NGL Energy Partners LP 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures, as defined in Rule 13(a)-15(e) and 15(d)-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to provide reasonable assurance that information required to be disclosed in our filings and submissions under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission (“SEC”) and that such information is accumulated and communicated to our management, including the principal executive officer and principal financial officer of our general partner, as appropriate, to allow timely decisions regarding required disclosure. We completed an evaluation under the supervision and with participation of our management, including the principal executive officer and principal financial officer of our general partner, of the effectiveness of the design and operation of our disclosure controls and procedures at March 31, 2021. Based on this evaluation, the principal executive officer and principal financial officer of our general partner have concluded that as of March 31, 2021, such disclosure controls and procedures were effective to provide the reasonable assurance described above. Management’s Report on Internal Control Over Financial Reporting The management of our Delaware limited partnership (the “Partnership”) and subsidiaries is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13(a)-15(f). Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer of our general partner, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or the COSO framework. Based on our evaluation under the COSO framework, our management concluded that our internal control over financial reporting was effective as of March 31, 2021. Our internal control over financial reporting as of March 31, 2021 has been audited by Grant Thornton LLP, an independent registered public accounting firm, as stated in their report, which appears below in this section of the Annual Report. Changes in Internal Control Over Financial Reporting 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. 92 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors of NGL Energy Holdings LLC and Unitholders of NGL Energy Partners LP Opinion on internal control over financial reporting We have audited the internal control over financial reporting of NGL Energy Partners LP (a Delaware limited partnership) and subsidiaries (the “Partnership”) 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”). In our opinion, the Partnership maintained, in all material respects, effective internal control over financial reporting as of March 31, 2021, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Partnership as of and for the year ended March 31, 2021, and our report dated June 3, 2021 expressed an unqualified opinion on those financial statements. Basis for opinion The Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Partnership’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and limitations of internal control over financial reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ GRANT THORNTON LLP Tulsa, Oklahoma June 3, 2021 93 Item 9B. Other Information None. PART III Item 10. Directors, Executive Officers and Corporate Governance Board of Directors of our General Partner NGL Energy Holdings LLC, our general partner, manages our operations and activities on our behalf through its directors and executive officers. Unitholders are not entitled to elect the directors of our general partner or directly or indirectly participate in our management or operations. The NGL Energy GP Investor Group appoints all members to the board of directors of our general partner. The board of directors of our general partner currently has eight members. The board of directors of our general partner has determined that Mr. Stephen L. Cropper, Mr. James M. Collingsworth, Mr. Brian K. Guderian and Mr. Derek S. 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. In addition, we are not required to have a nominating and corporate governance committee. In evaluating director candidates, the NGL Energy GP Investor Group assesses whether a candidate possesses the integrity, judgment, knowledge, experience, skill and expertise that are likely to enhance the ability of the board of directors of our general partner to manage and direct our affairs and business, including, when applicable, to enhance the ability of committees of the board to fulfill their duties. Our general partner has no minimum qualifications for director candidates. In general, however, the NGL Energy GP Investor Group reviews and evaluates both incumbent and potential new directors in an effort to achieve diversity of skills and experience among the directors of our general partner and in light of the following criteria: • experience in business, government, education, technology or public interests; • high-level managerial experience in large organizations; • breadth of knowledge regarding our business and industry; • specific skills, experience or expertise related to an area of importance to us, such as energy production, consumption, distribution or transportation, government, policy, finance or law; • moral character and integrity; • commitment to our unitholders’ interests; • ability to provide insights and practical wisdom based on experience and expertise; • ability to read and understand financial statements; and • ability to devote the time necessary to carry out the duties of a director, including attendance at meetings and consultation on partnership matters. Although our general partner does not have a formal policy in regard to the consideration of diversity in identifying director nominees, qualified candidates for nomination to the board are considered without regard to race, color, religion, gender, ancestry or national origin. 94 Directors and Named Executive Officers Directors of our general partner are appointed by the NGL Energy GP Investor Group and hold office until their successors have been duly elected and qualified or until the earlier of their death, resignation, removal or disqualification. Named executive officers are appointed by, and serve at the discretion of, the board of directors of our general partner. The following table summarizes information regarding the directors of our general partner and our named executive officers as of May 28, 2021. Name Age Position with NGL Energy Holdings LLC H. Michael Krimbill 67 Chief Executive Officer and Director Robert W. Karlovich III 44 Executive Vice President and Chief Financial Officer John A. Ciolek 57 Executive Vice President, Strategic Initiatives Kurston P. McMurray 49 Executive Vice President and General Counsel and Secretary Lawrence J. Thuillier 50 Chief Accounting Officer Shawn W. Coady 59 Director James M. Collingsworth 66 Director Stephen L. Cropper 71 Director Bryan K. Guderian 61 Director John T. Raymond 50 Director Derek S. Reiners 50 Director Randall S. Wade 51 Director H. Michael Krimbill . Mr. Krimbill has served as our Chief Executive Officer since October 2010 and as a member of the board of directors of our general partner since its formation in September 2010. From February 2007 through September 2010, Mr. Krimbill managed private investments. Mr. Krimbill was the President and Chief Financial Officer of Energy Transfer Partners, L.P. from 2004 until his resignation in January 2007. Mr. Krimbill joined Heritage Propane Partners, L.P., the predecessor of Energy Transfer Partners, L.P., as Vice President and Chief Financial Officer in 1990. Mr. Krimbill was President of Heritage Propane Partners, L.P. from 1999 to 2000 and President and Chief Executive Officer of Heritage Propane Partners, L.P. from 2000 to 2005. Mr. Krimbill also served as a director of Energy Transfer Equity, the general partner of Energy Transfer Partners, L.P., from 2000 to January 2007, Williams Partners L.P. from 2007 to September 2012, and Pacific Commerce Bank from January 2011 to March 2015. Mr. Krimbill brings leadership, oversight and financial experience to the board. Mr. Krimbill provides expertise in managing and operating a publicly traded partnership, including substantial expertise in successfully acquiring and integrating propane and midstream businesses. Mr. Krimbill also brings financial expertise to the board, including his prior service as a chief financial officer. Mr. Krimbill’s experience serving on other public company boards is also a valuable asset to our board of directors. Robert W. Karlovich III . Mr. Karlovich has served as our Executive Vice President and Chief Financial Officer since February 2016. Prior to joining NGL, Mr. Karlovich served as Chief Financial Officer of Targa Pipeline Partners, a subsidiary of Targa Resources Partners, LP, from February 2015 through February 2016, and as Senior Vice President of Commercial and Business Development for Targa Resources Partners, LP from November 2015 to February 2016. Mr. Karlovich served in various roles at Atlas Pipeline Partners, L.P. and its subsidiaries (“APL”), including most recently as Chief Financial Officer, from September 2006 to February 2015 when APL merged with Targa Resources Partners, LP. Mr. Karlovich served in various roles at Syntroleum Corporation from February 2004 to September 2006. Prior to that, Mr. Karlovich worked at Arthur Andersen LLP and Grant Thornton LLP. Mr. Karlovich is a certified public accountant. John A. Ciolek. Mr. Ciolek joined us in December 2019 and was appointed as our Executive Vice President, Strategic Initiatives, by the board of directors of our general partner in January 2020. Prior to joining NGL, Mr. Ciolek served as Managing Director in the Oil and Gas Group at Credit Suisse Securities LLC (“Credit Suisse”) from August 2015 to October 2019. Before joining Credit Suisse, he served as the Head of the Midstream Franchise within J.P. Morgan’s North American Energy Group starting in May 2011. He previously served for 14 years with Citigroup’s Global Energy Group. Kurston P. McMurray. Mr. McMurray has served as our Executive Vice President and General Counsel and Secretary since October 2016. Mr. McMurray joined NGL in February 2015 as Vice President, Legal and Corporate Secretary. Prior to joining NGL, Mr. McMurray practiced law in the Tulsa, Oklahoma area since 1998 at firms including Moyers, Martin, Santee, Imel & Tetrick LLP. and Robinett & Osmond and was a founding shareholder of Kurston P. McMurray, PC and Wilkin/ 95 McMurray PLLC. Mr. McMurray’s private practice specialized in business transactions, real estate, construction, healthcare, banking, corporate governance, corporate management and commercial litigation. Lawrence J. Thuillier. Mr. Thuillier has served as our Chief Accounting Officer since January 2016. Prior to joining NGL, Mr. Thuillier served in various roles at Eagle Rock Energy Partners, L.P. from December 2007 through October 2015, most recently as Vice President of Financial Reporting and Corporate Controller. Mr. Thuillier served as Assistant Corporate Controller for Exterran Holdings, Inc. (formerly Universal Compression) from November 2006 through November 2007. Prior to that, Mr. Thuillier served in various roles at Deloitte & Touche LLP, most recently as Audit Senior Manager. Shawn W. Coady . Dr. 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. Dr. Coady served as an executive officer of DCC from April 2018 until his retirement in December 2020. Dr. Coady served as a member of the board of directors of our general partner since its formation in September 2010. Dr. Coady has served as an officer of Hicks Oils & Hicksgas, Incorporated (“HOH”), from March 1989 to September 2010 when HOH contributed its propane and propane related assets to Hicksgas LLC, and the membership interests in Hicksgas LLC were contributed to us as part of our formation transactions. Dr. Coady was also the President of Hicksgas Gifford, Inc. from March 1989 until the membership interests in the company were contributed to us as part of our formation transactions. Dr. Coady has served as a director for the National Propane Gas Association from 2004 to 2015 and as a member of the executive committee of the Illinois Propane Gas Association from 2004 to March 2015. Dr. Coady brings valuable operational experience to the board. Dr. Coady has over 25 years of experience in the retail propane industry, and provides expertise in both acquisition and organic growth strategies. Dr. Coady also provides insight into developments and trends in the propane industry through his leadership roles in industry associations. James M. Collingsworth . Mr. Collingsworth has served on the board of directors of our general partner since January 2015. Mr. Collingsworth previously served as a Senior Vice President of the general partner of Enterprise Products Partners L.P. from November 2001 through January 2014. Prior to that, Mr. Collingsworth served as a board member of Texaco Canada Petroleum Inc. from July 1998 to October 2001 and was employed by Texaco from 1991 to 2001 in various management positions, including Senior Vice President of NGL Assets and Business Services from July 1998 to October 2001. Prior to joining Texaco, Mr. Collingsworth was director of feedstocks for Rexene Petrochemical Company from 1988 to 1991 and served in the MAPCO, Inc. organization from 1973 to 1988 in various capacities, including customer service and business development manager of the Mid-America and Seminole pipelines. Mr. Collingsworth served as a director of American Ethane Co. Mr. Collingsworth currently serves on the board of directors of Martin Midstream Partners L.P. Mr. Collingsworth brings a wealth of in-depth industry experience to the board. Mr. Collingsworth has worked in all facets of the midstream and petrochemical industry for more than 40 years. Stephen L. Cropper . Mr. Cropper joined the board of directors of our general partner in June 2011. Mr. Cropper held various positions during his 25-year career at The Williams Companies, Inc., including serving as the President and Chief Executive Officer of Williams Energy Services, a Williams operating unit involved in various energy-related businesses, until his retirement in 1998. Mr. Cropper served as a director of Energy Transfer Partners, L.P. from 2000 through 2005. Since Mr. 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, Rental Car Finance Corp., a subsidiary of Dollar Thrifty Automotive Group and Wawa Inc. Mr. Cropper currently serves on the board of directors of QuikTrip Corporation. Mr. 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. As a director for other public companies, Mr. Cropper also provides cross board experience. Bryan K. Guderian . Mr. Guderian joined the board of directors of our general partner in May 2012. Mr. Guderian currently serves as a Principal of BKG Consulting LLC, an energy related consulting firm. Mr. Guderian has served as Executive Vice President of Business Development of WPX Energy, Inc. (“WPX”) from February 2018 until his retirement in January 2021. Mr. 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. Mr. Guderian previously served as Vice President of the Exploration & Production unit of The Williams Companies, Inc. from 1998 until August 2011, where 96 he had responsibility for overseeing international operations. Mr. 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. from 2003 to 2015. Mr. Guderian brings considerable upstream experience to the board including executive, operational and financial expertise from 30 years of petroleum industry involvement, the majority of which has been focused in exploration and production. John T. Raymond. Mr. Raymond joined the board of directors of our general partner in August 2013. Mr. Raymond is the Founder and Majority Owner of The Energy & Minerals Group (“EMG”) of which he has been a Managing Partner and the Chief Executive Officer since its September 2006 inception. Mr. Raymond has held executive leadership positions with various energy companies, including President and Chief Executive Officer of Plains Resources Inc. (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. Mr. 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. Mr. Raymond manages various private investments through personally held Lynx Holdings, LLC. Mr. Raymond brings extensive financial and industry experience to the board. As a director for other public companies, Mr. Raymond also provides cross board experience. Derek S. Reiners. Mr. Reiners joined the board of directors of our general partners in December 2019 and was appointed to serve on the Audit Committee. Mr. Reiners currently serves as the President of Contango Energy Capital LLC, a privately held investment and consulting firm. Prior to that, Mr. Reiners served in various senior financial and accounting roles at ONEOK, Inc. and ONEOK Partners, L.P. from August 2009 to May 2019, including Senior Vice President and Chief Accounting Officer from August 2009 to December 2012, Senior Vice President, Chief Financial Officer from January 2013 to May 2017 and Senior Vice President, Finance and Treasurer from June 2017 to May 2019. Prior to joining ONEOK, Mr. Reiners was a partner at Grant Thornton LLP from August 2004 to July 2009. Mr. Reiners is a certified public accountant. Mr. Reiners brings extensive executive, financial and operational experience to the board. With over ten years of experience in the natural gas liquids industry in numerous positions, Mr. Reiners provides valuable insight into our business and industry. Randall S. Wade . Mr. Wade has served on the board of directors of our general partner since February 2021. Mr. 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. Mr. Wade brings extensive financial and industry experience to the board. Director Appointment Rights The Limited Liability Company Agreement of NGL Energy Holdings LLC grants certain parties the right to designate a specified number of persons to serve on the board of directors of our general partner. 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. Raymond. EIG has the right to designate one person to serve on the board of directors of our general partner, and has designated Randall S. Wade. The Coady Group (which consists of certain entities controlled by Shawn W. Coady and his brother Todd M. Coady) and the investors who formed the Partnership (“IEP Parties”) (which consists of certain entities controlled by H. Michael Krimbill, and two other investors) each have the right to designate one person to serve on the board of directors of our general partner. The Coady Group has designated Shawn W. Coady and the IEP Parties have designated H. Michael Krimbill. Board Leadership Structure and Role in Risk Oversight The board of directors of our general partner believes that whether the offices of chairman of the board and chief executive officer are combined or separated should be decided by the board, from time to time, in its business judgment after 97 considering relevant circumstances. The board of directors of our general partner currently does not have a chairman, although our chief executive officer, Mr. Krimbill, presides over the meetings. The board of directors and its committees regularly review material operational, financial, compensation and compliance risks with senior management. In particular, the audit committee is responsible for risk oversight with respect to financial and compliance risks and risks relating to our audit and independent registered public accounting firm. Our compensation committee considers risk in connection with its design and evaluation of compensation programs for our senior management. Each committee regularly reports to the board of directors regarding its respective risk oversight role. Audit Committee The board of directors of our general partner has established an audit committee. The audit committee assists the board in its oversight of the integrity of our financial statements and our compliance with legal and regulatory requirements and partnership policies and controls. The audit committee has the sole authority to, among other things: • retain and terminate our independent registered public accounting firm; • approve all auditing services and related fees and the terms thereof performed by our independent registered public accounting firm; and • establish policies and procedures for the pre-approval of all non-audit services and tax services to be rendered by our independent registered public accounting firm. The audit committee is also responsible for confirming the independence and objectivity of our independent registered public accounting firm. Our independent registered public accounting firm is given unrestricted access to the audit committee and our management, as necessary. Mr. Collingsworth, Mr. Cropper, and Mr. Reiners currently serve on the audit committee, and Mr. Reiners serves as the chairman. The board of directors of our general partner has determined that Mr. Reiners is an “audit committee financial expert” as defined under SEC rules and that each member of the audit committee is financially literate. In compliance with the requirements of the NYSE, all of the members of the audit committee are independent directors, as defined in the applicable NYSE and Exchange Act rules. Compensation Committee The board of directors of our general partner has established a compensation committee. The compensation committee’s responsibilities include the following, among others: • establishing the general partner’s compensation philosophy and objectives; • approving the compensation of the Chief Executive Officer and other officers; • making recommendations to the board of directors with respect to the directors; and • reviewing and making recommendations to the board of directors with respect to incentive compensation and equity-based plans. Mr. Collingsworth, Mr. Cropper, and Mr. Guderian currently serve on the compensation committee, and Mr. Cropper serves as the chairman. The board of directors has determined that Mr. Cropper, Mr. 