARCH 31, 2020 ( 51,390 ) 14,385,642 348,359 128,771,715 1,366,152 ( 385 ) 72,954 1,735,690

Distributions to general and common unit partners and preferred unitholders (Note 10) ( 65 ) — — — ( 147,715 ) — — ( 147,780 )

Distributions to noncontrolling interest owners — — — — — — ( 4,115 ) ( 4,115 )

Common unit repurchases and cancellations (Note 10) — — — ( 70,226 ) ( 182 ) — — ( 182 )

Equity issued pursuant to incentive compensation plan (Note 10) — — — 892,450 4,727 — — 4,727

Net (loss) income ( 733 ) — — — ( 639,086 ) — 632 ( 639,187 )

Other comprehensive income — — — — — 119 — 119

Cumulative effect adjustment for adoption of ASU 2016-13 (Note 17) ( 1 ) — — — ( 1,112 ) — — ( 1,113 )

BALANCES AT MARCH 31, 2021 $ ( 52,189 ) 14,385,642 $ 348,359 129,593,939 $ 582,784 $ ( 266 ) $ 69,471 $ 948,159

The accompanying notes are an integral part of these consolidated financial statements.

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Year Ended March 31,

2021 2020 2019

OPERATING ACTIVITIES:

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Non-cash equity-based compensation expense 6,727 26,510 41,367

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

Provision for doubtful accounts

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

Provision for expected credit losses 5,988 1,002 381

Net adjustments to fair value of commodity derivatives 83,578 ( 85,941 ) ( 10,817 )

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Lower of cost or net realizable value adjustments 3,898 33,973 14,305

Other 1,513 2,541 ( 485 )

Changes in operating assets and liabilities, exclusive of acquisitions:

Accounts receivable-trade and affiliates ( 162,031 ) 436,349 ( 185,717 )

Inventories ( 92,731 ) 29,779 ( 10,093 )

Other current and noncurrent assets 92,555 14,081 43,996

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Net cash provided by operating activities-continuing operations 305,763 382,426 151,523

Net cash provided by (used in) operating activities-discontinued operations

Net cash (used in) provided by operating activities-discontinued operations ( 1,769 ) 81,629 185,727

Net cash provided by operating activities 303,994 464,055 337,250

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Proceeds from divestitures of businesses and investments, net — — 335,809

Transaction with Victory Propane (Note 13)

Investments in unconsolidated entities ( 963 ) ( 21,218 ) ( 389 )

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Loan to affiliate — — ( 1,515 )

Repayments on loan to affiliate

Net cash (used in) provided by investing activities-continuing operations

Net cash used in investing activities-continuing operations ( 221,493 ) ( 1,737,620 ) ( 404,515 )

Net cash provided by investing activities-discontinued operations — 298,864 857,988

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FINANCING ACTIVITIES:

Proceeds from borrowings under Revolving Credit Facility

Payments on Revolving Credit Facility

Issuance of senior unsecured notes and term credit agreement

Repayment and repurchase of senior secured and senior unsecured notes

Proceeds from borrowings under revolving credit facilities 1,261,000 4,074,000 4,098,500

Payments on revolving credit facilities ( 2,727,000 ) ( 3,775,000 ) ( 3,897,000 )

Issuance of senior secured and unsecured notes and term credit agreement 2,300,000 700,000 —

Repayment of term credit agreements ( 555,562 ) — —

Repayment and repurchase of senior unsecured notes ( 115,796 ) ( 454 ) ( 737,058 )

Proceeds from borrowings on other long-term debt 50,000 — —

Payments on other long-term debt ( 5,590 ) ( 653 ) ( 653 )

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Investment in NGL Energy Holdings LLC — ( 15,226 ) —

Net cash provided by (used in) financing activities-continuing operations

Net cash (used in) provided by financing activities-continuing operations ( 100,376 ) 978,833 ( 793,920 )

Net cash used in financing activities-discontinued operations — — ( 325 )

Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents

Net cash (used in) provided by financing activities ( 100,376 ) 978,833 ( 794,245 )

Net (decrease) increase in cash and cash equivalents ( 17,875 ) 4,132 ( 3,522 )

Cash and cash equivalents, beginning of period 22,704 18,572 22,094

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NGL Energy Holdings LLC serves as our general partner.

At March 31, 2020 , our operations included:

At March 31, 2021, our operations included three segments:

• 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.

• 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.

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

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.

Our Liquids and Refined Products segment conducts marketing 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, other third party storage and terminal facilities, common carrier pipelines and our extensive fleet of leased railcars.

We also provide natural gas liquid and refined product terminaling and storage services at our salt dome storage facility joint venture in Utah and marine exports through our facility located in Chesapeake, Virginia.

We employ a number of contractual and hedging strategies to minimize commodity exposure and maximize earnings stability of this segment.

Recent Developments

On September 30, 2019, we completed the sale of TransMontaigne Product Services, LLC (“TPSL”) and associated assets to Trajectory Acquisition Company, LLC (“Trajectory”) for total consideration of $ 233.8 million , including equity consideration, inventory and net working capital (see Note 18 ).

TPSL made up a significant portion of our former Refined Products and Renewables segment.

The divested assets include the following:

TPSL Terminaling Services Agreement with TransMontaigne Partners LP, including the exclusive rights to utilize 19 terminals;

line space along Colonial and Plantation Pipelines;

two wholly-owned refined products terminals in Georgia and multiple third-party throughput agreements;

and customer contracts, inventory and other working capital associated with the assets.

On January 3, 2020, we completed the sale of our refined products marketing business in the mid-continent region of the United States (“Mid-Con”) to a third-party.

On March 30, 2020, we completed the sale of our gas blending business in the southeastern and eastern regions of the United States (“Gas Blending”) to another third-party.

The Partnership had determined that these businesses were no longer core to the Partnership’s strategy.

These transactions represent a strategic shift 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 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.

In addition, the assets and liabilities related to TPSL and certain assets and liabilities, particularly inventory, derivatives and leases, related to Mid-Con and Gas Blending have been classified as held for sale in our March 31, 2019 consolidated balance sheet.

See Note 18 for a further discussion of the accounting for these transactions.

On March 30, 2018, we sold a portion of our Retail Propane segment to DCC LPG (“DCC”) for net proceeds of $ 212.4 million in cash.

The Retail Propane businesses subject to this transaction consisted of our operations across the Mid-Continent and Western portions of the United States.

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

(“Superior”) for total consideration of $ 889.8 million in cash.

We retained our 50 % ownership interest in Victory Propane, LLC (“Victory Propane”), which we subsequently sold on August 14, 2018 (see Note 13 ).

These transactions represented a strategic shift 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) 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 18 for a further discussion of these transactions.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements

• 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.

Note 2— Significant Accounting Policies

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We use the following fair value hierarchy, which prioritizes valuation technique inputs used to measure fair value into three broad levels:

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Quoted prices in active markets for identical assets and liabilities that we have the ability to access at the measurement date.

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instead, we record the purchase or sale at the contracted value once the delivery occurs.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

We have not designated any financial instruments as hedges for accounting purposes.

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Depreciation and Amortization

Depreciation and amortization in our consolidated statements of operations includes all depreciation of our property, plant and equipment and amortization of intangible assets other than debt issuance costs, for which the amortization is recorded to interest expense and certain contract-based intangible assets, for which the amortization is recorded to either cost of sales or operating expense.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

to interest expense and certain contract-based intangible assets, for which the amortization is recorded to either cost of sales or operating expense.

We qualify as a partnership for income tax purposes.

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Although we routinely generate income outside of our corporate subsidiaries that is non-qualifying, we believe that at least 90 % of our gross income has been qualifying income for each of the calendar years since our IPO.

We have a deferred tax liability of $ 56.4 million at March 31, 2020 as a result of acquiring corporations in connection with certain of our acquisitions, which is included within other noncurrent liabilities in our consolidated balance sheet.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

deferred tax liability is the tax effected cumulative temporary difference between the GAAP basis and tax basis of the acquired assets within the corporation.

We have a deferred tax liability of $ 45.8 million and $ 56.4 million at March 31, 2021 and 2020, respectively, as a result of acquiring corporations in connection with certain of our acquisitions (see Note 4), which is included within other noncurrent liabilities in our consolidated balance sheets.

The deferred tax liability is the tax effected cumulative temporary difference between the GAAP basis and tax basis of the acquired assets within the corporation.

For GAAP purposes, certain of the acquired assets will be depreciated and amortized over time which will lower the GAAP basis.

The deferred tax benefit recorded during the year ended March 31, 2021 was $ 4.7 million with an effective tax rate of 39.7 %.

The deferred tax benefit recorded during the year ended March 31, 2020 was $ 2.9 million with an effective tax rate of 27.8 %.

We evaluate uncertain tax positions for recognition and measurement in the consolidated financial statements.

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We grant unsecured credit to customers under normal industry standards and terms, and have established policies and procedures that allow for an evaluation of each customer’s creditworthiness as well as general economic conditions.

The allowance for doubtful accounts is based on our assessment of the collectibility of customer accounts, which assessment considers the overall creditworthiness of customers and any specific disputes.

Accounts receivable are considered past due or delinquent based on contractual terms.

We write off accounts receivable against the allowance for doubtful accounts when collection efforts have been exhausted.

See Note 17 for a further discussion of our allowance for expected credit losses.

We execute netting agreements with certain customers to mitigate our credit risk.

Receivables and payables are reflected at a net balance to the extent a netting agreement is in place and we intend to settle on a net basis.

Our accounts receivable consists of the following at the dates indicated:

March 31, 2020

March 31, 2019

Allowance for

(in thousands)

Crude Oil Logistics

Water Solutions

Liquids and Refined Products

Corporate and Other

Changes in the allowance for doubtful accounts are as follows for the periods indicated:

Year Ended March 31,

(in thousands)

Allowance for doubtful accounts, beginning of period

Provision for doubtful accounts (1)

Write off of uncollectible accounts

Allowance for doubtful accounts, end of period

The amount for the year ended March 31, 2020 includes $ 0.2 million assumed in the Hillstone acquisition (see Note 4 ).

We did not have any customers that represented over 10% of consolidated revenues for fiscal years 2021, 2020 and 2019.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Amounts in the tables above do not include accounts receivable or allowance for doubtful accounts related to TPSL, as these amounts have been classified as current assets held for sale within our March 31, 2019 consolidated balance sheet (see Note 1 and Note 18 ).

We did not have any customers that represented over 10% of consolidated revenues for fiscal years 2020 , 2019 and 2018 .

Our inventories are valued at the lower of cost or net realizable value, with cost determined using either the weighted-average cost or the first in, first out (FIFO) methods, including the cost of transportation and storage, and with net realizable value defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.

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(in thousands)

Amounts in the table above do not include inventory related to Mid-Con, Gas Blending and TPSL, as these amounts have been classified as current assets held for sale within our March 31, 2019 consolidated balance sheet (see Note 1 and Note 18 ).

Crude oil $ 64,916 $ 18,201

Propane 45,521 25,163

Butane 19,189 9,619

Biodiesel 16,169 8,195

Ethanol 3,056 1,834

Diesel 2,252 2,414

Other 7,364 4,208

Total $ 158,467 $ 69,634

Investments in Unconsolidated Entities

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We consider distributions received from unconsolidated entities in excess of cumulative equity in earnings subsequent to the date of investment to be a return of investment and are classified as investing activities in our consolidated statements of cash flows.

At March 31, 2021, cumulative equity earnings and cumulative distributions of our unconsolidated entities since they were acquired were $ 5.1 million and $ 6.8 million, respectively.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

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Our investments in unconsolidated entities consist of the following at the dates indicated:

Date Acquired

Ownership March 31,

Entity Segment Interest (1) Date Acquired 2021 2020

(in thousands)

Water services and land company (2)

Water Solutions

November 2019

Water services and land company (3)

Water Solutions

November 2019

Water services and land company (4)

Water Solutions

November 2019

Aircraft company (5)

Corporate and Other

Water services company (6)

Water Solutions

Natural gas liquids terminal company (7)

Liquids and Refined Products

Water services and land company Water Solutions 50 % November 2019 $ 15,832 $ 16,607

Water services and land company Water Solutions 50 % November 2019 2,284 2,092

Water services and land company Water Solutions 10 % November 2019 3,254 3,384

Aircraft company (2) Corporate and Other 50 % June 2019 748 447

Water services company Water Solutions 50 % August 2018 424 449

Natural gas liquids terminal company Liquids Logistics 50 % March 2019 177 203

Total $ 22,719 $ 23,182

(1) Ownership interest percentages are at March 31, 2021.

This is an investment that we acquired as part of an acquisition in November 2019 (see Note 4), and represents certain membership interests in a limited liability company and are related to specific land operations.

(2) This is an investment with a related party.

See Note 13 for a further discussion.

This is an investment that we acquired as part of an acquisition in August 2018.

This is an investment that we acquired as part of an acquisition in March 2019.

Combined summarized financial information for all of our unconsolidated entities is as follows for the dates and periods indicated.

This information includes 100 % of the activity of our unconsolidated entities and not just our ownership interest.

Balance sheets:

(in thousands)

Current assets

Noncurrent assets

Current liabilities

Noncurrent liabilities

Statements of operations:

(in thousands)

Cost of sales

At March 31, 2020 , cumulative equity earnings and cumulative distributions of our unconsolidated entities since they were acquired were $ 3.2 million and $ 3.4 million , respectively.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Other Noncurrent Assets

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(in thousands)

Loans receivable (1)

Loan receivable (1) $ 2,962 $ 5,374

Line fill (2) 28,110 25,763

Minimum shipping fees - pipeline commitments (3) 13,171 17,443

Represents the noncurrent portion of a loan receivable associated with our interest in the construction of a natural gas liquids loading/unloading facility (the “Facility”) that is utilized by a third party.

As of March 31, 2020 , we are owed a total of $ 26.7 million under this loan receivable, of which approximately $ 24.2 million is recorded within prepaid expenses and other current assets in our consolidated balance sheet.

Our loan receivable is secured by a lien on the Facility.

Other 6,490 14,557

Total $ 50,733 $ 63,137

(1) Amounts at March 31, 2021 and 2020 represent the noncurrent portion of a loan receivable, net of an allowance for an expected credit loss, with a former related party.

In addition, the amount at March 31, 2020 represents the noncurrent portion of a loan receivable associated with our interest in the construction of a natural gas liquids loading/unloading facility (the “Facility”) that is utilized by a third party.

The third party filed for Chapter 11 bankruptcy in July 2019.

For a further discussion, see Note 18.

The remaining amount represents the noncurrent portion of a loan receivable with Victory Propane.

(2) Represents minimum volumes of product we are required to leave on certain third-party owned pipelines under long-term shipment commitments.

At March 31, 2020 , line fill consisted of 335,069 barrels of crude oil and 262,000 barrels of propane.

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

At March 31, 2021, line fill consisted of 423,978 barrels of crude oil.

At March 31, 2020, line fill consisted of 335,069 barrels of crude oil and 262,000 barrels of propane.

Line fill held in pipelines we own is included within property, plant and equipment (see Note 5).

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

(3) Represents the noncurrent portion of minimum shipping fees paid in excess of volumes shipped, or deficiency credits, for one contract with a crude oil pipeline operator.

This amount can be recovered when volumes shipped exceed the minimum monthly volume commitment (see Note 9).

As of March 31, 2019, the deficiency credit was $ 23.5 million .

In October 2019, we extended our commitment with this crude oil pipeline operator and this extension allows us an additional 5.0 years to recapture the minimum shipping deficiency fees (see Note 9).

As of March 31, 2021, the deficiency credit was $ 17.4 million, of which $ 4.2 million is recorded within prepaid expenses and other current assets in our consolidated balance sheet.

Amounts in the table above do not include other noncurrent assets related to TPSL, as these amounts have been classified as noncurrent assets held for sale within our March 31, 2019 consolidated balance sheet (see Note 1 and Note 18 ).

Accrued Expenses and Other Payables

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(in thousands)

Accrued interest $ 56,299 $ 39,803

Accrued compensation and benefits 41,456 29,990

Excise and other tax liabilities

Derivative liabilities 21,562 17,777

Accrued interest

Excise and other tax liabilities 10,970 9,941

Contingent consideration liability (1) 3,083 102,419

Product exchange liabilities 1,188 1,687

Gavilon legal matter settlement (Note 9)

Contingent consideration liability (Note 4)

Amounts in the table above do not include accrued expenses and other payables related to TPSL and Mid-Con and Gas Blending derivative liabilities, as these amounts have been classified as current liabilities held for sale within our March 31, 2019 consolidated balance sheet (see Note 1 and Note 18 ).

Other 35,842 30,445

Total $ 170,400 $ 232,062

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(1) Decrease is due to the monthly installment payments totaling $ 100.0 million made during the year ended March 31, 2021 related to our acquisition of certain assets of Mesquite.

We made our last installment payment in December 2020.

Property, Plant and Equipment

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Acquisitions and improvements are capitalized, and maintenance and repairs are expensed as incurred.

As we dispose of assets, we remove the cost and related accumulated depreciation from the accounts, and any resulting gain or loss is included within loss (gain) on disposal or impairment of assets, net .

As we dispose of assets, we remove the cost and related accumulated depreciation from the accounts, and any resulting gain or loss is included within loss on disposal or impairment of assets, net.

We compute depreciation expense of our property, plant and equipment using the straight-line method over the estimated useful lives of the assets (see Note 5).

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Our intangible assets include contracts and arrangements acquired in business combinations, including customer relationships, customer commitments, pipeline capacity rights, rights-of-way and easements, water rights, executory contracts and other agreements, covenants not to compete, and trade names.

In addition, we capitalize certain debt issuance costs associated with the Revolving Credit Facility (as defined herein).

In addition, we capitalize certain debt issuance costs associated with the Revolving Credit Facility (as defined herein), ABL Facility (as defined herein) and the Sawtooth Caverns, LLC (“Sawtooth”) credit agreement.

We amortize the majority of our intangible assets on a straight-line basis over the estimated useful lives of the assets (see Note 7).

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See Note 6 for a further discussion and analysis of our goodwill impairment assessment.

Product Exchanges

Quantities of products receivable or returnable under exchange agreements are reported within prepaid expenses and other current assets and within accrued expenses and other payables in our consolidated balance sheets.

We estimate the value

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

of product exchange assets and liabilities based on the weighted-average cost basis of the inventory we have delivered or will deliver on the exchange, plus or minus location differentials.

Product exchanges related to TPSL have been classified as current assets and current liabilities held for sale within our March 31, 2019 consolidated balance sheet (see Note 1 and Note 18 ).

Product Exchanges

We estimate the value of product exchange assets and liabilities based on the weighted-average cost basis of the inventory we have delivered or will deliver on the exchange, plus or minus location differentials.

Noncontrolling Interests

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The redeemable noncontrolling interest is adjusted at each balance sheet date to its maximum redemption value if the amount is greater than the carrying value.

During the year ended March 31, 2019, the redeemable noncontrolling interest of $ 12.8 million was included in the sale of our former Retail Propane segment (see Note 18 ).

To determine if a transaction should be accounted for as a business combination or an acquisition of assets, we first calculate the relative fair values of the assets acquired.

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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Pursuant to GAAP, an entity is allowed a reasonable period of time (not to exceed one year) to obtain the information necessary to identify and measure the fair value of the assets acquired and liabilities assumed in a business combination.

As discussed in Note 4 , certain of our acquisitions are still within this measurement period, and as a result, the acquisition date fair values we have recorded for the assets acquired and liabilities assumed are subject to change.

Also, as discussed in Note 4, we made certain adjustments during the year ended March 31, 2021 to our estimates of the acquisition date fair values of the assets acquired and liabilities assumed in business combinations that occurred during the year ended March 31, 2020.

Reclassifications

We have reclassified certain prior period financial statement information to be consistent with the classification methods used in the current fiscal year.

These reclassifications did not impact previously reported amounts of assets, liabilities, equity, net income, or cash flows.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2016-13, “Financial Instruments-Credit Losses.” The ASU requires a financial asset (or a group of financial assets) measured at amortized cost to be presented at the net amount expected to be collected, which would include accounts receivable.

The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount.

We adopted ASU No.

2016-13 on April 1, 2020 and $ 1.1 million will be recognized as a cumulative effect adjustment in the beginning balance of our retained earnings as a result of our implementation of this new guidance.

In February 2016, the FASB issued ASC 842, “Leases.” This ASU replaced previous lease accounting guidance in GAAP.

The new guidance requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases.

It also retains a distinction between finance leases and operating leases.

For lessors, the new accounting model remains largely the same, although some changes have been made to align it with the new lessee model and the ASC 606 revenue recognition guidance.

We adopted ASC 842 effective April 1, 2019 using the modified retrospective method, with no adjustment to comparative period information, which remains reported under ASC 840, and no cumulative effect adjustment to equity.

See Note 16 for a further discussion of the impact of adoption of ASC 842 to our consolidated financial statements.

In November 2020, the Securities and Exchange Commission (“SEC”) issued a Final Rule, “Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information”, to modernize, simplify and enhance certain financial disclosure requirements in Regulation S-K.

The Final Rule eliminates Regulation S-K, Item 301.

Selected Financial Data, streamlines the requirements in Item 302.

Supplementary Financial Information, and updates certain requirements in Item 303.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The guidance is effective for fiscal periods ending on or after August 9, 2021, although early adoption is permitted if an entity complies with an amended Item in its entirety.

