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•	the prices of crude oil, natural gas liquids, diesel, ethanol, and biodiesel;

•	energy prices generally;

•	the general level of crude oil, natural gas, and natural gas liquids production;

•	the general level of demand, and the availability of supply, for crude oil, natural gas liquids, diesel, ethanol, and biodiesel;

•	the level of crude oil and natural gas drilling and production in areas where we have water treatment and disposal facilities;

•	the price of gasoline relative to the price of corn, which affects the price of ethanol;

•	the ability to obtain adequate supplies of products if an interruption in supply or transportation occurs and the availability of capacity to transport products to market areas;

•	actions taken by foreign oil and gas producing nations;

•	the political and economic stability of foreign oil and gas producing nations;

•	the effect of weather conditions on supply and demand for crude oil, natural gas liquids, diesel, ethanol, and biodiesel;

•	the effect of natural disasters, lightning strikes, or other significant weather events;

•	the availability of local, intrastate, and interstate transportation infrastructure with respect to our truck, railcar, and barge transportation services;

•	the availability, price, and marketing of competing fuels;

•	the effect of energy conservation efforts on product demand;

•	energy efficiencies and technological trends;

•	changes in applicable laws and regulations, including tax, environmental, transportation, and employment regulations, or new interpretations by regulatory agencies concerning such laws and regulations and the effect of such laws and regulations (now existing or in the future) on our business operations;

•	the effect of legislative and regulatory actions on hydraulic fracturing, produced water disposal and transportation, and the treatment of flowback and produced water;

•	hazards or operating risks related to transporting and distributing petroleum products that may not be fully covered by insurance;

•	the maturity of the crude oil, natural gas liquids, and refined products industries and competition from other markets;

•	loss of key personnel;

•	the ability to renew contracts with key customers;

•	the ability to maintain or increase the margins we realize for our terminal, barging, trucking, produced water disposal, recycling, and discharge services;

•	the ability to renew leases for our leased equipment and storage facilities;

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•	the nonpayment or nonperformance by our counterparties;

•	the availability and cost of capital and our ability to access certain capital sources;

•	a deterioration of the credit and capital markets;

•	the ability to successfully identify and complete accretive acquisitions, and integrate acquired assets and businesses;

•	changes in the volume of hydrocarbons recovered during the produced water treatment process;

•	changes in the financial condition and results of operations of entities in which we own noncontrolling equity interests;

•	the costs and effects of legal and administrative proceedings;

•	any reduction or the elimination of the federal Renewable Fuel Standard; and

•	changes in the jurisdictional characteristics of, or the applicable regulatory policies with respect to, our pipeline assets.

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NGL Energy Partners LP (“we,” “us,” “our,” or the “Partnership”) is a Delaware limited partnership. NGL Energy Holdings LLC serves as our general partner. At December 31, 2019, our operations included:

•	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, trucking, marine and pipeline transportation services through its owned assets.

•

Our Water Solutions segment provides services for the treatment and disposal of produced water generated from crude oil and natural gas production and for the disposal of solids such as tank bottoms, drilling fluids and drilling muds and performs truck and frac tank washouts. In addition, our Water Solutions segment sells the recovered hydrocarbons that result from performing these services and sells freshwater to producers for exploration and production activities.

•

Our Liquids segment supplies natural gas liquids to retailers, wholesalers, refiners, and petrochemical plants throughout the United States and in Canada using its leased underground storage and fleet of leased railcars, markets regionally through its 27 owned terminals throughout the United States, and provides terminaling and storage services at its salt dome storage facility joint venture in Utah.

•

Our Refined Products and Renewables segment conducts diesel, ethanol, and biodiesel marketing operations, purchases refined petroleum and renewable products primarily in the Gulf Coast, West Coast and Midwest regions of the United States and schedules them for delivery at various locations throughout the country. See below for a discussion of the sale of a portion of our Refined Products and Renewables segment.

Recent Developments

On September 30, 2019, we completed the sale of TransMontaigne Product Services, LLC (“TPSL”) and associated assets to Trajectory Acquisition Company, LLC (“Trajectory”) for total consideration of approximately $233.8 million, including equity consideration, inventory and net working capital (see Note 17). TPSL made up a portion of our Refined Products and Renewables segment. The divested assets include (i) TPSL Terminaling Services Agreement with TransMontaigne Partners LP, including the exclusive rights to utilize 19 terminals; (ii) line space along Colonial and Plantation Pipelines; (iii) two wholly-owned refined products terminals in Georgia that we acquired in January 2019 and multiple third-party throughput agreements; and (iv) all associated customer contracts, inventory and other working capital associated with the assets. In December 2019, the Partnership formalized a plan and received approval to divest of its gas blending business in the southeastern and eastern regions of the United States (“Gas Blending”) and its refined products marketing business in the mid-continent region of the United States (“Mid-Con”). The Partnership had determined that these businesses were no longer core to the Partnership’s strategy. These transactions represent a strategic shift in our operations and will have a significant effect on our operations and financial results going forward. Accordingly, the results of operations and cash flows related to TPSL, Mid-Con and Gas Blending have been classified as discontinued operations for all periods presented, and prior periods have been retrospectively adjusted in the unaudited condensed consolidated statements of operations and unaudited condensed consolidated statements of cash flows. In addition, the assets and liabilities related to TPSL have been classified as held for sale in our March 31, 2019 unaudited condensed consolidated balance sheet and certain assets and liabilities, particularly inventory, derivatives and leases, related to Mid-Con and Gas Blending have been classified as held for sale in our December 31, 2019 and March 31, 2019 unaudited condensed consolidated balance sheets. On January 3, 2020, we completed the sale of Mid-Con to a third-party. See Note 16 for a further discussion of these transactions.

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. We retained our 50% ownership interest in Victory Propane, LLC (“Victory Propane”), which we subsequently sold on August 14, 2018. This transaction represented a strategic shift in our operations and will have a significant effect on our operations and financial results going forward. Accordingly, the results of operations and cash flows related to our former Retail Propane segment (including equity in earnings of Victory Propane) have been classified as discontinued operations for all periods presented and prior periods have been retrospectively adjusted in the unaudited condensed consolidated statements of operations and unaudited condensed consolidated statements of cash flows.