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, 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. 98 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. The information contained on, or connected to, our website is not incorporated by reference into this Annual Report and should not be considered part of this or any other report that we file with or furnish to the SEC. Meeting of Non-Management Directors and Communications with Directors At each quarterly meeting of the audit committee and/or the board of directors of our general partner, our independent directors meet in an executive session without participation by management or non-independent directors. Mr. Reiners presides over these executive sessions. Unitholders or interested parties may communicate directly with the board of directors of our general partner, any committee of the board, any independent directors, or any one director, by sending written correspondence by mail addressed to the board, committee or director to the attention of our Secretary at the following address: Name of the Director(s), c/o Secretary, NGL Energy Partners LP, 6120 South Yale Avenue, Suite 805, Tulsa, Oklahoma 74136. Communications are distributed to the board, committee, or director as appropriate, depending on the facts and circumstances outlined in the communication. Item 11. Executive Compensation Compensation Discussion and Analysis The year “2021” in the Compensation Discussion and Analysis and the summary compensation table refers to our fiscal year ended March 31, 2021. Introduction 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 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. Our “named executive officers” for fiscal year 2021 were: • H. Michael Krimbill–Chief Executive Officer • Robert W. Karlovich III–Executive Vice President and Chief Financial Officer • Lawrence J. Thuillier–Chief Accounting Officer • Kurston P. McMurray–Executive Vice President and General Counsel and Secretary • John A. Ciolek–Executive Vice President, Strategic Initiatives Compensation Philosophy Our compensation philosophy emphasizes pay-for-performance, focused primarily on the ability to increase sustainable quarterly distributions to our unitholders. Pay-for-performance is based on a combination of our performance and the individual executive officer’s contribution to our performance. We believe this pay-for-performance approach generally aligns the interests of our executive officers with the interests of our unitholders, and at the same time enables us to maintain a lower level of cash compensation expense in the event our operating and financial performance do not meet our expectations. Our executive compensation program is designed to provide a total compensation package that allows us to: • Attract and retain individuals with the background and skills necessary to successfully execute our business strategies; 99 • Motivate those individuals to reach short-term and long-term goals in a way that aligns their interests with the interests of our unitholders; and • Reward success in reaching those goals. Recent Achievements Our compensation structure is designed to reward our executive officers for achieving above-market returns for our unitholders. Our achievements during the year ended March 31, 2021 included the following: • Issued $2.05 billion of 7.5% senior secured notes due 2026 (“2026 Senior Secured Notes”); and • 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. Karlovich and Mr. 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 • At risk incentive compensation based on annual financial performance and growth in unitholder value; • No excise tax gross-ups; and • Compensation committee engages an independent compensation adviser. Compensation Setting Process Our compensation program for our named executive officers supports our philosophy of pay-for-performance. • Role of Management: Our Chief Executive Officer provides periodic recommendations to the compensation committee and the board of directors regarding the compensation of our named executive officers, other than his own. • Role of the Compensation Committee’s Consultant: In carrying out its responsibilities for establishing, implementing and monitoring the effectiveness of our executive compensation philosophy, plans and programs, our compensation committee has the authority to engage outside experts to assist in its deliberations. During fiscal year 2021, the compensation committee received compensation advice and data from Pearl Meyer & Partners (“PM&P”). 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: ◦ PM&P did not provide any services to the Partnership or management other than compensation consulting services requested by or with the approval of the compensation committee; ◦ PM&P does not provide, directly or indirectly through affiliates, any non-compensation services such as pension consulting or human resource outsourcing; ◦ PM&P maintains a conflicts policy, which was provided to the compensation committee with specific policies and procedures designed to ensure independence; ◦ Fees paid to PM&P by the Partnership during fiscal year 2021 were less than 1% of PM&P’s total revenue; ◦ None of the PM&P consultants working on Partnership matters had any business or personal relationship with compensation committee members; ◦ None of the PM&P consultants working on Partnership matters (or any consultants at PM&P) had any business or personal relationship with any executive officer of the Partnership; and ◦ None of the PM&P consultants working on Partnership matters own Partnership interests. 100 The compensation committee continues to monitor the independence of its compensation consultant on a periodic basis. Elements of Executive Compensation As part of our pay-for-performance approach to executive compensation, the compensation of our executive officers includes a significant component of incentive compensation based on our performance. The following table summarizes the primary elements of compensation in our executive compensation program: Objective Supported Element Primary Purpose How Amount Determined Attract & Retain Motivate & Pay for Performance Unitholder Alignment 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 X 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 X X X 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 Based on the named executive officer’s expected contribution to long-term performance goals X X X Provides a forfeitable long-term incentive to encourage executive retention Base Salary 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. • Mr. 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. Effective April 1, 2018, Mr. Krimbill’s base salary was increased to $625,000, in consideration of the fact that his salary was low relative to the benchmark peer group. • Mr. Karlovich’s base salary of $400,000 was negotiated prior to his joining our management team in February 2016. Mr. Karlovich’s base salary was increased to $430,000 in April 2017. On June 10, 2018, Mr. 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. • Mr. Thuillier’s base salary of $250,000 was negotiated prior to his joining our management team in January 2016. In April 2017, Mr. Thuillier’s base salary was increased to $260,000. In April 2018, Mr. 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. Thuillier’s base salary was increased to $300,000. • Mr. McMurray’s base salary of $250,000 was negotiated prior to his joining our management team in February 2015. Mr. McMurray’s base salary was increased to $300,000 in April 2017. Effective April 1, 2018, Mr. 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. McMurray’s base salary was increased to $500,000. • Mr. Ciolek’s base salary of $500,000 was negotiated prior to joining our management team in December 2019. 101 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 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 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. Neither Mr. Krimbill nor Mr. Ciolek received a cash bonus in fiscal year 2021. Long-Term Equity Incentive Awards 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 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) H. Michael Krimbill (1) 225,000 (150,000) 75,000 Robert W. Karlovich III (2) 37,500 (25,000) 12,500 Lawrence J. Thuillier (3) 15,000 (10,000) 5,000 Kurston P. McMurray (4) 27,500 (17,500) 10,000 John A. Ciolek (5) 37,500 (25,000) 12,500 (1) Mr. Krimbill vested in 75,000 Service Awards on November 10, 2020 and 75,000 Service Awards on February 11, 2021. (2) Mr. Karlovich vested in 12,500 Service Awards on November 10, 2020 and 12,500 Service Awards on February 11, 2021. (3) Mr. Thuillier vested in 5,000 Service Awards on November 10, 2020 and 5,000 Service Awards on February 11, 2021. (4) Mr. McMurray vested in 7,500 Service Awards on November 10, 2020 and 10,000 Service Awards on February 11, 2021. (5) Mr. 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. Thuillier. 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 We do not provide any severance or change of control benefits to our named executive officers, other than to Mr. McMurray, who is entitled to receive severance benefits pursuant to his employment agreement in the event of certain terminations of his employment (as described below after the “Summary Compensation Table” under the heading, “Employment Agreement with Mr. McMurray”). 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. If the board of directors were to exercise its discretion to accelerate the vesting of restricted units upon a change in control, the value of such units would be the same as reported in the “Outstanding Equity Awards at March 31, 2021” table below (in the “Market Value of Service Award Units that Have Not Yet Vested” column). 401(k) Plan We have established a defined contribution 401(k) plan to assist our eligible employees in saving for retirement on a tax-deferred basis. The 401(k) plan permits all eligible employees, including our named executive officers, to make voluntary pre-tax contributions to the plan, subject to applicable tax limitations. 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). Our matching contributions vest over two years. 102 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 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 Certain officers who have leadership roles within our individual business units, but who are not executive officers, participate in formulaic bonus programs that are based on the performance of the individual business units with which they are involved. In most cases, similar programs were in place prior to our acquisition of the businesses, and we have left the programs substantially intact. Employment Agreements We do not have employment agreements with any of our named executive officers, other than Mr. McMurray (as described below after the “Summary Compensation Table” under the heading, “Employment Agreement with Mr. McMurray”). Deductibility of Compensation We believe that the compensation paid to the named executive officers is generally fully deductible for federal income tax purposes. We are a limited partnership and do not meet the definition of a “corporation” subject to deduction limitations under Section 162(m) of the Internal Revenue Code of 1986, as amended. Compensation Committee Report The compensation committee of the board of directors of our general partner has reviewed and discussed the Compensation Discussion and Analysis set forth above with management. Based on this review and discussion, the compensation committee recommended to the board of directors of our general partner that the Compensation Discussion and Analysis be included in this Annual Report. Members of the Compensation Committee: Stephen L. Cropper (Chairman) James M. Collingsworth Bryan K. Guderian Relation of Compensation Policies and Practices to Risk Management Our compensation arrangements contain a number of design elements that serve to minimize the incentive for taking excessive or inappropriate risk to achieve short-term, unsustainable results. This includes using restricted unit grants as a significant element of executive compensation, as the restricted units are designed to reward the executive officers based on the long-term performance of the Partnership. In combination with our risk management practices, we do not believe that risks arising from our compensation policies and practices for our employees are reasonably likely to have a material adverse effect on us. Compensation Committee Interlocks and Insider Participation During fiscal year 2021, James M. Collingsworth, Stephen L. Cropper, and Bryan K. Guderian served on the compensation committee. None of these individuals is an employee or an officer of our general partner. As described under Part I, Item 13–“Transactions with Related Persons,” Mr. Guderian was an executive officer of WPX, and we entered into certain transactions with WPX during fiscal year 2021. 103 Summary Compensation Table The following table summarizes the compensation earned by our named executive officers for fiscal years 2019 through 2021. Name and Position Fiscal Year Salary ($) Bonus ($) Restricted Unit Awards (Service and Performance Awards) (1) ($) All Other Compensation (2) ($) Total ($) H. Michael Krimbill 2021 625,000 — — 17,632 642,632 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 Robert W. Karlovich III 2021 500,000 600,000 — 12,759 1,112,759 Executive Vice President and 2020 500,000 500,000 100,012 6,900 1,106,912 Chief Financial Officer 2019 483,846 650,000 142,405 7,695 1,283,946 Lawrence J. 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 Kurston P. 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 John A. Ciolek (3) 2021 500,000 — — 15,390 515,390 Executive Vice President, 2020 140,385 — 501,250 119 641,754 Strategic Initiatives (1) The fair values of the restricted units shown in the table above were calculated based on the closing market prices of our common units on the grant dates, with adjustments made to reflect the fact that the restricted units are not entitled to distributions during the vesting period. The impact of the lack of distribution rights during the vesting period was estimated using the value of the most recent distribution prior to the grant date and assumptions that a market participant might make about future distribution growth. This calculation of fair value is consistent with the provisions of Accounting Standards Codification (“ASC”) 718 Stock Compensation. (2) The amounts in this column include matching contributions to our 401(k) plan. (3) Mr. Ciolek commenced employment in December 2019, and thus was not a named executive office prior to fiscal year 2020. Employment Agreement with Mr. McMurray Mr. McMurray is party to an employment agreement with the Partnership, dated March 10, 2017. The agreement has a term of five years from the effective date, subject to automatic renewals for one-year periods thereafter unless either party provides 60 days’ notice of non-renewal of the term. The agreement provides that Mr. 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. Mr. 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. McMurray’s employment is terminated by the Partnership without “cause” (as defined in his agreement), provided that he executes a general release of claims, Mr. McMurray is entitled to receive (i) continued payment of his base salary for 12 months following the termination, (ii) the guaranteed unit awards that would have been paid or granted to Mr. McMurray had Mr. McMurray remained employed for an additional three years following his termination, and (iii) his target annual bonus for the performance year in which his termination occurs. Mr. McMurray would also be entitled to receive the severance benefits described in the foregoing sentence in the event that he voluntarily resigns due to a “constructive discharge,” which circumstances would include (1) a reduction of Mr. McMurray’s annual base salary below $250,000 (other than an across-the-board, pro rata reduction of no more than 10% applicable to all similarly situated executive officers of the Partnership) or the Partnership’s failure to provide Mr. McMurray’s elements of compensation, (2) the removal of Mr. McMurray from the position of Executive Vice President and General Counsel and Secretary without Mr. McMurray’s written consent, (3) any action by the Partnership that results in significant diminution of Mr. McMurray’s authority, power or responsibilities, or (4) the Partnership’s relocation of its principal place of business in Oklahoma to a location more than 50 miles from its current location. Mr. McMurray is subject to non-disclosure and intellectual property rights assignment 104 obligations, and an obligation not to solicit customers, employees or consultants lasting during his employment and for a period of 12 months thereafter. Restricted Unit Awards During fiscal year 2021, the compensation committee granted no units to the named executive officers. Outstanding Equity Awards at March 31, 2021 The following table summarizes the number of unvested Service Awards outstanding and their fair values at March 31, 2021: Number of Service Award Units that Have Not Yet Vested Market Value of Service Award Units that Have Not Yet Vested Name (#)(1) ($)(2) H. Michael Krimbill 75,000 153,000 Robert W. Karlovich III 12,500 25,500 Lawrence J. Thuillier 5,000 10,200 Kurston P. McMurray 10,000 20,400 John A. Ciolek 12,500 25,500 (1) Reflects Service Awards that have not vested and are held by each named executive officer. (2) Calculated based on the closing market price of our common units at March 31, 2021 of $2.04. No adjustments were made to reflect the fact that the restricted units are not entitled to distributions during the vesting period. 2021 Units Vested During fiscal year 2021, certain of the restricted Service Awards vested. The following table summarizes the value of the awards on the vesting date which was calculated based of the closing market price per common unit on the vesting dates. Name Number of Service Award Units Acquired on Vesting (#) Value Realized on Vesting ($) H. Michael Krimbill (1) 150,000 379,500 Robert W. Karlovich III (2) 25,000 63,250 Lawrence J. Thuillier (3) 10,000 25,300 Kurston P. McMurray (4) 17,500 43,925 John A. Ciolek (5) 25,000 63,250 (1) Mr. Krimbill vested in 75,000 Service Awards on November 10, 2020 and 75,000 Service Awards on February 11, 2021. (2) Mr. Karlovich vested in 12,500 Service Awards on November 10, 2020 and 12,500 Service Awards on February 11, 2021. (3) Mr. Thuillier vested in 5,000 Service Awards on November 10, 2020 and 5,000 Service Awards on February 11, 2021. (4) Mr. McMurray vested in 7,500 Service Awards on November 10, 2020 and 10,000 Service Awards on February 11, 2021. (5) Mr. 