Effective March 31, 2021, we adopted a portion of this guidance by electing to comply with guidance related to Item 301, which eliminated the Selected Financial Data, and Item 302, which allowed us to eliminate the Quarterly Financial Data from this filing.

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2020-06, “Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” This ASU (i) simplifies an issuer’s accounting for convertible instruments by eliminating two of the three models in ASC 470-20 that require separate accounting for embedded conversion features, (ii) amends diluted earnings per share calculations for convertible instruments by requiring the use of the if-converted method and (iii) simplifies the settlement assessment entities are required to perform on contracts that can potentially settle in an entity’s own equity by removing certain requirements.

This guidance is effective for interim and annual periods beginning after December 15, 2021, with early adoption permitted.

We are currently evaluating the effect that this guidance will have on our financial position, results of operations and cash flows.

In March 2020, the SEC issued “Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities”, which amends the disclosure requirements for guarantors and issuers of guaranteed securities registered or being registered in Rule 3-10 of Regulation S-X.

The amendment simplifies the disclosure requirements and permits the amended disclosures to be provided outside the footnotes in audited annual or

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

unaudited interim consolidated financial statements in all filings.

The guidance is effective for the Partnership for fiscal periods ending after January 4, 2021, although early adoption is permitted.

We adopted this guidance effective April 1, 2020 and elected to include the required summarized financial information in “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations –Liquidity, Sources of Capital and Capital Resource Activities– Guarantor Summarized Financial Information .”

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

This guidance is effective prospectively upon issuance through December 31, 2022 and may be applied from the beginning of an interim period that includes the issuance date of this ASU.

We are currently evaluating the effect that this guidance will have on our financial position, results of operations and cash flows.

In June 2016, the FASB issued ASU No.

We adopted ASU No.

2016-13 on April 1, 2020, using the modified retrospective approach with a cumulative effect adjustment of $ 1.1 million to opening equity at the beginning of the period of adoption.

See Note 17 for a further discussion of the impact of the adoption of this ASU on our consolidated financial statements.

Note 3— (Loss) Income Per Common Unit

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Year Ended March 31,

2021 2020 2019

Weighted average common units outstanding during the period:

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For the years ended March 31, 2021, 2020 and 2019, all potential common units or convertible securities were considered antidilutive.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Our (loss) income per common unit is as follows for the periods indicated:

Year Ended March 31,

2021 2020 2019

(in thousands, except unit and per unit amounts)

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

Continuing operations loss (income) attributable to noncontrolling interests

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

Net loss from continuing operations attributable to NGL Energy Partners LP ( 638,050 ) ( 178,772 ) ( 59,249 )

Distributions to preferred unitholders (1)(2) ( 93,364 ) ( 188,734 ) ( 111,936 )

Continuing operations net loss (income) allocated to general partner (2)

Repurchase of warrants (3)

Continuing operations net loss allocated to general partner (3) 731 260 32

Net loss from continuing operations allocated to common unitholders $ ( 730,683 ) $ ( 367,246 ) $ ( 171,153 )

(Loss) income from discontinued operations, net of tax $ ( 1,769 ) $ ( 218,235 ) $ 418,850

Discontinued operations loss (income) attributable to redeemable noncontrolling interests

Discontinued operations loss attributable to redeemable noncontrolling interests — — 446

Discontinued operations net loss (income) allocated to general partner (3) 2 218 ( 419 )

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Diluted weighted average common units outstanding 128,980,823 127,411,908 123,017,064

This amount includes distributions to preferred unitholders, the final accretion for the beneficial conversion of the Class A Preferred Units (as defined herein) and the excess of the Class A Preferred Units repurchase price over the carrying value of the units, as discussed further in Note 10 .

(1) This amount includes distributions to preferred unitholders.

The final accretion for the beneficial conversion of the 10.75 % Class A Preferred Units (as defined herein) and the excess of the 10.75 % Class A Preferred Units repurchase price over the carrying value of the units, as discussed further in Note 10, are included in the year ended March 31, 2020.

(2) Includes cumulative dividends for the quarter ended March 31, 2021 which were earning but not declared or paid (see Note 10).

(3) Net loss (income) allocated to the general partner includes distributions to which it is entitled as the holder of incentive distribution rights.

This amount represents the excess of the repurchase price over the fair value of the warrants, as discussed further in Note 10 .

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Note 4— Acquisitions

The following summarizes our business combinations and acquisitions of assets during the year ended March 31, 2020 :

Business Combinations

Hillstone Acquisition

On October 31, 2019, we acquired all of the equity interests of Hillstone Environmental Partners, LLC (“Hillstone”) for $ 642.5 million , subject to certain adjustments.

Hillstone provides water pipeline and disposal infrastructure solutions to producers with a core operational focus in the state line area of southern Eddy and Lea Counties, New Mexico and northern Loving County, Texas in the Delaware Basin.

Hillstone has a fully interconnected produced water pipeline transportation and disposal system, which consists of 19 saltwater disposal wells, representing approximately 580,000 barrels per day of permitted disposal capacity, and approximately 70 miles of a newly-built network of water pipelines, with approximately 680,000 barrels per day of transportation capacity.

Hillstone also has an additional 22 permits to develop another 660,000 barrels per day of disposal capacity.

As part of this acquisition, we recorded contract and customer relationship intangible assets related to multiple long-term agreements, including acreage dedications and minimum volume commitments.

We estimated the value of these intangible assets using the income approach, which uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted).

The measurement is based on the value indicated by current market expectations about those future amounts.

The agreement for this acquisition contemplates post-closing payments for certain working capital items.

We are accounting for this transaction as a business combination.

The following table summarizes the preliminary estimates of the fair values as of the acquisition date for the assets acquired and liabilities assumed (in thousands):

Current assets

Property, plant and equipment

Intangible assets

Investments in unconsolidated entities

Operating lease right-of-use assets

Other noncurrent assets

Assets held for sale

Current liabilities

Operating lease obligations

Other noncurrent liabilities

Deferred tax liability

Liabilities held for sale

Fair value of net assets acquired

As of March 31, 2020 , the allocation of the purchase price is considered preliminary as we are continuing to gather additional information to (i) finalize the fair values of the property, plant and equipment and intangible assets, (ii) finalize the calculation of the deferred tax liability and (iii) finalize working capital items.

Goodwill represents the excess of the consideration paid for the acquired business over the fair value of the individual assets acquired, net of liabilities assumed.

Goodwill represents a premium paid to expand the number of our disposal sites in an oilfield production basin currently serviced by us, thereby enhancing our competitive position as a provider of disposal services in this oilfield production basin.

We expect that all of the goodwill will be deductible for federal income tax purposes.

The operations of these water solutions facilities have been included in our consolidated statement of operations since their acquisition date.

Our consolidated statement of operations for the year ended March 31, 2020 includes revenues of $ 37.9 million and operating income of $ 5.4 million that were generated by the operations of these water solutions facilities.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

incurred $ 12.3 million of transaction costs related to this acquisition during the year ended March 31, 2020 , which is recorded within general and administrative expenses in our consolidated statement of operations.

In addition, on December 31, 2019, the Partnership sold its interest in the unconsolidated entity acquired as part of this transaction.

Mesquite Acquisition

On July 2, 2019, we acquired all of the assets of Mesquite Disposals Unlimited, LLC (“Mesquite”) (including 34 saltwater disposal wells and approximately 175 miles of pipelines).

The purchase price was comprised of (i) $ 592.5 million in cash, (ii) the issuance of $ 102.8 million of our Class B Preferred Units (as defined herein) and (iii) additional cash payments of $ 200.0 million to be paid in two deferred installments contingent on the average daily volume of water processed utilizing the assets being acquired.

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.

The vast majority of volumes on Mesquite’s system are contracted under long-term acreage dedications and minimum volume commitments.

To determine our preliminary purchase price of $ 885.3 million , we included the fair value of the deferred payments at the date of acquisition of $ 190.0 million , to the sum of the cash paid and the value of the preferred units issued.

During the three months ended December 31, 2019, the volume of produced water processed utilizing the assets acquired surpassed both thresholds, thus triggering the payment of the full $ 200.0 million .

The agreement was amended by both parties for the payment to be made in six installments over the next six months.

We made the first three installment payments totaling $ 100.0 million prior to March 31, 2020.

The agreement was further amended by both parties for the remaining balance to be paid in accordance with the following schedule:

$ 55.0 million on April 2, 2020, $ 5.6 million on May 5, 2020, $ 5.6 million on June 5, 2020, $ 5.6 million on July 6, 2020, $ 5.6 million on August 5, 2020, $ 5.6 million on September 7, 2020, $ 5.6 million on October 5, 2020, $ 5.6 million on November 5, 2020 and $ 5.6 million on December 7, 2020.

As part of this acquisition, we recorded customer commitment, customer relationship and right-of way intangible assets.

The measurement is based on the value indicated by current market expectations about those future amounts.

We are accounting for this transaction as a business combination.

As of March 31, 2020, we completed the acquisition accounting for this acquisition.

The following table summarizes the final fair values as of the acquisition date for the assets acquired and liabilities assumed (in thousands):

Property, plant and equipment

Intangible assets

Other noncurrent liabilities

Noncontrolling interests

Fair value of net assets acquired

Goodwill represents the excess of the consideration paid for the acquired business over the fair value of the individual assets acquired, net of liabilities assumed.

We expect that all of the goodwill will be deductible for federal income tax purposes.

The operations of these water solutions facilities have been included in our consolidated statement of operations since their acquisition date.

Our consolidated statement of operations for the year ended March 31, 2020 includes revenues of $ 92.4 million and operating income of $ 14.4 million that were generated by the operations of these water solutions facilities.

We incurred $ 6.1 million of transaction costs related to this acquisition during the year ended March 31, 2020 , which is recorded within general and administrative expenses in our consolidated statement of operations.

Saltwater Disposal Facility Acquisition

During the year ended March 31, 2020 , we acquired one saltwater disposal facility (including three saltwater disposal wells) in Eddy County, New Mexico for total consideration of approximately $ 53.0 million .

As part of this acquisition, we recorded customer relationship, favorable contract, non-compete agreement and right-of way intangible assets.

We estimated the value of these intangible assets using the income approach, which uses valuation

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted).

The measurement is based on the value indicated by current market expectations about those future amounts.

The agreement for this acquisition contemplates post-closing payments for certain working capital items.

We are accounting for this transaction as a business combination.

As of March 31, 2020, we completed the acquisition accounting for this acquisition.

The following table summarizes the final fair values as of the acquisition date for the assets acquired and liabilities assumed (in thousands):

Property, plant and equipment

Intangible assets

Other noncurrent liabilities

Fair value of net assets acquired

Goodwill represents the excess of the consideration paid for the acquired business over the fair value of the individual assets acquired, net of liabilities assumed.

We expect that all of the goodwill will be deductible for federal income tax purposes.

The operations of these water solutions facilities have been included in our consolidated statement of operations since their acquisition date.

Our consolidated statement of operations for the year ended March 31, 2020 includes revenues of $ 6.4 million and operating income of $ 2.1 million that were generated by the operations of these water solutions facilities.

We incurred less than $ 0.1 million of transaction costs related to this acquisition during the year ended March 31, 2020 , which is recorded within general and administrative expenses in our consolidated statement of operations.

Propane Terminal Acquisition

On January 31, 2020, we completed the acquisition of a propane terminal located in West Point, Virginia, from Quarles Petroleum, Incorporated for total consideration of approximately $ 5.6 million .

As part of this acquisition, we recorded a customer relationship intangible asset whereby we estimated the value of this intangible asset using the income approach, which uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted).

The measurement is based on the value indicated by current market expectations about those future amounts.

As of March 31, 2020, we completed the acquisition accounting for this acquisition.

As of the acquisition date, we recorded $ 2.6 million to property, plant and equipment, $ 2.2 million to intangible assets and $ 0.7 million to goodwill as the final fair values for the assets acquired.

Goodwill represents the excess of the consideration paid for the acquired business over the fair value of the individual assets acquired.

Goodwill represents a premium paid to expand the number of our propane terminals in an area currently serviced by us, thereby enhancing our competitive position as a provider of services in this area.

We expect that all of the goodwill will be deductible for federal income tax purposes.

The operations of this propane terminal have been included in our consolidated statement of operations since its acquisition date.

Our consolidated statement of operations for the year ended March 31, 2020 includes revenues (including intercompany transactions) of $ 0.1 million and operating income of $ 0.1 million that were generated by the operations of this propane terminal.

We incurred less than $ 0.1 million of transaction costs related to this acquisition during the year ended March 31, 2020.

These amounts are recorded within general and administrative expenses in our consolidated statement of operations.

Acquisitions of Assets

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 (see Note 2 ) in another entity and other assets.

The membership interests are in an entity that owns real property and provides brackish non-potable water services.

In addition, we entered into a joint development agreement with the seller and affiliates to build and operate produced, treated and blended water facilities.

The total purchase price for this transaction was $ 56.5 million , of which $ 36.1 million was allocated to the

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Notes to Consolidated Financial Statements (Continued)

produced and treated water rights (intangible asset), $ 20.2 million to the membership interests and $ 0.3 million to net other current and noncurrent assets.

During the year ended March 31, 2020 , we also acquired land and two saltwater disposal wells in Pecos County, Texas, for total consideration of $ 13.0 million , which we are accounting for as an acquisition of assets.

The following summarizes our acquisitions of assets during the year ended March 31, 2021:

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.

This pipeline complements our existing assets in the upper Midwest and expands our presence with anchor assets in the state of Michigan, one of the top propane markets in the United States.

Total consideration for this acquisition was $ 18.2 million, which we are accounting for as an acquisition of assets.

The consideration paid for this transaction was allocated primarily to property, plant and equipment.

The following summarizes the status of the preliminary purchase price allocation of acquisitions prior to April 1, 2019:

Saltwater Water Solutions Facilities

During the three months ended June 30, 2019, we completed the acquisition accounting for all saltwater disposal facilities and saltwater disposal wells acquired during the fiscal year ended March 31, 2019.

Due to the receipt of additional information, we recorded a decrease of $ 2.3 million to intangible assets with the offset recorded to goodwill.

There were no other adjustments to the fair value of assets acquired and liabilities assumed during the three months ended June 30, 2019.

Brackish Non-Potable Water Solutions Facilities

During the three months ended June 30, 2019, we completed the acquisition accounting for four brackish non-potable water facilities (including 16 brackish non-potable water wells).

There were no adjustments to the fair value of assets acquired and liabilities assumed during the three months ended June 30, 2019 for this acquisition.

During the six months ended September 30, 2019, we completed the acquisition accounting for a separate brackish non-potable water acquisition.

We paid $ 2.5 million in cash to the sellers during the six months ended September 30, 2019 to complete the settlement of the acquisition.

The offset of the cash payment was recorded to goodwill.

There were no other adjustments to the fair value of assets acquired and liabilities assumed during the six months ended September 30, 2019.

Natural Gas Liquids Terminal Business

During the year ended March 31, 2020, we completed the acquisition accounting for this transaction and recorded a decrease of $ 2.7 million to inventories, an increase of $ 0.3 million to other current assets, an increase of $ 0.1 million to property, plant and equipment, a decrease of $ 0.9 million to current liabilities and a decrease of $ 0.5 million to noncurrent liabilities related to working capital items.

Also, due to the receipt of additional information, we recorded an increase of $ 29.0 million to property, plant and equipment, a decrease of $ 26.9 million to intangible assets and a decrease of $ 2.1 million to goodwill.

There were no other adjustments to the fair value of assets acquired and liabilities assumed during the year ended March 31, 2020.

This acquisition is included in our Liquids Logistics segment.

The following summarizes the status of the preliminary purchase price allocation of acquisitions completed prior to April 1, 2020:

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Notes to Consolidated Financial Statements (Continued)

Hillstone Environmental Partners, LLC (“Hillstone”) Acquisition

As of October 31, 2020, we completed the acquisition accounting for the Hillstone acquisition.

During the seven months ended October 31, 2020, we received additional information and recorded a decrease of $ 0.7 million to current assets, a decrease of $ 5.1 million to current liabilities and a decrease of $ 6.0 million to the deferred tax liability with the offset to goodwill.

Also, there was a $ 0.9 million decrease to the preliminary purchase price as a result of a true up to the working capital acquired.

This amount was recorded as an offset to goodwill.

There were no other adjustments to the fair value of assets acquired and liabilities assumed during the seven months ended October 31, 2020.

Note 5— Property, Plant and Equipment

Our property, plant and equipment consists of the following at the dates indicated:

(in thousands)

Estimated March 31,

Description Useful Lives 2021 2020

(in years) (in thousands)

Natural gas liquids terminal and storage assets 2 - 30 $ 319,554 $ 314,694

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Buildings and leasehold improvements 3 - 40 165,679 151,690

Land 100,352 91,446

Tank bottoms and line fill (1) 20,237 20,346

Other 3 - 20 15,054 14,627

Construction in progress 114,796 499,707

3,483,132 3,380,623

Accumulated depreciation ( 776,279 ) ( 529,068 )

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Line fill, which represents our portion of the product volume required for the operation of the proportionate share of a pipeline we own, is recorded at historical cost.

Amounts in the table above do not include property, plant and equipment and accumulated depreciation related to TPSL, as these amounts have been classified as noncurrent assets held for sale within our March 31, 2019 consolidated balance sheet (see Note 1 and Note 18 ).

The following table summarizes depreciation expense and capitalized interest expense for the periods indicated:

Year Ended March 31,

2021 2020 2019

(in thousands)

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Capitalized interest expense $ 2,778 $ 650 $ 482

Amounts in the table above do not include depreciation expense and capitalized interest related to TPSL and our former Retail Propane segment, as these amounts have been classified as discontinued operations within our consolidated statements of operations for all periods presented (see Note 1 and Note 18 ).

Amounts in the table above do not include depreciation expense and capitalized interest related to TransMontaigne Product Services, LLC (“TPSL”) and our former Retail Propane segment, as these amounts have been classified as discontinued operations within our consolidated statements of operations for all periods presented (see Note 19).

We record (gains) losses from the sales of property, plant and equipment and any write-downs in value due to impairment within loss on disposal or impairment of assets, net in our consolidated statement of operations.

The following table summarizes (gains) losses on the disposal or impairment of property, plant and equipment by segment for the periods indicated:

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Notes to Consolidated Financial Statements (Continued)

We record (gains) losses from the sales of property, plant and equipment and any write-downs in value due to impairment within loss (gain) on disposal or impairment of assets, net in our consolidated statement of operations.

The following table summarizes (gains) losses on the disposal or impairment of property, plant and equipment by segment for the periods indicated:

Year Ended March 31,

2021 2020 2019

(in thousands)

Crude Oil Logistics (1)

Water Solutions $ 36,492 $ 22,491 $ 3,067

Liquids and Refined Products

Amount for the year ended March 31, 2018 primarily relates to a gain related to the sale of excess pipe, partially offset by losses from the disposal of certain assets and the write-down of other assets.

Amount for the year ended March 31, 2020 relates to an impairment charge for inactive saltwater disposal facilities as well as losses from the disposal of certain assets and the write-down of other assets.

Crude Oil Logistics 1,766 36 3,489

Liquids Logistics 3,350 ( 30 ) 993

Corporate 228 — —

Total $ 41,836 $ 22,497 $ 7,549

During the year ended March 31, 2021, the following transactions were recorded within our Water Solutions segment:

• An impairment charge of $ 30.6 million to write down the value of an asset group due to a decline in producer activity, resulting in lower disposal volumes.

See Note 7 for a discussion of the impairment of intangible assets within this asset group.

• An impairment charge of $ 11.9 million to write down the value of certain inactive saltwater disposal facilities that we do not expect to bring back online.

• 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.

• A gain of $ 12.8 million related to the sale of certain permits, land and a saltwater disposal facility (see Note 18).

During the year ended March 31, 2020, the following transactions were recorded within our Water Solutions segment:

• An impairment charge of $ 13.5 million to write down the value of certain inactive saltwater disposal facilities.

• A net loss of $ 9.0 million related to write-down or write off of certain assets, including abandoned projects, and the sale of certain other miscellaneous assets.

Note 6— Goodwill

The following table summarizes changes in goodwill by segment for the periods indicated (in thousands):

Liquids and Refined Products

Solutions Crude Oil

Logistics Liquids Logistics Total

(in thousands)

Balances at March 31, 2019 $ 410,139 $ 579,846 $ 120,471 $ 1,110,456

Acquisitions (Note 4)

Disposals (Note 17)

Revisions to acquisition accounting 4,755 — ( 2,103 ) 2,652

Acquisitions 129,764 — 715 130,479

Impairment ( 250,000 ) — — ( 250,000 )

Balances at March 31, 2020 294,658 579,846 119,083 993,587

Revisions to acquisition accounting (Note 4) ( 11,348 ) — — ( 11,348 )

Acquisitions (Note 4)

Impairment — ( 237,800 ) — ( 237,800 )

Balances at March 31, 2021 $ 283,310 $ 342,046 $ 119,083 $ 744,439

Amounts in the table above do not include goodwill that was allocated to TPSL and Gas Blending as the amounts have been classified as noncurrent assets held for sale within our consolidated balance sheets (see Note 1 and Note 18 ).

Fiscal Year 2021 Goodwill Impairment Assessment

We performed a qualitative assessment as of January 1, 2021 to determine whether it was more likely than not that the fair value of each reporting unit was greater than the carrying value of the reporting unit.