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Basis of Presentation

The accompanying unaudited condensed 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 unaudited condensed consolidated financial statements.

Our unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim consolidated financial information in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, the unaudited condensed consolidated financial statements exclude certain information and notes required by GAAP for complete annual consolidated financial statements. However, we believe that the disclosures made are adequate to make the information presented not misleading. The unaudited condensed consolidated financial statements include all adjustments that we consider necessary for a fair presentation of our consolidated financial position, results of operations and cash flows for the interim periods presented. Such adjustments consist only of normal recurring items, unless otherwise disclosed in this Quarterly Report. The unaudited condensed consolidated balance sheet at March 31, 2019 was derived from our audited consolidated financial statements for the fiscal year ended March 31, 2019 included in our Current Report on Form 8-K (“Current Report”) filed with the SEC on November 22, 2019.

These interim unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Current Report. Due to the seasonal nature of certain of our operations and other factors, the results of operations for interim periods are not necessarily indicative of the results of operations to be expected for future periods or for the full fiscal year ending March 31, 2020.

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 unaudited condensed 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.

Significant Accounting Policies

Our significant accounting policies are consistent with those disclosed in Note 2 of our audited consolidated financial statements included in our Current Report.

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:

•	Level 1: Quoted prices in active markets for identical assets and liabilities that we have the ability to access at the measurement date.

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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 unaudited condensed 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 unaudited condensed 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 unaudited condensed 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.

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.

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We have a deferred tax liability of $51.3 million at December 31, 2019 as a result of acquiring corporations in connection with certain of our acquisitions, which is included within other noncurrent liabilities in our unaudited condensed consolidated balance sheet. The deferred tax liability at December 31, 2019 increased by $38.7 million from September 30, 2019 due to our acquisition of Hillstone (as defined herein), which included entities taxed as corporations for United States federal income tax purposes. 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 nine months ended December 31, 2019 was $1.4 million with an effective tax rate of 25.1%.

We evaluate uncertain tax positions for recognition and measurement in the unaudited condensed 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 unaudited condensed consolidated financial statements. We had no material uncertain tax positions that required recognition in our unaudited condensed consolidated financial statements at December 31, 2019 or March 31, 2019.

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:

		December 31, 2019				March 31, 2019
		(in thousands)
Crude oil		$	48,901			$	51,359
Natural gas liquids:
Propane		68,144				33,478
Butane		37,134				15,294
Other		11,506				7,482
Refined products and renewables:
Diesel		10,474				9,186
Ethanol		1,668				14,650
Biodiesel		5,911				4,679
Total		$	183,738			$	136,128

Amounts as of December 31, 2019 and March 31, 2019 in the table above do not include inventory related to Mid-Con and Gas Blending, as these amounts have been classified as current assets held for sale within our December 31, 2019 and March 31, 2019 unaudited condensed consolidated balance sheets (see Note 16). Amounts as of March 31, 2019 in the table above do not include inventory related to TPSL, as these amounts have been classified as current assets held for sale within our March 31, 2019 unaudited condensed consolidated balance sheet (see Note 16).

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 unaudited condensed consolidated balance sheets; instead, our ownership interests are reported within investments in unconsolidated entities on our unaudited condensed 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,

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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.

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

Entity		Segment		Ownership Interest (1)		Date Acquired		December 31, 2019				March 31, 2019
								(in thousands)
Water services and land company (2)		Water Solutions		50%		November 2019		$	15,624			$	—
Water services and land company (3)		Water Solutions		50%		November 2019		2,067				—
Water services and land company (4)		Water Solutions		10%		November 2019		3,247				—
Aircraft company (5)		Corporate and Other		50%		June 2019		638				—
Water services company (6)		Water Solutions		50%		August 2018		480				920
Natural gas liquids terminal company (7)		Liquids		50%		March 2019		180				207
Total								$	22,236			$	1,127

(1)	Ownership interest percentages are at December 31, 2019.

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

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

(4)	This is an investment that we acquired as part of an acquisition in November 2019 (see Note 4), and represents certain membership interests related to specific water services operations.

(5)	This is an investment with a related party. See Note 13 for a further discussion.

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

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

Other Noncurrent Assets

Other noncurrent assets consist of the following at the dates indicated:

		December 31, 2019				March 31, 2019
		(in thousands)
Loan receivable (1)		$	9,060			$	19,474
Line fill (2)		33,437				33,437
Minimum shipping fees - pipeline commitments (3)		18,510				23,494
Other		22,937				37,452
Total		$	83,944			$	113,857

(1)

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 that filed for Chapter 11 bankruptcy during the three months ended September 30, 2019. As of December 31, 2019, we are owed a total of $26.4 million under this loan receivable, of which approximately $20.2 million is recorded within prepaid expenses and other current assets in our unaudited condensed unconsolidated balance sheet. Our loan receivable is secured by a lien on the Facility. We have filed our Proof of Claim within the bankruptcy case and although the third party may have the option to reject the agreement governing the receivable in the context of the bankruptcy proceeding, subject to bankruptcy court approval, the third party’s current intention appears to be to transfer the Facility to a third party purchaser in satisfaction of the full amount owed under the receivable. It is also possible that the third party may deviate from this course and propose a different plan. Accordingly, we will continue to monitor the bankruptcy case through its conclusion. The remaining amount represents the noncurrent portion of a loan receivable with Victory Propane.

(2)	Represents minimum volumes of product we are required to leave on certain third-party owned pipelines under long-term shipment commitments. At December 31, 2019, line fill consisted of 335,069 barrels of crude oil and 262,000 barrels of propane. At March 31,

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2019, 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).

(3)

Represents the noncurrent portion of minimum shipping fees paid in excess of volumes shipped, or deficiency credits, for one contract with a crude oil pipeline operator. This amount can be recovered when volumes shipped exceed the minimum monthly volume commitment (see Note 9). As of March 31, 2019, the deficiency credit was $23.5 million. In October 2019, we extended our commitment with this crude oil pipeline operator and this extension provides us with an additional 5.5 years in which to use the deficiency credit (see Note 9). As of December 31, 2019, the deficiency credit was $22.8 million, of which $4.3 million is recorded within prepaid expenses and other current assets in our unaudited condensed unconsolidated balance sheet.