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: Name Number of Units Issued Number of Units Withheld Total H. Michael Krimbill 116,737 33,263 150,000 Robert W. Karlovich III 13,749 11,251 25,000 Lawrence J. Thuillier 5,699 4,301 10,000 Kurston P. McMurray 9,558 7,942 17,500 John A. Ciolek 11,531 13,469 25,000 105 Potential Payments Upon Termination or Change in Control We do not provide any severance or change of control benefits to our named executive officers , other than Mr. McMurray, who is entitled to receive severance benefits for certain types of terminations (as described in more detail above under the heading, “Employment Agreement with Mr. McMurray”). In the event that Mr. McMurray’s employment had been terminated as of March 31, 2021 by the Partnership without “cause” or due to a “constructive discharge,” Mr. McMurray would have been entitled to receive the following amounts: 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. If the board of directors were to exercise its discretion to accelerate the vesting of restricted units upon a change in control, the value of such units would be the same as reported in the “Outstanding Equity Awards at March 31, 2021” table above (in the “Market Value of Service Award Units that Have Not Yet Vested” column). Pay Ratio Disclosure As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information regarding the ratio of the annual total compensation of our Chief Executive Officer, Mr. Krimbill, to the median of the annual total compensation of our employees for our last fiscal year. For the year ended March 31, 2021: • The median of the annual total compensation of all employees (other than the Chief Executive Officer) was $65,415; and • The annual total compensation of Mr. Krimbill, as reported in the Summary Compensation Table above, was $642,632. Based on the information for the year ended March 31, 2021, the ratio of the annual total compensation of our Chief Executive Officer to the annual total compensation of our median employee was approximately 10 to 1. To determine our median employee, we identified each individual employed by us on January 1, 2021, our determination date. As of that date, we had 1,038 employees located in two countries. 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 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. This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above. The SEC rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. Hedging of Partnership Common Units Our Supplemental Trading Policy prohibits directors, named executive offices and other designated employees from engaging in hedging activities with respect to our common units. 106 Director Compensation Officers or employees of our general partner or its affiliates who also serve as directors do not receive additional compensation for their service as a director of our general partner. Each director who is not an officer or employee of our general partner or its affiliates receives the following cash compensation for his board service: • an annual retainer of $80,000; • an annual retainer of $20,000 for the chairman of the audit committee; • an annual retainer of $15,000 for the chairman of the compensation committee; • an annual retainer of $14,000 for each member of the audit committee other than the chairman; and • an annual retainer of $10,000 for each member of the compensation committee other than the chairman. In addition, each director who is not an officer or employee of our general partner or its affiliates has been granted awards of restricted units. All of our directors are also reimbursed for all out-of-pocket expenses incurred in connection with attending board or committee meetings. Each director is indemnified for his actions associated with being a director to the fullest extent permitted under Delaware law. The following table summarizes the compensation earned during fiscal year 2021 by each director who is not an officer or employee of our general partner or its affiliates: Name Total ($)(1) Shawn W. Coady 80,000 James M. Collingsworth 104,000 Stephen L. Cropper 119,000 Bryan K. Guderian 90,000 Derek S. 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 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) Shawn W. Coady (1) 12,000 (8,000) 4,000 James M. Collingsworth (1) 12,000 (8,000) 4,000 Stephen L. Cropper (1) 12,000 (8,000) 4,000 Bryan K. Guderian (1) 12,000 (8,000) 4,000 Derek S. Reiners (1) 12,000 (8,000) 4,000 (1) Dr. Coady, Mr. Collingsworth, Mr. Cropper, Mr. 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. Coady, Mr. Collingsworth, Mr. Cropper, Mr. Guderian and Mr. Reiners. 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. 107 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters Security Ownership of Certain Beneficial Owners and Management The following table summarizes the beneficial ownership, as of May 28, 2021, of our common units by: • each person or group of persons known by us to be a beneficial owner of more than 5% of our outstanding common units; • each director of our general partner; • each named executive officer of our general partner; and • all directors and executive officers of our general partner as a group. Beneficial Owners Common Units Beneficially Owned Percentage of Common Units Beneficially Owned (1) 5% or greater unitholders (other than officers and directors): Invesco Ltd. (2) 19,923,209 15.37 % EIG Neptune Equity Aggregator, L.P. (3) 16,734,375 11.44 % Directors and named executive officers: John A. Ciolek (4) 49,764 * Shawn W. Coady (5) 2,598,195 2.00 % James M. Collingsworth (6) 310,870 * Stephen L. Cropper (7) 71,000 * Bryan K. Guderian 68,500 * Robert W. Karlovich III (8) 101,631 * H. Michael Krimbill (9) 2,940,018 2.27 % Kurston P. McMurray (10) 53,742 * John T. Raymond 50,000 * Derek S. Reiners 22,000 * Lawrence J. Thuillier (11) 49,830 * Randall S. Wade — * All directors and executive officers as a group (12 persons) (12) 6,315,550 4.87 % * Less than 1.0% (1) Based on 129,593,939 common units outstanding at May 28, 2021. (2) The mailing address for Invesco Ltd. is 1555 Peachtree Street NE, Suite 1800, Atlanta, GA 30309. Invesco Ltd. reported shared voting and dispositive power with respect to all common units beneficially owned. The information related to Invesco Ltd. is based upon its Schedule 13G filed with the SEC for the quarter ended December 31, 2020. (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. (5) Dr. Coady owns 118,304 of these common units. SWC Family Partnership LP owns 2,320,391 of these common units. SWC Family Partnership LP is solely owned by SWC General Partner, LLC, of which Dr. Coady is the sole member. Dr. 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 2012 Shawn W. Coady Irrevocable Insurance Trust, which was established for the benefit of Shawn W. Coady’s children, owns 135,000 of these common units. Dr. 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 of these common units. The Colleen Blair Coady Trust, of which the reporting person is the trustee, owns 12,250 of these common units. Dr. Coady also owns a 12.27% interest in our general partner through Coady Enterprises, LLC, of which he owns 100% of the membership interests. 108 (6) Mr. Collingsworth owns 298,500 of these common units. Mr. Collingsworth holds 2,000 of these common units jointly with his spouse, Cindy Collingsworth. Cindy Collingsworth and her sister jointly own 9,500 of these common units. Cindy Collingsworth owns 870 of these common units. (7) Mr. Cropper owns 46,000 of these common units. The Donna L. Cropper Revocable Living Trust, of which Mr. Cropper and his spouse, Donna L. Cropper, are the trustees, owns 25,000 of these common units. (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. Mr. Karlovich owns a 0.3% interest in our general partner through TK3 Investment Holdings, LLC. of which he own 100% of the membership interests. (9) Mr. 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. Krimbill’s Form 4. Krim2010, LLC owns 904,848 of these common units. Krimbill Enterprises LP, H. Michael Krimbill and James E. Krimbill own 90.89%, 4.05%, and 5.06% of Krim2010, LLC, respectively. Krimbill Enterprises LP also owns 388,000 of these common units. Krimbill Enterprises LP is controlled by H. Michael Krimbill via his ownership of its general partner, Krimbill Holding Company. H. 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. KrimGP2010 LLC owns 363,555 of these common units. KrimGP2010 LLC is solely owned by H. Michael Krimbill. H. 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. Krimbill Enterprises LP, II is controlled by H. Michael Krimbill via his ownership of its general partner, Krimbill Holding Company. H. 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. H. 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. (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. Mr. 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. Unless otherwise noted, each of the individuals listed above is believed to have sole voting and investment power with respect to the units beneficially held by them. The mailing address for each of the officers and directors of our general partner listed above is 6120 South Yale Avenue, Suite 805, Tulsa, Oklahoma 74136. Securities Authorized for Issuance Under Equity Compensation Plan The following table summarizes information regarding the securities that may be issued under the LTIP at March 31, 2021. Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuances Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) Plan Category (a) (b) (c) Equity Compensation Plans Approved by Security Holders — — — Equity Compensation Plans Not Approved by Security Holders (1) 446,975 — — 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. 109 Item 13. Certain Relationships and Related Transactions, and Director Independence Our directors, executive officers, and greater than 5% unitholders collectively own an aggregate of 42,973,134 common units, representing an aggregate 33.16% limited partner interest in us. In addition, our general partner owns a 0.1% general partner interest in us and all of our incentive distribution rights (“IDRs”). As of March 31, 2021, we owned 8.69% of our general partner. Distributions and 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. Our general partner determines the amount of these expenses. In addition, our general partner owns the 0.1% general partner interest and all of the IDRs. 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, 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, 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. 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. Liquidation Stage Liquidation Upon our liquidation, our partners, including our general partner, will be entitled to receive liquidating distributions according to their respective capital account balances. 110 Transactions with Related Persons WPX Bryan K. 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 DCC Shawn W. 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. 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 EIG 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 We purchase goods and services from certain entities that are partially owned by our named executive officers. The following table summarizes these transactions for the year ended March 31, 2021: Entity Nature of Purchases Amount Purchased Ownership Interest in Entity (in thousands) H. Michael Krimbill KAIR2014 LLC Aircraft $ 760 50 % Travis Krimbill, an employee of the Partnership, is the son of H. Michael Krimbill, who is a named executive officer of the Partnership and a member of the board of directors. Travis Krimbill does not report to H. Michael Krimbill and his compensation is determined by the Chief Financial Officer. During the year ended March 31, 2021, Travis Krimbill received total compensation of approximately $0.1 million. Registration Rights Agreement 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 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. Subject to limitations specified in the Registration Rights Agreement, the registration rights of the registration rights parties include the following: 111 • Demand Registration Rights. Certain registration rights parties deemed “Significant Holders” under the agreement may, to the extent that they continue to own more than 4% of our common units, require us to file a registration statement with the SEC registering the offer and sale of a specified number of common units, subject to limitations on the number of requests for registration that can be made in any twelve-month period as well as customary cutbacks at the discretion of the underwriters relating to a potential offering. All other registration rights parties are entitled to notice of a Significant Holder’s exercise of its demand registration rights and may include their common units in such registration. We can only be required to file a total of nine registration statements upon the Significant Holders’ exercise of these demand registration rights and are only required to effect demand registration if the aggregate proposed offering price to the public is at least $10.0 million. • 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. • Expenses of Registration. With specified exceptions, we are required to pay all expenses incidental to any registration of common units, excluding underwriting discounts and commissions. Review, Approval or Ratification of Transactions with Related Parties The board of directors of our general partner has adopted a Code of Business Conduct and Ethics that, among other things, sets forth our policies for the review, approval and ratification of transactions with related persons. The Code of Business Conduct and Ethics provides that the board of directors of our general partner or its authorized committee will periodically review all related person transactions that are required to be disclosed under SEC rules and, when appropriate, initially authorize or ratify all such transactions. In the event that the board of directors of our general partner or its authorized committee considers ratification of a related person transaction and determines not to so ratify, the Code of Business Conduct and Ethics provides that our officers will make all reasonable efforts to cancel or annul the transaction. The Code of Business Conduct and Ethics provides that, in determining whether or not to recommend the initial approval or ratification of a related person transaction, the board of directors of our general partner or its authorized committee should consider all of the relevant facts and circumstances available, including (if applicable) but not limited to: • whether there is an appropriate business justification for the transaction; • the benefits that accrue to the Partnership as a result of the transaction; • the terms available to unrelated third parties entering into similar transactions; • the impact of the transaction on a director’s independence (in the event the related party is a director, an immediate family member of a director or an entity in which a director is a partner, shareholder or executive officer); • the availability of other sources for comparable products or services; • whether it is a single transaction or a series of ongoing, related transactions; and • whether entering into the transaction would be consistent with the Code of Business Conduct and Ethics. Director Independence 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.” 112 Item 14. 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: March 31, 2021 2020 (in thousands) Audit fees (1) $ 2,149 $ 2,735 Audit-related fees (2) 7 48 Tax fees — — 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. (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 The audit committee of the board of directors of our general partner has adopted a pre-approval policy with respect to services which may be performed by Grant Thornton LLP. This policy lists specific audit-related services as well as any other services that Grant Thornton LLP is authorized to perform and sets out specific dollar limits for each specific service, which may not be exceeded without additional audit committee authorization. The audit committee receives quarterly reports on the status of expenditures pursuant to the pre-approval policy. The audit committee reviews the policy at least annually in order to approve services and limits for the current year. Any service that is not clearly enumerated in the policy must receive specific pre-approval by the audit committee prior to engagement. 113 PART IV Item 15. Exhibits, Financial Statement Schedules (a) The following documents are filed as part of this Annual Report: 1. Financial Statements . See the accompanying Index to Financial Statements. 2. Financial Statement Schedules . 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. 3. Exhibits. 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. 001-35172) filed with the SEC on August 7, 2013) 2.2 LLC Interest Transfer Agreement, dated as of August 1, 2013, by and among Oilfield Water Lines, LP, as the Representative, OWL Karnes SWD, LLC, OWL Karnes Holdings, LLC, NGL Energy Partners, LP and High Sierra Water-Eagle Ford, LLC (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on August 7, 2013) 2.3 LLC Interest Transfer Agreement, dated as of August 1, 2013, by and among Oilfield Water Lines, LP, OWL Cotulla SWD, LLC, Terry Bailey, as trustee of the PJB Irrevocable Trust, NGL Energy Partners, LP and High Sierra Water-Eagle Ford, LLC (incorporated by reference to Exhibit 2.3 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on August 7, 2013) 2.4 LLC Interest Transfer Agreement, dated as of August 1, 2013, by and among Oilfield Water Lines, LP, OWL Nixon SWD, LLC, Terry Bailey, as trustee of the PJB Irrevocable Trust, NGL Energy Partners, LP and High Sierra Water-Eagle Ford, LLC (incorporated by reference to Exhibit 2.4 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on August 7, 2013) 2.5 LLC Interest Transfer Agreement, dated as of August 1, 2013, by and among Oilfield Water Lines, LP, HR OWL, LLC, OWL Operating, LLC, Lotus Oilfield Services, L.L.C., OWL Lotus, LLC, NGL Energy Partners, LP, High Sierra Water-Eagle Ford, LLC and High Sierra Transportation, LLC (incorporated by reference to Exhibit 2.5 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on August 7, 2013) 2.6 Equity Interest Purchase Agreement, dated November 5, 2013, by and among NGL Energy Partners LP, High Sierra Energy, LP, Gavilon, LLC and Gavilon Energy Intermediate, LLC (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on December 5, 2013) 2.7 Membership Interest Purchase Agreement, dated as of May 30, 2018, by and among NGL Energy Operating, LLC, NGL Energy Partners LP, and Superior Plus Energy Services Inc. (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on July 10, 2018) 2.8 Asset Purchase and Sale Agreement, dated May 13, 2019, by and among NGL Energy Partners LP, Mesquite Disposals Unlimited, LLC and Mesquite SWD, Inc. (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on July 8, 2019) 2.9 Membership Interest Purchase Agreement, dated as of August 7, 2019, between NGL Energy Operating, LLC and Trajectory Acquisition Company LLC (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on October 4, 2019) 2.10 Equity Purchase Agreement, dated September 25, 2019, by and among NGL Energy Partners LP, NGL Water Solutions Permian, LLC, Water Remainco, LLC, Hillstone Environmental Partners, LLC, GGCOF HEP Blocker II, LLC, GGCOF HEP Blocker, LLC, Golden Gate Capital Opportunity Fund-A, L.P., GGCOF AIV L.P. and GGCOF HEP Blocker II Holdings, LLC (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on November 1, 2019) 3.1 Certificate of Limited Partnership of NGL Energy Partners LP (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 (File No. 333-172186) filed with the SEC on April 15, 2011) 3.2 Certificate of Amendment to Certificate of Limited Partnership of NGL Energy Partners LP (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 (File No. 333-172186) filed with the SEC on April 15, 2011) 3.3 Certificate of Formation of NGL Energy Holdings LLC (incorporated