Based on these qualitative assessments, we determined that the fair value of each of our reporting units was more likely than not greater than the carrying value of the reporting units as of January 1, 2021, with the exception of our Water Solutions reporting unit, and our Crude Oil Logistics reporting unit, which was tested for impairment as of December 31, 2020.

See below for a further discussion of the testing.

Due to lower than expected disposal volumes as a result of a slower than expected recovery in oil production in the various basins in which our Water Solutions reporting unit operates and the completion of our annual budget process, it was

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Notes to Consolidated Financial Statements (Continued)

decided that the goodwill within the Water Solutions reporting units should be tested for impairment as of January 1, 2021.

We estimated the fair value of our Water Solutions reporting unit based on the income approach, also known as the discounted cash flow method, which utilizes the present value of future expected cash flows to estimate the fair value.

The future cash flows of the Water Solutions reporting unit were projected based upon estimates as of the test date of future revenues, operating expenses and cash outflows necessary to support these cash flows, including working capital and maintenance capital expenditures.

We also considered expectations regarding:

(i) the crude oil price environment as reflected in crude oil forward prices as of the test date, (ii) disposal volumes based on historical information and estimates of future drilling and completion activity, as well as expectations for future demand recovery and (iii) estimated fixed and variable costs.

The discounted cash flows for the Water Solutions reporting unit were based on five years of projected cash flows and we applied a discount rate and terminal multiple that we believe would be applied by a theoretical market participant in similar market transactions.

Based on this test, we concluded that the fair value of the Water Solutions reporting unit exceeded its carrying value by approximately 3.0 %.

As discussed in Note 18, in December 2020, we reached a settlement in the Extraction Oil & Gas, Inc.(“Extraction”) bankruptcy case, which is expected to result in decreases in future cash flows for certain of our assets.

Based on this aforementioned event, we concluded that a triggering event occurred, which required us to perform a quantitative impairment test as of December 31, 2020 for our Crude Oil Logistics reporting unit.

We estimated the fair value of the Crude Oil Logistics reporting unit based on the income approach, also known as the discounted cash flow method, which utilizes the present value of future expected cash flows to estimate the fair value.

The future cash flows of the Crude Oil Logistics reporting unit were projected based upon estimates as of the test date of future revenues, operating expenses and cash outflows necessary to support these cash flows, including working capital and maintenance capital expenditures.

We also considered expectations regarding:

(i) the crude oil price environment as reflected in crude oil forward prices as of the test date, (ii) volumes based on historical information and estimates of future drilling and completion activity, as well as expectations for future demand recovery and (iii) estimated fixed and variable costs.

The discounted cash flows for the Crude Oil Logistics reporting unit were based on five years of projected cash flows and we applied a discount rate and terminal multiple that we believe would be applied by a theoretical market participant in similar market transactions.

Based on this test, we concluded that the fair value of the Crude Oil Logistics reporting unit was less than its carrying value by approximately 17.0 %.

During the three months ended December 31, 2020, in our Crude Oil Logistics reporting unit, we recorded a goodwill impairment charge of $ 237.8 million within loss on disposal or impairment of assets, net in our consolidated statement of operations.

Fiscal Year 2020 Goodwill Impairment Assessment

We performed a qualitative assessment as of January 1, 2020 to determine whether it was more likely than not that the fair value of each reporting unit was greater than the carrying value of the reporting unit.

Based on these qualitative assessments, we determined that the fair value of each of these reporting units was more likely than not greater than the carrying value of the reporting units as of January 1, 2020.

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Based on these events, we concluded that a triggering event occurred which required us to perform a quantitative impairment test as of March 31, 2020 for our reporting units.

We estimated the fair value of our reporting units based on the income approach, also known as the discounted cash flow method, which utilizes the present value of future expected cash flows to estimate the fair

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Notes to Consolidated Financial Statements (Continued)

The future cash flows of our reporting units were projected based upon estimates as of the test date of future revenues, operating expenses and cash outflows necessary to support these cash flows, including working capital and maintenance capital expenditures.

We also considered expectations regarding:

(i) the crude oil price environment as reflected in crude oil forward prices as of the test date, (ii) volumes based on historical information and estimates of future drilling and completion activity, as well expectations for future demand recovery and (iii) estimated fixed and variable costs.

The discounted cash flows for each reporting unit were based on five years of projected cash flows and we applied discount rates and terminal multiples that we believe would be applied by a theoretical market participant in similar market transactions.

Based on these tests, we concluded that the fair values of each of our reporting units exceeded their carrying values with the exception of our Water Solutions reporting unit, whose fair value was less than its carrying value by 7.3 %.

During the three months ended March 31, 2020, in our Water Solutions reporting unit, we recorded a goodwill impairment charge of $ 250.0 million within loss (gain) on disposal or impairment of assets, net in our consolidated statement of operations.

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Notes to Consolidated Financial Statements (Continued)

During the three months ended March 31, 2020, in our Water Solutions reporting unit, we recorded a goodwill impairment charge of $ 250.0 million within loss on disposal or impairment of assets, net in our consolidated statement of operations.

Fiscal Year 2019 Goodwill Impairment Assessment

Due to the continued decrease in demand for natural gas liquid storage and the resulting decline in revenues and earnings as compared to actual and projected results, we tested the goodwill within our natural gas liquids salt cavern storage reporting unit (“Sawtooth reporting unit”), which is part of our Liquids and Refined Products segment, for impairment at January 1, 2019.

Due to the continued decrease in demand for natural gas liquid storage and the resulting decline in revenues and earnings as compared to actual and projected results, we tested the goodwill within our natural gas liquids salt cavern storage reporting unit (“Sawtooth reporting unit”), which is part of our Liquids Logistics segment, for impairment at January 1, 2019.

We estimated the fair value of our Sawtooth reporting unit based on the income approach, also known as the discounted cash flow method, which utilizes the present value of future expected cash flows to estimate the fair value.

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During the three months ended March 31, 2019, we recorded a goodwill impairment charge of $ 66.2 million, which was a write-off of the remaining goodwill within the Sawtooth reporting unit.

The goodwill impairment charge was recorded within loss (gain) on disposal or impairment of assets, net in our consolidated statement of operations.

The goodwill impairment charge was recorded within loss on disposal or impairment of assets, net in our consolidated statement of operations.

We performed a qualitative assessment as of January 1, 2019 to determine whether it was more likely than not that the fair value of each reporting unit was greater than the carrying value of the reporting unit.

Fiscal Year 2018 Goodwill Impairment Assessment

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, we tested the goodwill within our Sawtooth reporting unit, which is part of our Liquids and Refined Products segment, for impairment at September 30, 2017.

The future cash flows of our Sawtooth reporting unit were projected based upon estimates as of the test date of future revenues, operating expenses and cash outflows necessary to support these cash flows, including working capital and maintenance capital expenditures.

We also considered expectations regarding:

(i) expected storage volumes, which are assumed to increase in the coming years due to increased production of natural gas liquids, (ii) expected propane and butane prices and (iii) expected rental fees.

We assumed a 2 % per year increase in commodity prices and a 4 % increase in rental fees per year starting in April 2018, and held such prices and fees flat for periods in our model beyond our 2023 fiscal year.

For expenses, we assumed an increase consistent with the increase in storage volumes, and maintenance capital was held flat throughout the model.

The discount rate used in our discounted cash flow method was a risk adjusted weighted average cost of capital calculated as of September 30, 2017 of 12 % .

The discounted cash

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Notes to Consolidated Financial Statements (Continued)

flow results indicated that the estimated fair value of our Sawtooth reporting unit was less than its carrying value by approximately 32 % at September 30, 2017.

During the three months ended September 30, 2017, we recorded a goodwill impairment charge of $ 116.9 million , which was recorded within loss (gain) on disposal or impairment of assets, net in our consolidated statement of operations.

At September 30, 2017, our Sawtooth reporting unit had a goodwill balance of $ 66.2 million .

In Note 17 , we discuss a transaction in which we formed a joint venture which included our Sawtooth salt dome storage facility.

As a result of this transaction, we tested the goodwill of our Sawtooth reporting unit, immediately prior to the closing of this transaction, for impairment.

As of March 30, 2018, our Sawtooth reporting unit had a goodwill balance of $ 66.2 million .

Similar to the analysis we performed as of September 30, 2017, as discussed above, we estimated the fair value of our Sawtooth reporting unit based on the income approach, also known as the discounted cash flow method, which utilizes the present value of future expected cash flows to estimate the fair value.

We also considered expectations regarding:

For expenses, we assumed an increase consistent with the increase in storage volumes, and maintenance capital was held flat throughout the model.

The discount rate used in our discounted cash flow method was a risk adjusted weighted average cost of capital calculated as of March 30, 2018 of 12.4 % .

The discounted cash flow results indicated that the estimated fair value of our Sawtooth reporting unit was greater than its carrying value by approximately 2 % at March 30, 2018.

We performed a qualitative assessment as of January 1, 2018 to determine whether it was more likely than not that the fair value of each reporting unit was greater than the carrying value of the reporting unit.

Note 7— Intangible Assets

Our intangible assets consist of the following at the dates indicated:

March 31, 2020

March 31, 2019

Gross Carrying

(in thousands)

March 31, 2021 March 31, 2020

Description Amortizable Lives Gross Carrying

Amount Accumulated

Amortization Net Gross Carrying

Amount Accumulated

Amortization Net

(in years) (in thousands)

Customer relationships 3 - 30 $ 1,318,638 $ ( 450,639 ) $ 867,999 $ 1,435,573 $ ( 445,250 ) $ 990,323

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Rights-of-way and easements 1 - 45 90,703 ( 9,270 ) 81,433 89,476 ( 6,506 ) 82,970

Water rights 13 - 30 100,369 ( 14,454 ) 85,915 100,937 ( 8,441 ) 92,496

Executory contracts and other agreements 5 - 30 48,709 ( 21,300 ) 27,409 48,570 ( 18,210 ) 30,360

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Non-amortizable:

Includes debt issuance costs related to the Revolving Credit Facility (as defined herein).

Debt issuance costs related to fixed-rate notes and Term Credit Agreement (as defined herein) are reported as a reduction of the carrying amount of long-term debt.

Amounts in the table above do not include intangible assets and accumulated amortization related to TPSL, as these amounts have been classified as noncurrent assets held for sale within our March 31, 2019 consolidated balance sheet (see Note 1 and Note 18 ).

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Notes to Consolidated Financial Statements (Continued)

Trade names 255 — 255 2,800 — 2,800

Total $ 1,780,131 $ ( 517,518 ) $ 1,262,613 $ 2,243,929 $ ( 631,449 ) $ 1,612,480

(1) Includes debt issuance costs related to the ABL Facility (as defined herein), Revolving Credit Facility (as defined herein) and the Sawtooth credit agreement.

Debt issuance costs related to fixed-rate notes, Bridge Term Credit Agreement (as defined herein) and Term Credit Agreement (as defined herein) are reported as a reduction of the carrying amount of long-term debt.

The weighted-average remaining amortization period for intangible assets is approximately 20.7 years.

Write off of Intangible Assets

During the year ended March 31, 2018, we wrote off $ 1.8 million related to the non-compete agreement which was terminated as part of our acquisition of the remaining interest in NGL Solids Solutions, LLC.

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

• An impairment charge of $ 145.8 million against the customer commitment intangible asset related to a transportation contract with Extraction that was rejected as part of Extraction’s bankruptcy.

See Note 18 for a further discussion of Extraction’s bankruptcy and the impairment of the intangible asset.

• An impairment charge of $ 39.2 million to write down the value of a customer relationship intangible asset as part of the write down in value of a larger asset group (see Note 5).

• A $ 4.5 million write off of the debt issuance costs related to the Revolving Credit Facility which was repaid and terminated on February 4, 2021 (see Note 8).

• An impairment charge of $ 2.5 million to write down the value of the trade name as part of the write down of a larger asset group (see Note 5).

Amortization expense is as follows for the periods indicated:

Year Ended March 31,

Recorded In 2021 2020 2019

(in thousands)

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Operating expenses 247 286 —

Amounts in the table above do not include amortization expense related to TPSL and our former Retail Propane segment, as these amounts have been classified as discontinued operations within our consolidated statements of operations for all periods presented (see Note 1 and Note 18 ).

Expected amortization of our intangible assets is as follows (in thousands):

Year Ending March 31,

Total $ 133,149 $ 138,618 $ 115,872

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Notes to Consolidated Financial Statements (Continued)

Expected amortization of our intangible assets is as follows (in thousands):

Year Ending March 31,

2022 $ 96,206

Thereafter 881,114

Total $ 1,262,358

Note 8— Long-Term Debt

Our long-term debt consists of the following at the dates indicated:

March 31, 2020

March 31, 2019

March 31, 2021 March 31, 2020

Amount Unamortized

Debt Issuance

Costs (1) Book

Amount Unamortized

Debt Issuance

Costs (1) Book

(in thousands)

Revolving credit facility:

Expansion capital borrowings

Working capital borrowings

Senior secured notes:

7.500 % Notes due 2026 (“2026 Senior Secured Notes”)

$ 2,050,000 $ ( 44,246 ) $ 2,005,754 $ — $ — $ —

Asset-based revolving credit facility 4,000 — 4,000 — — —

Senior unsecured notes:

7.500 % Notes due 2023 (“2023 Notes”)

555,251 ( 3,564 ) 551,687 607,323 ( 5,405 ) 601,918

6.125 % Notes due 2025 (“2025 Notes”)

380,020 ( 3,297 ) 376,723 387,320 ( 4,217 ) 383,103

7.500 % Notes due 2026 (“2026 Notes”)

Term credit agreement

338,402 ( 4,378 ) 334,024 450,000 ( 6,975 ) 443,025

Revolving credit facility:

Expansion capital borrowings — — — 1,120,000 — 1,120,000

Working capital borrowings — — — 350,000 — 350,000

Bridge term credit agreement — — — 250,000 ( 3,198 ) 246,802

Other long-term debt 49,095 ( 70 ) 49,025 4,683 — 4,683

3,376,768 ( 55,555 ) 3,321,213 3,169,326 ( 19,795 ) 3,149,531

Current maturities 2,183 — 2,183 4,683 — 4,683

Long-term debt $ 3,374,585 $ ( 55,555 ) $ 3,319,030 $ 3,164,643 $ ( 19,795 ) $ 3,144,848

Debt issuance costs related to the Revolving Credit Facility are reported within intangible assets, rather than as a reduction of the carrying amount of long-term debt.

Amortization expense for debt issuance costs related to long-term debt in the table above was $ 5.4 million , $ 4.3 million and $ 6.1 million during the years ended March 31, 2020 , 2019 and 2018 .

Expected amortization of debt issuance costs is as follows (in thousands):

Year Ending March 31,

Credit Agreement

We are a party to a credit agreement (“Credit Agreement”) with a syndicate of banks.

The Credit Agreement provides up to $ 1.915 billion in aggregate commitments and consists of a revolving credit facility to fund working capital needs, which had a capacity of $ 641.5 million for cash borrowings and letters of credit (the “Working Capital Facility”), and a revolving credit facility to fund acquisitions and expansion projects, which had a capacity of $ 1.273 billion (the “Expansion Capital Facility,” and together with the Working Capital Facility, the “Revolving Credit Facility”) at March 31, 2020.

We had letters of credit of $ 65.8 million on the Working Capital Facility at March 31, 2020 .

The capacity under the Working Capital Facility may be limited by a “borrowing base” (as defined in the Credit Agreement) which is calculated based on the value of certain working capital items at any point in time.

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.

(1) Debt issuance costs related to the ABL Facility, the Sawtooth credit agreement (included in other long-term debt) and the Revolving Credit Facility are reported within intangible assets, rather than as a reduction of the carrying amount of long-term debt.

Recent Developments

On February 4, 2021, we closed on our private offering of $ 2.05 billion of 7.5 % 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”).

Total offering costs and expenses were approximately $ 150.7 million, which includes certain make-whole (see Term Credit Agreement below) and consent costs (see Note 13).

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.

2026 Senior Secured Notes

The 2026 Senior Secured Notes bear interest at 7.5 %, 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.

The 2026 Senior Secured Notes were issued pursuant to an indenture dated February 4, 2021 (the “Indenture”).

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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

We have the right to prepay outstanding borrowings under the Credit Agreement without incurring any penalties, and prepayments of principal may be required if we enter into certain transactions to sell assets or obtain new borrowings.

The Credit Agreement is secured by substantially all of our assets.

At March 31, 2020 , the borrowings under the Credit Agreement had a weighted average interest rate of 3.36 % , calculated as the weighted average LIBOR rate of 0.85 % plus a margin of 2.50 % for LIBOR borrowings and the prime rate of 3.25 % plus a margin of 1.50 % on alternate base rate borrowings.

At March 31, 2020 , the interest rate in effect on letters of credit was 2.50 % .

Commitment fees are charged at a rate ranging from 0.375 % to 0.50 % on any unused capacity.

On October 30, 2019, we amended the Credit Agreement to, among other things, adjust the allocation of the commitments of the lenders to make revolving loans thereunder and, effective with the fiscal quarter ending December 31, 2019, amend the covenant package to include the senior secured leverage ratio, interest coverage ratio and total leverage indebtedness ratio financial covenants (each as defined in the Credit Agreement).

The following table summarizes the debt covenant levels specified in the Credit Agreement as of March 31, 2020 (as amended):

Senior Secured

Total Leverage

Period Beginning

Leverage Ratio (1)

Coverage Ratio (2)

Indebtedness Ratio (1)

March 31, 2020

June 30, 2020 and thereafter

Represents the maximum ratio for the period presented.

Represents the minimum ratio for the period presented.

At March 31, 2020 , our senior secured leverage ratio was approximately 2.56 to 1 , our interest coverage ratio was approximately 3.98 to 1 and our total leverage indebtedness ratio was approximately 4.86 to 1 .

The Credit Agreement contains various customary representations, warranties, and additional covenants, including, without limitation, limitations on fundamental changes and limitations on indebtedness and liens.

Our obligations under the Credit Agreement may be accelerated following certain events of default (subject to applicable cure periods), including, without limitation, (i) the failure to pay principal or interest when due, (ii) a breach by the Partnership or its subsidiaries of any material representation or warranty or any covenant made in the Credit Agreement, or (iii) certain events of bankruptcy or insolvency.

We were in compliance with the covenants under the Credit Agreement at March 31, 2020 .

The 2026 Senior Secured Notes are secured by first priority liens in substantially all of our assets other than our accounts receivable, inventory, pledged deposit accounts, cash and cash equivalents, renewable energy tax credits and related assets and second priority liens in our accounts receivable, inventory, pledged deposit accounts, cash and cash equivalents, renewable energy tax credits and related assets.

The Indenture contains covenants that, among other things, limit our ability to:

pay distributions or make other restricted payments or repurchase stock;

incur or guarantee additional indebtedness or issue disqualified stock or certain preferred stock;

make certain investments;

create or incur liens;

enter into restrictions affecting the ability of restricted subsidiaries to make distributions, make loans or advances or transfer assets to the guarantors (including the Partnership);

enter into certain transactions with our affiliates;

designate restricted subsidiaries as unrestricted subsidiaries;

and merge, consolidate or transfer or sell all or substantially all of our assets.

The Indenture specifically restricts our ability to pay distributions until our total leverage ratio (as defined in the Indenture) for the most recently ended four full fiscal quarters at the time of the distribution is not greater than 4.75 to 1.00.

These covenants are subject to a number of important exceptions and qualifications.

We have an option to redeem all or a portion of the 2026 Senior Secured Notes at any time on or after February 1, 2023 at fixed redemption prices contained within the Indenture.

Prior to such time, we, at our option, may redeem up to 40% of the aggregate principal amount of the 2026 Senior Secured Notes with an amount of cash not greater than the net cash proceeds from certain equity offerings at the redemption price specified in the Indenture.

In addition, before February 1, 2023, we may redeem some or all of the 2026 Senior Secured Notes at a redemption price equal to 100% of the aggregate principal amount of the 2026 Senior Secured Notes redeemed, plus the applicable premium as specified in the Indenture and accrued and unpaid interest, if any, to, but not including, the redemption date.

If we experience certain kinds of change of control triggering events, we will be required to offer to repurchase the 2026 Senior Secured Notes at 101% of the aggregate principal amount of the 2026 Senior Secured Notes repurchased plus accrued and unpaid interest on the 2026 Senior Secured Notes repurchased to, but not including, the date of purchase.

At March 31, 2021, we were in compliance with the covenants under the 2026 Senior Secured Notes indenture.

The $ 500.0 million ABL Facility is subject to a borrowing base, which includes a sub-limit for letters of credit.

The initial borrowing base is $ 500.0 million and the sub-limit for letters of credit is $ 200.0 million.

The ABL Facility is secured by a lien on substantially all of our assets, including among other things, a first priority lien on our accounts receivable, inventory, pledged deposit accounts, cash and cash equivalents, renewable energy tax credits and related assets and a second priority lien on all of our other assets.

At March 31, 2021, $ 4.0 million had been borrowed under the ABL Facility and we had letters of credit outstanding of approximately $ 156.0 million.

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.

The ABL Facility bears interest at a LIBOR-based rate (with such customary provisions under the ABL Facility providing for the replacement of LIBOR with any successor rate) or an alternate base rate, in each case plus an applicable borrowing margin based on our Fixed Charge Coverage Ratio (as defined in the New Credit Agreement).