Amounts as of March 31, 2019 in the table above do not include other noncurrent assets related to TPSL, as these amounts have been classified as noncurrent assets held for sale within our March 31, 2019 unaudited condensed consolidated balance sheet (see Note 16).

Accrued Expenses and Other Payables

Accrued expenses and other payables consist of the following at the dates indicated:

		December 31, 2019				March 31, 2019
		(in thousands)
Accrued compensation and benefits		$	17,940			$	19,312
Excise and other tax liabilities		19,300				10,481
Derivative liabilities		5,353				4,960
Accrued interest		25,838				24,882
Product exchange liabilities		7,382				5,945
Gavilon legal matter settlement (Note 9)		—				12,500
Contingent consideration liability (Note 4)		200,000				—
TPSL working capital settlement (Note 17)		41,508				—
Other		35,527				29,679
Total		$	352,848			$	107,759

Amounts as of December 31, 2019 and March 31, 2019 in the table above do not include derivative liabilities related to Mid-Con and Gas Blending, as these amounts have been classified as current liabilities held for sale within our December 31, 2019 and March 31, 2019 unaudited condensed consolidated balance sheets (see Note 16). Amounts as of March 31, 2019 in the table above do not include accrued expenses and other payables related to TPSL, as these amounts have been classified as current liabilities held for sale within our March 31, 2019 unaudited condensed consolidated balance sheet (see Note 16).

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.

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. For an acquisition of assets, 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.

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

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

Also, as discussed in Note 4, we made certain adjustments during the nine months ended December 31, 2019 to our estimates of the acquisition date fair values of the assets acquired and liabilities assumed in business combinations that occurred during the fiscal year ended March 31, 2019.

Reclassifications

We have reclassified certain prior period financial statement information to be consistent with the classification methods used in the current fiscal year. These reclassifications did not impact previously reported amounts of assets, liabilities, equity, net income, or cash flows.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments-Credit Losses.” The ASU requires a financial asset (or a group of financial assets) measured at amortized cost to be presented at the net amount expected to be collected, which would include accounts receivable. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. The ASU is effective for the Partnership beginning April 1, 2020, and requires a modified retrospective method of adoption, although early adoption is permitted. We are currently in the process of assessing the impact of this ASU on our consolidated financial statements.

In February 2016, the FASB issued ASC 842, “Leases.” This ASU replaced previous lease accounting guidance in GAAP. The new guidance requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. It also retains a distinction between finance leases and operating leases. For lessors, the new accounting model remains largely the same, although some changes have been made to align it with the new lessee model and the ASC 606 revenue recognition guidance. We adopted ASC 842 effective April 1, 2019 using the modified retrospective method, with no adjustment to comparative period information, which remains reported under ASC 840, and no cumulative effect adjustment to equity. See Note 15 for a further discussion of the impact of adoption of ASC 842 to our unaudited condensed consolidated financial statements.

The following table presents our calculation of basic and diluted weighted average common units outstanding for the periods indicated:

		Three Months Ended December 31,						Nine Months Ended December 31,
		2019			2018			2019			2018
Weighted average common units outstanding during the period:
Common units - Basic		128,201,369			123,892,680			127,026,510			122,609,625
Effect of Dilutive Securities:
Warrants		—			1,456,947			—			—
Service awards		1,157,221			610,124			—			—
Common units - Diluted		129,358,590			125,959,751			127,026,510			122,609,625

For the three months ended December 31, 2019, the warrants were antidilutive. For the three months ended December 31, 2018, the Class A Preferred Units (as defined herein) were considered antidilutive. For the nine months ended December 31, 2019 and 2018, the warrants, Service Awards (as defined herein) and Class A Preferred Units were considered antidilutive.

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

		Three Months Ended December 31,								Nine Months Ended December 31,
		2019				2018				2019				2018
		(in thousands, except unit and per unit amounts)
Income (loss) from continuing operations		$	49,106			$	97,199			$	42,464			$	(137,323	)
Less: Continuing operations loss attributable to noncontrolling interests		166				307				563				1,170
Net income (loss) from continuing operations attributable to NGL Energy Partners LP		49,272				97,506				43,027				(136,153		)
Less: Distributions to preferred unitholders (1)		(20,312		)		(29,748		)		(166,835		)		(73,882		)
Less: Continuing operations net (income) loss allocated to general partner (2)		(65		)		(102		)		16				107
Net income (loss) from continuing operations allocated to common unitholders		$	28,895			$	67,656			$	(123,792	)		$	(209,928	)
(Loss) income from discontinued operations, net of tax		$	(6,115	)		$	13,329			$	(192,800	)		$	433,501
Less: Discontinued operations loss attributable to redeemable noncontrolling interests		—				—				—				446
Less: Discontinued operations loss (income) allocated to general partner (2)		6				(13		)		193				(434		)
Net (loss) income from discontinued operations allocated to common unitholders		$	(6,109	)		$	13,316			$	(192,607	)		$	433,513
Net income (loss) allocated to common unitholders		$	22,786			$	80,972			$	(316,399	)		$	223,585
Basic income (loss) per common unit
Income (loss) from continuing operations		$	0.23			$	0.54			$	(0.97	)		$	(1.71	)
(Loss) income from discontinued operations, net of tax		$	(0.05	)		$	0.11			$	(1.52	)		$	3.53
Net income (loss)		$	0.18			$	0.65			$	(2.49	)		$	1.82
Diluted income (loss) per common unit
Income (loss) from continuing operations		$	0.22			$	0.53			$	(0.97	)		$	(1.71	)
(Loss) income from discontinued operations, net of tax		$	(0.05	)		$	0.11			$	(1.52	)		$	3.53
Net income (loss)		$	0.18			$	0.64			$	(2.49	)		$	1.82
Basic weighted average common units outstanding		128,201,369				123,892,680				127,026,510				122,609,625
Diluted weighted average common units outstanding		129,358,590				125,959,751				127,026,510				122,609,625

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

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

The following summarizes our acquisitions during the nine months ended December 31, 2019:

Business Combinations

Hillstone Acquisition

On October 31, 2019, we acquired all of the equity interests of Hillstone Environmental Partners, LLC (“Hillstone”) for $642.5 million, subject to certain adjustments. Hillstone provides water pipeline and disposal infrastructure solutions to producers with a core operational focus in the state line area of southern Eddy and Lea Counties, New Mexico and northern Loving County, Texas in the Delaware Basin. Hillstone has a fully interconnected produced water pipeline transportation and disposal system, which consists of 19 saltwater disposal wells, representing approximately 580,000 barrels per day of permitted disposal capacity, and a newly-built network of produced water pipelines with approximately 680,000 barrels per day of

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transportation capacity. Hillstone also has an additional 22 permits to develop another 660,000 barrels per day of disposal capacity. The acquired assets also include minimum volume commitments and long-term dedications covering over 110,000 contracted acres, including a 20-year acreage dedication, a 10-year acreage dedication, including first call rights, with a leading independent exploration and production company, and multiple contracts with one of the largest crude oil and natural gas exploration and production companies in the United States.

As part of this acquisition, we recorded a customer relationship intangible asset. We estimated the value of this intangible asset using the income approach, which uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts.

The agreement for this acquisition contemplates post-closing payments for certain working capital items. We are accounting for this transaction as a business combination. The following table summarizes the preliminary estimates of the fair values as of December 31, 2019 for the assets acquired and liabilities assumed (in thousands):

Current assets	$	35,171
Property, plant and equipment	144,803
Goodwill	113,939
Intangible assets	400,000
Investments in unconsolidated entities	335
Operating lease right-of-use assets	3,090
Other noncurrent assets	811
Assets held for sale	5,100
Current liabilities	(16,234		)
Operating lease obligations	(3,090		)
Other noncurrent liabilities	(1,448		)
Deferred tax liability	(39,178		)
Liabilities held for sale	(786		)
Fair value of net assets acquired	$	642,513

As of December 31, 2019, the allocation of the purchase price is considered preliminary as we are continuing to gather additional information to (i) finalize the fair values of the property, plant and equipment and intangible assets and (ii) finalize the calculation of the operating lease liabilities and right-of-use assets, asset retirement obligations and the deferred tax liability.

Goodwill represents the excess of the consideration paid for the acquired business over the fair value of the individual assets acquired, net of liabilities assumed. Goodwill represents a premium paid to expand the number of our disposal sites in an oilfield production basin currently serviced by us, thereby enhancing our competitive position as a provider of disposal services in this oilfield production basin. We expect that all of the goodwill will be deductible for federal income tax purposes.

The operations of these water solutions facilities have been included in our unaudited condensed consolidated statement of operations since their acquisition date. Our unaudited condensed consolidated statement of operations for the nine months ended December 31, 2019 includes revenues of $13.2 million and an operating loss of $4.4 million that were generated by the operations of these water solutions facilities. We incurred $12.0 million of transaction costs related to this acquisition during the nine months ended December 31, 2019, which is recorded within general and administrative expenses in our unaudited condensed consolidated statement of operations. In addition, on December 31, 2019, the Partnership sold its interest in the unconsolidated entity acquired as part of this transaction.

Mesquite Acquisition

On July 2, 2019, we acquired all of the assets of Mesquite Disposals Unlimited, LLC (“Mesquite”) (including 34 saltwater disposal wells). The purchase price was comprised of (i) $592.5 million in cash, (ii) the issuance of $102.8 million of our Class B Preferred Units (as defined herein) and (iii) additional cash payments of $200.0 million to be paid in two deferred installments contingent on the average daily volume of produced water processed utilizing the assets being acquired. Mesquite SWD Inc. will remain the operator of the Mesquite assets led by Mesquite’s current management team. The assets consist of a fully interconnected produced water pipeline transportation and disposal system in Eddy and Lea Counties, New Mexico, and Loving County, Texas.

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To determine our preliminary purchase price of $885.3 million, we included the fair value of the deferred payments at the date of acquisition of $190.0 million, to the sum of the cash paid and the value of the preferred units issued. During the three months ended December 31, 2019, the volume of produced water processed utilizing the assets acquired surpassed both thresholds, thus triggering the payment of the full $200.0 million. The agreement was amended by both parties for the payment to be made in six installments over the next six months. The first installment payment of $55.0 million was made on January 10, 2020.

As part of this acquisition, we recorded customer commitment, customer relationship and right-of way intangible assets. We estimated the value of these intangible assets using the income approach, which uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts.

The agreement for this acquisition contemplates post-closing payments for certain working capital items. We are accounting for this transaction as a business combination. The following table summarizes the preliminary estimates of the fair values as of December 31, 2019 for the assets acquired and liabilities assumed (in thousands):

Property, plant and equipment	$	370,923
Goodwill	77,549
Intangible assets	458,678
Other noncurrent liabilities	(4,769		)
Noncontrolling interests	(17,124		)
Fair value of net assets acquired	$	885,257

As of December 31, 2019, the allocation of the purchase price is considered preliminary as we are continuing to gather additional information to (i) finalize the fair values of the property, plant and equipment and intangible assets and (ii) finalize the calculation of asset retirement obligations.

Goodwill represents the excess of the consideration paid for the acquired business over the fair value of the individual assets acquired, net of liabilities assumed. Goodwill represents a premium paid to expand the number of our disposal sites in an oilfield production basin currently serviced by us, thereby enhancing our competitive position as a provider of disposal services in this oilfield production basin. We expect that all of the goodwill will be deductible for federal income tax purposes.

The operations of these water solutions facilities have been included in our unaudited condensed consolidated statement of operations since their acquisition date. Our unaudited condensed consolidated statement of operations for the nine months ended December 31, 2019 includes revenues of $57.6 million and operating income of $3.4 million that were generated by the operations of these water solutions facilities. We incurred $6.0 million of transaction costs related to this acquisition during the nine months ended December 31, 2019, which is recorded within general and administrative expenses in our unaudited condensed consolidated statement of operations.

Saltwater Water Solutions Facilities

During the nine months ended December 31, 2019, we acquired one saltwater disposal facility (including three saltwater disposal wells) for total consideration of approximately $53.0 million.