by reference to Exhibit 3.4 to the Registration Statement on Form S-1 (File No. 333-172186) filed with the SEC on April 15, 2011) 3.4 Certificate of Amendment to Certificate of Formation of NGL Energy Holdings LLC (incorporated by reference to Exhibit 3.5 to the Registration Statement on Form S-1 (File No. 333-172186) filed with the SEC on April 15, 2011) 3.5 Third Amended and Restated Limited Liability Company Agreement of NGL Energy Holdings LLC (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 28, 2013) 3.6 Amendment No. 1 to Third Amended and Restated Limited Liability Company Agreement of NGL Energy Holdings LLC, dated as of August 6, 2013 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on August 7, 2013) 3.7 Amendment No. 2 to Third Amended and Restated Limited Liability Company Agreement of NGL Energy Holdings LLC, dated as of June 27, 2014 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on July 3, 2014) 114 Exhibit Number Description 3.8 Amendment No. 3 to Third Amended and Restated Limited Liability Company Agreement of NGL Energy Holdings LLC, dated as of June 24, 2016 (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on June 28, 2016) 3.9 Amendment No. 4 to Third Amended and Restated Limited Liability Company Agreement of NGL Energy Holdings LLC, dated as of August 20, 2019 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on August 21, 2019) 3.10 Fourth Amended and Restated Agreement of Limited Partnership of NGL Energy Partners LP, dated as of June 13, 2017 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on June 13, 2017) 3.11 Fifth Amended and Restated Agreement of Limited Partnership of NGL Energy Partners LP, dated as of April 2, 2019 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on April 2, 2019) 3.12 Sixth Amended and Restated Agreement of Limited Partnership of NGL Energy Partners LP, dated as of July 2, 2019 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on July 8, 2019) 3.13 Seventh Amended and Restated Agreement of Limited Partnership of NGL Energy Partners LP, dated as of October 31, 2019 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 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. Osterman Propane, Inc. and the other holders party thereto (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on October 7, 2011) 4.2 Amendment No. 1 and Joinder to First Amended and Restated Registration Rights Agreement dated as of November 1, 2011 by and among the Partnership and SemStream (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on November 4, 2011) 4.3 Amendment No. 2 and Joinder to First Amended and Restated Registration Rights Agreement, dated January 3, 2012, by and among NGL Energy Holdings LLC, Liberty Propane, L.L.C., Pacer-Enviro Propane, L.L.C., Pacer-Pittman Propane, L.L.C., Pacer-Portland Propane, L.L.C., Pacer Propane (Washington), L.L.C., Pacer-Salida Propane, L.L.C. and Pacer-Utah Propane, L.L.C. (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on January 9, 2012) 4.4 Amendment No. 3 and Joinder to First Amended and Restated Registration Rights Agreement, dated May 1, 2012, by and between NGL Energy Holdings LLC and Downeast Energy Corp. (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on May 4, 2012) 4.5 Amendment No. 4 and Joinder to First Amended and Restated Registration Rights Agreement, dated June 19, 2012, by and between NGL Energy Holdings LLC and NGP M&R HS LP LLC (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on June 25, 2012) 4.6 Amendment No. 5 and Joinder to First Amended and Restated Registration Rights Agreement, dated October 1, 2012, by and between NGL Energy Holdings LLC and Enstone, LLC (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on October 3, 2012) 4.7 Amendment No. 6 and Joinder to First Amended and Restated Registration Rights Agreement, dated November 13, 2012, by and between NGL Energy Holdings LLC and Gerald L. Jensen, Thrift Opportunity Holdings, LP, Jenco Petroleum Corporation, Caritas Trust, Animosus Trust and Nitor Trust (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on November 19, 2012) 4.8 Amendment No. 7 and Joinder to First Amended and Restated Registration Rights Agreement, dated as of August 1, 2013, by and among NGL Energy Holdings LLC, Oilfield Water Lines, LP and Terry G. Bailey (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on August 7, 2013) 4.9 Amendment No. 8 and Joinder to First Amended and Restated Registration Rights Agreement, dated as of February 17, 2015, by and among NGL Energy Holdings LLC and Magnum NGL Holdco LLC (incorporated by reference to Exhibit 4.9 to the Annual Report on Form 10-K (File No. 001-35172) for the year ended March 31, 2015 filed with the SEC on June 1, 2015) 4.10 Amendment No. 9 and Joinder to First Amended and Restated Registration Rights Agreement, dated as of February 25, 2016, by and among NGL Energy Holdings LLC and Magnum NGL Holdco LLC (incorporated by reference to Exhibit 4.10 to the Annual Report on Form 10-K (File No. 001-35172) for the year ended March 31, 2016 filed with the SEC on May 31, 2016) 4.11 Registration Rights Agreement, dated December 2, 2013, by and among NGL Energy Partners LP and the purchasers set forth on Schedule A thereto (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on December 5, 2013) 4.12 Indenture, dated as of October 24, 2016, by and among NGL Energy Partners LP, NGL Energy Finance Corp., the guarantors party thereto and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on October 24, 2016) 4.13 Forms of 7.5% Senior Notes due 2023 (incorporated by reference to Exhibit 4.2 and included as Exhibits A1 and A2 to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on October 24, 2016) 115 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. as representative of the several initial purchasers (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on October 24, 2016) 4.15 First Supplemental Indenture, dated as of February 21, 2017, 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 4.8 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) 4.16 Second Supplemental Indenture, dated as of July 18, 2018, 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 4.9 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) 4.17 Third Supplemental Indenture, dated as of January 25, 2019, 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 4.10 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) 4.18 Fourth Supplemental Indenture, dated as of October 31, 2019, 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 September 30, 2019 filed with the SEC on November 8, 2019) 4.19 Fifth Supplemental Indenture, dated as of December 27, 2019, 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 4.5 to the Quarterly Report on Form 10-Q (File No. 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. Bank National Association, as trustee (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 22, 2017) 4.23 Forms of 6.125% Senior Notes due 2025 (incorporated by reference to Exhibit 4.2 and included as Exhibits A1 and A2 to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on February 22, 2017) 4.24 Registration Rights Agreement, dated as of February 22, 2017, by and among NGL Energy Partners LP, NGL Energy Finance Corp., the guarantors listed therein on Exhibit A and RBC Capital Markets, LLC and Deutsche Bank Securities Inc., as representatives of the several initial purchasers (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on February 22, 2017) 4.25 First Supplemental Indenture, dated as of July 18, 2018, 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 4.11 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) 4.26 Second Supplemental Indenture, dated as of January 25, 2019, 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 4.12 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) 4.27 Third Supplemental Indenture, dated as of October 31, 2019, 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 4.4 to the Quarterly Report on Form 10-Q (File No. 001-35172) for the quarter ended September 30, 2019 filed with the SEC on November 8, 2019) 4.28 Fourth Supplemental Indenture, dated as of December 27, 2019, 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 4.6 to the Quarterly Report on Form 10-Q (File No. 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. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on April 9, 2019) 4.32 Forms of 7.5 % Senior Notes due 2026 (incorporated by reference to Exhibit 4.2 and included as Exhibits A1 and A2 to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on April 9, 2019) 116 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. 001-35172) filed with the SEC on April 9, 2019) 4.34 First Supplemental Indenture, dated as of October 31, 2019, 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 4.5 to the Quarterly Report on Form 10-Q (File No. 001-35172) for the quarter ended September 30, 2019 filed with the SEC on November 8, 2019) 4.35 Second Supplemental Indenture, dated as of December 27, 2019, 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 4.7 to the Quarterly Report on Form 10-Q (File No. 001-35172) for the quarter ended December 31, 2019 filed with the SEC on February 6, 2020) 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. 001-35172) for the quarter ended June 30, 2017 filed with the SEC on August 4, 2017) 4.41 Registration Rights Agreement, dated July 2, 2019, by and among NGL Energy Partners LP, EIG Neptune Aggregator, L.P. and FS Energy and Power Fund (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on July 8, 2019) 4.42 Amended and Restated Registration Rights Agreement, dated October 31, 2019, by and among NGL Energy Partners LP, EIG Neptune Equity Aggregator, L.P., FS Energy and Power Fund and GCM Pellit Holdings, LLC (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on November 1, 2019) 4.43* Description of NGL Energy Partners LP’s securities 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) 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. 001-35172) filed with the SEC on December 5, 2013) 10.3+ NGL Energy Partners LP 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on May 17, 2011) 10.4+ Form of Restricted Unit Award Agreement under the NGL Energy Partners LP 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q (File No. 001-35172) for the quarter ended June 30, 2012 filed with the SEC on August 14, 2012 ) 10.5 Class D Preferred Unit and Warrant Purchase Agreement, dated July 2, 2019, by and among NGL Energy Partners LP, EIG Neptune Equity Aggregator, L.P. and FS Energy and Power Fund (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 8, 2019) 10.6 Board Representation Rights Agreement, dated July 2, 2019, by and among NGL Energy Partners LP, NGL Energy Holdings LLC and certain affiliates of EIG Neptune Equity Aggregator, L.P. and FS Energy and Power Fund (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on July 8, 2019) 10.7 Voting Agreement, dated July 2, 2019, by and among the members of NGL Energy Holdings LLC named therein (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on July 8, 2019) 10.8 Letter Agreement, dated July 2, 2019, by and among NGL Energy Partners LP, Mesquite Disposals Unlimited, LLC and Mesquite SWD, Inc. (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on July 8, 2019) 10.9 Form of Par Warrant (incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on July 8, 2019) 10.10 Form of Premium Warrant (incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on July 8, 2019) 10.11 Class D Preferred Unit and Warrant Purchase Agreement, dated September 25, 2019, by and among NGL Energy Partners LP, EIG Neptune Equity Aggregator, L.P., FS Energy and Power Fund and GCM Pellit Holdings, LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on September 30, 2019) 117 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. 001-35172) filed with the SEC on November 1, 2019) 10.13 Form of Premium Warrant (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (File No. 001-35172) filed with the SEC on November 1, 2019) 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 31.1* Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2* Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1* Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2* Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS** XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH** Inline XBRL Schema Document 101.CAL** Inline XBRL Calculation Linkbase Document 101.DEF** Inline XBRL Definition Linkbase Document 101.LAB** Inline XBRL Label Linkbase Document 101.PRE** Inline XBRL Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) * Exhibits filed with this report. ** The following documents are formatted in Inline XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets at March 31, 2021 and 2020, (ii) Consolidated Statements of Operations for the years ended March 31, 2021, 2020, and 2019, (iii) Consolidated Statements of Comprehensive (Loss) Income for the years ended March 31, 2021, 2020, and 2019, (iv) Consolidated Statements of Changes in Equity for the years ended March 31, 2021, 2020, and 2019, (v) Consolidated Statements of Cash Flows for the years ended March 31, 2021, 2020, and 2019, and (vi) Notes to Consolidated Financial Statements. + Management contracts or compensatory plans or arrangements. Item 16. Form 10-K Summary None. 118 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on June 3, 2021. NGL ENERGY PARTNERS LP By: NGL Energy Holdings LLC, its general partner By: /s/ H. Michael Krimbill H. Michael Krimbill Chief Executive Officer 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. Signature Title Date /s/ H. Michael Krimbill Chief Executive Officer and Director June 3, 2021 H. Michael Krimbill (Principal Executive Officer) /s/ Robert W. Karlovich III Chief Financial Officer June 3, 2021 Robert W. Karlovich III (Principal Financial Officer) /s/ Lawrence J. Thuillier Chief Accounting Officer June 3, 2021 Lawrence J. Thuillier (Principal Accounting Officer) /s/ Shawn W. Coady Director June 3, 2021 Shawn W. Coady /s/ James M. Collingsworth Director June 3, 2021 James M. Collingsworth /s/ Stephen L. Cropper Director June 3, 2021 Stephen L. Cropper /s/ Bryan K. Guderian Director June 3, 2021 Bryan K. Guderian /s/ John T. Raymond Director June 3, 2021 John T. Raymond /s/ Derek S. Reiners Director June 3, 2021 Derek S. Reiners /s/ Randall S. Wade Director June 3, 2021 Randall S. Wade 119 INDEX TO FINANCIAL STATEMENTS NGL ENERGY PARTNERS LP 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 F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors of NGL Energy Holdings LLC and Unitholders of NGL Energy Partners LP Opinion on the financial statements We have audited the accompanying consolidated balance sheets of NGL Energy Partners LP (a Delaware limited partnership) and subsidiaries (the “Partnership”) as of March 31, 2021 and 2020, the related consolidated statements of operations, comprehensive (loss) income, changes in equity, and cash flows for each of the three years in the period ended March 31, 2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Partnership as of March 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2021, in conformity with accounting principles generally accepted in the United States of America. 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. Basis for opinio n These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on the Partnership’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. 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 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 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 F-2 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 goodwill impairment assessment included the following, among others. We tested the effectiveness of controls relating to management’s goodwill impairment tests, including controls over the determination of the fair value of the reporting units. 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 appropriateness of the discount rate by recalculating the weighted average costs of capital and evaluating future market conditions, and ◦ 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. /s/ GRANT THORNTON LLP We have served as the Partnership’s auditor since 2010. Tulsa, Oklahoma June 3, 2021 F-3 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Consolidated Balance Sheets (in Thousands, except unit amounts) March 31, 2021 2020 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 4,829 $ 22,704 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 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 OPERATING LEASE RIGHT-OF-USE ASSETS 152,146 180,708 OTHER NONCURRENT ASSETS 50,733 63,137 Total assets $ 5,947,341 $ 6,498,736 LIABILITIES AND EQUITY CURRENT LIABILITIES: Accounts payable-trade $ 679,868 $ 515,049 Accounts payable-affiliates 119 17,717 Accrued expenses and other payables 170,400 232,062 Advance payments received from customers 11,163 19,536 Current maturities of long-term debt 2,183 4,683 Operating lease obligations 47,070 56,776 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 COMMITMENTS AND CONTINGENCIES (NOTE 9) CLASS D 9.00 % PREFERRED UNITS, 600,000 and 600,000 preferred units issued and outstanding, respectively 551,097 537,283 EQUITY: 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 The accompanying notes are an integral part of these consolidated financial statements. F-4 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Consolidated Statements of Operations (in Thousands, except unit and per unit amounts) Year Ended March 31, 2021 2020 2019 REVENUES: Water Solutions $ 370,986 $ 422,059 $ 301,686 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: Water Solutions 9,622 ( 33,870 ) ( 10,787 ) 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 on disposal or impairment of assets, net 475,436 261,786 34,296 Revaluation of liabilities 6,261 9,194 ( 5,373 ) Operating (Loss) Income ( 390,753 ) ( 3,332 ) 126,728 OTHER INCOME (EXPENSE): Equity in earnings of unconsolidated entities 1,938 1,291 2,533 Interest expense ( 198,799 ) ( 181,184 ) ( 164,725 ) (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 BENEFIT (EXPENSE) 3,391 ( 345 ) ( 1,233 ) Loss From Continuing Operations ( 637,418 ) ( 180,545 ) ( 79,455 ) (Loss) Income From Discontinued Operations, net of Tax ( 1,769 ) ( 218,235 ) 418,850 Net (Loss) Income ( 639,187 ) ( 398,780 ) 339,395 LESS: NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS ( 632 ) 1,773 20,206 LESS: NET LOSS ATTRIBUTABLE TO REDEEMABLE NONCONTROLLING INTERESTS — — 446 NET (LOSS) INCOME ATTRIBUTABLE TO NGL ENERGY PARTNERS LP $ ( 639,819 ) $ ( 397,007 ) $ 360,047 NET LOSS FROM CONTINUING OPERATIONS ALLOCATED TO COMMON UNITHOLDERS (NOTE 3) $ ( 730,683 ) $ ( 367,246 ) $ ( 171,153 ) 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 (NOTE 3) $ ( 732,450 ) $ ( 585,263 ) $ 247,724 BASIC (LOSS) INCOME PER COMMON UNIT Loss From Continuing Operations $ ( 5.67 ) $ ( 2.88 ) $ ( 1.39 ) (Loss) Income From Discontinued Operations, net of Tax $ ( 0.01 ) $ ( 1.71 ) $ 3.41 Net (Loss) Income $ ( 5.68 ) $ ( 4.59 ) $ 2.01 DILUTED (LOSS) INCOME PER COMMON UNIT Loss From Continuing Operations $ ( 5.67 ) $ ( 2.88 ) $ ( 1.39 ) (Loss) Income From Discontinued Operations, net of Tax $ ( 0.01 ) $ ( 1.71 ) $ 3.41 Net (Loss) Income $ ( 5.68 ) $ ( 4.59 ) $ 2.01 BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING 128,980,823 127,411,908 123,017,064 DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING 128,980,823 127,411,908 123,017,064 The accompanying notes are an integral part of these consolidated financial statements. F-5 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Consolidated Statements of Comprehensive (Loss) Income (in Thousands) Year Ended March 31, 2021 2020 2019 Net (loss) income $ ( 639,187 ) $ ( 398,780 ) $ 339,395 Other comprehensive income (loss) 119 ( 130 ) ( 9 ) Comprehensive (loss) income $ ( 639,068 ) $ ( 398,910 ) $ 339,386 The accompanying notes are an integral part of these consolidated financial statements. F-6 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Consolidated Statements of Changes in Equity For the Years Ended March 31, 2021, 2020, and 2019 (in Thousands, except unit amounts) Limited Partners Preferred Common General Partner Units Amount Units Amount Accumulated Other Comprehensive Income (Loss) Noncontrolling Interests Total Equity 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 Distributions to general and common unit partners and preferred unitholders (Note 10) ( 330 ) — — — ( 236,303 ) — — ( 236,633 ) Contributions — — — — — — 169 169 Sawtooth joint venture (Note 18) — — — — ( 63 ) — ( 791 ) ( 854 ) Purchase of noncontrolling interest — — — — ( 33 ) — ( 3,927 ) ( 3,960 ) Redeemable noncontrolling interest valuation adjustment — — — — ( 3,349 ) — — ( 3,349 ) Repurchase of warrants (Note 10) — — — — ( 14,988 ) — — ( 14,988 ) 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 Warrants exercised (Note 10) — — — 228,797 2 — — 2 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 Other comprehensive loss — — — — — ( 9 ) — ( 9 ) Cumulative effect adjustment for adoption of ASC 606 139 — — — 139,167 — — 139,306 Cumulative effect adjustment for adoption of ASU 2016-01 ( 2 ) — — — ( 1,567 ) 1,569 — — BALANCES AT MARCH 31, 2019 ( 50,603 ) 8,400,000 202,731 124,508,497 2,067,197 ( 255 ) 58,748 2,277,818 Distributions to general and common unit partners and preferred unitholders (Note 10) ( 342 ) — — — ( 258,020 ) — — ( 258,362 ) Distributions to noncontrolling interest owners — — — — — — ( 1,145 ) ( 1,145 ) Issuance of Class B preferred units, net of offering costs (Note 10) — 4,185,642 102,737 — — — — 102,737 Issuance of Class C preferred units, net of offering costs (Note 10) — 1,800,000 42,891 — — — — 42,891 Issuance of warrants, net of offering costs (Note 10) — — — — 52,742 — — 52,742 Warrants exercised (Note 10) — — — 1,458,371 15 — — 15 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 — — — ( 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. F-7 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Consolidated Statements of Cash Flows (in Thousands) Year Ended March 31, 2021 2020 2019 OPERATING ACTIVITIES: Net (loss) income $ ( 639,187 ) $ ( 398,780 ) $ 339,395 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Loss (income) from discontinued operations, net of tax 1,769 218,235 ( 418,850 ) Depreciation and amortization, including amortization of debt issuance costs 331,200 276,848 221,674 Loss on early extinguishment or revaluation of liabilities, net 22,953 7,853 6,967 Non-cash equity-based compensation expense 6,727 26,510 41,367 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 ) Equity in earnings of unconsolidated entities ( 1,938 ) ( 1,291 ) ( 2,533 ) Distributions of earnings from unconsolidated entities 3,364 — 2,206 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 Accounts payable-trade and affiliates 207,505 ( 375,257 ) 87,739 Other current and noncurrent liabilities ( 34,836 ) ( 65,262 ) ( 12,308 ) Net cash provided by operating activities-continuing operations 305,763 382,426 151,523 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 INVESTING ACTIVITIES: Capital expenditures ( 186,801 ) ( 555,713 ) ( 455,586 ) Acquisitions, net of cash acquired 901 ( 1,268,474 ) ( 300,614 ) Net settlements of commodity derivatives ( 80,372 ) 86,702 ( 10,173 ) Proceeds from sales of assets 45,742 17,621 16,177 Proceeds from divestitures of businesses and investments, net — — 335,809 Investments in unconsolidated entities ( 963 ) ( 21,218 ) ( 389 ) Distributions of capital from unconsolidated entities — 440 1,440 Repayments on loan for natural gas liquids facility — 3,022 10,336 Loan to affiliate — — ( 1,515 ) 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 Net cash (used in) provided by investing activities ( 221,493 ) ( 1,438,756 ) 453,473 FINANCING ACTIVITIES: 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 ) Debt issuance costs ( 65,566 ) ( 14,950 ) ( 1,383 ) Contributions from noncontrolling interest owners, net — — 169 Distributions to general and common unit partners and preferred unitholders ( 142,128 ) ( 244,400 ) ( 236,633 ) Distributions to noncontrolling interest owners ( 4,115 ) ( 1,145 ) — Proceeds from sale of preferred units, net of offering costs — 622,391 — Payments for redemption of preferred units — ( 265,128 ) — Repurchase of warrants — — ( 14,988 ) Common unit repurchases and cancellations ( 182 ) ( 1,644 ) ( 297 ) Payments for settlement and early extinguishment of liabilities ( 95,437 ) ( 98,958 ) ( 4,577 ) Investment in NGL Energy Holdings LLC — ( 15,226 ) — 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 (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 Cash and cash equivalents, end of period $ 4,829 $ 22,704 $ 18,572 Supplemental cash flow information: Cash interest paid $ 168,642 $ 155,445 $ 170,632 Income taxes paid (net of income tax refunds) $ 2,586 $ 4,931 $ 2,423 Supplemental non-cash investing and financing activities: Distributions declared but not paid to Class B, Class C and Class D preferred unitholders $ 13,814 $ 18,687 $ 4,725 Accrued capital expenditures $ 21,824 $ 88,917 $ 19,121 The accompanying notes are an integral part of these consolidated financial statements. F-8 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Notes to Consolidated Financial Statements Note 1— Nature of Operations and Organization NGL Energy Partners LP (“we,” “us,” “our,” or the “Partnership”) is a Delaware limited partnership formed in September 2010. NGL Energy Holdings LLC serves as our general partner. 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 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 Basis of Presentation Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The accompanying consolidated financial statements include our accounts and those of our controlled subsidiaries. Intercompany transactions and account balances have been eliminated in consolidation. Investments we do not control, but can exercise significant influence over, are accounted for using the equity method of accounting. We also own an undivided interest in a crude oil pipeline, and include our proportionate share of assets, liabilities, and expenses related to this pipeline in our consolidated financial statements. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amount of assets and liabilities reported at the date of the consolidated financial statements and the amount of revenues and expenses reported during the periods presented. Critical estimates we make in the preparation of our consolidated financial statements include, among others, determining the fair value of assets and liabilities acquired in acquisitions, the fair value of derivative instruments, the collectibility of accounts receivable, the recoverability of inventories, useful lives and recoverability of property, plant and equipment and amortizable intangible assets, the impairment of long-lived assets and goodwill, the fair value of asset retirement obligations, the value of equity-based compensation, accruals for environmental matters and estimating certain revenues. Although we believe these estimates are reasonable, actual results could differ from those estimates. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Fair value is based upon assumptions that market participants would use when pricing an asset or liability. We use the following fair value hierarchy, which prioritizes valuation technique inputs used to measure fair value into three broad levels: F-9 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) • Level 1: Quoted prices in active markets for identical assets and liabilities that we have the ability to access at the measurement date. • Level 2: Inputs (other than quoted prices included within Level 1) that are either directly or indirectly observable for the asset or liability, including (i) quoted prices for similar assets or liabilities in active markets, (ii) quoted prices for identical or similar assets or liabilities in inactive markets, (iii) inputs other than quoted prices that are observable for the asset or liability, and (iv) inputs that are derived from observable market data by correlation or other means. Instruments categorized in Level 2 include non-exchange traded derivatives such as over-the-counter commodity price swap and option contracts and forward commodity contracts. We determine the fair value of all of our derivative financial instruments utilizing pricing models for similar instruments. Inputs to the pricing models include publicly available prices and forward curves generated from a compilation of data gathered from third parties. • Level 3: Unobservable inputs for the asset or liability including situations where there is little, if any, market activity for the asset or liability. The fair value hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3). In some cases, the inputs used to measure fair value might fall into different levels of the fair value hierarchy. The lowest level input that is significant to a fair value measurement determines the applicable level in the fair value hierarchy. Assessing the significance of a particular input to a fair value measurement requires judgment, considering factors specific to the asset or liability. Derivative Financial Instruments We record all derivative financial instrument contracts at fair value in our consolidated balance sheets except for certain physical contracts that qualify for 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. We have not designated any financial instruments as hedges for accounting purposes. All changes in the fair value of our physical contracts that do not qualify as normal purchases and normal sales and settlements (whether cash transactions or non-cash mark-to-market adjustments) are reported either within revenue (for sales contracts) or cost of sales (for purchase contracts) in our consolidated statements of operations, regardless of whether the contract is physically or financially settled. We utilize various commodity derivative financial instrument contracts to attempt to reduce our exposure to price fluctuations. We do not enter into such contracts for trading purposes. Changes in assets and liabilities from commodity derivative financial instruments result primarily from changes in market prices, newly originated transactions, and the timing of settlements and are reported within cost of sales on the consolidated statements of operations, along with related settlements. We attempt to balance our contractual portfolio in terms of notional amounts and timing of performance and delivery obligations. However, net unbalanced positions can exist or are established based on our assessment of anticipated market movements. Inherent in the resulting contractual portfolio are certain business risks, including commodity price risk and credit risk. Commodity price risk is the risk that the market value of crude oil, natural gas liquids, or refined and renewables products will change, either favorably or unfavorably, in response to changing market conditions. Credit risk is the risk of loss from nonperformance by suppliers, customers or financial counterparties to a contract. Procedures and limits for managing commodity price risks and credit risks are specified in our market risk policy and credit policy, respectively. Open commodity positions and market price changes are monitored daily and are reported to senior management and to marketing operations personnel. Credit risk is monitored daily and exposure is minimized through customer deposits, restrictions on product liftings, letters of credit, and entering into master netting agreements that allow for offsetting counterparty receivable and payable balances for certain transactions. Cost of Sales We include all costs we incur to acquire products, including the costs of purchasing, terminaling, and transporting inventory, prior to delivery to our customers, in cost of sales. Cost of sales excludes depreciation of our property, plant and equipment. 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 F-10 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. Income Taxes We qualify as a partnership for income tax purposes. As such, we generally do not pay United States federal income tax. Rather, each owner reports his or her share of our income or loss on his or her individual tax return. The aggregate difference in the basis of our net assets for financial and tax reporting purposes cannot be readily determined, as we do not have access to information regarding each partner’s basis in the Partnership. We have certain taxable corporate subsidiaries in the United States and Canada, and our operations in Texas are subject to a state franchise tax that is calculated based on revenues net of cost of sales. Our fiscal years 2017 to 2020 generally remain subject to examination by federal, state, and Canadian tax authorities. We utilize the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which these temporary differences are expected to be recovered or settled. Changes in tax rates are recognized in income in the period that includes the enactment date. A publicly traded partnership is required to generate at least 90 % of its gross income (as defined for federal income tax purposes) from certain qualifying sources. Income generated by our taxable corporate subsidiaries is excluded from this qualifying income calculation. 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 $ 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. To recognize a tax position, we determine whether it is more likely than not that the tax position will be sustained upon examination, including resolution of any related appeals or litigation, based on the technical merits of the position. A tax position that meets the more likely than not threshold is measured to determine the amount of benefit to be recognized in the consolidated financial statements. We had no material uncertain tax positions that required recognition in our consolidated financial statements at March 31, 2021 or 2020. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, demand and time deposits, and funds invested in highly liquid instruments with maturities of three months or less at the date of purchase. At times, certain account balances may exceed federally insured limits. Accounts Receivable and Concentration of Credit Risk We operate in the United States and Canada. 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. 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. We did not have any customers that represented over 10% of consolidated revenues for fiscal years 2021, 2020 and 2019. F-11 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Inventories 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. In performing this analysis, we consider fixed-price forward commitments. Inventories consist of the following at the dates indicated: March 31, 2021 2020 (in thousands) 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 Investments we do not control, but can exercise significant influence over, are accounted for using the equity method of accounting. Investments in partnerships and limited liability companies, unless our investment is considered to be minor, and investments in unincorporated joint ventures are also accounted for using the equity method of accounting. Under the equity method, we do not report the individual assets and liabilities of these entities on our consolidated balance sheets; instead, our ownership interests are reported within investments in unconsolidated entities on our consolidated balance sheets. Under the equity method, the investment is recorded at acquisition cost, increased by our proportionate share of any earnings and additional capital contributions and decreased by our proportionate share of any losses, distributions paid, and amortization of any excess investment. Excess investment is the amount by which our total investment exceeds our proportionate share of the net assets of the investee. We consider distributions received from unconsolidated entities which do not exceed cumulative equity in earnings subsequent to the date of investment to be a return on investment and are classified as operating activities in our consolidated statements of cash flows. 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. F-12 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Our investments in unconsolidated entities consist of the following at the dates indicated: Ownership March 31, Entity Segment Interest (1) Date Acquired 2021 2020 (in thousands) 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. (2) This is an investment with a related party. See Note 13 for a further discussion. Other Noncurrent Assets Other noncurrent assets consist of the following at the dates indicated: March 31, 2021 2020 (in thousands) Loan receivable (1) $ 2,962 $ 5,374 Line fill (2) 28,110 25,763 Minimum shipping fees - pipeline commitments (3) 13,171 17,443 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. (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, 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, 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. Accrued Expenses and Other Payables Accrued expenses and other payables consist of the following at the dates indicated: March 31, 2021 2020 (in thousands) Accrued interest $ 56,299 $ 39,803 Accrued compensation and benefits 41,456 29,990 Derivative liabilities 21,562 17,777 Excise and other tax liabilities 10,970 9,941 Contingent consideration liability (1) 3,083 102,419 Product exchange liabilities 1,188 1,687 Other 35,842 30,445 Total $ 170,400 $ 232,062 F-13 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 We record property, plant and equipment at cost, less accumulated depreciation. 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 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). Intangible Assets 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), 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). We amortize debt issuance costs over the terms of the related debt using a method that approximates the effective interest method. Impairment of Long-Lived Assets We evaluate the carrying value of our long-lived assets (property, plant and equipment and amortizable intangible assets) for potential impairment when events and circumstances warrant such a review. A long-lived asset group is considered impaired when the anticipated undiscounted future cash flows from the use and eventual disposition of the asset group is less than its carrying value. In that event, we recognize a loss equal to the amount by which the carrying value exceeds the fair value of the asset group. When we cease to use an acquired trade name, we test the trade name for impairment using the relief from royalty method and we begin amortizing the trade name over its estimated useful life as a defensive asset. See Note 5 and Note 7 for a further discussion of long-lived asset impairments recognized in the consolidated statements of operations. We evaluate our equity method investments for impairment when we believe the current fair value may be less than the carrying amount and record an impairment if we believe the decline in value is other than temporary. Goodwill Goodwill represents the excess of the consideration paid for the acquired businesses over the fair value of the individual assets acquired, net of liabilities assumed. Business combinations are accounted for using the “acquisition method” (see Note 4). We expect that all of our goodwill at March 31, 2021 is deductible for federal income tax purposes. Goodwill and indefinite-lived intangible assets are not amortized, but instead are evaluated for impairment at least annually. We perform our annual assessment of impairment during the fourth quarter of our fiscal year, and more frequently if circumstances warrant. To perform this assessment, we first consider qualitative factors to determine whether it is more likely than not that the fair value of each reporting unit exceeds its carrying amount. If we conclude that it is more likely than not that the fair value of a reporting unit does not exceed its carrying amount, we calculate the fair value for the reporting unit and compare the amount to its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered impaired. If the carrying amount of a reporting unit exceeds its fair value, goodwill is considered to be impaired and the goodwill balance is reduced by the difference between the fair value and carrying amount of the reporting unit. Estimates and assumptions used to perform the impairment evaluation are inherently uncertain and can significantly affect the outcome of the analysis. The estimates and assumptions we used in the annual goodwill impairment assessment included market participant considerations and future forecasted operating results. Changes in operating results and other assumptions could materially affect these estimates. See Note 6 for a further discussion and analysis of our goodwill impairment assessment. F-14 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) 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 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 Noncontrolling interests represent the portion of certain consolidated subsidiaries that are owned by third parties. Amounts are adjusted by the noncontrolling interest holder’s proportionate share of the subsidiaries’ earnings or losses each period and any distributions that are paid. Noncontrolling interests are reported as a component of equity, unless the noncontrolling interest is considered redeemable, in which case the noncontrolling interest is recorded between liabilities and equity (mezzanine or temporary equity) in our consolidated balance sheet. 