The applicable margin for alternate base rate loans varies from 1.50% to 2.00% and the applicable margin for LIBOR-based loans varies from 2.50% to 3.00%.

In addition, a commitment fee will be charged and payable quarterly in arrears based on the average daily unused portion of the revolving commitments under the ABL Facility.

Such commitment fee will be 0.50% per year, subject to a reduction to 0.375% in the event our Fixed Charge Coverage Ratio is greater than or equal to 1.75 to 1.00.

At March 31, 2021, the borrowings under the ABL Facility had a weighted average interest rate of 5.25 % calculated as the prime rate of 3.25 % plus a margin of 2.00 % on the alternate base rate borrowings.

On March 31, 2021, the interest rate in effect on letters of credit was 3.00 %.

The New Credit Agreement contains various affirmative and negative covenants, including financial reporting requirements and limitations on indebtedness, liens, mergers, consolidations, liquidations and dissolutions, sales of assets, distributions and other restricted payments, investments (including acquisitions) and transactions with affiliates.

The New Credit Agreement contains, as the only financial covenant, a minimum Fixed Charge Coverage Ratio financial covenant that is

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

tested based on the financial statements for the most recently ended fiscal quarter upon the occurrence and during the continuation of a Cash Dominion Event (as defined in the New Credit Agreement).

At March 31, 2021, no Cash Dominion Event had occurred or was continuing.

At March 31, 2021, we were in compliance with the covenants under the ABL Facility.

Senior Unsecured Notes

1 unchanged sentence

The Partnership and NGL Energy Finance Corp.

are co-issuers of the Senior Unsecured Notes, and the obligations under the Senior Unsecured Notes are fully and unconditionally guaranteed by certain of our existing and future restricted subsidiaries that incur or guarantee indebtedness under certain of our other indebtedness, including the Revolving Credit Facility.

The indentures governing the Senior Unsecured Notes contain various customary covenants, including, (i) pay distributions on, purchase or redeem our common equity or purchase or redeem our subordinated debt, (ii) incur or guarantee additional indebtedness or issue preferred units, (iii) create or incur certain liens, (iv) enter into agreements that restrict distributions or other payments from our restricted subsidiaries to us, (v) consolidate, merge or transfer all or substantially all of our assets, and (vi) engage in transactions with affiliates.

Our obligations under the Senior Unsecured Notes may be accelerated following certain events of default (subject to applicable cure periods), including, without limitation, (i) the failure to pay principal or interest when due, (ii) experiencing an event of default on certain other debt agreements, or (iii) certain events of bankruptcy or insolvency.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

On July 9, 2014, we issued $ 400.0 million of 5.125 % Senior Unsecured Notes Due 2019 (the “2019 Notes”).

Interest is payable on January 15 and July 15 of each year.

On July 9, 2014, we issued $ 400.0 million of 5.125 % Senior Unsecured Notes Due 2019 (“2019 Notes”).

The 2019 Notes were redeemed on March 15, 2019.

See further discussion below.

On October 16, 2013, we issued $ 450.0 million of 6.875 % Senior Unsecured Notes Due 2021 (the “2021 Notes”).

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

On October 16, 2013, we issued $ 450.0 million of 6.875 % Senior Unsecured Notes Due 2021 (“2021 Notes”).

The 2021 Notes were redeemed on October 16, 2018.

2 unchanged sentences

Interest is payable on May 1 and November 1 of each year.

The registration of the 2023 Notes became effective on July 11, 2017.

The 2023 Notes mature on November 1, 2023.

1 unchanged sentence

Interest is payable on March 1 and September 1 of each year.

The registration of the 2025 Notes became effective on July 11, 2017.

The 2025 Notes mature on March 1, 2025.

On April 9, 2019, we issued $ 450.0 million of 7.5 % 2026 Notes in a private placement.

The 2026 Notes bear interest, which 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 .

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

The 2026 Notes mature on April 15, 2026.

We have the option to redeem all or a portion of the 2026 Notes at any time on or after April 15, 2022 at fixed redemption prices beginning at 103.750% on such date and declining annually and ratably to par for redemptions occurring on or after April 15, 2024 plus accrued and unpaid interest.

At any time prior to April 15, 2022, we may redeem all or a portion of the 2026 Notes, at a redemption price equal to the “make whole price” specified in the indenture, plus accrued and unpaid interest.

In connection with the issuance of the 2026 Notes, we entered into a registration rights agreement in which we agreed to file a registration statement with the Securities and Exchange Commission (“SEC”) so that holders can exchange the 2026 Notes for registered notes that have substantially identical terms as the 2026 Notes and evidence the same indebtedness of the 2026 Notes.

In addition, the subsidiary guarantors agreed to exchange the guarantee related to the 2026 Notes for a registered guarantee having substantially the same terms as the original guarantee.

We filed a registration statement with the SEC for the 2026 Notes, and the related guarantees, which became effective on January 22, 2020 and 100 % of the 2026 Notes were exchanged on February 21, 2020.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

1 unchanged sentence

The following table summarizes redemptions of Senior Unsecured Notes for the period indicated:

Year Ended March 31,

March 31, 2019

(in thousands)

9 unchanged sentences

Loss on the early extinguishment of debt for the 2019 Notes during the year ended March 31, 2019 is inclusive of the write off of debt issuance costs of $ 0.4 million.

The loss is reported within gain (loss) on early extinguishment of liabilities, net within our consolidated statement of operations.

The loss is reported within (loss) gain on early extinguishment of liabilities, net within our consolidated statement of operations.

(2) On October 16, 2018, we redeemed all of the remaining outstanding 2021 Notes.

Loss on the early extinguishment of debt for the 2021 Notes during the year ended March 31, 2019 is inclusive of the write off of debt issuance costs of $ 3.8 million.

The loss is reported within gain (loss) on early extinguishment of liabilities, net within our consolidated statement of operations.

The loss is reported within (loss) gain on early extinguishment of liabilities, net within our consolidated statement of operations.

The following table summarizes repurchases of Senior Unsecured Notes for the periods indicated:

Year Ended March 31,

2021 2020 2019

(in thousands)

4 unchanged sentences

Cash paid (excluding payments of accrued interest) $ 33,566 $ — $ 8,575

Loss on early extinguishment of debt (2)

Gain (loss) on early extinguishment of debt (2) $ 18,096 $ — $ ( 63 )

Notes repurchased $ 7,300 $ 1,815 $ —

1 unchanged sentence

Gain on early extinguishment of debt (3) $ 3,575 $ 1,341 $ —

Loss on early extinguishment of debt for the 2019 Notes during the years ended March 31, 2019 and 2018 is inclusive of the write off of debt issuance costs of less than $ 0.1 million and $ 0.2 million , respectively.

The loss is reported within gain (loss) on early extinguishment of liabilities, net within our consolidated statement of operations.

Loss on early extinguishment of debt for the 2023 Notes during the years ended March 31, 2019 and 2018 is inclusive of the write off of debt issuance costs of $ 0.1 million and $ 1.2 million , respectively.

The loss is reported within gain (loss) on early extinguishment of liabilities, net within our consolidated statement of operations.

Gain on early extinguishment of debt for the 2025 Notes during the years ended March 31, 2020 and 2018 is inclusive of the write off of debt issuance costs of less than $ 0.1 million and $ 1.8 million , respectively.

The gain is reported within gain (loss) on early extinguishment of liabilities, net within our consolidated statement of operations.

Notes repurchased $ 111,598 $ — $ —

Cash paid (excluding payments of accrued interest) $ 78,583 $ — $ —

Gain on early extinguishment of debt (4) $ 31,463 $ — $ —

(1) Loss on early extinguishment of debt for the 2019 Notes during the year ended March 31, 2019 is inclusive of the write off of debt issuance costs of less than $ 0.1 million.

The loss is reported within (loss) gain on early extinguishment of liabilities, net within our consolidated statement of operations.

(2) Gain (loss) on early extinguishment of debt for the 2023 Notes during the years ended March 31, 2021 and 2019 is inclusive of the write off of debt issuance costs of $ 0.4 million and $ 0.1 million, respectively.

The gain (loss) is reported within (loss) gain on early extinguishment of liabilities, net within our consolidated statements of operations.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(3) Gain on early extinguishment of debt for the 2025 Notes during the years ended March 31, 2021 and 2020 is inclusive of the write off of debt issuance costs of $ 0.1 million and less than $ 0.1 million, respectively.

The gain is reported within (loss) gain on early extinguishment of liabilities, net within our consolidated statements of operations.

(4) Gain on early extinguishment of debt for the 2026 Notes during the year ended March 31, 2021 is inclusive of the write off of debt issuance costs of $ 1.6 million.

The gain is reported within (loss) gain on early extinguishment of liabilities, net within our consolidated statement of operations.

At March 31, 2021, we were in compliance with the covenants under all of the Senior Unsecured Notes indentures.

Credit Agreement

We were party to a credit agreement (“Credit Agreement”) with a syndicate of banks.

The Credit Agreement provided up to $ 1.915 billion in aggregate commitments and consisted of a revolving credit facility to fund working capital needs, which had a capacity of $ 350.0 million for cash borrowings and letters of credit (the “Working Capital Facility”), and a revolving credit facility to fund acquisitions and expansion projects, which had a capacity of $ 1.565 billion (the “Expansion Capital Facility,” and together with the Working Capital Facility, the “Revolving Credit Facility”).

On February 4, 2021, we repaid all of the outstanding borrowings under and terminated the Credit Agreement which included $ 0.3 million of termination expenses as well as the write off of debt issuance cost which were recorded within intangible assets (see Note 7).

Term Credit Agreement

On July 2, 2019 (the “Closing Date”), we entered into a term credit agreement (the “Term Credit Agreement”) with Toronto Dominion (Texas) LLC for a $ 250.0 million term loan facility.

On June 3, 2020, we entered into a new $ 250.0 million term credit agreement (the “Term Credit Agreement”) with certain funds and accounts managed by affiliates of Apollo Global Management, Inc.

to refinance the previous Bridge Term Credit Agreement (as defined herein).

The commitments under the Term Credit Agreement were set to expire on June 3, 2023 and were callable by us after two years at par.

On February 4, 2021, we repaid all of the outstanding borrowings under and terminated the Term Credit Agreement.

This termination required us to pay a make-whole fee of $ 55.6 million, write off debt issuance costs of $ 7.4 million, and pay additional termination expenses of $ 0.1 million.

Bridge Term Credit Agreement

On July 2, 2019 (the “Closing Date”), we entered into a bridge term credit agreement (the “Bridge Term Credit Agreement”) with Toronto Dominion (Texas) LLC for a $ 250.0 million term loan facility.

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

Proceeds from the term loan facility were used to fund a portion of the purchase price for the Mesquite acquisition (see Note 4 ).

The commitments under the Term Credit Agreement expire on July 2, 2024.

We are subject to prepayments of principal if we enter into certain transactions to sell assets, issue equity or obtain new borrowings.

The obligations under the Term Credit Agreement are guaranteed by the Partnership and certain of the Borrower’s wholly owned subsidiaries, and are secured by substantially all of the assets of the Borrower, the Partnership and the other subsidiary guarantors subject to certain customary exclusions.

All borrowings under the Term Credit Agreement bear interest, at either (a) an alternate base rate plus (i) during the first three-month period after the Closing Date, margin equal to the applicable margin for alternate base rate loans calculated under our existing revolving credit facility, (ii) 2.00% per annum for the second three-month period after the Closing Date, (iii) 2.25% per annum for the third three-month period after the Closing Date, (iv) 2.50% per annum for the fourth three-month period after the Closing Date, and (v) thereafter, the rate per year such that the alternate base rate equals a rate of interest agreed to between us and the administrative agent, or (b) an adjusted LIBOR rate plus (i) during the first three-month period after the Closing Date, margin equal to the applicable margin for LIBOR rate loans calculated under our existing revolving credit facility, (ii) 3.00% per annum for the second three-month period after the Closing Date, (iii) 3.25% per annum for the third three-month period after the Closing Date, (iv) 3.50% per annum for the fourth three-month period after the Closing Date, and (v) thereafter, such rate per annum such that the adjusted LIBOR rate equals a rate of interest agreed to between us and the administrative agent.

At March 31, 2020 , the borrowings under the Term Credit Agreement had an interest rate of 4.05 % calculated as the LIBOR rate of 0.80 % plus a margin of 3.25 % .

The Term Credit Agreement contains various customary representations, warranties and covenants by the Partnership and its subsidiaries, including, without limitation, (i) commencing September 30, 2019, the Partnership and the subsidiary guarantors will be subject to financial covenants limiting leverage, including senior leverage, secured leverage and total leverage, and requiring a minimum interest coverage, (ii) negative covenants limiting indebtedness, liens, equity distributions and fundamental changes involving the Partnership or its subsidiaries and (iii) affirmative covenants requiring, among other things, reporting of financial information and material events and covenants to maintain existence and pay taxes, in each case substantially consistent with the Partnership’s existing Revolving Credit Facility.

On October 30, 2019, we amended the Term Credit Agreement, to, among other things, conform financial covenants in the Term Credit Agreement to the financial covenants set forth in the amended Credit Agreement, as described above.

Senior Secured Notes

On June 19, 2012, we entered into the Note Purchase Agreement (as amended, the “Senior Secured Notes Purchase Agreement”) whereby we issued $ 250.0 million of senior secured notes in a private placement (the “Senior Secured Notes”).

The Senior Secured Notes paid interest at a fixed rate of 6.65 % which was payable quarterly.

The Senior Secured Notes were required to be repaid in semi-annual installments of $ 25.0 million beginning on December 19, 2017 and ending on the maturity date of June 19, 2022.

We had the option to prepay outstanding principal, although we would incur a prepayment penalty.

On December 29, 2017, we repurchased all of the remaining outstanding Senior Secured Notes.

See below for the details related to the repurchase.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

The following table summarizes repurchases of Senior Secured Notes for the period indicated:

Year Ended March 31,

(in thousands)

Senior Secured Notes

Notes repurchased

Cash paid (excluding payments of accrued interest)

Loss on early extinguishment of debt (1)

Loss on the early extinguishment of debt for the Senior Secured Notes during the year ended March 31, 2018 is inclusive of the write off of debt issuance costs of $ 4.3 million .

The loss is reported within gain (loss) on early extinguishment of liabilities, net within our consolidated statement of operations.

Prior to the December 29, 2017 repurchase of all the remaining outstanding Senior Secured Notes, we made a semi-annual principal installment payment of $ 19.5 million on December 19, 2017.

Proceeds from the term loan facility were used to fund a portion of the purchase price for the Mesquite acquisition.

The commitments under the Term Credit Agreement were set to expire on July 2, 2024.

On June 3, 2020, we used the proceeds from the Term Credit Agreement to pay off the outstanding balance of the Bridge Term Credit Agreement.

We wrote off $ 2.3 million of debt issuance costs which is reported within (loss) gain on early extinguishment of liabilities, net within our consolidated statement of operations.

Sawtooth Credit Agreement

On November 27, 2019, Sawtooth Caverns LLC (“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”).

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.

At March 31, 2020 , no amounts had been borrowed under the Sawtooth credit agreement.

At March 31, 2021, $ 5.0 million had been borrowed under the Sawtooth credit agreement.

The borrowings under this facility had an average interest rate of 2.36 %.

Commitment fees are charged at a rate of 0.50 % on any unused capacity.

Other Long-Term Debt

We have other notes payable related to equipment financing.

The interest rates on these instruments range from 4.13 % to 7.10 % per year and have an aggregate principal balance of $ 4.7 million at March 31, 2020 .

At March 31, 2021, we were in compliance with the covenants under the Sawtooth credit agreement.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

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.

We have an aggregate principal balance of $ 44.1 million at March 31, 2021.

The loan matures on November 1, 2027.

Debt Maturity Schedule

The scheduled maturities of our long-term debt are as follows at March 31, 2021:

Year Ending March 31, 2026 Senior Secured Notes ABL Facility Senior Unsecured Notes Other

(in thousands)

2022 $ — $ — $ — $ 2,184 $ 2,184

2023 — — — 7,585 7,585

2024 — — 555,251 2,816 558,067

2025 — — 380,020 3,068 383,088

2026 2,050,000 4,000 — 3,343 2,057,343

Thereafter — — 338,402 30,099 368,501

Total $ 2,050,000 $ 4,000 $ 1,273,673 $ 49,095 $ 3,376,768

Amortization of Debt Issuance Costs

Amortization expense for debt issuance costs related to long-term debt was $ 7.8 million, $ 5.4 million and $ 4.3 million during the years ended March 31, 2021, 2020 and 2019, respectively.

Expected amortization of debt issuance costs is as follows (in thousands):

Year Ending March 31,

Credit Facility

Senior Unsecured Notes

Term Credit Agreement

2022 $ 12,247

Thereafter 53

Total $ 55,555

Note 9— Commitments and Contingencies

3 unchanged sentences

After pre-trial rulings, LCT was limited to pursuing claims of (i) quantum meruit (the value of the services rendered by LCT) and (ii) fraudulent misrepresentation against the defendants.

Following a jury trial conducted in Delaware state court from July 23, 2018 through August 1, 2018, the jury returned a verdict consisting of an award of $ 4.0 million for

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

quantum meruit and $ 29.0 million for fraudulent misrepresentation, subject to statutory interest.

The GP and the Partnership contend that the jury verdict, at least in respect of fraudulent misrepresentation, is not supportable by either controlling law or the evidentiary record.

Following a jury trial conducted in Delaware state court from July 23, 2018 through August 1, 2018, the jury returned a verdict consisting of an award of $ 4.0 million for quantum meruit and $ 29.0 million for fraudulent misrepresentation, subject to statutory interest.

On December 5, 2019, in response to the defendants’ post-trial motion, the Court issued an Order overturning the jury’s damages award and ordering the case to be set for a damages-only trial.

Both parties filed applications with the trial court asking the trial court to certify the December 5th Order for interlocutory, immediate review by the Appellate Court.

On December 23, 2019, the trial court issued an Order certifying for immediate review by the appellate court the issue of whether the types of damages awarded by the jury are legally supportable since it was also determined by the Court that there was no contract between the parties.

On January 7, 2020, the Supreme Court of Delaware entered an Order expanding the issues to be reviewed on appeal to include the additional issues raised by the NGL parties’ application - namely, whether the December 5th Order correctly set aside the jury’s $ 4.0 million quantum meruit award, whether certain jury instructions were correct and whether the evidence presented at trial supported the claims asserted by LCT.

The Supreme Court consolidated the appeal proceedings for judicial efficiency;

and set a briefing cycle for the parties whereby the appeal-related materials will likely be fully submitted by both parties by the Summer of 2020.

It is our position that the awards, even if they each stand, are not cumulative.

Any allocation of the ultimate verdict award between the GP and the Partnership will be made by the Board of Directors once all information is available to it and after the post-trial and any appellate process has run its course and the verdict is final as a matter of law.

Because the Partnership is a named defendant in the suit, and any judgment ultimately awarded would be joint and several with the GP, we have determined that it is probable that the Partnership could be liable for a portion of this judgment.

At this time, we believe the amount that could be allocated to the Partnership would not be material as it is estimated to be less than $ 4.0 million .

On January 7, 2020, the Supreme Court of Delaware (“Supreme Court”) entered an Order accepting an interlocutory appeal of various issues relating to both the quantum meruit and fraudulent misrepresentation verdicts.

The Supreme Court heard oral arguments of the parties on November 4, 2020, took the matters presented under advisement and on January 28, 2021, issued a ruling that (a) LCT is not entitled to “benefit-of-the-bargain” damages on its fraud claim;

(b) LCT is not entitled to receive fraudulent misrepresentation damages separate from its quantum meruit damages;

(c) the trial court abused its discretion when it ordered a new trial on damages relating to LCT’s claim of fraudulent misrepresentation;

and (d) the trial court properly ordered a new trial on LCT’s claim of quantum meruit

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

The date for a new trial, to be limited to the quantum meruit claim, has not yet been set by the trial court.

Any allocation of the ultimate verdict award, if any, between the GP and the Partnership will be made by the board of directors of our general partner once all information is available to it and after the new trial, any post-trial and/or any appellate process has concluded and the verdict is final as a matter of law.

As of March 31, 2021, we have accrued $ 2.5 million related to this matter.

24 unchanged sentences

The consent decree resolves all matters between Gavilon Energy and the EPA in connection with the above-described complaint.

During the year ended March 31, 2019 , we

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

paid the EPA $ 12.5 million and retired all 36 million RINs.

During the year ended March 31, 2019, we paid the EPA $ 12.5 million and retired all 36 million RINs.

During the year ended March 31, 2020, we paid the final EPA settlement amount of $ 12.5 million.

5 unchanged sentences

The following table summarizes changes in our asset retirement obligation, which is reported within other noncurrent liabilities in our consolidated balance sheets (in thousands):

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Balance at March 31, 2019 $ 9,723

1 unchanged sentence

Liabilities assumed in acquisitions 6,642

Liabilities associated with disposed assets (1)

Liabilities settled ( 658 )

2 unchanged sentences

Liabilities incurred 7,952

Liabilities assumed in acquisitions

Liabilities settled

Liabilities associated with disposed assets (1) ( 22 )

Accretion expense 1,733

Balance at March 31, 2021 $ 28,079

This amount primarily relates to the sales of our Bakken and South Pecos water disposal businesses (see Note 17 ).