As part of this acquisition, we recorded customer relationship, favorable contract, non-compete agreement and right-of way intangible assets. We estimated the value of these intangible assets using the income approach, which uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts.

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The agreement for this acquisition contemplates post-closing payments for certain working capital items. We are accounting for this transaction as a business combination. The following table summarizes the preliminary estimates of the fair values as of December 31, 2019 for the assets acquired and liabilities assumed (in thousands):

Property, plant and equipment	$	24,324
Goodwill	2,413
Intangible assets	26,688
Other noncurrent liabilities	(425		)
Fair value of net assets acquired	$	53,000

As of December 31, 2019, the allocation of the purchase price is considered preliminary as we are continuing to gather additional information to finalize the fair values of the property, plant and equipment and intangible assets.

Goodwill represents the excess of the consideration paid for the acquired business over the fair value of the individual assets acquired, net of liabilities assumed. Goodwill represents a premium paid to expand the number of our disposal sites in an oilfield production basin currently serviced by us, thereby enhancing our competitive position as a provider of disposal services in this oilfield production basin. We expect that all of the goodwill will be deductible for federal income tax purposes.

The operations of these water solutions facilities have been included in our unaudited condensed consolidated statement of operations since their acquisition date. Our unaudited condensed consolidated statement of operations for the nine months ended December 31, 2019 includes revenues of $4.8 million and operating income of $0.9 million that were generated by the operations of these water solutions facilities. We incurred less than $0.1 million of transaction costs related to this acquisition during the nine months ended December 31, 2019, which is recorded within general and administrative expenses in our unaudited condensed consolidated statement of operations.

Acquisitions of Assets

On November 7, 2019, we acquired the exclusive rights to use certain land for produced and treated water operations from one entity, certain membership interests (see Note 2) in another entity and other assets. The membership interests are in an entity that owns real property and provides freshwater services. In addition, we entered into a joint development agreement with the seller and affiliates to build and operate produced, treated and blended water facilities. The total purchase price for this transaction was $56.6 million, of which $36.1 million was allocated to the produced and treated water rights (intangible asset), $20.3 million to the membership interests and $0.3 million to net other current and noncurrent assets.

During the nine months ended December 31, 2019, we also acquired land and two saltwater disposal wells for total consideration of $13.0 million, which we are accounting for as an acquisition of assets. The consideration paid for this transaction was allocated primarily to property, plant and equipment.

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

Saltwater Water Solutions Facilities

During the three months ended June 30, 2019, we completed the acquisition accounting for all saltwater disposal facilities and saltwater disposal wells acquired during the fiscal year ended March 31, 2019. Due to the receipt of additional information, we recorded a decrease of $2.3 million to intangible assets with the offset recorded to goodwill. There were no other adjustments to the fair value of assets acquired and liabilities assumed during the three months ended June 30, 2019.

Freshwater Water Solutions Facilities

During the three months ended June 30, 2019, we completed the acquisition accounting for four freshwater facilities (including 16 freshwater wells). There were no adjustments to the fair value of assets acquired and liabilities assumed during the three months ended June 30, 2019 for this acquisition.

During the six months ended September 30, 2019, we completed the acquisition accounting for a separate freshwater acquisition. We paid $2.5 million in cash to the sellers during the six months ended September 30, 2019 to complete the settlement of the acquisition. The offset of the cash payment was recorded to goodwill. There were no other adjustments to the fair value of assets acquired and liabilities assumed during the six months ended September 30, 2019.

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Natural Gas Liquids Terminal Business

During the six months ended September 30, 2019, we finalized the adjustments related to the working capital items received and recorded a decrease of $2.7 million to inventories, an increase of $0.3 million to other current assets, an increase of $0.1 million to property, plant and equipment, a decrease of $0.9 million to current liabilities and a decrease of $0.5 million to noncurrent liabilities. Also, due to the receipt of additional information, we recorded an increase of $29.0 million to property, plant and equipment, a decrease of $26.9 million to intangible assets and a decrease of $2.1 million to goodwill. The purchase price allocation is still preliminary as we are continuing to finalize the fair value of the property, plant and equipment.

Our property, plant and equipment consists of the following at the dates indicated:

Description	Estimated Useful Lives				December 31, 2019				March 31, 2019
	(in years)				(in thousands)
Natural gas liquids terminal and storage assets	2	-	30		$	310,091			$	280,106
Pipeline and related facilities	30	-	40		244,021				243,799
Vehicles and railcars	3	-	25		122,219				124,948
Water treatment facilities and equipment	3	-	30		1,277,654				704,666
Crude oil tanks and related equipment	2	-	30		228,012				225,476
Barges and towboats	5	-	30		123,847				103,735
Information technology equipment	3	-	7		34,331				31,831
Buildings and leasehold improvements	3	-	40		147,964				143,711
Land					87,593				62,379
Tank bottoms and line fill (1)					20,339				20,071
Other	3	-	20		15,069				14,870
Construction in progress					597,703				290,805
					3,208,843				2,246,397
Accumulated depreciation					(504,731		)		(417,457		)
Net property, plant and equipment					$	2,704,112			$	1,828,940

(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.

Amounts as of March 31, 2019 in the table above do not include property, plant and equipment and accumulated depreciation related to TPSL, as these amounts have been classified as noncurrent assets held for sale within our March 31, 2019 unaudited condensed consolidated balance sheet (see Note 16).

The following table summarizes depreciation expense and capitalized interest expense for the periods indicated:

		Three Months Ended December 31,								Nine Months Ended December 31,
		2019				2018				2019				2018
		(in thousands)
Depreciation expense		$	37,687			$	26,263			$	94,477			$	76,671
Capitalized interest expense		$	439			$	160			$	439			$	482

Amounts in the table above do not include depreciation expense and capitalized interest related to TPSL and our former Retail Propane segment, as these amounts have been classified within discontinued operations in our unaudited condensed consolidated statements of operations (see Note 16).