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. Acquisitions 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 and goodwill is not recorded. All other transactions are recorded as business combinations. We record the assets acquired and liabilities assumed in a business combination at their acquisition date fair values. For a business combination, the excess of the purchase price over the net fair value of acquired assets and assumed liabilities is recorded as goodwill, which is not amortized but instead is evaluated for impairment at least annually (as described above). 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. 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. Recent Accounting Pronouncements 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 F-15 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. 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 trade 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, 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 The following table presents our calculation of basic and diluted weighted average common units outstanding for the periods indicated: Year Ended March 31, 2021 2020 2019 Weighted average common units outstanding during the period: Common units - Basic 128,980,823 127,411,908 123,017,064 Common units - Diluted 128,980,823 127,411,908 123,017,064 For the years ended March 31, 2021, 2020 and 2019, all potential common units or convertible securities were considered antidilutive. F-16 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 ) Less: 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 ) Less: Distributions to preferred unitholders (1)(2) ( 93,364 ) ( 188,734 ) ( 111,936 ) Less: 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 Less: Discontinued operations loss attributable to redeemable noncontrolling interests — — 446 Less: Discontinued operations net loss (income) allocated to general partner (3) 2 218 ( 419 ) Net (loss) income from discontinued operations allocated to common unitholders $ ( 1,767 ) $ ( 218,017 ) $ 418,877 Net (loss) income allocated to common unitholders $ ( 732,450 ) $ ( 585,263 ) $ 247,724 Basic (loss) income per common unit Loss from continuing operations $ ( 5.67 ) $ ( 2.88 ) $ ( 1.39 ) (Loss) income from discontinued operations, net of tax $ ( 0.01 ) $ ( 1.71 ) $ 3.41 Net (loss) income $ ( 5.68 ) $ ( 4.59 ) $ 2.01 Diluted (loss) income per common unit Loss from continuing operations $ ( 5.67 ) $ ( 2.88 ) $ ( 1.39 ) (Loss) income from discontinued operations, net of tax $ ( 0.01 ) $ ( 1.71 ) $ 3.41 Net (loss) income $ ( 5.68 ) $ ( 4.59 ) $ 2.01 Basic weighted average common units outstanding 128,980,823 127,411,908 123,017,064 Diluted weighted average common units outstanding 128,980,823 127,411,908 123,017,064 (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. Note 4— Acquisitions 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. 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: F-17 NGL ENERGY PARTNERS LP AND SUBSIDIARIES 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: 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 Pipeline and related facilities 30 - 40 264,405 244,751 Vehicles and railcars 3 - 25 126,088 123,937 Water treatment facilities and equipment 3 - 30 1,930,437 1,525,859 Crude oil tanks and related equipment 2 - 30 238,924 234,143 Barges and towboats 5 - 30 137,386 125,162 Information technology equipment 3 - 7 50,220 34,261 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 ) Net property, plant and equipment $ 2,706,853 $ 2,851,555 (1) Tank bottoms, which are product volumes required for the operation of storage tanks, are recorded at historical cost. We recover tank bottoms when the storage tanks are removed from service. 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. The following table summarizes depreciation expense and capitalized interest expense for the periods indicated: Year Ended March 31, 2021 2020 2019 (in thousands) Depreciation expense $ 190,204 $ 132,791 $ 101,515 Capitalized interest expense $ 2,778 $ 650 $ 482 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: F-18 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Year Ended March 31, 2021 2020 2019 (in thousands) Water Solutions $ 36,492 $ 22,491 $ 3,067 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): Water Solutions Crude Oil Logistics Liquids Logistics Total (in thousands) Balances at March 31, 2019 $ 410,139 $ 579,846 $ 120,471 $ 1,110,456 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 ) Impairment — ( 237,800 ) — ( 237,800 ) Balances at March 31, 2021 $ 283,310 $ 342,046 $ 119,083 $ 744,439 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 F-19 NGL ENERGY PARTNERS LP AND SUBSIDIARIES 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. During the month of March 2020, our market capitalization declined significantly driven by current macroeconomic conditions including the collapse of oil prices driven by both the decrease in demand caused by the novel strain of coronavirus (COVID-19) pandemic and excess supply, as well as changing market conditions and expected lower crude oil production in certain regions, resulting in expected decreases in future cash flows for certain of our assets. In addition, the uncertainty related to oil demand continues to have a significant impact on the investment and operating plans of our primary customers. 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 value. 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 as 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 %. F-20 NGL ENERGY PARTNERS LP AND SUBSIDIARIES 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 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. 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, (iii) expected rental fees and (iv) the addition of storing refined products (which we acquired as part of the sale of a portion of the reporting unit (see Note 18). We assumed that commodity prices would be flat through the duration of the model and an average increase of approximately 7 % increase in rental fees per year starting in April 2020, and held such prices and fees flat for periods in our model beyond our 2024 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 January 1, 2019 of approximately 13.1 %. The discounted cash flow results indicated that the estimated fair value of our Sawtooth reporting unit was less than its carrying value by approximately 35.2 % at January 1, 2019. 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 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. 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, other than the Sawtooth reporting unit as previously described. F-21 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Note 7— Intangible Assets Our intangible assets consist of the following at the dates indicated: 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) Amortizable: Customer relationships 3 - 30 $ 1,318,638 $ ( 450,639 ) $ 867,999 $ 1,435,573 $ ( 445,250 ) $ 990,323 Customer commitments 10 - 25 192,000 ( 13,440 ) 178,560 502,000 ( 111,677 ) 390,323 Pipeline capacity rights 30 7,799 ( 1,907 ) 5,892 7,799 ( 1,647 ) 6,152 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 Non-compete agreements 2 - 24 12,100 ( 6,102 ) 5,998 12,723 ( 4,735 ) 7,988 Debt issuance costs (1) 2 - 5 9,558 ( 406 ) 9,152 44,051 ( 34,983 ) 9,068 Total amortizable 1,779,876 ( 517,518 ) 1,262,358 2,241,129 ( 631,449 ) 1,609,680 Non-amortizable: 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, 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) Depreciation and amortization $ 127,023 $ 132,521 $ 110,458 Cost of sales 307 349 486 Interest expense 5,572 5,462 4,928 Operating expenses 247 286 — Total $ 133,149 $ 138,618 $ 115,872 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 19). F-22 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Expected amortization of our intangible assets is as follows (in thousands): Year Ending March 31, 2022 $ 96,206 2023 78,510 2024 72,308 2025 67,807 2026 66,413 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, 2021 March 31, 2020 Face Amount Unamortized Debt Issuance Costs (1) Book Value Face Amount Unamortized Debt Issuance Costs (1) Book Value (in thousands) 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”) 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 Less: 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 (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”). F-23 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) 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; sell assets; 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. Compliance At March 31, 2021, we were in compliance with the covenants under the 2026 Senior Secured Notes indenture. ABL Facility 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 F-24 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 The senior unsecured notes include, as defined below, the 2019 Notes, 2021 Notes, 2023 Notes, 2025 Notes and 2026 Notes (collectively, the “Senior Unsecured Notes”). 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 ABL 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. Issuances 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 (“2021 Notes”). The 2021 Notes were redeemed on October 16, 2018. See further discussion below. On October 24, 2016, we issued $ 700.0 million of 7.5 % 2023 Notes. Interest is payable on May 1 and November 1 of each year. The 2023 Notes mature on November 1, 2023. On February 22, 2017, we issued $ 500.0 million of 6.125 % 2025 Notes. Interest is payable on March 1 and September 1 of each year. 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. Interest is payable on April 15 and October 15 of each year. The 2026 Notes mature on April 15, 2026. F-25 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Redemptions The following table summarizes redemptions of Senior Unsecured Notes for the period indicated: Year Ended March 31, 2019 (in thousands) 2019 Notes (1) Notes redeemed $ 328,005 Cash paid (excluding payments of accrued interest) $ 329,719 Loss on early extinguishment of debt $ ( 2,113 ) 2021 Notes (2) Notes redeemed $ 367,048 Cash paid (excluding payments of accrued interest) $ 373,358 Loss on early extinguishment of debt $ ( 10,130 ) (1) On March 15, 2019, we redeemed all of the remaining outstanding 2019 Notes. 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 (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 (loss) gain on early extinguishment of liabilities, net within our consolidated statement of operations. Repurchases The following table summarizes repurchases of Senior Unsecured Notes for the periods indicated: Year Ended March 31, 2021 2020 2019 (in thousands) 2019 Notes Notes repurchased $ — $ — $ 25,419 Cash paid (excluding payments of accrued interest) $ — $ — $ 25,406 Loss on early extinguishment of debt (1) $ — $ — $ ( 34 ) 2023 Notes Notes repurchased $ 52,072 $ — $ 8,624 Cash paid (excluding payments of accrued interest) $ 33,566 $ — $ 8,575 Gain (loss) on early extinguishment of debt (2) $ 18,096 $ — $ ( 63 ) 2025 Notes Notes repurchased $ 7,300 $ 1,815 $ — Cash paid (excluding payments of accrued interest) $ 3,647 $ 454 $ — Gain on early extinguishment of debt (3) $ 3,575 $ 1,341 $ — 2026 Notes 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. F-26 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. Compliance 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 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. 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, 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, 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. At March 31, 2021, we were in compliance with the covenants under the Sawtooth credit agreement. F-27 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 Long-Term Debt Total (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, 2022 $ 12,247 2023 12,247 2024 11,677 2025 10,802 2026 8,529 Thereafter 53 Total $ 55,555 Note 9— Commitments and Contingencies Legal Contingencies In August 2015, LCT Capital, LLC (“LCT”) filed a lawsuit against NGL Energy Holdings LLC (the “GP”) and the Partnership seeking payment for investment banking services relating to the purchase of TransMontaigne Inc. and related assets in July 2014. 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 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 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 F-28 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) damages. 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. We are party to various other claims, legal actions, and complaints arising in the ordinary course of business. In the opinion of our management, the ultimate resolution of these claims, legal actions, and complaints, after consideration of amounts accrued, insurance coverage, and other arrangements, is not expected to have a material adverse effect on our consolidated financial position, results of operations or cash flows. However, the outcome of such matters is inherently uncertain, and estimates of our liabilities may change materially as circumstances develop. Environmental Matters At March 31, 2021, we have an environmental liability, measured on an undiscounted basis, of $ 1.7 million, which is recorded within accrued expenses and other payables in our consolidated balance sheet. Our operations are subject to extensive federal, state, and local environmental laws and regulations. Although we believe our operations are in substantial compliance with applicable environmental laws and regulations, risks of additional costs and liabilities are inherent in our business, and there can be no assurance that we will not incur significant costs. Moreover, it is possible that other developments, such as increasingly stringent environmental laws, regulations and enforcement policies thereunder, and claims for damages to property or persons resulting from the operations, could result in substantial costs. Accordingly, we have adopted policies, practices, and procedures in the areas of pollution control, product safety, occupational health, and the handling, storage, use, and disposal of hazardous materials designed to prevent material environmental or other damage, and to limit the financial liability that could result from such events. However, some risk of environmental or other damage is inherent in our business. In 2015, as previously disclosed, the United States Environmental Protection Agency (“EPA”) informed NGL Crude Logistics, LLC, formerly known as Gavilon, LLC (“Gavilon Energy”), of alleged violations that occurred in 2011 by Gavilon Energy of the Clean Air Act’s renewable fuel standards regulations (prior to its acquisition by us in December 2013). On October 4, 2016, the United States Department of Justice, acting at the request of the EPA, filed a civil complaint in the Northern District of Iowa against Gavilon Energy and one of its then suppliers, Western Dubuque Biodiesel LLC (“Western Dubuque”). Consistent with the earlier allegations by the EPA, the civil complaint related to transactions between Gavilon Energy and Western Dubuque and the generation of biodiesel renewable identification numbers (“RINs”) sold by Western Dubuque to Gavilon Energy in 2011. On December 19, 2016, we filed a motion to dismiss the complaint. On January 9, 2017, the EPA filed an amended complaint. The amended complaint seeks an order declaring Western Dubuque’s RINs invalid and requiring the defendants to retire an equivalent number of valid RINs and that the defendants pay statutory civil penalties. On January 23, 2017, we filed a motion to dismiss the amended complaint. On May 24, 2017, the court denied our motion to dismiss. Subsequently, the EPA filed a second amended complaint seeking an order declaring Western Dubuque’s RINs invalid, an order requiring us to retire an equivalent number of valid RINs and an award against us of statutory civil penalties. In May 2018, the parties completed briefing on cross-motions for summary judgment concerning liability issues in the case. On July 3, 2018, the Court denied our summary judgment motion and largely granted the plaintiff’s two summary judgment motions on liability. On July 19, 2018, Gavilon Energy reached an agreement in principle with the EPA regarding the terms of a settlement of the case, which was memorialized in a consent decree lodged to the Court on September 27, 2018. Such terms will result in Gavilon Energy paying cash of $ 25.0 million and retiring 36 million RINs, over a twelve-month period. The consent decree was approved by the Court on November 8, 2018. 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 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. Asset Retirement Obligations We have contractual and regulatory obligations at certain facilities for which we have to perform remediation, dismantlement, or removal activities when the assets are retired. Our liability for asset retirement obligations is discounted to present value. To calculate the liability, we make estimates and assumptions about the retirement cost and the timing of retirement. Changes in our assumptions and estimates may occur as a result of the passage of time and the occurrence of future events. The following table summarizes changes in our asset retirement obligation, which is reported within other noncurrent liabilities in our consolidated balance sheets (in thousands): F-29 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Balance at March 31, 2019 $ 9,723 Liabilities incurred 1,643 Liabilities assumed in acquisitions 6,642 Liabilities settled ( 658 ) Accretion expense 1,066 Balance at March 31, 2020 18,416 Liabilities incurred 7,952 Liabilities associated with disposed assets (1) ( 22 ) Accretion expense 1,733 Balance at March 31, 2021 $ 28,079 (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. However, the fair value of the asset retirement obligation cannot currently be reasonably estimated because the settlement dates are indeterminable. We will record an asset retirement obligation for these assets in the periods in which settlement dates are reasonably determinable. Other Commitments We have noncancelable agreements for product storage, railcar spurs and real estate. The following table summarizes future minimum payments under these agreements at March 31, 2021 (in thousands): Year Ending March 31, 2022 $ 10,074 2023 4,568 2024 4,568 2025 74 2026 55 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. 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. Pipeline Capacity Agreements We have noncancelable agreements with crude oil pipeline operators, which guarantee us minimum monthly shipping capacity on the pipelines. As a result, we are required to pay the minimum shipping fees if actual shipments are less than our allotted capacity. Under certain agreements we have the ability to recover minimum shipping fees previously paid if our shipping volumes exceed the minimum monthly shipping commitment during each month remaining under the agreement, with some contracts containing provisions that allow us to continue shipping up to six months after the maturity date of the contract in order to recapture previously paid minimum shipping delinquency fees. 