(1) This amount relates to the sale of certain permits, land and a saltwater disposal facility (se e Note 18 ).

In addition to the obligations described above, we may be obligated to remove facilities or perform other remediation upon retirement of certain other assets.

5 unchanged sentences

Year Ending March 31,

2022 $ 10,074

Thereafter 275

Total $ 19,614

As part of the Hillstone acquisition discussed in Note 4, we assumed an obligation to pay a quarterly subsidy payment in the event that specified volumetric thresholds are not exceeded at a third-party facility.

This agreement expires on December 31, 2022.

For the year ended March 31, 2020 , we recorded $ 0.8 million within operating expense in our consolidated statement of operations.

During the years ended March 31, 2021 and 2020, we recorded $ 2.6 million and $ 0.8 million, respectively, within operating expense in our consolidated statements of operations.

At March 31, 2021, the range of potential payments we could be obligated to make pursuant to the subsidy agreement could be from $ 0.0 million to $ 5.7 million.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Pipeline Capacity Agreements

3 unchanged sentences

We currently have an asset recorded in prepaid expenses and other current assets and in other noncurrent assets in our consolidated balance sheet for minimum shipping fees paid in both the current and previous periods that are expected to be recovered in future periods by exceeding the minimum monthly volumes (see Note 2).

In September 2019, we extended our commitment with one pipeline operator through March 31, 2025 and in October 2019, we extended our commitment with another pipeline operator through October 31, 2024.

Both extensions are backed by long-term purchase agreements.

The extension with the second operator also allows us an additional 5.0 years , as of March 31, 2020, to recapture the minimum shipping deficiency fees discussed above.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

The following table summarizes future minimum throughput payments under these agreements at March 31, 2021 (in thousands):

Year Ending March 31,

Construction Commitments

At March 31, 2020 , we had construction commitments of $ 5.1 million .

2022 $ 35,314

Total $ 136,935

Sales and Purchase Contracts

1 unchanged sentence

At March 31, 2021, we had the following commodity purchase commitments (in thousands):

Crude Oil (1)

Natural Gas Liquids

Crude Oil (1) Natural Gas Liquids

(in barrels) Value Volume

Fixed-Price Commodity Purchase Commitments:

2022 $ 93,285 1,515 $ 12,705 21,936

2023 — — 819 1,260

Total $ 93,285 1,515 $ 13,524 23,196

Index-Price Commodity Purchase Commitments:

2022 $ 3,038,806 54,413 $ 848,891 1,094,967

2023 1,835,567 35,588 2,848 4,774

2024 1,715,198 34,775 — —

2025 1,532,174 31,938 — —

2026 938,787 20,263 — —

Total $ 9,060,532 176,977 $ 851,739 1,099,741

(1) Our crude oil index-price purchase commitments exceed our crude oil index-price sales commitments (presented below) due primarily to our long-term purchase commitments for crude oil that we purchase and ship on the Grand Mesa Pipeline.

As these purchase

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

commitments are deliver-or-pay contracts, whereby our counterparty is required to pay us for any volumes not delivered, we have not entered into corresponding long-term sales contracts for volumes we may not receive.

As these purchase commitments are deliver-or-pay contracts, whereby our counterparty is required to pay us for any volumes not delivered, we have not entered into corresponding long-term sales contracts for volumes we may not receive.

At March 31, 2021, we had the following commodity sale commitments (in thousands):

Natural Gas Liquids

Crude Oil Natural Gas Liquids

(in barrels) Value Volume

Fixed-Price Commodity Sale Commitments:

2022 $ 93,464 1,515 $ 36,731 45,827

2023 — — 2,568 3,640

Total $ 93,464 1,515 $ 39,299 49,467

Index-Price Commodity Sale Commitments:

2022 $ 3,147,543 54,634 $ 546,242 558,346

2023 1,106,564 20,988 1,686 2,088

2024 1,058,526 21,045 — —

2025 1,024,037 20,988 — —

2026 484,326 10,242 — —

Total $ 6,820,996 127,897 $ 547,928 560,434

We account for the contracts shown in the tables above using the normal purchase and normal sale election.

Under this accounting policy election, we do not record the physical contracts at fair value at each balance sheet date;

instead, we record the purchase or sale at the contracted value once the delivery occurs.

instead, we record

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

the purchase or sale at the contracted value once the delivery occurs.

Contracts in the tables above may have offsetting derivative contracts (described in Note 11) or inventory positions (described in Note 2).

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In connection with the issuance of common units for the vesting of restricted units and warrants that were exercised for common units during the years ended March 31, 2021, 2020 and 2019, we issued 823 , 4,268 and 3,039 , respectively, notional units to our general partner which represented less than $ 0.1 million in each of the years, in order to maintain its 0.1 % interest in us.

Equity Issuances

On August 24, 2016, we entered into an equity distribution agreement in connection with an at-the-market program (the “ATM Program”) pursuant to which we may issue and sell up to $ 200.0 million of common units.

This ATM Program is registered with the SEC on an effective registration statement on Form S-3.

During the year ended March 31, 2017, we sold 3,321,135 common units for net proceeds of $ 64.4 million (net of offering costs of $ 0.9 million ).

We did not sell any common units under the ATM Program during the years ended March 31, 2020 , 2019 and 2018.

The registration statement applicable to this program expired in July 2019.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Common Unit Repurchase Program

On August 29, 2017, the board of directors of our general partner authorized a common unit repurchase program, under which we may repurchase up to $ 15.0 million of our outstanding common units through December 31, 2017 from time to time in the open market or in other privately negotiated transactions .

Under this program, we repurchased 1,516,848 common units for an aggregate price of $ 15.0 million , including commissions.

This program ended on December 31, 2017.

On August 30, 2019, the board of directors of our general partner authorized a common unit repurchase program, under which we may repurchase up to $ 150.0 million of our outstanding common units through September 30, 2021 from time to time in the open market or in other privately negotiated transactions.

We did not repurchase any units under this plan during the year ended March 31, 2020 .

We have not repurchased units under this program.

Suspension of Common Unit and Preferred Unit Distributions

The board of directors of our general partner temporarily suspended all distributions (common unit distributions beginning with the quarter ended December 31, 2020 and preferred unit distributions beginning with the quarter ended March 31, 2021) in order to deleverage our balance sheet and meet the financial performance ratios set within the Indenture of the 2026 Senior Secured Notes, as discussed further in Note 8.

Our Distributions

The following table summarizes distributions declared on our common units during the last three fiscal years:

Date Declared

Amount Paid to

Limited Partners

Amount Paid to

Date Declared Record Date Payment Date Amount

Per Unit Amount Paid to

Limited Partners Amount Paid to

General Partner

(in thousands)

April 24, 2017

July 20, 2017

August 4, 2017

August 14, 2017

October 19, 2017

November 6, 2017

November 14, 2017

January 23, 2018

February 6, 2018

February 14, 2018

April 24, 2018

July 24, 2018

August 8, 2018

August 14, 2018

October 23, 2018

November 8, 2018

November 14, 2018

January 22, 2019

February 6, 2019

February 14, 2019

April 24, 2019

July 23, 2019

August 7, 2019

August 14, 2019

October 23, 2019

November 7, 2019

November 14, 2019

January 23, 2020

February 7, 2020

February 14, 2020

April 27, 2020

(in thousands) (in thousands)

April 24, 2018 May 7, 2018 May 15, 2018 $ 0.3900 $ 47,374 $ 82

July 24, 2018 August 8, 2018 August 14, 2018 $ 0.3900 $ 47,600 $ 82

October 23, 2018 November 8, 2018 November 14, 2018 $ 0.3900 $ 48,260 $ 83

January 22, 2019 February 6, 2019 February 14, 2019 $ 0.3900 $ 48,373 $ 83

April 24, 2019 May 7, 2019 May 15, 2019 $ 0.3900 $ 49,127 $ 85

July 23, 2019 August 7, 2019 August 14, 2019 $ 0.3900 $ 49,217 $ 85

October 23, 2019 November 7, 2019 November 14, 2019 $ 0.3900 $ 49,936 $ 86

January 23, 2020 February 7, 2020 February 14, 2020 $ 0.3900 $ 50,056 $ 86

April 27, 2020 May 7, 2020 May 15, 2020 $ 0.2000 $ 25,754 $ 26

July 23, 2020 August 6, 2020 August 14, 2020 $ 0.2000 $ 25,754 $ 26

October 27, 2020 November 6, 2020 November 13, 2020 $ 0.1000 $ 12,877 $ 13

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Class A Convertible Preferred Units

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As noted below, the remaining Class A Preferred Units were redeemed and all remaining warrants were exercised during the year ended March 31, 2020.

We pay a cumulative, quarterly distribution in arrears at an annual rate of 10.75 % on the Class A Preferred Units to the extent declared by the board of directors of our general partner.

To the extent declared, such distributions will be paid for each such quarter within 45 days after each quarter end.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

The following table summarizes distributions declared on our Class A Preferred Units during the last three fiscal years:

Date Declared

Amount Paid to Class A

We paid a cumulative, quarterly distribution in arrears at an annual rate of 10.75 % on the Class A Preferred Units to the extent declared by the board of directors of our general partner.

To the extent declared, such distributions were paid for each such quarter within 45 days after each quarter end.

The following table summarizes distributions declared on our Class A Preferred Units during the last two fiscal years:

Date Declared Payment Date Amount Paid to Class A

Preferred Unitholders

(in thousands)

April 24, 2017

July 20, 2017

August 14, 2017

October 19, 2017

November 14, 2017

January 23, 2018

February 14, 2018

April 24, 2018

July 24, 2018

August 14, 2018

October 23, 2018

November 14, 2018

January 22, 2019

February 14, 2019

April 24, 2019

April 24, 2018 May 15, 2018 $ 6,449

July 24, 2018 August 14, 2018 $ 6,449

October 23, 2018 November 14, 2018 $ 6,449

January 22, 2019 February 14, 2019 $ 6,449

April 24, 2019 May 10, 2019 $ 4,034

We allocated the net proceeds on a relative fair value basis to the Class A Preferred Units, which includes the value of a beneficial conversion feature, and warrants.

We recorded the accretion attributable to the beneficial conversion feature as a deemed distribution.

Accretion for the beneficial conversion feature was $ 36.5 million , $ 67.2 million and $ 18.8 million for the years ended March 31, 2020 , 2019 and 2018 , respectively.

Accretion for the beneficial conversion feature was $ 36.5 million and $ 67.2 million for the years ended March 31, 2020 and 2019, respectively.

During the year ended March 31, 2019, 228,797 warrants were exercised for common units and we received proceeds of less than $ 0.1 million, and we repurchased 1,229,575 unvested warrants for a total purchase price of $ 15.0 million on April 26, 2018.

During the year ended March 31, 2018, 607,653 warrants were exercised for common units and we received proceeds of less than $ 0.1 million , and we repurchased 850,716 unvested warrants for a total purchase price of $ 10.5 million on June 23, 2017.

On April 5, 2019, we redeemed 7,468,978 of the Class A Preferred Units.

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On June 13, 2017, we issued 8,400,000 of our 9.00 % Class B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class B Preferred Units”) representing limited partner interests at a price of $ 25.00 per unit for net proceeds of $ 202.7 million (net of the underwriters’ discount of $ 6.6 million and offering costs of $ 0.7 million).

On July 2, 2019, we issued 4,185,642 Class B Preferred Units to fund a portion of the purchase price for the Mesquite acquisition (see Note 4 ).

On July 2, 2019, we issued 4,185,642 Class B Preferred Units to fund a portion of the purchase price for the Mesquite acquisition.

At any time on or after July 1, 2022, we may redeem our Class B Preferred Units, in whole or in part, at a redemption price of $25.00 per Class B Preferred Unit plus an amount equal to all accumulated and unpaid distributions to, but not including, the date of redemption, whether or not declared.

We may also redeem the Class B Preferred Units upon a change of control as defined in our partnership agreement.

If we choose not to redeem the Class B Preferred Units, the Class B preferred unitholders may have the ability to convert the Class B Preferred Units to common units at the then applicable conversion rate.

Class B preferred unitholders have no voting rights except with respect to certain matters set forth in our partnership agreement.

We may also redeem the Class B Preferred Units upon a change of

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

control as defined in our partnership agreement.

Class B preferred unitholders have no voting rights except with respect to certain matters set forth in our partnership agreement.

Distributions on the Class B Preferred Units are payable on the 15th day of each January, April, July and October of each year to holders of record on the first day of each payment month.

3 unchanged sentences

The following table summarizes distributions declared on our Class B Preferred Units during the last three fiscal years:

Date Declared

Amount Per Unit

Amount Paid to Class B

Date Declared Record Date Payment Date Amount Per Unit Amount Paid to Class B

Preferred Unitholders

(in thousands)

September 18, 2017

September 29, 2017

October 16, 2017

December 19, 2017

December 29, 2017

January 15, 2018

March 19, 2018

April 2, 2018

April 16, 2018

June 19, 2018

July 16, 2018

September 12, 2018

October 1, 2018

October 15, 2018

December 17, 2018

December 31, 2018

January 15, 2019

March 15, 2019

April 1, 2019

April 15, 2019

June 14, 2019

July 15, 2019

September 16, 2019

October 1, 2019

October 15, 2019

December 16, 2019

December 31, 2019

January 15, 2020

March 16, 2020

March 31, 2020

April 15, 2020

The distribution amount paid on April 15, 2020 is included in accrued expenses and other payables in our consolidated balance sheet at March 31, 2020 .

March 19, 2018 April 2, 2018 April 16, 2018 $ 0.5625 $ 4,725

June 19, 2018 July 2, 2018 July 16, 2018 $ 0.5625 $ 4,725

September 12, 2018 October 1, 2018 October 15, 2018 $ 0.5625 $ 4,725

December 17, 2018 December 31, 2018 January 15, 2019 $ 0.5625 $ 4,725

March 15, 2019 April 1, 2019 April 15, 2019 $ 0.5625 $ 4,725

June 14, 2019 July 1, 2019 July 15, 2019 $ 0.5625 $ 4,725

September 16, 2019 October 1, 2019 October 15, 2019 $ 0.5625 $ 7,079

December 16, 2019 December 31, 2019 January 15, 2020 $ 0.5625 $ 7,079

March 16, 2020 March 31, 2020 April 15, 2020 $ 0.5625 $ 7,079

June 15, 2020 June 30, 2020 July 15, 2020 $ 0.5625 $ 7,079

September 15, 2020 September 30, 2020 October 15, 2020 $ 0.5625 $ 7,079

December 17, 2020 January 1, 2021 January 15, 2021 $ 0.5625 $ 7,079

For the quarter ended March 31, 2021, we did not declare or pay distributions to the holders of the Class B Preferred Units, thus the cumulative distribution for each Class B Preferred Unit is $ 0.5625 .

Class C Preferred Units

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On and after April 15, 2024, distributions on the Class C Preferred Units will accumulate at a percentage of the $25.00 liquidation preference equal to the applicable three-month LIBOR plus a spread of 7.384%.

The current distribution rate for the Class C Preferred Units is 9.625% per year of the $25.00 liquidation preference per unit (equal to $2.41 per unit per year).

The following table summarizes distributions declared on our Class C Preferred Units during the last two fiscal years:

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

The current distribution rate for the Class C Preferred Units is 9.625% per year of the $25.00 liquidation preference per unit (equal to $2.41 per unit per year).

The following table summarizes distributions declared on our Class C Preferred Units during the last fiscal year:

Amount Paid to Class C

Date Declared

Amount Per Unit

Preferred Unitholders

Date Declared Record Date Payment Date Amount Per Unit Preferred Unitholders

(in thousands)

June 14, 2019

July 15, 2019

September 16, 2019

October 1, 2019

October 15, 2019

December 16, 2019

December 31, 2019

January 15, 2020

March 16, 2020

March 31, 2020

April 15, 2020

The distribution amount paid on April 15, 2020 is included in accrued expenses and other payables in our consolidated balance sheet at March 31, 2020 .

June 14, 2019 July 1, 2019 July 15, 2019 $ 0.5949 $ 1,071

September 16, 2019 October 1, 2019 October 15, 2019 $ 0.6016 $ 1,083

December 16, 2019 December 31, 2019 January 15, 2020 $ 0.6016 $ 1,083

March 16, 2020 March 31, 2020 April 15, 2020 $ 0.6016 $ 1,083

June 15, 2020 June 30, 2020 July 15, 2020 $ 0.6016 $ 1,083

September 15, 2020 September 30, 2020 October 15, 2020 $ 0.6016 $ 1,083

December 17, 2020 January 1, 2021 January 15, 2021 $ 0.6016 $ 1,083

For the quarter ended March 31, 2021, we did not declare or pay distributions to the holders of the Class C Preferred Units, thus the cumulative distribution for each Class C Preferred Unit is $ 0.6016 .

Class D Preferred Units

On July 2, 2019, we completed a private placement of an aggregate o f 400,000 preferred units (“Class D Preferred Units”) and warrants exercisable to purchase an aggregate of 17,000,000 common units for an aggregate purchase price of $ 400.0 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 an aggregate purchase price of $ 400.0 million.

The private placement resulted in aggregate net proceeds to us of approximately $ 385.4 million (net of a closing fee of $ 14.6 million payable to affiliates of the purchasers and certain estimated expenses and expense reimbursements).

We allocated the net proceeds, on a relative fair value basis, to the Class D Preferred Units ($ 343.7 million) and warrants ($ 41.7 million).

Proceeds from this issuance of Class D Preferred Units were used to fund a portion of the purchase price for the Mesquite acquisition (see Note 4 ).

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 an aggregate purchase price of $ 200.0 million.

4 unchanged sentences

The current distribution rate for the Class D Preferred Units is 9.00% per year per unit (equal to $90.00 per unit per year).

The following table summarizes distributions declared on our Class D Preferred Units during the last fiscal year:

The following table summarizes cash distributions declared on our Class D Preferred Units during the last two fiscal years:

Amount Paid to Class D

Date Declared

Amount Per Unit

Preferred Unitholders

Date Declared Record Date Payment Date Amount Per Unit Preferred Unitholders

(in thousands)

October 23, 2019

November 7, 2019

November 14, 2019

January 23, 2020

February 7, 2020

February 14, 2020

April 27, 2020

The distributions paid in cash for the year ended March 31, 2020 of $ 17.4 million represented 50 % of the Class D Preferred Units distribution amount.

In accordance with the terms of our Partnership Agreement, the value of each Class D Preferred Unit shall automatically increase by the non-cash accretion, which is approximately $ 17.4 million in the aggregate with respect to the distributions for the year ended March 31, 2020 .

October 23, 2019 November 7, 2019 November 14, 2019 $ 11.25 $ 4,450

January 23, 2020 February 7, 2020 February 14, 2020 $ 11.25 $ 6,075

April 27, 2020 May 7, 2020 May 15, 2020 $ 11.25 $ 6,868

July 23, 2020 August 6, 2020 August 14, 2020 $ 11.25 $ 6,946

October 27, 2020 November 6, 2020 November 13, 2020 $ 26.01 $ 15,608

January 20, 2021 February 5, 2021 February 12, 2021 $ 26.01 $ 15,608

For the quarter ended March 31, 2021, we did not declare or pay distributions to the holders of the Class D Preferred Units, thus the average cumulative distribution at March 31, 2021 for each Class D Preferred Unit is $ 26.01 .

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

The distributions for the quarters ended September 30, 2020 and December 31, 2020 include a 1.0 % rate increase due to us exceeding the adjusted total leverage ratio, as defined within the Amended and Restated Partnership Agreement.

The distributions paid in cash for the three months ended June 30, 2020 of $ 6.9 million represented 50 % of the Class D Preferred Units distributions amount, as represented in the table above.

In accordance with the terms of our Amended and Restated Partnership Agreement, the value of each Class D Preferred Unit automatically increased by the non-cash accretion which was approximately $ 6.9 million in the aggregate with respect to the distribution for the three months ended June 30, 2020.

The distributions paid in cash for the year ended March 31, 2020 of $ 17.4 million represented 50 % of the Class D Preferred Units distribution amount.

In accordance with the terms of our Amended and Restated Partnership Agreement, the value of each Class D Preferred Unit automatically increased by the non-cash accretion, which was approximately $ 17.4 million in the aggregate with respect to the distributions for the year ended March 31, 2020.

At any time after the Closing Date, the Partnership shall have the right to redeem all of the outstanding Class D Preferred Units at a price per Class D Preferred Unit equal to the sum of the then-unpaid accumulations with respect to such Class D Preferred Unit and the greater of either the applicable multiple on invested capital or the applicable redemption price based on an applicable internal rate of return, as more fully described in the Amended and Restated Partnership Agreement.

11 unchanged sentences

A change of control occurs when (a) the current general partner owners cease to own, directly or indirectly, at least 50% of the outstanding voting securities of the general partner, (b) the general partner withdraws or is removed by the limited partners, (c) the common units are no longer listed on a national exchange, or (d) the general partners and/or its affiliates become beneficial owner, directly or indirectly, of 80% or more of the outstanding common units or any transaction or event that occurs due to default on our credit agreement.

