NGL Energy Partners LP NGL is set to release fiscal third-quarter 2024 results on Feb 8. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 3 cents per share on revenues of $2.1 billion.

Let’s delve into the factors that might have influenced the diversified energy master limited partnership’s performance in the December quarter. But it’s worth taking a look at NGL’s previous-quarter performance first.

Highlights of Q2 Earnings & Surprise History

In the last reported quarter, this Tulsa, OK-based midstream operator beat the consensus mark on the back of higher water disposal volumes. NGL had reported a loss per unit of 5 cents, narrower than the Zacks Consensus Estimate for a loss of 29 cents. However, revenues of $1.8 billion generated by the firm came in below the Zacks Consensus Estimate of $2.1 billion due to weak sales from the Crude Oil Logistics unit.

NGL beat the Zacks Consensus Estimate in two of the last four quarters and missed in the other two, which resulted in an earnings surprise of (28.9%), on average. This is depicted in the graph below:

NGL Energy Partners LP Price and EPS Surprise

NGL Energy Partners LP price-eps-surprise | NGL Energy Partners LP Quote

 

Trend in Estimate Revision

The Zacks Consensus Estimate for the fiscal third-quarter bottom line has been revised 50% upward in the past seven days. The estimated figure indicates an 84.2% drop year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 4.3% decrease from the year-ago period.

Factors to Consider

NGL is expected to have reaped the reward of strong growth in its Water Solutions business, which specializes in services for the treatment and disposal of wastewater generated from oil and gas production. In the previous three-month period, the segment’s operating income rose 25.4% year over year to $59.1 million. This positive momentum is most likely to have continued in the fiscal third quarter, thanks to higher produced water processing on a daily basis at its network of large diameter pipelines. This is likely to have buoyed the results of NGL.

On a somewhat bearish note, the decrease in the partnership’s Crude Oil Logistics operating income might have dented its to-be-reported bottom line. NGL’s fiscal second-quarter operating income from the segment — purchasing oil from the producers and shipping to downstream operators for resale — totaled $14.8 million, down from the $32.9 million in the year-ago period. The downward income trajectory is likely to have continued in the fiscal third quarter due to lower contracted rates on the back of weaker commodity prices.