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We record (gains) losses from the sales of property, plant and equipment and any write-downs in value due to impairment within (gain) loss on disposal or impairment of assets, net in our unaudited condensed consolidated statements of operations. The following table summarizes (gains) losses on the disposal or impairment of property, plant and equipment by segment for the periods indicated:

		Three Months Ended December 31,								Nine Months Ended December 31,
		2019				2018				2019				2018
		(in thousands)
Crude Oil Logistics		$	198			$	(75	)		$	(592	)		$	1,251
Water Solutions		4,476				(443		)		8,075				2,762
Liquids		(26		)		—				(33		)		994
Total		$	4,648			$	(518	)		$	7,450			$	5,007

The following table summarizes changes in goodwill by segment during the nine months ended December 31, 2019:

		Crude Oil Logistics				Water Solutions				Liquids				Refined Products and Renewables				Total
		(in thousands)
Balances at March 31, 2019		$	579,846			$	410,139			$	103,421			$	17,050			$	1,110,456
Revisions to acquisition accounting (Note 4)		—				4,755				(2,057		)		—				2,698
Acquisitions (Note 4)		—				193,901				—				—				193,901
Balances at December 31, 2019		$	579,846			$	608,795			$	101,364			$	17,050			$	1,307,055

Amounts in the table above do not include goodwill that was allocated to Gas Blending, as the amount has been classified as current assets held for sale in our December 31, 2019 unaudited condensed consolidated balance sheet. Amounts in the table above do not include goodwill that was allocated to TPSL and Gas Blending, as the amounts have been classified as noncurrent assets held for sale within our March 31, 2019 unaudited condensed consolidated balance sheet (see Note 1 and Note 16).

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Our intangible assets consist of the following at the dates indicated:

						December 31, 2019												March 31, 2019
Description		Amortizable Lives				Gross Carrying Amount				Accumulated Amortization				Net				Gross Carrying Amount				Accumulated Amortization				Net
		(in years)				(in thousands)
Amortizable:
Customer relationships		3	-	30		$	1,384,922			$	(428,971	)		$	955,951			$	742,832			$	(369,983	)		$	372,849
Customer commitments		10	-	25		502,000				(102,007		)		399,993				310,000				(74,917		)		235,083
Pipeline capacity rights		30				7,800				(1,582		)		6,218				7,799				(1,387		)		6,412
Rights-of-way and easements		1	-	45		86,988				(6,185		)		80,803				73,409				(4,509		)		68,900
Water rights		13	-	30		100,936				(6,709		)		94,227				64,868				(3,018		)		61,850
Executory contracts and other agreements		5	-	30		55,029				(19,412		)		35,617				47,230				(17,212		)		30,018
Non-compete agreements		2	-	24		19,823				(5,259		)		14,564				12,723				(2,570		)		10,153
Debt issuance costs (1)		3	-	5		43,830				(33,448		)		10,382				42,345				(29,521		)		12,824
Total amortizable						2,201,328				(603,573		)		1,597,755				1,301,206				(503,117		)		798,089
Non-amortizable:
Trade names						2,800				—				2,800				2,800				—				2,800
Total						$	2,204,128			$	(603,573	)		$	1,600,555			$	1,304,006			$	(503,117	)		$	800,889

(1)	Includes debt issuance costs related to the Revolving Credit Facility (as defined herein). Debt issuance costs related to fixed-rate notes and Term Credit Agreement (as defined herein) are reported as a reduction of the carrying amount of long-term debt.

Amounts as of March 31, 2019 in the table above do not include intangible assets and accumulated amortization of TPSL, as these amounts have been classified as noncurrent assets held for sale within our March 31, 2019 unaudited condensed consolidated balance sheet (see Note 16).

The weighted-average remaining amortization period for intangible assets is approximately 17.4 years.

Amortization expense is as follows for the periods indicated:

		Three Months Ended December 31,								Nine Months Ended December 31,
Recorded In		2019				2018				2019				2018
		(in thousands)
Depreciation and amortization		$	36,039			$	27,018			$	96,116			$	81,100
Cost of sales		86				101				262				385
Interest expense		1,371				1,250				3,927				3,668
Operating expenses		110				—				372				—
Total		$	37,606			$	28,369			$	100,677			$	85,153

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 within discontinued operations within our unaudited condensed consolidated statements of operations (see Note 16).

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Expected amortization of our intangible assets is as follows (in thousands):

Fiscal Year Ending March 31,
2020 (three months)	$	39,679
2021	146,692
2022	133,534
2023	125,159
2024	118,961
Thereafter	1,033,730
Total	$	1,597,755

Our long-term debt consists of the following at the dates indicated:

		December 31, 2019												March 31, 2019
		Face Amount				Unamortized Debt Issuance Costs (1)				Book Value				Face Amount				Unamortized Debt Issuance Costs (1)				Book Value
		(in thousands)
Revolving credit facility:
Expansion capital borrowings		$	945,000			$	—			$	945,000			$	275,000			$	—			$	275,000
Working capital borrowings		447,000				—				447,000				896,000				—				896,000
Senior unsecured notes:
7.500% Notes due 2023 ("2023 Notes")		607,323				(5,782		)		601,541				607,323				(6,916		)		600,407
6.125% Notes due 2025 ("2025 Notes")		389,135				(4,451		)		384,684				389,135				(5,092		)		384,043
7.500% Notes due 2026 ("2026 Notes")		450,000				(7,198		)		442,802				—				—				—
Term credit agreement		250,000				(2,832		)		247,168				—				—				—
Other long-term debt		4,845				—				4,845				5,331				—				5,331
		3,093,303				(20,263		)		3,073,040				2,172,789				(12,008		)		2,160,781
Less: Current maturities		4,835				—				4,835				648				—				648
Long-term debt		$	3,088,468			$	(20,263	)		$	3,068,205			$	2,172,141			$	(12,008	)		$	2,160,133

(1)	Debt issuance costs related to the Revolving Credit Facility are reported within intangible assets, rather than as a reduction of the carrying amount of long-term debt.

Amortization expense for debt issuance costs related to long-term debt in the table above was $1.6 million and $0.9 million during the three months ended December 31, 2019 and 2018, respectively, and $3.5 million and $3.4 million during the nine months ended December 31, 2019 and 2018, respectively.