Registration Rights Agreement

In connection with the issuance of the Class D Preferred Units, we entered into a registration rights agreement (“Registration Rights Agreement”) with the purchasers of the Class D Preferred Units (“Purchasers”), pursuant to which we are required to prepare and file a registration statement (the “Registration Statement”) within 180 days of the Closing Date, to permit the public resale of (i) the Class D Preferred Units, (ii) the common units issued or issuable upon the exercise of the warrants, (iii) the common units that are issuable pursuant to the terms of the Class D Preferred Units in connection with a redemption of the Class D Preferred Units and (iv) any common units issued in lieu of cash as liquidated damages under the Registration Rights Agreement.

The Partnership is also required to use its commercially reasonable efforts to cause the Registration Statement to become effective no later than 360 days after the Closing Date.

The Registration Rights Agreement provides that if the Registration Statement is not declared effective on or prior to the Registration Statement Deadline, the Partnership will be liable to the Purchasers for liquidated damages in accordance with a formula, subject to the limitations set forth in the Registration Rights Agreement.

Such liquidated damages would be payable in cash, or if payment in cash would breach any covenant or a cause a default under a credit facility or any other debt instrument filed by the Partnership as an exhibit to a periodic report filed with the SEC, then such liquidated damages would be payable in the form of newly issued common units.

In addition, the Registration Rights Agreement grants the Purchasers piggyback registration rights.

These registration rights are transferable to affiliates of the Purchasers and, in certain circumstances, to third parties.

The Partnership’s registration statement was declared effective by the SEC on February 7, 2020.

Board Rights Agreement

In connection with the issuance of the Class D Preferred Units, we entered into a board rights agreement pursuant to which affiliates of the purchasers of the Class D Preferred Units (“Purchasers”) will have the right to designate one director on the board of directors of our general partner, so long as the Purchasers and their respective affiliates, in the aggregate, own either at least (i) (A) 50% of the number of Class D Preferred Units issued on the Closing Date or (B) 50% of the aggregate liquidation preference of any class or series of Class D Parity Securities (as defined in the Amended and Restated Partnership Agreement), or (ii) warrants and/or common units that, in the aggregate, comprise 10% or more of the then-outstanding common units.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Board Rights Agreement

In connection with the issuance of the Class D Preferred Units, we entered into a board rights agreement pursuant to which affiliates of the Purchasers will have the right to designate one director on the board of directors of our general partner, so long as the Purchasers and their respective affiliates, in the aggregate, own either at least (i) (A) 50% of the number of Class D Preferred Units issued on the Closing Date or (B) 50% of the aggregate liquidation preference of any class or series of Class D Parity Securities (as defined in the Amended and Restated Partnership Agreement), or (ii) warrants and/or common units that, in the aggregate, comprise 10% or more of the then-outstanding common units.

Amended and Restated Partnership Agreement

On February 4, 2021, NGL Energy Holdings LLC executed the First Amendment to the Seventh Amended and Restated Agreement of Limited Partnership for the purpose of amending certain consent rights in relation to the Class D Preferred Units.

On October 31, 2019, NGL Energy Holdings LLC executed the Seventh Amended and Restated Agreement of Limited Partnership.

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Our general partner has adopted a long-term incentive plan (“LTIP”), which allows for the issuance of equity-based compensation.

Our general partner has granted certain restricted units to employees and directors , which vest in tranches, subject to the continued service of the recipients.

Our general partner has granted certain restricted units to employees and directors, 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.

No distributions accrue to or are paid on the restricted units during the vesting period.

The restricted units include awards that vest contingent on the continued service of the recipients through the vesting date (the “Service Awards”).

On April 1, 2017, we made an accounting policy election to account for actual forfeitures when they occur, rather than estimate forfeitures each period (as previously required).

As a result, the cumulative effect adjustment, which represents the differential between the amount of compensation expense previously recorded and the amount that would have been recorded without assuming forfeitures, had no impact on our consolidated financial statements.

No distributions accrue to or are paid on the Service Awards during the vesting period.

The following table summarizes the Service Award activity during the years ended March 31, 2021, 2020 and 2019:

12 unchanged sentences

Unvested Service Award units at March 31, 2021 446,975

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

The weighted-average grant prices for March 31, 2021, 2020 and 2019 were $ 3.76 , $ 12.84 and $ 9.74 , respectively.

1 unchanged sentence

Pursuant to the terms of the LTIP, these canceled units are available for future grants under the LTIP.

The following table summarizes the scheduled vesting of our unvested Service Award units at March 31, 2020 :

Year Ending March 31,

As of March 31, 2021, we had 446,975 unvested Service Award units which will vest during the year ended March 31, 2022.

Service Awards are valued at the average of the high/low sales price as of the grant date less the present value of the expected distribution stream over the vesting period using a risk-free interest rate.

We record the expense for each Service Award on a straight-line basis over the requisite period for the entire award (that is, over the requisite service period of the last

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

separately vesting portion of the award), ensuring that the amount of compensation cost recognized at any date at least equals the portion of the grant-date value of the award that is vested at that date.

During the years ended March 31, 2021, 2020 and 2019, we recorded compensation expense related to Service Award units of $ 4.7 million, $ 8.5 million and $ 12.0 million, respectively.

During the year ended March 31, 2021, no units were granted as performance bonuses.

Of the restricted units granted and vested during the years ended March 31, 2020 and 2019, 1,886,131 and 1,922,618 units, respectively, were granted for performance bonuses.

1 unchanged sentence

The total amount of the bonus payment for the year ended March 31, 2019 was $ 22.8 million, of which we had accrued $ 6.3 million as of March 31, 2018.

The total amount of the bonus payment for the year ended March 31, 2018 was $ 0.7 million .

The following table summarizes the estimated future expense we expect to record on the unvested Service Award units at March 31, 2020 (in thousands):

Year Ending March 31,

As of March 31, 2021, we had estimated future expense of $ 1.7 million on unvested Service Award units which we expect to record during the year ended March 31, 2022.

Beginning in April 2015, our general partner granted units to certain employees that vest contingent both on the continued service of the recipients through the vesting date and also on the performance of our common units relative to other entities in the Alerian MLP Index (the “Index”) over specified periods of time (the “Performance Awards”).

3 unchanged sentences

During the year ended March 31, 2019, we recorded compensation expense related to the cancellation of the Performance Award units of $ 3.1 million which was recorded within general and administrative expense in our consolidated statement of operations for the year ended March 31, 2019.

The following table summarizes the Performance Award activity during the years ended March 31, 2019 and 2018 :

Unvested Performance Award units at March 31, 2017

Units granted

Units forfeited

The following table summarizes the Performance Award activity during the year ended March 31, 2019:

Unvested Performance Award units at March 31, 2018 917,000

2 unchanged sentences

Unvested Performance Award units at March 31, 2019 —

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

During the July 1, 2015 through June 30, 2018 performance period, the return on our common units was below the return of the 50th percentile of our peer companies in the Index.

3 unchanged sentences

We recorded the expense on a straight-line basis over the period beginning with the grant date and ending with the vesting date of the tranche.

During the years ended March 31, 2019 , and 2018 , we recorded compensation expense related to Performance Award units of $ 4.9 million (including amounts recorded related to the cancellation of the Performance Award plan (see above)) and $ 5.3 million , respectively.

The number of common units that may be delivered pursuant to awards under the LTIP is limited to 10 % of our issued and outstanding common units.

The maximum number of common units deliverable under the LTIP automatically increases to 10 % of the issued and outstanding common units immediately after each issuance of common units, unless the plan administrator determines to increase the maximum number of units deliverable by a lesser amount.

When an award is forfeited, canceled, exercised, paid or otherwise terminates or expires without the delivery of units, the units subject to such award are again available for new awards under the LTIP.

As of March 31, 2020 , there are approximately 2.9 million units remaining available for issuance under the LTIP.

During the year ended March 31, 2019, we recorded compensation expense related to Performance Award units of $ 4.9 million (including amounts recorded related to the cancellation of the Performance Award plan (see above)).

As of March 31, 2021, there are approximately 3.3 million common units remaining available for issuance under the LTIP.

Prior to the expiration of the LTIP on May 10, 2021, we granted approximately 3.3 million common units as Service Awards, which will vest in our 2022 and 2023 fiscal years.

Due to the LTIP expiring, we have no common units available for grant and any current unvested Service Awards that are forfeited, canceled or expire will not be available for future grants.

Note 11— Fair Value of Financial Instruments

Our cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and other current assets and liabilities (excluding derivative instruments) are carried at amounts which reasonably approximate their fair values due to their short-term nature.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Commodity Derivatives

The following table summarizes the estimated fair values of our commodity derivative assets and liabilities reported in our consolidated balance sheet at the dates indicated:

March 31, 2020

March 31, 2019

March 31, 2021 March 31, 2020

Assets Derivative

Liabilities Derivative

Assets Derivative

(in thousands)

1 unchanged sentence

Level 2 measurements 37,520 ( 24,474 ) 25,217 ( 17,635 )

49,832 ( 42,331 ) 89,254 ( 19,870 )

Netting of counterparty contracts (1) ( 12,648 ) 12,648 ( 2,282 ) 2,282

Net cash collateral (held) provided

Net cash collateral provided (held) 2,660 5,543 ( 50,104 ) ( 370 )

Commodity derivatives $ 39,844 $ ( 24,140 ) $ 36,868 $ ( 17,958 )

1 unchanged sentence

Our physical contracts that do not qualify as normal purchase normal sale transactions are not subject to such netting arrangements.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

The following table summarizes the accounts that include our commodity derivative assets and liabilities in our consolidated balance sheets at the dates indicated:

6 unchanged sentences

We do not account for these derivatives as hedges.

Settlement Period

Contracts Settlement Period Net Long

Notional Units

(in barrels) Fair Value

(Liabilities)

1 unchanged sentence

At March 31, 2021:

Crude oil fixed-price (1)

April 2020–December 2021

Propane fixed-price (1)

April 2020–December 2021

Refined products fixed-price (1)

April 2020–January 2021

April 2020–March 2022

Net cash collateral held

Crude oil fixed-price (1) April 2021–December 2023 ( 1,850 ) $ ( 5,414 )

Propane fixed-price (1) April 2021–December 2023 ( 195 ) 2,188

Refined products fixed-price (1) April 2021–January 2022 ( 503 ) 1,928

Butane fixed-price (1) April 2021–March 2022 ( 753 ) ( 3,764 )

Other April 2021–June 2022 12,563

Net cash collateral provided 8,203

Net commodity derivative asset $ 15,704

At March 31, 2020:

Crude oil fixed-price (1)

April 2019–December 2020

Propane fixed-price (1)

April 2019–March 2020

Refined products fixed-price (1)

April 2019–January 2021

April 2019–March 2022

Net cash collateral provided

Crude oil fixed-price (1) April 2020–December 2021 ( 2,252 ) $ 41,721

Propane fixed-price (1) April 2020–December 2021 415 ( 738 )

Refined products fixed-price (1) April 2020–January 2021 ( 26 ) 27,401

Other April 2020–March 2022 1,000

Net cash collateral held ( 50,474 )

Net commodity derivative asset $ 18,910

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(1) We may have fixed price physical purchases, including inventory, offset by floating price physical sales or floating price physical purchases offset by fixed price physical sales.

These contracts are derivatives we have entered into as an economic hedge against the risk of mismatches between fixed and floating price physical obligations.

The following table summarizes the net gains (losses) recorded from our commodity derivatives to revenues and cost of sales in our consolidated statements of operations for the periods indicated (in thousands):

The following table summarizes the net (losses) gains recorded from our commodity derivatives to revenues and cost of sales in our consolidated statements of operations for the periods indicated (in thousands):

Year Ended March 31,

Amounts in the tables above do not include commodity derivative contract positions related to Mid-Con, Gas Blending and TPSL, as these amounts have been classified as current and noncurrent assets and liabilities held for sale within our March 31, 2019 consolidated balance sheet, and net gains (losses) from our commodity derivatives related to Mid-Con, Gas Blending, TPSL and our former Retail Propane segment, as these amounts have been classified as discontinued operations within our consolidated statements of operations for all periods presented (see Note 1 and Note 18 ).

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

2021 $ ( 83,578 )

2020 $ 85,941

2019 $ 10,817

Amounts in the table above do not include net (losses) gains from our commodity derivatives related to Mid-Con, Gas Blending, TPSL and our former Retail Propane segment, as these amounts have been classified as discontinued operations within our consolidated statements of operations for all periods presented (see Note 19).

We have credit policies that we believe minimize our overall credit risk, including an evaluation of potential counterparties’ financial condition (including credit ratings), collateral requirements under certain circumstances, and the use of industry standard master netting agreements, which allow for offsetting counterparty receivable and payable balances for certain transactions.

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Interest Rate Risk

The Revolving Credit Facility is variable-rate debt with interest rates that are generally indexed to bank prime or LIBOR interest rates.

At March 31, 2020 , we had $ 1.5 billion of outstanding borrowings under the Revolving Credit Facility at a weighted average interest rate of 3.36 % .

The Term Credit Agreement is variable-rate debt with interest rates that are generally indexed to bank prime or LIBOR interest rates.

At March 31, 2020 , we had $ 250.0 million of outstanding borrowings under the Term Credit Agreement at an interest rate of 4.05 % .

The ABL Facility is variable-rate debt with interest rates that are generally indexed to the Wall Street Journal prime rate or LIBOR interest rate (or successor rate).

At March 31, 2021, we had $ 4.0 million of outstanding borrowings under the ABL Facility at a weighted average interest rate of 5.25 %.

The Sawtooth credit agreement is variable-rate debt with interest rates that are generally indexed to the rate the lender announces from time to time as its prime rate or base commercial lending rate or LIBOR interest rate (or successor rate).

At March 31, 2021, we had $ 5.0 million of outstanding borrowings under the Sawtooth credit agreement at an average interest rate of 2.36 %.

Fair Value of Fixed-Rate Notes

The following table provides fair values estimates of our fixed-rate notes at March 31, 2021 (in thousands):

Senior Secured Notes:

2026 Senior Secured Notes $ 2,114,917

Senior Unsecured Notes:

For the Senior Unsecured Notes, the fair value estimates were developed based on publicly traded quotes and would be classified as Level 2 in the fair value hierarchy.

2023 Notes $ 535,817

2025 Notes $ 322,384

2026 Notes $ 287,924

For the 2026 Senior Secured Notes and Senior Unsecured Notes, the fair value estimates were developed based on publicly traded quotes and would be classified as Level 2 in the fair value hierarchy.

Note 12— Segments

As a result of the sale of a large part of the assets that constituted the former Refined Products and Renewables reportable segment, the Chief Operating Decision Maker (CODM) 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 former 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.

The following table summarizes revenues related to our segments.

Revenues for reporting periods beginning after April 1, 2018 are presented under Topic 606 (see Note 15 for a further discussion), while prior periods are not adjusted and continue to be reported under the accounting standard in effect for those periods.

The following table summarizes revenues related to our segments for the periods indicated.

During the three months ended March 31, 2021, we changed the name of our Liquids and Refined Products segment to Liquids Logistics.

Transactions between segments are recorded based on prices negotiated between the segments.

3 unchanged sentences

Year Ended March 31,

2021 2020 2019

(in thousands)

Crude Oil Logistics:

Topic 606 revenues

Crude oil sales

Crude oil transportation and other

Non-Topic 606 revenues

Elimination of intersegment sales

Total Crude Oil Logistics revenues

Water Solutions:

6 unchanged sentences

Total Water Solutions revenues 370,986 422,059 301,686

Liquids and Refined Products:

Crude Oil Logistics:

Topic 606 revenues

Refined products

Crude oil sales 1,574,699 2,383,812 3,011,355

Crude oil transportation and other 142,233 170,138 148,738

Non-Topic 606 revenues 11,355 13,991 12,598

Elimination of intersegment sales ( 6,651 ) ( 18,174 ) ( 36,056 )

Total Crude Oil Logistics revenues 1,721,636 2,549,767 3,136,635

Liquids Logistics:

Topic 606 revenues

Refined products sales 1,123,963 2,399,642 2,535,243

Propane sales 1,023,479 842,400 1,169,117

Butane sales 516,358 562,053 628,063

Other product sales 373,707 484,373 592,889

2 unchanged sentences

Elimination of intersegment sales ( 6,073 ) ( 4,983 ) ( 23,291 )

Total Liquids and Refined Products revenues

Total Liquids Logistics revenues 3,133,146 4,611,136 5,249,474

Corporate and Other:

2 unchanged sentences

Total revenues $ 5,227,023 $ 7,584,000 $ 8,689,157

We adopted ASC 606 as of April 1, 2018.

Revenue reported in fiscal year 2018 has not been changed from its previous presentation.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

The following table summarizes depreciation and amortization expense and operating income (loss) by segment for the periods indicated.

The following table summarizes depreciation and amortization expense (including amortization expense recorded within interest expense, cost of sales and operating expenses in Note 7 and Note 8) and operating income (loss) by segment for the periods indicated.

Year Ended March 31,

2021 2020 2019

(in thousands)

Depreciation and Amortization:

Crude Oil Logistics

Water Solutions $ 222,354 $ 163,874 $ 108,162

Liquids and Refined Products

Crude Oil Logistics 60,874 70,759 74,245

Liquids Logistics 29,503 28,279 27,034

Corporate and Other 18,469 13,936 12,233

1 unchanged sentence

Operating Income (Loss):

Crude Oil Logistics

Water Solutions $ ( 92,720 ) $ ( 173,064 ) $ 210,525

Liquids and Refined Products

Crude Oil Logistics ( 304,330 ) 117,768 ( 7,379 )

Liquids Logistics 70,441 142,411 9,288

Corporate and Other ( 64,144 ) ( 90,447 ) ( 85,706 )

Total operating (loss) income $ ( 390,753 ) $ ( 3,332 ) $ 126,728

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

The following table summarizes additions to property, plant and equipment and intangible assets by segment for the periods indicated.

2 unchanged sentences

Year Ended March 31,

2021 2020 2019

(in thousands)

Crude Oil Logistics

Water Solutions $ 66,649 $ 2,076,866 $ 567,637

Liquids and Refined Products

Crude Oil Logistics 9,933 28,828 28,039

Liquids Logistics 31,172 19,753 72,717

Corporate and Other 11,953 7,968 1,819

All of the tables above do not include amounts related to Mid-Con, Gas Blending, TPSL and our former Retail Propane segment, as these amounts have been classified as discontinued operations within our consolidated statements of operations for all periods presented (see Note 1 and Note 18 ).

Total $ 119,707 $ 2,133,415 $ 670,212

The following tables summarize long-lived assets (consisting of property, plant and equipment, intangible assets, operating lease right-of-use assets and goodwill) and total assets by segment at the dates indicated:

1 unchanged sentence

Long-lived assets, net:

Crude Oil Logistics

Water Solutions $ 3,104,450 $ 3,382,727

Liquids and Refined Products (1)

Crude Oil Logistics 1,090,578 1,567,503

Liquids Logistics (1) 626,221 654,530

Corporate and Other 44,802 33,570

Total $ 4,866,051 $ 5,638,330

(1) Includes $ 20.9 million and $ 25.9 million of non-US long-lived assets at March 31, 2021 and 2020, respectively.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

(in thousands)

Total assets:

Crude Oil Logistics

Water Solutions $ 3,204,850 $ 3,539,328

Liquids and Refined Products (1)

Crude Oil Logistics 1,665,005 1,886,211

Liquids Logistics (1) 1,003,370 972,684

Corporate and Other 74,116 100,513

Assets held for sale

Total $ 5,947,341 $ 6,498,736

(1) Includes $ 37.9 million and $ 37.8 million of non-US total assets at March 31, 2021 and 2020, respectively.

The two tables above do not include amounts related to Mid-Con, Gas Blending and TPSL as they have been classified as held for sale within our March 31, 2019 consolidated balance sheet (see Note 1 and Note 18 ).

Note 13— Transactions with Affiliates

A member of the board of directors of our general partner is an executive officer of WPX Energy, Inc.

A member of the board of directors of our general partner was an executive officer of WPX Energy, Inc.

We also treat and dispose of produced water and solids received from WPX.

On January 7, 2021, Devon Energy Corporation (“Devon”) acquired WPX and the member of the board of directors of our general partner has since retired from WPX/Devon.

Due to his retirement, we will no longer be classifying transactions with WPX or Devon as related party transactions after December 31, 2020.

SemGroup Corporation (“SemGroup”) holds ownership interests in our general partner.

2 unchanged sentences

During the three months ended December 31, 2019, we reevaluated our related parties and determined that SemGroup/ET no longer meet the criteria to be disclosed as a related party.

For the tables below, information disclosed in prior periods have been retained but we have not disclosed any information related to transactions for the six months ended March 31, 2020.

We purchased ethanol from E Energy Adams, LLC, in which we previously held an ownership interest as an equity method investee.

We sold our interest in E Energy Adams, LLC on May 3, 2018 (see Note 17 ).

These transactions are reported within cost of sales in our consolidated statements of operations.

The following table summarizes these related party transactions for the periods indicated:

For the tables below, information for the year ended March 31, 2019 and six months

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

ended September 30, 2019 have been retained but we have not disclosed any information related to transactions subsequent to September 30, 2019.