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). F-30 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, 2022 $ 35,314 2023 35,314 2024 35,410 2025 30,897 Total $ 136,935 Sales and Purchase Contracts We have entered into product sales and purchase contracts for which we expect the parties to physically settle and deliver the inventory in future periods. At March 31, 2021, we had the following commodity purchase commitments (in thousands): Crude Oil (1) Natural Gas Liquids Value Volume (in barrels) Value Volume (in gallons) 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 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): Crude Oil Natural Gas Liquids Value Volume (in barrels) Value Volume (in gallons) 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 F-31 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). Certain other forward purchase and sale contracts do not qualify for the normal purchase and normal sale election. These contracts are recorded at fair value in our consolidated balance sheet and are not included in the tables above. These contracts are included in the derivative disclosures in Note 11, and represent $ 37.2 million of our prepaid expenses and other current assets and $ 24.0 million of our accrued expenses and other payables at March 31, 2021. Note 10— Equity Partnership Equity The Partnership’s equity consists of a 0.1 % general partner interest and a 99.9 % limited partner interest, which consists of common units. Our general partner has the right, but not the obligation, to contribute a proportionate amount of capital to us to maintain its 0.1 % general partner interest. Our general partner is not required to guarantee or pay any of our debts or obligations. As of March 31, 2021, we owned 8.69 % of our general partner. General Partner Contributions 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. Common Unit Repurchase Program 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 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 Record Date Payment Date Amount Per Unit Amount Paid to Limited Partners Amount Paid to General Partner (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 F-32 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Class A Convertible Preferred Units On April 21, 2016, we entered into a private placement agreement to issue $ 200 million of 10.75 % Class A Convertible Preferred Units (“Class A Preferred Units”) to Oaktree Capital Management L.P. and its co-investors (“Oaktree”). On June 23, 2016, the private placement agreement was amended to increase the aggregate principal amount from $ 200 million to $ 240 million. We received net proceeds of $ 235.0 million (net of offering costs of $ 5.0 million) in connection with the issuance of 19,942,169 Class A Preferred Units and 4,375,112 warrants, which have an exercise price of $ 0.01 . 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 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, 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 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. On April 5, 2019, we redeemed 7,468,978 of the Class A Preferred Units. The applicable Class A redemption price was $ 13.389 per Class A Preferred Unit, calculated at 111.25 % of $ 12.035 (the Class A Preferred Unit price), plus accrued but unpaid and accumulated distributions of $ 0.338 . The amount per Class A Preferred Unit paid to each Class A preferred unitholder was $ 13.727 , for a total payment of $ 102.5 million. On April 5, 2019, all 1,458,371 outstanding warrants to purchase common units were exercised for proceeds of less than $ 0.1 million. On May 11, 2019, we redeemed the remaining 12,473,191 outstanding Class A Preferred Units. The applicable Class A redemption price was $ 13.2385 per Class A Preferred Unit, calculated at 110 % of $ 12.035 (the Class A Preferred Unit price), plus accrued but unpaid and accumulated distributions of $ 0.1437 . The amount per Class A Preferred Unit paid to each Class A preferred unitholder was $ 13.3822 , for a total payment of $ 166.9 million. In addition, we paid the Class A preferred unitholders the distribution declared on April 24, 2019 for the quarter ended March 31, 2019 of $ 4.0 million, or $ 0.3234 per unit, which was paid to the holders of the Class A Preferred Units on May 10, 2019. Class B Preferred Units 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. 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 F-33 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) 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. 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. The initial distribution rate for the Class B Preferred Units from and including the date of original issue to, but not including, July 1, 2022 is 9.00% per year of the $25.00 liquidation preference per unit (equal to $2.25 per unit per year). On and after July 1, 2022, distributions on the Class B Preferred Units will accumulate at a percentage of the $25.00 liquidation preference equal to the applicable three-month LIBOR plus a spread of 7.213%. The current distribution rate for the Class B Preferred Units is 9.00% per year of the $25.00 liquidation preference per unit (equal to $2.25 per unit per year). The following table summarizes distributions declared on our Class B Preferred Units during the last three fiscal years: Date Declared Record Date Payment Date Amount Per Unit Amount Paid to Class B Preferred Unitholders (in thousands) 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 On April 2, 2019, we issued 1,800,000 of our 9.625 % Class C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class C Preferred Units”) representing limited partner interests at a price of $ 25.00 per unit for net proceeds of $ 42.9 million (net of the underwriters’ discount of $ 1.4 million and estimated offering costs of $ 0.7 million). At any time on or after April 15, 2024, we may redeem our Class C Preferred Units, in whole or in part, at a redemption price of $25.00 per Class C 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 C Preferred Units upon a change of control as defined in our partnership agreement. If we choose not to redeem the Class C Preferred Units, the Class C preferred unitholders may have the ability to convert the Class C Preferred Units to common units at the then applicable conversion rate. Class C preferred unitholders have no voting rights except with respect to certain matters set forth in our partnership agreement. Distributions on the Class C 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. 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: F-34 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Amount Paid to Class C Date Declared Record Date Payment Date Amount Per Unit Preferred Unitholders (in thousands) 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 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. 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. The private placement resulted in aggregate net proceeds to us of approximately $ 194.7 million (net of a closing fee of $ 5.3 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 ($ 183.6 million) and warrants ($ 11.1 million). Proceeds from this issuance of Class D Preferred Units were used to fund a portion of the purchase price for the Hillstone acquisition (see Note 4). The holders of the Class D Preferred Units are entitled to receive a cumulative, quarterly distribution in arrears on each Class D Preferred Unit then held at an annual rate of (i) 9.00% per annum for all periods during which the Class D Preferred Units are outstanding beginning on the Closing Date and ending on the date and including the last day of the eleventh full quarter following the Closing Date, (ii) 10.00% per annum for all periods during which the Class D Preferred Units are outstanding beginning on and including the first day of the twelfth full quarter following the Closing Date and ending on the last day of the nineteenth full quarter following the Closing Date, and (iii) thereafter, 10.00% per annum or, at the purchasers’ election from time to time, a floating rate equal to the applicable three-month LIBOR, plus 7.00% per annum. 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 cash distributions declared on our Class D Preferred Units during the last two fiscal years: Amount Paid to Class D Date Declared Record Date Payment Date Amount Per Unit Preferred Unitholders (in thousands) 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 . F-35 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. At any time on or after the eighth anniversary of the Closing Date, each Class D Preferred Unitholder will have the right to require the Partnership to redeem on a date not prior to the 180th day after such anniversary all or a portion of the Class D Preferred Units then held by such preferred unitholder for the then-applicable redemption price, which may be paid in cash or, at the Partnership’s election, a combination of cash and a number of common units not to exceed one-half of the aggregate then-applicable redemption price, as more fully described in the Amended and Restated Partnership Agreement. Upon a Class D Change of Control (as defined in the Amended and Restated Partnership Agreement), each Class D Preferred Unitholder will have the right to require the Partnership to redeem the Class D Preferred Units then held by such Preferred Unitholder at a price per Class D Preferred Unit equal to the applicable redemption price. The Class D Preferred Units generally will not have any voting rights, except with respect to certain matters which require the vote of the Class D Preferred Units. The Class D Preferred Units generally do not have any voting rights, except that the Class D Preferred Units shall be entitled to vote as a separate class on any matter on which unitholders are entitled to vote that adversely affects the rights, powers, privileges or preferences of the Class D Preferred Units in relation to other classes of Partnership Interests (as defined in the Amended and Restated Partnership Agreement) or as required by law. The consent of a majority of the then-outstanding Class D Preferred Units, with one vote per Class D Preferred Unit, shall be required to approve any matter for which the preferred unitholders are entitled to vote as a separate class or the consent of the representative of the Class D Preferred Unitholders, as applicable. The warrants issued in the July 2, 2019 private placement are exercisable for, in the aggregate, 17,000,000 common units, of which 10,000,000 were issued with an exercise price of $ 17.45 per common unit (the “Premium Warrants”), and the remaining warrants to purchase 7,000,000 common units were issued with an exercise price of $ 14.54 per common unit (the “Par Warrants”). The warrants issued in the October 31, 2019 private placement are exercisable for, in the aggregate, 8,500,000 common units, of which, 5,000,000 were issued with an exercise price of $ 16.28 per common unit, and the remaining warrants to purchase 3,500,000 common units were issued with an exercise price of $ 13.56 per common unit. The warrants may be exercised from and after the first anniversary of the date of issuance. Unexercised warrants will expire on the tenth anniversary of the date of issuance. The warrants will not participate in cash distributions. Upon a change of control, all unvested warrants shall immediately vest and be exercisable in full. 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. 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. F-36 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) 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. The preferences, rights, powers and duties of holders of Class D Preferred Units are defined in the Amended and Restated Partnership Agreement. The Class D Preferred Units rank senior to the common units with respect to payment of distributions and distribution of assets upon liquidation, dissolution and winding up, and are in parity with the Class B Preferred Units and Class C Preferred Units. The Class D Preferred Units have no stated maturity, but we may redeem the Class D Preferred Units at any time after the Closing Date or upon the occurrence of a change in control. On April 2, 2019, NGL Energy Holdings LLC executed the Fifth Amended and Restated Agreement of Limited Partnership. The preferences, rights, powers and duties of holders of the Class C Preferred Units are defined in the Amended and Restated Partnership Agreement. The Class C Preferred Units rank senior to the common units, with respect to the payment of distributions and distribution of assets upon liquidation, dissolution and winding up, and are on parity with the Class A Preferred Units (see above discussion regarding the redemption of these units) and Class B Preferred Units. The Class C Preferred Units have no stated maturity but we may redeem the Class C Preferred Units at any time on or after April 15, 2024 or upon the occurrence of a change in control. Equity-Based Incentive Compensation 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 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 Service Awards during the vesting period. The following table summarizes the Service Award activity during the years ended March 31, 2021, 2020 and 2019: Unvested Service Award units at March 31, 2018 2,278,875 Units granted 3,141,993 Units vested and issued ( 2,833,968 ) Units forfeited ( 278,500 ) Unvested Service Award units at March 31, 2019 2,308,400 Units granted 2,211,431 Units vested and issued ( 2,938,481 ) Units forfeited ( 209,925 ) Unvested Service Award units at March 31, 2020 1,371,425 Units granted 7,000 Units vested and issued ( 892,450 ) Units forfeited ( 39,000 ) Unvested Service Award units at March 31, 2021 446,975 The weighted-average grant prices for March 31, 2021, 2020 and 2019 were $ 3.76 , $ 12.84 and $ 9.74 , respectively. In connection with the vesting of certain restricted units during the year ended March 31, 2021, we canceled 70,226 of the newly-vested common units in satisfaction of $ 0.2 million of employee tax liability paid by us. Pursuant to the terms of the LTIP, these canceled units are available for future grants under the LTIP. 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 F-37 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. The total amount of the bonus payment for the year ended March 31, 2020 was $ 24.5 million, of which we had accrued $ 8.7 million as of March 31, 2019. 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. 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”). Performance was to be calculated based on the return on our common units (including changes in the market price of the common units and distributions paid during the performance period) relative to the returns on the common units of the other entities in the Index. During the three months ended December 31, 2018, the compensation committee of the board of directors of our general partner terminated the Performance Award plan and all unvested outstanding Performance Award units were canceled. Accordingly, as no replacement awards were granted, all previously unrecognized compensation cost was expensed as of the cancellation date. 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 year ended March 31, 2019: Unvested Performance Award units at March 31, 2018 917,000 Units forfeited ( 445,500 ) Units canceled ( 471,500 ) Unvested Performance Award units at March 31, 2019 — 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. As a result, no Performance Award units vested on July 1, 2018 and Performance Award units with the July 1, 2018 vesting date are considered to be forfeited. The fair value of the Performance Awards was estimated using a Monte Carlo simulation at the grant date. The significant inputs used to calculate the fair value of these awards include (i) the price per our common units at the grant date and the beginning of the performance period, (ii) a compounded risk-free interest rate, (iii) our compounded dividend yield, (iv) our historical volatility, (v) the volatility and correlations of our peers and (vi) the remaining performance period. 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 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. F-38 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, 2021 March 31, 2020 Derivative Assets Derivative Liabilities Derivative Assets Derivative Liabilities (in thousands) Level 1 measurements $ 12,312 $ ( 17,857 ) $ 64,037 $ ( 2,235 ) 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 provided (held) 2,660 5,543 ( 50,104 ) ( 370 ) Commodity derivatives $ 39,844 $ ( 24,140 ) $ 36,868 $ ( 17,958 ) (1) Relates to commodity derivative assets and liabilities that are expected to be net settled on an exchange or through a netting arrangement with the counterparty. Our physical contracts that do not qualify as normal purchase normal sale transactions are not subject to such netting arrangements. The following table summarizes the accounts that include our commodity derivative assets and liabilities in our consolidated balance sheets at the dates indicated: March 31, 2021 2020 (in thousands) Prepaid expenses and other current assets $ 39,844 $ 36,868 Accrued expenses and other payables ( 21,562 ) ( 17,777 ) Other noncurrent liabilities ( 2,578 ) ( 181 ) Net commodity derivative asset $ 15,704 $ 18,910 The following table summarizes our open commodity derivative contract positions at the dates indicated. We do not account for these derivatives as hedges. Contracts Settlement Period Net Long (Short) Notional Units (in barrels) Fair Value of Net Assets (Liabilities) (in thousands) At March 31, 2021: 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 7,501 Net cash collateral provided 8,203 Net commodity derivative asset $ 15,704 At March 31, 2020: 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 69,384 Net cash collateral held ( 50,474 ) Net commodity derivative asset $ 18,910 F-39 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 (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, 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). Credit Risk 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. At March 31, 2021, our primary counterparties were retailers, resellers, energy marketers, producers, refiners, and dealers. This concentration of counterparties may impact our overall exposure to credit risk, either positively or negatively, as the counterparties may be similarly affected by changes in economic, regulatory or other conditions. If a counterparty does not perform on a contract, we may not realize amounts that have been recorded in our consolidated balance sheets and recognized in our net income. Interest Rate Risk 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: 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 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. The “Corporate and Other” category in the table below includes certain corporate expenses that are not allocated to the reportable segments. F-40 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Year Ended March 31, 2021 2020 2019 (in thousands) Revenues: Water Solutions: Topic 606 revenues Disposal service fees $ 317,640 $ 330,877 $ 217,545 Sale of recovered crude oil 28,599 59,445 72,678 Sale of brackish non-potable water 10,554 11,676 2,404 Other service revenues 14,193 20,061 9,017 Non-Topic 606 revenues — — 42 Total Water Solutions revenues 370,986 422,059 301,686 Crude Oil Logistics: Topic 606 revenues 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 Service revenues 22,270 37,938 26,655 Non-Topic 606 revenues 79,442 289,713 320,798 Elimination of intersegment sales ( 6,073 ) ( 4,983 ) ( 23,291 ) Total Liquids Logistics revenues 3,133,146 4,611,136 5,249,474 Corporate and Other: Non-Topic 606 revenues 1,255 1,038 1,362 Total Corporate and Other revenues 1,255 1,038 1,362 Total revenues $ 5,227,023 $ 7,584,000 $ 8,689,157 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: Water Solutions $ 222,354 $ 163,874 $ 108,162 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 Total depreciation and amortization $ 331,200 $ 276,848 $ 221,674 Operating Income (Loss): Water Solutions $ ( 92,720 ) $ ( 173,064 ) $ 210,525 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 F-41 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. This information has been prepared on the accrual basis, and includes property, plant and equipment and intangible assets acquired in acquisitions. This information below does not include goodwill by segment. Year Ended March 31, 2021 2020 2019 (in thousands) Water Solutions $ 66,649 $ 2,076,866 $ 567,637 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 Total $ 119,707 $ 2,133,415 $ 670,212 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 19). 