Expected amortization of debt issuance costs is as follows (in thousands):

Fiscal Year Ending March 31,
2020 (three months)		$	1,922
2021		3,942
2022		3,929
2023		3,929
2024		3,305
Thereafter		3,236
Total		$	20,263

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Credit Agreement

During the quarter, we utilized a portion of the accordion feature under our credit agreement (“Credit Agreement”) whereby two new lenders and one existing lender committed to provide an additional $150.0 million of commitments in total. The Credit Agreement provides up to $1.915 billion in aggregate commitments and consists of a revolving credit facility to fund working capital needs, which had a capacity of $641.5 million for cash borrowings and letters of credit (the “Working Capital Facility”), and a revolving credit facility to fund acquisitions and expansion projects, which had a capacity of $1.273 billion (the “Expansion Capital Facility,” and together with the Working Capital Facility, the “Revolving Credit Facility”) at December 31, 2019. We had letters of credit of $117.2 million on the Working Capital Facility at December 31, 2019. The capacity under the Working Capital Facility may be limited by a “borrowing base” (as defined in the Credit Agreement) which is calculated based on the value of certain working capital items at any point in time.

On October 30, 2019, we amended the Credit Agreement to, among other things, adjust the allocation of the commitments of the lenders to make revolving loans thereunder and, effective with the fiscal quarter ending December 31, 2019, amend the covenant package to include the senior secured leverage ratio, interest coverage ratio and total leverage indebtedness ratio financial covenants (each as defined in the Credit Agreement). The new debt covenant levels are presented in the table below.

At December 31, 2019, the borrowings under the Credit Agreement had a weighted average interest rate of 4.07%, calculated as the weighted average LIBOR rate of 1.76% plus a margin of 2.25% for LIBOR borrowings and the prime rate of 4.75% plus a margin of 1.25% on alternate base rate borrowings. At December 31, 2019, the interest rate in effect on letters of credit was 2.25%. Commitment fees are charged at a rate ranging from 0.375% to 0.50% on any unused capacity.

The following table summarizes the debt covenant levels specified in the Credit Agreement (as amended):

		Senior Secured			Interest			Total Leverage
Period Beginning		Leverage Ratio (1)			Coverage Ratio (2)			Indebtedness Ratio (1)
December 31, 2019		3.50			2.50			5.75
June 30, 2020 and thereafter		3.50			2.50			5.50

(1)	Represents the maximum ratio for the period presented.

(2)	Represents the minimum ratio for the period presented.

At December 31, 2019, our senior secured leverage ratio was approximately 1.83 to 1, our interest coverage ratio was approximately 3.89 to 1, and our total leverage indebtedness ratio was approximately 5.00 to 1.

We were in compliance with the covenants under the Credit Agreement at December 31, 2019.

Senior Unsecured Notes

On April 9, 2019, we issued $450.0 million of 7.50% Senior Unsecured Notes Due 2026 (the “2026 Notes”) in a private placement. The 2026 Notes bear interest, which is payable on April 15 and October 15 of each year, beginning on October 15, 2019 at 7.50% per annum. We received net proceeds of $442.1 million, after the initial purchasers’ discount of $6.8 million and offering costs of $1.1 million. The 2026 Notes mature on April 15, 2026. We filed a registration statement for the 2026 Notes with the SEC which became effective on January 22, 2020. Our exchange offer launched on January 23, 2020 and is set to expire on February 21, 2020, unless we decide to extend it.

At December 31, 2019, we were in compliance with the covenants under the indentures for all of the Senior Unsecured Notes.

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Term Credit Agreement

On July 2, 2019 (the “Closing Date”), we entered into a term credit agreement (the “Term Credit Agreement”) with Toronto Dominion (Texas) LLC for a $250.0 million term loan facility. 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 (as defined herein) acquisition (see Note 4).

The commitments under the Term Credit Agreement expire on July 2, 2024. We are subject to prepayments of principal if we enter into certain transactions to sell assets, issue equity or obtain new borrowings.

The obligations under the Term Credit Agreement are guaranteed by the Partnership and certain of the Borrower’s wholly owned subsidiaries, and are secured by substantially all of the assets of the Borrower, the Partnership and the other subsidiary guarantors subject to certain customary exclusions.

All borrowings under the Term Credit Agreement bear interest, at either (a) an alternate base rate plus (i) during the first three-month period after the Closing Date, margin equal to the applicable margin for alternate base rate loans calculated under our existing revolving credit facility, (ii) 2.00% per annum for the second three-month period after the Closing Date, (iii) 2.25% per annum for the third three-month period after the Closing Date, (iv) 2.50% per annum for the fourth three-month period after the Closing Date, and (v) thereafter, the rate per year such that the alternate base rate equals a rate of interest agreed to between us and the administrative agent, or (b) an adjusted LIBOR rate plus (i) during the first three-month period after the Closing Date, margin equal to the applicable margin for LIBOR rate loans calculated under our existing revolving credit facility, (ii) 3.00% per annum for the second three-month period after the Closing Date, (iii) 3.25% per annum for the third three-month period after the Closing Date, (iv) 3.50% per annum for the fourth three-month period after the Closing Date, and (v) thereafter, such rate per annum such that the adjusted LIBOR rate equals a rate of interest agreed to between us and the administrative agent. At December 31, 2019, the borrowings under the Term Credit Agreement had an interest rate of 4.74% calculated as the LIBOR rate of 1.74% plus a margin of 3.00%.

The Term Credit Agreement contains various customary representations, warranties and covenants by the Partnership and its subsidiaries, including, without limitation, (i) commencing September 30, 2019, the Partnership and the subsidiary guarantors will be subject to financial covenants limiting leverage, including senior leverage, secured leverage and total leverage, and requiring a minimum interest coverage, (ii) negative covenants limiting indebtedness, liens, equity distributions and fundamental changes involving the Partnership or its subsidiaries and (iii) affirmative covenants requiring, among other things, reporting of financial information and material events and covenants to maintain existence and pay taxes, in each case substantially consistent with the Partnership’s existing Revolving Credit Facility.

On October 30, 2019, we amended the Term Credit Agreement, to, among other things, conform financial covenants in the Term Credit Agreement to the financial covenants set forth in the amended Credit Agreement, as described above.