The following table summarizes our related party transactions for the periods indicated:

Year Ended March 31,

2021 2020 2019

(in thousands)

Sales to WPX $ 39,129 $ 48,222 $ 28,026

Purchases from WPX (1) $ 216,487 $ 313,578 $ 329,525

6 unchanged sentences

(1) Amount primarily relates to purchases of crude oil under the definitive agreement we signed with WPX, as discussed further below.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Accounts receivable from affiliates consist of the following at the dates indicated:

(in thousands)

Receivables from NGL Energy Holdings LLC

Receivables from WPX

Receivables from SemGroup

Receivables from entities affiliated with management

Receivables from equity method investees

NGL Energy Holdings LLC $ 8,245 $ 7,781

Entities affiliated with management 728 151

Equity method investees 462 1,439

Total $ 9,435 $ 12,934

Accounts payable to affiliates consist of the following at the dates indicated:

(in thousands)

Payables to WPX

Payables to entities affiliated with management

Payables to equity method investees

WPX $ — $ 17,039

Entities affiliated with management 12 149

Equity method investees 107 529

Total $ 119 $ 17,717

Other Related Party Transactions

2026 Senior Secured Notes and ABL Facility

To complete the issuance of the 2026 Senior Secured Notes and the ABL Facility (see Note 8), we were required to receive the consent of the holders of our Class D Preferred Units, who are represented on the board of directors of our general partner.

For their consent, we paid to the holders of the Class D Preferred Units $ 40.0 million.

Acquisition of Interest in KAIR2014 LLC

3 unchanged sentences

Acquisition of Interest in NGL Energy Holdings LLC

During the year ended March 31, 2020 , we purchased, in three transactions, a 2.97 % interest in our general partner, NGL Energy Holdings LLC, for $ 3.8 million in cash and accounted for this as a deduction within limited partners’ equity in our consolidated balance sheet.

During the year ended March 31, 2020, we purchased, in three transactions, a 2.97 % interest in our general partner, NGL Energy Holdings LLC, for $ 3.8 million in cash and accounted for this as a deduction within limited partners’ equity in our

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

consolidated balance sheet.

We also purchased a 5.73 % interest in our general partner, NGL Energy Holdings LLC, for $ 11.5 million in cash and accounted for this as a deduction within limited partners’ equity in our consolidated balance sheet.

This interest was purchased from a fund controlled by The Energy & Minerals Group, which is represented on the board of directors of our general partner.

Victory Propane

On August 14, 2018, we sold our 50 % interest in Victory Propane to Victory Propane, LLC.

Victory Propane, LLC

On August 14, 2018, we sold our 50 % interest in Victory Propane, LLC (“Victory Propane”) to Victory Propane, LLC.

As consideration, we received a promissory note in the amount of $ 3.4 million, which encompassed the purchase price for our 50 % interest plus the outstanding balance of the loan receivable of $ 2.6 million as of the date of the transaction.

The promissory note bears no interest and matures on July 31, 2023.

We discounted the promissory note to its net present value of $ 2.6 million , with the amount of the reduction in the value of the promissory note recorded as a loss within loss (gain) on disposal or impairment of assets, net in our consolidated statement of operations.

We discounted the promissory note to its net present value of $ 2.6 million, with the amount of the reduction in the value of the promissory note recorded as a loss within loss on disposal or impairment of assets, net in our consolidated statement of operations.

This was the final transaction in exiting the retail propane business and was considered to be inconsequential by management.

As a result of the sale, Victory Propane is no longer considered a related party.

At March 31, 2018, we had a loan receivable from Victory Propane, an equity method investee at the time, of $ 1.2 million .

During the three months ended December 31, 2017 we completed a transaction with Victory Propane, an equity method investee at the time, to purchase Victory Propane’s Michigan assets.

We paid Victory Propane $ 6.4 million in cash and

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

received current assets, property, plant and equipment and customers.

The allocation of the consideration was as follows (in thousands):

Current assets

Property, plant and equipment

Intangible assets (customer relationships)

Fair value of net assets acquired

Victory Propane recognized a gain on this transaction.

As all intra-entity profits and losses are eliminated between an investor and investee until realized, we eliminated our proportionate share of the gain from this transaction on our books.

As a result, our underlying equity in the net assets of Victory Propane exceeded our investment, and this difference was amortized as income over the remaining life of the noncurrent assets acquired until they were sold on August 14, 2018.

As the sale of virtually all of our remaining Retail Propane segment to Superior (see Note 1 ) included Victory Propane’s Michigan assets, we were able to recognize our proportionate share of the gain recognized by Victory Propane.

As a result, we were able to reverse our proportionate share of their losses that had been recorded against the balance of the loan receivable and write up the value of our investment in Victory Propane to $ 0.8 million .

Agreement with WPX

1 unchanged sentence

Under this agreement, we agreed to provide WPX the benefit of our minimum shipping fees or deficiency credits (fees paid in previous periods that were in excess of the volumes actually shipped) totaling $ 67.7 million at the time of the transaction (as discussed further in Note 2), which can be utilized for volumes shipped that exceed the minimum monthly volume commitment in subsequent periods.

As a result, we wrote-off these minimum shipping fees previously included within other noncurrent assets in our consolidated balance sheet (see Note 2 ) and recorded a loss within loss (gain) on disposal or impairment of assets, net .

As a result, we wrote-off these minimum shipping fees previously included within other noncurrent assets in our consolidated balance sheet (see Note 2) and recorded a loss within loss on disposal or impairment of assets, net.

We also agreed that we would only ship crude oil that we are required to purchase from WPX in utilizing our allotted capacity on these pipelines and they agreed to be fully responsible to us for all deficiency payments (money due when our actual shipments are less than our allotted capacity) for the remaining term of our contract, which totaled $ 50.3 million at June 30, 2018 (as discussed further in Note 9).

As consideration for this transaction, we paid WPX a net $ 35.3 million , which was recorded as a loss within loss (gain) on disposal or impairment of assets, net .

As consideration for this transaction, we paid WPX a net $ 35.3 million, which was recorded as a loss within loss on disposal or impairment of assets, net.

Repurchase of Warrants

On April 26, 2018 and June 23, 2017, we repurchased outstanding warrants, as discussed further in Note 10 , from funds managed by Oaktree, who were represented on the board of directors of our general partner (see Note 10 ).

On April 26, 2018, we repurchased outstanding warrants, as discussed further in Note 10, from funds managed by Oaktree, who were represented on the board of directors of our general partner (see Note 10).

Note 14— Employee Benefit Plan

5 unchanged sentences

Expenses under the plan for the years ended March 31, 2021, 2020 and 2019 were $ 3.4 million, $ 2.3 million and $ 1.9 million, respectively.

Expenses for matching contributions related to Mid-Con, Gas Blending, TPSL and our former Retail Propane segment have been classified as discontinued operations within our consolidated statements of operations for all periods presented (see Note 1 and Note 18 ).

Note 15— Revenue from Contracts with Customers

3 unchanged sentences

Our revenue contracts in scope under ASC 606 primarily have a single performance obligation.

The evaluation of when performance obligations have been satisfied and the transaction price that is allocated to our performance obligations requires

The evaluation of when performance obligations have been satisfied and the transaction price that is allocated to our performance obligations requires significant judgment and assumptions, including our evaluation of the timing of when control of the underlying good or service has transferred to our customers and the relative stand-alone selling price of goods and services provided to customers under

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

significant judgment and assumptions, including our evaluation of the timing of when control of the underlying good or service has transferred to our customers and the relative stand-alone selling price of goods and services provided to customers under contracts with multiple performance obligations.

contracts with multiple performance obligations.

Actual results can vary from those judgments and assumptions.

3 unchanged sentences

See Note 12 for a detail of disaggregated revenue.

Revenue from contracts accounted for as derivatives under ASC 815 within our Liquids and Refined Products segment includes $ 5.0 million of net losses related to changes in the mark-to-market value of these arrangements recorded during the year ended March 31, 2020 .

Revenue from contracts accounted for as derivatives under ASC 815 within our Liquids Logistics segment includes $ 11.0 million of net gains related to changes in the mark-to-market value of these arrangements recorded during the year ended March 31, 2021.

Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days.

3 unchanged sentences

We include amounts billed to customers for shipping and handling costs in revenues in our consolidated statements of operations.

Crude Oil Logistics Performance Obligations

Within the Crude Oil Logistics segment, revenue is disaggregated into two primary revenue streams that include revenue from the sale of commodities and service revenue.

For sales of commodities, we are obligated to deliver a predetermined amount of product on a month-to-month basis to our customers.

For these types of agreements, revenue is recognized at a point in time based on when the product is delivered and control is transferred to the customer.

For revenue received from services rendered, we are obligated to provide throughput services to move product via pipeline, truck, railcar, or marine vessel or to provide terminal maintenance services.

In either case, the obligation is satisfied over time utilizing the output method based on each volume of product that is moved from the origination point to the final destination or based on the passage of time.

Water Solutions Performance Obligations

16 unchanged sentences

If the tiered pricing spans across multiple reporting periods, we estimate the total transaction price at the beginning of each reset period, based on the expected volumes.

We revise our estimates of variable consideration at each reporting date throughout each reset period.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

We revise the estimate of variable consideration at each reporting date throughout each reset period.

• Volume discount pricing.

4 unchanged sentences

If the volume discount period spans across multiple reporting periods, we estimate the total transaction price at the beginning of each reset period, based on the expected volumes.

We revise the estimate of variable consideration at each reporting date.

We revise the estimate of variable consideration at each reporting date throughout each reset period.

For all of our disposal contracts within the Water Solutions segment, revenue will be recognized over time utilizing the output method based on the volume of produced water or solids we accept from the customer.

For contracts that involve the sale of recovered crude oil and brackish non-potable water, we will recognize revenue at a point in time, based on when control of the product is transferred to the customer.

Liquids and Refined Products Performance Obligations

Within the Liquids and Refined Products segment, revenue is disaggregated into two primary revenue streams that include revenue from the sale of commodities and providing services.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Crude Oil Logistics Performance Obligations

Within the Crude Oil Logistics segment, revenue is disaggregated into two primary revenue streams that include revenue from the sale of commodities and service revenue.

For sales of commodities, we are obligated to deliver a predetermined amount of product on a month-to-month basis to our customers.

For these types of agreements, revenue is recognized at a point in time based on when the product is delivered and control is transferred to the customer.

Liquids Logistics Performance Obligations

Within the Liquids Logistics segment, revenue is disaggregated into two primary revenue streams that include revenue from the sale of commodities and providing services.

For commodity sales, we are obligated to deliver a specified amount of product over a specified period of time.

13 unchanged sentences

Year Ending March 31,

2022 $ 111,966

Thereafter 5,667

Total $ 371,596

Many agreements are short-term in nature with a contract term of one year or less.

5 unchanged sentences

Amounts owed from our customers under our revenue contracts are typically billed as the service is being provided on a monthly basis and are due within 1-30 days of billing, and are classified as accounts receivable-trade on our consolidated balance sheets.

Under certain of our contracts, we recognize revenues in excess of billings, referred to as contract assets, within

Under certain of our contracts, we recognize revenues in excess of billings, referred to as contract assets, within prepaid expenses and other current assets in our consolidated balance sheets.

Accounts receivable from contracts with customers are presented within accounts receivable-trade and accounts receivable-affiliates in our consolidated balance sheets.

Our contract asset balances primarily relate to our underground cavern storage contracts with multi-period contracts in which

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

prepaid expenses and other current assets in our consolidated balance sheets.

Accounts receivable from contracts with customers are presented within accounts receivable-trade and accounts receivable-affiliates in our consolidated balance sheets.

Our contract asset balances primarily relate to our underground cavern storage contracts with multi-period contracts in which the fee escalates each year and the customer provides upfront payment at the beginning of the contract period.

the fee escalates each year and the customer provides upfront payment at the beginning of the contract period.

We did not record any contract assets during this period.

2 unchanged sentences

Our deferred revenue primarily relates to:

Some revenue contracts contain prepayment provisions within our Liquids and Refined Products segment.

• Prepayments.

Some revenue contracts contain prepayment provisions within our Liquids Logistics segment.

Revenue received related to our underground cavern storage services is received upfront at the beginning of the contract period and is deferred until services have been rendered.

5 unchanged sentences

• Tiered pricing and volume discount pricing.

As described above, we revise our estimates of variable consideration at each reporting date throughout each reset period.

As described above, we revise the estimate of variable consideration at each reporting date throughout each reset period.

As the actual amount billed and received from the customer differs from the amount of revenue recognized, a contract liability is recorded.

2 unchanged sentences

Because we consider these amounts as consideration from customers associated with ongoing services to be provided to customers, we defer these upfront payments in deferred revenue and recognize the amounts in revenue over the life of the associated revenue contract as the performance obligations are satisfied under the contract.

Contract Assets and Liabilities

The following tables summarize the balances of our contract assets and liabilities at the dates indicated:

March 31, 2019

March 31, 2020

March 31, 2021 March 31, 2020

(in thousands)

4 unchanged sentences

Contract liabilities balance at March 31, 2021 $ 11,163

Amount as of March 31, 2019 in the table above does not include contract assets related to TPSL, as these amounts have been classified as current assets held for sale within our March 31, 2019 consolidated balance sheet (see Note 1 and Note 18 ).

Note 16— Leases

Upon adoption, we recorded operating lease right-of-use assets of $ 551.2 million and operating lease obligations of $ 549.0 million , including amounts classified as assets and liabilities held for sale.

Upon adoption, we recorded operating lease right-of-use assets of $ 551.2 million and operating lease obligations of $ 549.0 million, including amounts classified as assets and liabilities held for sale as of April 1, 2019.

The adoption of this standard did not impact our unaudited condensed consolidated statement of operations or unaudited condensed consolidated statement of cash flows for the three months ended June 30, 2019.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

We also elected the following transitional practical expedients, which allowed us to (i) not evaluate land easements prior to April 1, 2019;

3 unchanged sentences

and (v) not reassess initial costs.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Lessee Accounting

22 unchanged sentences

At March 31, 2021, we had operating lease right-of-use assets of $ 152.1 million and current and noncurrent operating lease obligations of $ 47.1 million and $ 103.6 million, respectively, on our consolidated balance sheet.

At March 31, 2020, we had operating lease right-of-use assets of $ 180.7 million and current and noncurrent operating lease obligations of $ 56.8 million and $ 121.0 million, respectively, on our consolidated balance sheet.

At March 31, 2021, the weighted-average remaining lease term and weighted-average discount rate for our operating leases was 6.88 years and 7.06 %, respectively.

The following table summarizes the components of our lease expense for the period indicated:

At March 31, 2020, the weighted-average remaining lease term and weighted-average discount rate for our operating leases was 6.74 years and 6.06 %, respectively.

The following table summarizes the components of our lease expense for the periods indicated:

Year Ended March 31,

4 unchanged sentences

Total lease expense $ 89,119 $ 92,297

Amounts in the table above do not include lease expense related to TPSL and Gas Blending, as these amounts have been classified within discontinued operations within our consolidated statement of operations (see Note 1 and Note 18 ).

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Rental expense relating to operating leases was $ 91.6 million and $ 111.3 million for the year ended March 31, 2019 and March 31, 2018 , respectively.

Amounts above do not include rental expense related to Mid-Con, Gas Blending, TPSL and our former Retail Propane segment, as these amounts have been classified within discontinued operations in our consolidated statements of operations for all periods presented (see Note 1 and Note 18 ).

Rental expense relating to operating leases was $ 91.6 million for the year ended March 31, 2019, which does not include rental expense related to Mid-Con, Gas Blending, TPSL and our former Retail Propane segment, as these amounts have been classified within discontinued operations in our consolidated statements of operations for all periods presented (see Note 19).

The following table summarizes maturities of our operating lease obligations at March 31, 2021 (in thousands):

Year Ending March 31,

2022 $ 53,842

Thereafter 50,804

Total lease payments 195,385

1 unchanged sentence

Total operating lease obligations $ 150,707

The following table summarizes future minimum lease payments under various noncancelable operating lease agreements at March 31, 2019 (in thousands):

Year Ending March 31,

Amounts in the table above do not include future minimum lease payments related to Mid-Con, Gas Blending and TPSL, which have been classified as discontinued operations in our consolidated statements of operations (see Note 1 and Note 18 ).

The following table summarizes supplemental cash flow and non-cash information related to our operating leases for the period indicated:

The following table summarizes supplemental cash flow and non-cash information related to our operating leases for the periods indicated:

Year Ended March 31,

2021 2020 (1)

(in thousands)

1 unchanged sentence

Operating lease right-of-use assets obtained in exchange for operating lease obligations $ 33,579 $ 598,734

(1) Amounts include the leases and activity for TPSL and Gas Blending which were sold during the year ended March 31, 2020 (see Note 19).

Lessor Accounting and Subleases

5 unchanged sentences

Fixed rental revenue is recognized on a straight-line basis over the lease term.

During the year ended March 31, 2020 , fixed rental revenue was $ 20.4 million , which includes $ 4.6 million of sublease revenue.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

During the years ended March 31, 2021 and 2020, fixed rental revenue was $ 15.9 million and $ 20.4 million, which includes $ 2.5 million and $ 4.6 million of sublease revenue, respectively.

The following table summarizes future minimum lease payments receivable under various noncancelable operating lease agreements at March 31, 2021 (in thousands):

Year Ending March 31,

2022 $ 11,944

Thereafter 800

Total $ 27,626

Note 17— Allowance for Current Expected Credit Loss (CECL)

ASU 2016-13 requires that an allowance for expected credit losses be recognized for certain financial assets that reflects the current expected credit loss over the financial asset’s contractual life.

The valuation allowance considers the risk of loss, even if remote, and considers past events, current conditions and reasonable and supportable forecasts.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

We are exposed to credit losses primarily through sale of products and services and notes receivable from third-parties.

A counterparty’s ability to pay is assessed through a credit process that considers the payment terms, the counterparty’s established credit rating or our assessment of the counterparty’s credit worthiness and other risks.

We can require prepayment or collateral to mitigate credit risks.

We group our financial assets into pools of counterparties with similar risk characteristics for the purpose of determining the allowance for expected credit losses.

Each reporting period, we assess whether a significant change in the risk of expected credit loss has occurred.

Among the quantitative and qualitative factors considered in calculating our allowance for expected credit losses are historical financial data, including write-offs and allowances, current conditions, industry risk and current credit ratings.

Financial assets will be written off in whole, or in part, when practical recovery efforts have been exhausted and no reasonable expectation of recovery exists.

Subsequent recoveries of amounts previously written off are recorded as an increase to the allowance.

We manage receivable pools using past due balances as a key credit quality indicator.

The following table summarizes changes in our expected credit loss allowance for accounts receivable - trade for the periods indicated:

Year Ended March 31,

2021 2020 (1) 2019 (1)

(in thousands)

Balance at beginning of year $ 4,540 $ 4,016 $ 3,851

Cumulative effect adjustment 433 — —

Current period provision for expected credit losses 319 1,202 381

Write-offs charged against the allowance ( 3,100 ) ( 678 ) ( 216 )

Balance at end of year $ 2,192 $ 4,540 $ 4,016

(1) We adopted ASU No.

2016-13 as of April 1, 2020.

The allowance reported for the years ended March 31, 2020 and 2019 has not been changed from its previous presentation.

The following table summarizes changes in our expected credit loss allowance for notes receivable and other for the period indicated:

March 31, 2021 (1)

(in thousands)

Balance at beginning of year $ —

Cumulative effect adjustment 680

Write-offs charged against the allowance ( 222 )

Balance at end of year $ 458

(1) We adopted ASU No.

2016-13 as of April 1, 2020.

An allowance had not been established for notes receivable and other prior to the adoption of ASU No.

In addition to the provision for expected credit losses above, we also wrote off $ 5.7 million during the year ended March 31, 2021 as discussed in Note 18.

Note 18— Other Matters

Third-party Loan Receivable

As discussed in Note 2 , we have outstanding a loan receivable of $ 26.7 million , including accrued interest, associated with our interest in the construction of the Facility that is utilized by a third party.

Our loan receivable is secured by a lien interest on the Facility.

The third party filed for Chapter 11 bankruptcy in July 2019, at which time we filed our Proof of Claim within the bankruptcy case.

As discussed previously in Note 2, we had an outstanding loan receivable of $ 26.7 million, including accrued interest, associated with our interest in the Facility that is utilized by a third party.

Our loan receivable was secured by title to and a lien interest on the Facility.

The third party filed a petition for bankruptcy under Chapter 11 of the bankruptcy code in July 2019, at which time we filed our Proof of Claim within the bankruptcy case.

The Chapter 11 plan, as supplemented, was approved by the bankruptcy court in February 2020, pursuant to which we were expected to be paid a $ 26.7 million secured claim as an unimpaired creditor.

After the approval of the supplemental plan, the third party has tried to negotiate with us to accept an amount less than the full amount of our claim or to take back the Facility in kind.

After the approval of the supplemental plan, the third party attempted to negotiate with us to accept an amount less than the full amount of our claim or to take back the Facility in kind.

In May 2020, we filed a motion with the bankruptcy court to compel the third party to pay us the full amount of the claim in accordance with the approved plan.

The bankruptcy court ruled in May 2020 that the third party would need to either pay us the full amount of the claim or deliver the Facility to us at a destination of our reasonable choosing.

While at March 31, 2020 we expected to receive the full amount of our claim, the third-party has continued to try to negotiate a lower payment.

As we are unable to estimate the resolution of this matter at this time, we have not impaired the value of our loan receivable.

On June 26, 2020, we settled our claim with the third party and agreed to receive $ 16.3 million, for which we released any and all claims and/or liens with respect to the Facility and transferred title of the Facility to the third party.