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: March 31, 2021 2020 (in thousands) Long-lived assets, net: Water Solutions $ 3,104,450 $ 3,382,727 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. March 31, 2021 2020 (in thousands) Total assets: Water Solutions $ 3,204,850 $ 3,539,328 Crude Oil Logistics 1,665,005 1,886,211 Liquids Logistics (1) 1,003,370 972,684 Corporate and Other 74,116 100,513 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. Note 13— Transactions with Affiliates A member of the board of directors of our general partner was an executive officer of WPX Energy, Inc. (“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 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. We sell product to and purchase product from SemGroup, and these transactions are included within revenues and cost of sales, respectively, in our consolidated statements of operations. In December 2019, Energy Transfer LP (“ET”) acquired SemGroup. 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 for the year ended March 31, 2019 and six months F-42 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 Sales to SemGroup $ 458 $ 1,114 Purchases from SemGroup $ — $ 4,395 Sales to entities affiliated with management $ 18,402 $ 8,367 $ 21,385 Purchases from entities affiliated with management $ 1,239 $ 3,799 $ 4,382 Sales to equity method investees $ — $ 203 $ — Purchases from equity method investees $ 3,249 $ 2,120 $ — (1) Amount primarily relates to purchases of crude oil under the definitive agreement we signed with WPX, as discussed further below. Accounts receivable from affiliates consist of the following at the dates indicated: March 31, 2021 2020 (in thousands) NGL Energy Holdings LLC $ 8,245 $ 7,781 WPX — 3,563 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: March 31, 2021 2020 (in thousands) 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 During the three months ended June 30, 2019, we purchased a 50 % interest in an aircraft company, KAIR2014 LLC, for $ 0.9 million in cash and accounted for our interest using the equity method of accounting (see Note 2). The remaining interest in KAIR2014 LLC is owned by our Chief Executive Officer, H. Michael Krimbill. 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 F-43 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, 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 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. Agreement with WPX During the three months ended June 30, 2018, we entered into a definitive agreement with WPX. 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 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 on disposal or impairment of assets, net. Repurchase of Warrants 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 We have established a defined contribution 401(k) plan to assist our eligible employees in saving for retirement on a tax-deferred basis. The 401(k) plan permits all eligible employees to make voluntary pre-tax contributions to the plan, subject to applicable tax limitations. For every dollar that employees contribute up to 1% of their eligible compensation (as defined in the plan), we contribute one dollar, plus 50 cents for every dollar employees contribute between 1% and 6% of their eligible compensation (as defined in the plan). 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). 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 19). Note 15— Revenue from Contracts with Customers Effective April 1, 2018, we recognize revenue for services and products under revenue contracts as our obligations to either perform services or deliver or sell products under the contracts are satisfied. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation in the contract and is recognized as revenue when, or as, the performance obligation is satisfied. 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 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 F-44 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) contracts with multiple performance obligations. Actual results can vary from those judgments and assumptions. We do not have any material contracts with multiple performance obligations or under which we receive material amounts of non-cash consideration. Our costs to obtain or fulfill our revenue contracts were not material as of March 31, 2021. The majority of our revenue agreements are within scope under ASC 606 and the remainder of our revenue comes from contracts that are accounted for as derivatives under ASC 815 or that contain nonmonetary exchanges or leases and are in scope under Topics 845 and 842, respectively. See Note 12 for a detail of disaggregated revenue. 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. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component. The primary purpose of our invoicing terms is to allow customers to secure the right to reserve the product or storage capacity to be received or used at a later date, not to receive financing from our customers or to provide customers with financing. We report taxes collected from customers and remitted to taxing authorities, such as sales and use taxes, on a net basis. We include amounts billed to customers for shipping and handling costs in revenues in our consolidated statements of operations. Water Solutions Performance Obligations Within the Water Solutions segment, revenue is disaggregated into two primary revenue streams that include service revenue and commodity sales revenue. For contracts involving disposal services, we accept produced water and solids for disposal at our facilities. In cases where we have agreed within a contract or are required by law to remove crude oil from the produced water, the skim oil will be valued as non-cash consideration. Ordinarily, it is required that the fair value of the skim oil is to be estimated at contract inception; however, due to variability of the form of the non-cash consideration, the amount and dollar value is unknown at the contract inception date. Accordingly, ASC 606-10-32-11 allows us to value the skim oil on the date in which the value becomes known. The Water Solutions segment has certain disposal contracts that contain the following types of terms or pricing structures that involve significant judgment that impacts the determination and timing of revenue. • Minimum volume commitments. We receive a shortfall fee if the customer does not deliver a certain amount of volume of produced water over a specified period of time. At each reporting period, we make a determination as to the likelihood of earning this fee. We recognize revenue from these contracts when (i) actual volumes are received; and (ii) when the likelihood of a customer exercising its remaining rights to make up the deficient volumes under minimum volume commitments becomes remote (also known as the breakage model). • Tiered pricing. For contracts with tiered pricing provisions, the period in which the tiers are earned and settled (i.e. the “reset period”) may vary from monthly to over a period of multiple months. If the tiered pricing is based on a month, we allocate the fee to the distinct daily service to which it relates. 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 the estimate of variable consideration at each reporting date throughout each reset period. • Volume discount pricing. Volume discount pricing is a form of variable consideration whereby the customer pays for the volumes delivered on a cumulative basis. Similar to tiered pricing, the period in which the cumulative volumes are earned and settled (i.e. the “reset period”) may vary from daily to over a period of multiple months. If the volume discount is based on a month, we allocate the fee to the distinct daily service to which it relates. 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 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. F-45 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. 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. 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. 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 offer a variety of services which include: (i) storage services where product is commingled; (ii) railcar transportation services; (iii) transloading services; and (iv) logistics services. We are obligated to provide these services over a predetermined period of time. All revenue from services is recognized over time utilizing the output method based on volumes stored or moved. Remaining Performance Obligations Most of our service contracts are such that we have the right to consideration from a customer in an amount that corresponds directly with the value to the customer of our performance completed to date. Therefore, we are utilizing the practical expedient in ASC 606-10-55-18 under which we recognize revenue in the amount to which we have the right to invoice. Applying this practical expedient, we are not required to disclose the transaction price allocated to remaining performance obligations under these agreements. The following table summarizes the amount and timing of revenue recognition for such contracts at March 31, 2021 (in thousands): Year Ending March 31, 2022 $ 111,966 2023 101,702 2024 78,241 2025 56,288 2026 17,732 Thereafter 5,667 Total $ 371,596 Many agreements are short-term in nature with a contract term of one year or less. For those contracts, we utilized the practical expedient in ASC 606-10-50 that exempts us from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less. Additionally, for our product sales contracts, we have elected the practical expedient set out in ASC 606-10-50-14A, which states that we are not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Under these agreements, each unit of product represents a separate performance obligation and therefore future volumes are wholly unsatisfied and disclosure of transaction price allocated to remaining performance obligations is not required. Under product sales contracts, the variability arises as both volume and pricing (typically index-based) are not known until the product is delivered. Contract Assets and Liabilities 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 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 F-46 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) 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. Under certain of our contracts we may be entitled to receive payments in advance of satisfying our performance obligations under the contract. We recognize a liability for these payments in excess of revenue recognized, referred to as deferred revenue or contract liabilities, within advance payments received from customers in our consolidated balance sheets. Our deferred revenue primarily relates to: • 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. In some cases, we also receive prepayments from customers purchasing commodities, which allows the customer to secure the right to receive their requested volumes in a future period. Revenue from these contracts is initially deferred, thus creating a contract liability. • Multi-period contract in which fee escalates each subsequent year of the contract. Revenue from these contracts is recognized over time based on a weighted average of what is expected to be received over the life of the contract. As the actual amount billed and received from the customer differs from the amount of revenue recognized, a contract liability is recorded. • Tiered pricing and volume discount pricing. 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. • Capital reimbursements. Certain contracts in our Water Solutions segment require that our customers reimburse us for capital expenditures related to the construction of long-lived assets, such as water gathering pipelines and custody transfer points, utilized to provide services to them under the revenue contracts. 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, 2021 March 31, 2020 (in thousands) Accounts receivable from contracts with customers $ 436,682 $ 372,930 Contract liabilities balance at March 31, 2020 $ 19,536 Payment received and deferred 36,861 Payment recognized in revenue ( 45,234 ) Contract liabilities balance at March 31, 2021 $ 11,163 Note 16— Leases 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. 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. We also elected the following transitional practical expedients, which allowed us to (i) not evaluate land easements prior to April 1, 2019; (ii) use hindsight in determining the lease term; (iii) not reassess whether current or expired contracts contain leases; (iv) not reassess the lease classification for any expired or existing leases; and (v) not reassess initial costs. F-47 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Lessee Accounting Our leasing activity primarily consists of product storage, office space, real estate, railcars, and equipment. We determine if an agreement contains a lease at the inception of the arrangement. If an arrangement is determined to contain a lease, we classify the lease as an operating lease or a finance lease depending on the terms of the arrangement. All of our leases are classified as operating leases. Operating lease right-of-use assets represent our right to use an underlying asset for the lease term when we control the use of the asset by obtaining substantially all of the economic benefits of the asset and direct the use of the asset. Operating lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease right-of-use assets and operating lease liabilities with an initial term of greater than one year are recognized at the commencement date based on the present value of lease payments over the lease term. As our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Our incremental borrowing rate represents the interest rate which we would pay to borrow, on a collateralized basis, an amount equal to the lease payments over a similar term in a similar economic environment. We do not have any leases that provide for guarantees of residual value. Our lease agreements may include options to extend or terminate the lease which are included in the measurement of our operating lease liability when it is reasonably certain that we will exercise the option. Lease renewal terms vary from one year to 30 years. Operating lease expense is recognized on a straight-line basis over the lease term. We have variable lease payments, including adjustments to lease payments based on an index or rate, such as a consumer price index, fair value adjustments to lease payments, and common area maintenance, real estate taxes, and insurance payments in certain real estate leases. We also have certain land leas es within our Water Solutions segment that require us to pay a royalty, which could be based on a flat rate per barrel disposed or a percentage of revenue generated. Variable lease payments are excluded from operating lease right-of-use assets and operating lease liabilities and are expensed as incurred. Operating lease right-of-use assets also include any lease prepayments and exclude lease incentives. For leases acquired as a result of an acquisition, the right-of-use asset also includes adjustments for any favorable or unfavorable market terms present in the lease. Short-term leases with an initial term of 12 months or less that do not include a purchase option, with the exception of railcar leases, are not recorded on the consolidated balance sheet. Operating lease expense for short-term leases is recognized on a straight-line basis over the lease term and amounts related to short-term leases are disclosed within our consolidated financial statements. We have lease agreements with lease and non-lease components, which are generally accounted for separately. For certain leases of buildings and land, we account for the lease and non-lease components as a single lease component based on the election of the practical expedient to not separate lease components from non-lease components. 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. 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, 2021 2020 (in thousands) Operating lease expense $ 69,031 $ 72,340 Variable lease expense 18,871 19,158 Short-term lease expense 1,217 799 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 for all periods presented (see Note 19). F-48 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) 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 2023 41,395 2024 26,589 2025 15,349 2026 7,406 Thereafter 50,804 Total lease payments 195,385 Less imputed interest ( 44,678 ) Total operating lease obligations $ 150,707 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) Cash paid for amounts included in the measurement of operating lease obligations $ 68,141 $ 101,678 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 Our lessor arrangements include storage and railcar contracts, of which certain agreements contain renewal options for periods of between one year and five years . We determine if an agreement contains a lease at the inception of the arrangement. If an arrangement is determined to contain a lease, we classify the lease as operating, sales-type or direct financing. Lessor accounting under ASC 842 is substantially unchanged and all of our leases will continue to be classified as operating leases. We also, from time to time, sublease certain of our storage capacity and railcars to third parties. Fixed rental revenue is recognized on a straight-line basis over the lease term. 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 2023 8,959 2024 4,817 2025 690 2026 416 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. F-49 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: Year Ended 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. 2016-13. 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 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 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. 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 F-50 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 F-51 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: (i) nine saltwater disposal facilities, (ii) all disposal agreements, commercial, surface and other contracts related to those facilities, (iii) pipelines connected to the facilities and (iv) several disposal permits. All of the assets sold in this transaction are located near the town of Pecos, Texas in southern Reeves and Ward counties. 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 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 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. 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 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 on disposal or impairment of assets, net in our consolidated statement of operations. Sawtooth Joint Venture 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. F-52 NGL ENERGY PARTNERS LP AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) The following table summarizes the results of operations from discontinued operations for the periods indicated: 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 Operating expenses 290 6,997 37,348 General and administrative expense — 56 2,716 Depreciation and amortization — 749 9,593 Loss (gain) on disposal or impairment of assets, net (1) 1,174 203,990 ( 407,608 ) Operating (loss) income from discontinued operations ( 1,822 ) ( 218,237 ) 417,945 Equity in earnings of unconsolidated entities — — 1,183 Interest expense — ( 111 ) ( 126 ) Other income, net — 133 837 (Loss) income from discontinued operations before taxes (2) ( 1,822 ) ( 218,215 ) 419,839 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 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 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. F-53