How Investors May Respond To NGL Energy Partners (NGL) Cash Flow Strength From Water Solutions Rebound

• Earlier this year, NGL Energy Partners experienced a strong business rebound, highlighted by improved operations and aggressive reductions in debt levels.
• The water solutions segment, fueled by Delaware Basin drilling, now delivers 85% of EBITDA and supports the company’s stable cash flows.
• We'll explore how this renewed cash flow strength from water solutions is shaping NGL Energy Partners' overall investment narrative.

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What Is NGL Energy Partners' Investment Narrative?

To be a shareholder in NGL Energy Partners today, you need to believe that the company's strategic emphasis on water solutions, now driving the bulk of its EBITDA, will continue to underpin stable cash flows, even as overall revenues are forecast to decline significantly in coming years. The recent sharp rebound in business operations, highlighted by aggressive debt reduction and robust cash generation from Delaware Basin drilling, has provided the stock with fresh momentum and reshaped short-term catalysts. These catalysts now revolve around ongoing operational efficiency, debt management, and the sustainability of their preferred dividend payouts. While recent strong price moves have reduced some near-term default risks and improved earnings have narrowed losses, the reality of forecast revenue declines and the possibility of a drilling slowdown in the Delaware Basin remain significant risks. This news event appears materially positive in reducing immediate risk, but it doesn't fully offset the structural challenges ahead. However, if drilling slows in the Delaware Basin, cash flow stability could be put to the test.

NGL Energy Partners' share price has been on the slide but might be dropping deeper into value territory. Find out whether it's a bargain at this price.

Exploring Other Perspectives

Two fair value estimates from the Simply Wall St Community range between US$2.71 and US$7.03 per share, reflecting widely differing opinions on NGL Energy Partners’ outlook. With a very large 3-year total return fueling optimism, be mindful that diverging market views often surface when near-term catalysts shift, as seen in recent business updates. Explore these perspectives to understand the company's broader risks and possibilities.

Explore 2 other fair value estimates on NGL Energy Partners - why the stock might be worth less than half the current price!

Build Your Own NGL Energy Partners Narrative

Disagree with this assessment? Create your own narrative in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your NGL Energy Partners research is our analysis highlighting 2 key rewards that could impact your investment decision.
• Our free NGL Energy Partners research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate NGL Energy Partners' overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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