For the remaining $ 10.4 million of the loan receivable, we have filed an unsecured claim

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

within the bankruptcy.

As of June 30, 2020, we wrote-off approximately $ 9.4 million, the portion of the unsecured claimed we have deemed uncollectible, and this amount was recorded as a loss within loss (gain) on disposal or impairment of assets, net in our unaudited condensed consolidated statement of operations.

As of March 31, 2021, the remaining balance of $ 0.6 million, net of an allowance for an expected credit loss, is recorded within prepaid expenses and other current assets in our consolidated balance sheet.

Third-party Bankruptcy

During the three months ended June 30, 2020, Extraction, who is a significant shipper on our crude oil pipeline, filed a petition for bankruptcy under Chapter 11 of the bankruptcy code.

Extraction has transportation contracts pursuant to which it has committed to ship crude oil on our pipeline through October 2026.

As part of the bankruptcy filing, Extraction requested that the court authorize it to reject these transportation contracts, effective June 14, 2020.

We disputed its ability to reject the transportation contracts, filed objections and took various other legal steps within the bankruptcy proceedings to protect the value to us of the contracts at issue.

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 provides 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.

Due to entering into a new supply agreement and withdrawing our appeal of the rejection of our transportation contract, we determined that the customer commitment intangible asset related to one of the transportation contracts was impaired as of December 31, 2020.

We recorded an impairment charge of $ 145.8 million , which was calculated as the difference between the carrying value of the intangible asset of $ 180.8 million and the $ 35.0 million received from Extraction.

We recorded the impairment charge within loss on disposal or impairment of assets, net in our consolidated statement of operations for the year ended March 31, 2021 .

We also determined, as a result of these transactions, that it was more likely than not, that the fair value of our Crude Oil Logistics reporting unit was less than its carrying value and assessed goodwill for impairment, which resulted in an impairment charge of $ 237.8 million .

See Note 6 for a further discussion of the impairment of goodwill.

Extraction continued to utilize, during the bankruptcy period, the services under the transportation contracts by nominating and delivering barrels to be shipped on our pipeline.

During the three months ended September 30, 2020, Extraction paid us for the barrels that have actually been shipped, but did not pay for the difference between the minimum volume commitment specified under the contracts and the actual volumes shipped (“deficiency volumes”).

The amount owed by Extraction related to the deficiency volumes is $ 5.7 million.

Following our global settlement, we deemed this amount uncollectible and wrote off the entire amount to bad debt expense within our consolidated statement of operations during the year ended March 31, 2021.

Extraction also has a water disposal contract with our Water Solutions segment whereby we dispose of its produced water for a fee.

On August 10, 2020, they filed a motion with the bankruptcy court to also reject our water disposal contract but subsequently filed a motion to remove that contract from the list of contracts it was asking the court for permission to reject.

Since the filing of the bankruptcy petition, Extraction continued, and has continued after emerging from bankruptcy, to utilize the services under the water disposal contract.

We received payment for all prepetition services and they are current on all of its post-filing date receivables.

Sale of Certain Assets

During the three months ended December 31, 2020, we sold certain permits, land and a saltwater disposal facility to WaterBridge Resources LLC for total proceeds of $ 43.2 million, of which $ 0.3 million remains held back until satisfaction of certain conditions.

We recorded a gain of $ 14.0 million within loss on disposal or impairment of assets, net in our consolidated statement of operations for the year ended March 31, 2021 .

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.

This gain is reported within loss (gain) on disposal or impairment of assets, net in our consolidated statement of operations.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

the year ended March 31, 2019.

This gain is reported within loss on disposal or impairment of assets, net in our consolidated statement of operations.

These operations include:

2 unchanged sentences

As part of this transaction, WaterBridge Resources LLC also has the option to acquire additional land and permits once the permitting process has been completed.

During the year ended March 31, 2020, WaterBridge Resources LLC acquired two additional permits and we received proceeds of $ 15.0 million .

During the year ended March 31, 2020, WaterBridge Resources LLC acquired two additional permits and we received proceeds of $ 15.0 million and recorded a gain of $ 14.5 million.

This gain is reported within loss on disposal or impairment of assets, net in our consolidated statement of operations.

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 within loss (gain) on disposal or impairment of assets, net in our consolidated statement of operations.

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 within loss on disposal or impairment of assets, net in our consolidated statement of operations.

These operations include five saltwater disposal wells located in McKenzie and Dunn Counties, North Dakota.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Sale of E Energy Adams, LLC

On May 3, 2018, we sold our approximately 20 % interest in E Energy Adams, LLC for net proceeds of $ 18.6 million and recorded a gain on disposal of $ 3.0 million during the year ended March 31, 2019 within loss (gain) on disposal or impairment of assets, net in our consolidated statement of operations.

On May 3, 2018, we sold our approximately 20 % interest in E Energy Adams, LLC for net proceeds of $ 18.6 million and recorded a gain on disposal of $ 3.0 million during the year ended March 31, 2019 within loss on disposal or impairment of assets, net in our consolidated statement of operations.

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 , which we valued at $ 21.6 million and recorded within intangible assets in our consolidated balance sheet.

The disposition of this interest was accounted for as an equity transaction, no gain or loss was recorded and the carrying value of the noncontrolling interest was adjusted to reflect the change in ownership interest of the subsidiary.

We own approximately 71.5 % of the joint venture;

and Magnum has an option to acquire our remaining interest for an additional $ 182.4 million that expires on March 31, 2021.

Sale of Interest in Glass Mountain Pipeline, LLC (“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 within loss (gain) on disposal or impairment of assets, net in our consolidated statement of operations.

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.

Note 18 — Assets and Liabilities Held for Sale and Discontinued Operations

As discussed in Note 1 , we have classified certain assets and liabilities of the Mid-Con and Gas Blending businesses as held for sale and the operations as discontinued.

On January 3, 2020, we completed the sale of Mid-Con to a third-party whom assumed the Partnership’s obligations under certain system storage agreements.

The Partnership retained all of the outstanding accounts receivable and accounts payable balances associated with this business that related to transactions prior to the closing date.

To facilitate the assignment of the system storage agreements, the Partnership paid $ 6.3 million .

On March 30, 2020, we completed the sale of Gas Blending to another third-party whom purchased the inventory and open derivative positions and assumed the Partnership’s obligations under a lease storage agreement and blending service agreement.

The Partnership retained all of the outstanding accounts receivable and accounts payable balances associated with this business that related to transactions prior to the closing date.

To facilitate the assignment of these agreements, the Partnership paid $ 1.4 million on March 30, 2020 and will pay the remaining $ 8.5 million in six equal quarterly payments.

The current portion of the remaining amount to be paid is included in accrued expenses and other payables and the noncurrent portion of the remaining amount to be paid is included in other noncurrent liabilities in our consolidated balance sheet at March 31, 2020 .

As discussed in Note 1 , the assets and liabilities of TPSL have been classified as held for sale and the operations as discontinued.

On September 30, 2019, we completed the sale of TPSL and associated assets to Trajectory.

As discussed in Note 1 , on March 30, 2018, we sold a portion of our Retail Propane segment to DCC, on July 10, 2018, we completed the sale of virtually all of our remaining Retail Propane segment to Superior and on August 14, 2018, we sold our interest in Victory Propane, and the operations of our Retail Propane segment have been classified as discontinued.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

The following table summarizes the major classes of assets and liabilities classified as held for sale at March 31, 2019 (in thousands):

Current Assets Held for Sale

Accounts receivable-trade, net

Prepaid expenses and other current assets

Total current assets held for sale

Noncurrent Assets Held for Sale

Property, plant and equipment, net

Intangible assets, net

Other noncurrent assets

Total noncurrent assets held for sale

Total assets held for sale

Current Liabilities Held for Sale

Accounts payable-trade

Accrued expenses and other payables

Advance payments received from customers

Total current liabilities held for sale

Noncurrent Liabilities Held for Sale

Other noncurrent liabilities

Total noncurrent liabilities held for sale

Total liabilities held for sale

As previously reported, on March 30, 2018, we formed 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.

At that time, Magnum acquired an approximately 28.5 % interest in Sawtooth from us .

Magnum had an option to acquire our remaining 71.5 % interest in Sawtooth for an additional $ 182.4 million by March 31, 2021, which was not exercised.

Note 19— Discontinued Operations

As previously disclosed, on July 10, 2018, we completed the sale of virtually all of our remaining Retail Propane segment to Superior Plus Corp.

(“Superior”) for total consideration of $ 889.8 million in cash and on August 14, 2018, we sold our interest in Victory Propane (see Note 13).

On September 30, 2019, we completed the sale of TPSL to Trajectory Acquisition Company, LLC for total consideration of $ 233.8 million , including equity consideration, inventory and net working capital.

On January 3, 2020, we completed the sale of our refined products business in the mid-continent region of the United States (“Mid-Con”) to a third-party.

On March 30, 2020, we completed the sale of our gas blending business in the southeastern and eastern regions of the United States (“Gas Blending”) to another third-party.

As the sale of each of these businesses represented strategic shifts, the results of operations and cash flows related to these businesses are classified as discontinued operations for all periods presented.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

2 unchanged sentences

Year Ended March 31,

2021 2020 2019

(in thousands)

Revenues $ 16,198 $ 12,186,862 $ 15,398,608

Cost of sales 16,556 12,193,307 15,338,614

8 unchanged sentences

(Loss) income from discontinued operations before taxes (2) ( 1,822 ) ( 218,215 ) 419,839

Income tax expense

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

(Loss) income from discontinued operations, net of tax $ ( 1,769 ) $ ( 218,235 ) $ 418,850

(1) Amount for the year ended March 31, 2021 includes a loss of $ 1.0 million on the sale of Gas Blending and $ 0.2 million on the sale of TPSL.

Amount for the year ended March 31, 2020 includes a loss of $ 182.1 million on the sale of TPSL, a loss of $ 6.3 million on the sale of Mid-Con, a loss of $ 14.5 million on the sale of Gas Blending and a loss of $ 1.0 million on the sale of virtually all of our remaining Retail Propane segment to Superior on July 10, 2018.

Amount for the year ended March 31, 2019 includes a gain of $ 408.9 million on the sale of virtually all of our remaining Retail Propane segment to Superior on July 10, 2018, partially offset by a loss of $ 1.3 million on the sale of a portion of our Retail Propane segment to DCC on March 30, 2018 related to a working capital adjustment.

Amount for the year ended March 31, 2018 includes a gain of $ 89.3 million on the sale of a portion of our Retail Propane segment to DCC, partially offset by the sale of other assets prior to the sale to DCC.

Amounts include income (loss) attributable to redeemable noncontrolling interests.

Loss attributable to redeemable noncontrolling interests was $ 0.4 million for the year ended March 31, 2019 and income attributable to redeemable noncontrolling interest was $ 1.0 million for the year ended March 31, 2018 .

Amount for the year ended March 31, 2019 includes a gain of $ 408.9 million on the sale of virtually all of our remaining Retail Propane segment to Superior on July 10, 2018, partially offset by a loss of $ 1.3 million on the sale of a portion of our Retail Propane segment to DCC LPG on March 30, 2018 related to a working capital adjustment.

(2) Amount for the year ended March 31, 2019 includes a loss attributable to redeemable noncontrolling interests of $ 0.4 million.

Continuing Involvement

During the year ended March 31, 2020 , we paid $ 10.8 million to Trajectory for finished gasoline purchased from them during the period.

During the year ended March 31, 2020 , we received $ 8.7 million from Trajectory for finished gasoline sold to them during the period.

As of March 31, 2020 , we have commitments to sell up to 9.9 million gallons of propane, valued at $ 4.6 million (based on the contract price) to Superior and DCC, the purchasers of our former Retail Propane segment, through March 2021.

As of March 31, 2021, we have commitments to sell up to 3.2 million gallons of propane, valued at $ 3.8 million (based on the contract price) to Superior and DCC, the purchasers of our former Retail Propane segment, through December 2021.

During the year ended March 31, 2021, we received a combined $ 52.3 million from Superior and DCC for propane sold to them during the period.

Note 19— Quarterly Financial Data (Unaudited)

The following tables summarize our unaudited quarterly financial data.

The computation of net income (loss) per common unit is done separately by quarter and year.

The total of net income (loss) per common unit of the individual quarters may not equal net income (loss) per common unit for the year, due primarily to the income allocation between the general partner and limited partners and variations in the weighted average units outstanding used in computing such amounts.

Our Liquids and Refined Products segment is subject to seasonal fluctuations, as demand for propane and butane is typically higher during the winter months.

Our operating revenues from our other segments are less weather sensitive.

Additionally, the acquisitions described in Note 4 impact the comparability of the quarterly information within the year, and year to year.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Quarter Ended

June 30, 2019

September 30, 2019

December 31, 2019

March 31, 2020

(in thousands, except unit and per unit amounts)

Total revenues

Total cost of sales

Income (loss) from continuing operations

Net income (loss)

Net income (loss) attributable to NGL Energy Partners LP

Basic (loss) income per common unit

(Loss) income from continuing operations

Net (loss) income

Diluted (loss) income per common unit

(Loss) income from continuing operations

Net (loss) income

Basic weighted average common units outstanding

Diluted weighted average common units outstanding

Quarter Ended

June 30, 2018

September 30, 2018

December 31, 2018

March 31, 2019

(in thousands, except unit and per unit amounts)

Total revenues

Total cost of sales

(Loss) income from continuing operations

Net (loss) income

Net (loss) income attributable to NGL Energy Partners LP

Basic (loss) income per common unit

(Loss) income from continuing operations

Net (loss) income

Diluted (loss) income per common unit

(Loss) income from continuing operations

Net (loss) income

Basic weighted average common units outstanding

Diluted weighted average common units outstanding

The following summarizes significant items recognized during the years ended March 31, 2020 and 2019 :

Year Ended March 31, 2020

During the fourth quarter of fiscal year 2020, we recorded a goodwill impairment charge related to the Water Solutions segment (see Note 6 );

On March 30, 2020, we sold Gas Blending and recorded a loss (see Note 18 );

On January 3, 2020, we sold Mid-Con and recorded a loss (see Note 18 );

On October 31, 2019, we acquired Hillstone (see Note 4 );

On September 30, 2019, we sold TPSL and recorded a loss (see Note 18 );

On July 2, 2019, we acquired Mesquite (see Note 4 ).

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Year Ended March 31, 2019

During the fourth quarter of fiscal year 2019, we recorded a goodwill impairment charge related to Sawtooth (see Note 6 );

On February 28, 2019, we sold our South Pecos water disposal business and recorded a gain (see Note 17 );

On November 30, 2018, we sold our Bakken saltwater disposal business and recorded a gain (see Note 17 );

On July 10, 2018, we sold virtually all of our remaining Retail Propane segment and recorded a gain (see Note 18 );

On May 3, 2018, we sold our interest in E Energy Adams, LLC and recorded a gain (see Note 17 );

During fiscal year 2019, we repurchased a portion of our 2019 Notes and 2023 Notes and redeemed the outstanding 2019 Notes and 2021 Notes and recorded a loss on the early extinguishment of these notes (see Note 8 ).

Note 20 — Subsequent Events

On April 27, 2020, we amended our Credit Agreement.

See Note 8 for a further discussion.

During April and May of 2020 , we repurchased $ 15.0 million of the 2023 Notes for a payment of $ 8.8 million (including accrued interest of $ 0.4 million ), $ 7.3 million of the 2025 Notes for a payment of $ 3.7 million (including accrued interest of $ 0.1 million ) and $ 24.9 million of the 2026 Notes for a payment of $ 13.2 million (including accrued interest of $ 0.2 million ).

Note 21— Consolidating Guarantor and Non-Guarantor Financial Information

Certain of our wholly owned subsidiaries have, jointly and severally, fully and unconditionally guaranteed the Senior Unsecured Notes (see Note 8 ).

Pursuant to Rule 3-10 of Regulation S-X, we have presented in columnar format the consolidating financial information for NGL Energy Partners LP (Parent), NGL Energy Finance Corp., the guarantor subsidiaries on a combined basis, and the non-guarantor subsidiaries on a combined basis in the tables below.

NGL Energy Partners LP and NGL Energy Finance Corp.

are co-issuers of the Senior Unsecured Notes.

Since NGL Energy Partners LP received the proceeds from the issuance of the Senior Unsecured Notes, all activity has been reflected in the NGL Energy Partners LP (Parent) column in the tables below.

During the periods presented in the tables below, the status of certain subsidiaries changed, in that they either became guarantors of or ceased to be guarantors of the Senior Unsecured Notes.

For purposes of the tables below, when the status of a subsidiary changes, all subsidiary activity is included in either the guarantor subsidiaries column or non-guarantor subsidiaries column based on the status of the subsidiary at the balance sheet date regardless of activity during the year.

There are no significant restrictions that prevent the parent or any of the guarantor subsidiaries from obtaining funds from their respective subsidiaries by dividend or loan.

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.

For purposes of the tables below, (i) the consolidating financial information is presented on a legal entity basis, (ii) investments in consolidated subsidiaries are accounted for as equity method investments, and (iii) contributions, distributions, and advances to (from) consolidated entities are reported on a net basis within net changes in advances with consolidated entities in the consolidating statement of cash flow tables below.

As discussed further in Note 1 and Note 18 , certain assets and liabilities related to Mid-Con and Gas Blending and the assets and liabilities related to TPSL have been classified as held for sale within our March 31, 2019 consolidated balance sheet.

The results of operations and cash flows related to Mid-Con, Gas Blending, TPSL and our former Retail Propane segment (including equity in earnings of Victory Propane) 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.

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Consolidating Balance Sheet

(in Thousands)

March 31, 2020

Finance Corp.

Non-Guarantor

Consolidating

CURRENT ASSETS:

Cash and cash equivalents

Accounts receivable-trade, net of allowance for doubtful accounts

Accounts receivable-affiliates

Prepaid expenses and other current assets

Total current assets

PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation

INTANGIBLE ASSETS, net of accumulated amortization

INVESTMENTS IN UNCONSOLIDATED ENTITIES

NET INTERCOMPANY RECEIVABLES (PAYABLES)

INVESTMENTS IN CONSOLIDATED SUBSIDIARIES

OPERATING LEASE RIGHT-OF-USE ASSETS

OTHER NONCURRENT ASSETS

LIABILITIES AND EQUITY

CURRENT LIABILITIES:

Accounts payable-trade

Accounts payable-affiliates

Accrued expenses and other payables

Advance payments received from customers

Current maturities of long-term debt

Operating lease obligations

Total current liabilities

LONG-TERM DEBT, net of debt issuance costs and current maturities

OPERATING LEASE OBLIGATIONS

OTHER NONCURRENT LIABILITIES

CLASS D 9.00% PREFERRED UNITS

Partners’ equity

Accumulated other comprehensive loss

Noncontrolling interests

Total liabilities and equity

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Consolidating Balance Sheet

(in Thousands)

March 31, 2019

Finance Corp.

Non-Guarantor

Consolidating

CURRENT ASSETS:

Cash and cash equivalents

Accounts receivable-trade, net of allowance for doubtful accounts

Accounts receivable-affiliates

Prepaid expenses and other current assets

Assets held for sale

Total current assets

PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation

INTANGIBLE ASSETS, net of accumulated amortization

INVESTMENTS IN UNCONSOLIDATED ENTITIES

NET INTERCOMPANY RECEIVABLES (PAYABLES)

INVESTMENTS IN CONSOLIDATED SUBSIDIARIES

OTHER NONCURRENT ASSETS

ASSETS HELD FOR SALE

LIABILITIES AND EQUITY

CURRENT LIABILITIES:

Accounts payable-trade

Accounts payable-affiliates

Accrued expenses and other payables

Advance payments received from customers

Current maturities of long-term debt

Liabilities held for sale

Total current liabilities

LONG-TERM DEBT, net of debt issuance costs and current maturities

OTHER NONCURRENT LIABILITIES

NONCURRENT LIABILITIES HELD FOR SALE

CLASS A 10.75% CONVERTIBLE PREFERRED UNITS

Partners’ equity

Accumulated other comprehensive loss

Noncontrolling interests

Total liabilities and equity

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Consolidating Statement of Operations

(in Thousands)

Year Ended March 31, 2020

Finance Corp.

Non-Guarantor

Consolidating

COST OF SALES

OPERATING COSTS AND EXPENSES:

General and administrative

Depreciation and amortization

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

Revaluation of liabilities

Operating (Loss) Income

OTHER INCOME (EXPENSE):

Equity in earnings of unconsolidated entities

Interest expense

Gain on early extinguishment of liabilities, net

Other income, net

(Loss) Income From Continuing Operations Before Income Taxes

INCOME TAX EXPENSE

EQUITY IN NET (LOSS) INCOME FROM CONTINUING OPERATIONS OF CONSOLIDATED SUBSIDIARIES

(Loss) Income From Continuing Operations

Loss From Discontinued Operations, Net of Tax

Net (Loss) Income

NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS

NET (LOSS) INCOME ATTRIBUTABLE TO NGL ENERGY PARTNER LP

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

Consolidating Statement of Operations

(in Thousands)

Year Ended March 31, 2019

Finance Corp.

Non-Guarantor

Consolidating

COST OF SALES

OPERATING COSTS AND EXPENSES:

General and administrative

Depreciation and amortization

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

Revaluation of liabilities

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 9A. Controls and Procedures