Sawtooth Credit Agreement

On November 27, 2019, Sawtooth Caverns LLC (“Sawtooth”), a joint venture in which we own a 71.48% 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 December 31, 2019, no amounts had been borrowed under the Sawtooth credit agreement. Commitment fees are charged at a rate of 0.50% on any unused capacity.

Other Long-Term Debt

We have other notes payable related to equipment financing. The interest rates on these instruments range from 4.13% to 7.10% per year and have an aggregate principal balance of $4.8 million at December 31, 2019.

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Debt Maturity Schedule

The scheduled maturities of our long-term debt are as follows at December 31, 2019:

Fiscal Year Ending March 31,		Revolving Credit Facility				Senior Unsecured Notes				Term Credit Agreement				Other Long-Term Debt				Total
		(in thousands)
2020 (three months)		$	—			$	—			$	—			$	161			$	161
2021		—				—				—				4,684				4,684
2022		1,392,000				—				—				—				1,392,000
2023		—				—				—				—				—
2024		—				607,323				—				—				607,323
Thereafter		—				839,135				250,000				—				1,089,135
Total		$	1,392,000			$	1,446,458			$	250,000			$	4,845			$	3,093,303

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. The GP and the Partnership contend that the jury verdict, at least in respect of fraudulent misrepresentation, is not supportable by either controlling law or the evidentiary record. On December 5, 2019, in response to the defendants’ post-trial motion, the Court issued an Order overturning the jury’s damages award and ordering the case to be set for a damages-only trial. Both parties filed applications with the trial court asking the trial court to certify the December 5th Order for interlocutory, immediate review by the Appellate Court. On December 23, 2019, the trial court issued an Order certifying for immediate review by the appellate court the issue of whether the types of damages awarded by the jury are legally supportable since it was also determined by the Court that there was no contract between the parties. On January 7, 2020, the Supreme Court of Delaware entered an Order expanding the issues to be reviewed on appeal to include the additional issues raised by the NGL parties’ application - namely, whether the December 5th Order correctly set aside the jury’s $4.0 million quantum meruit award, whether certain jury instructions were correct and whether the evidence presented at trial supported the claims asserted by LCT. The Supreme Court consolidated the appeal proceedings for judicial efficiency; and set a briefing cycle for the parties whereby the appeal-related materials will likely be fully submitted by both parties by the Summer of 2020. It is our position that the awards, even if they each stand, are not cumulative. Any allocation of the ultimate verdict award between the GP and the Partnership will be made by the Board of Directors once all information is available to it and after the post-trial and any appellate process has run its course and the verdict is final as a matter of law. Because the Partnership is a named defendant in the suit, and any judgment ultimately awarded would be joint and several with the GP, we have determined that it is probable that the Partnership could be liable for a portion of this judgment. At this time, we believe the amount that could be allocated to the Partnership would not be material as it is estimated to be less than $4.0 million. As of December 31, 2019, 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 December 31, 2019, we have an environmental liability, measured on an undiscounted basis, of $2.1 million, which is recorded within accrued expenses and other payables in our unaudited condensed consolidated balance sheet. Our operations are subject to extensive federal, state, and local environmental laws and regulations. Although we believe our operations are in

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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 U.S. 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 U.S. 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 fiscal year ended March 31, 2019, we paid the EPA $12.5 million and retired all 36 million RINs. On December 18, 2019, 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 unaudited condensed consolidated balance sheets (in thousands):

Balance at March 31, 2019	$	9,723
Liabilities incurred	1,125
Liabilities assumed in acquisitions	6,641
Liabilities settled	(642		)
Accretion expense	734
Balance at December 31, 2019	$	17,581

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.

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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 December 31, 2019 (in thousands):

Fiscal Year Ending March 31,
2020 (three months)	$	2,463
2021	6,453
2022	6,163
2023	4,502
2024	4,502
Thereafter	679
Total	$	24,762

Amounts in the table above do not include future minimum payments related to Mid-Con and Gas Blending as Mid-Con and Gas Blending have been classified as discontinued operations in our unaudited condensed consolidated statements of operations (see Note 16).

As part of the acquisition of Hillstone, discussed in Note 4, we assumed an obligation to pay a quarterly subsidy payment in the event that specified volumetric thresholds are not exceeded at a third-party facility. This agreement expires on December 31, 2022. For the three months and nine months ended December 31, 2019, we recorded $0.4 million within operating expense in our unaudited condensed consolidated statement of operations. At December 31, 2019, the range of potential payments we could be obligated to make pursuant to the subsidy agreement could be from $0.0 million to $9.7 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 assets recorded in prepaid expenses and other current assets and in other noncurrent assets in our unaudited condensed consolidated balance sheet for minimum shipping fees paid in both the current and previous periods that are expected to be recovered in future periods by exceeding the minimum monthly volumes (see Note 2). In September 2019, we extended our commitment with one pipeline operator through March 31, 2025 and in October 2019, we extended our commitment with another pipeline operator through October 31, 2024. Both extensions are backed by long-term purchase agreements. The extension with the second operator also allows us an additional 5.5 years to recapture the minimum shipping deficiency fees discussed above.

The following table summarizes future minimum throughput payments under these agreements at December 31, 2019 (in thousands):

Fiscal Year Ending March 31,
2020 (three months)	$	11,006
2021	35,314
2022	35,314
2023	35,314
2024	35,410
Thereafter	30,897
Total	$	183,255

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Construction Commitments

At December 31, 2019, we had construction commitments of $6.5 million.

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 December 31, 2019, 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:
2020 (three months)		$	49,160			824			$	8,410			14,526
2021		—				—			1,341				2,100
Total		$	49,160			824			$	9,751			16,626
Index-Price Commodity Purchase Commitments:
2020 (three months)		$	684,946			11,730			$	198,694			421,949
2021		544,878				10,617			1,321				3,662
2022		394,385				8,264			—				—
2023		255,818				5,482			—				—
2024		190,259				4,110			—				—
Total		$	2,070,286			40,203			$	200,015			425,611

(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 December 31, 2019, 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:
2020 (three months)		$	45,605			750			$	99,333			123,418
2021		—				—			13,746				20,034
2022		—				—			157				203
Total		$	45,605			750			$	113,236			143,655
Index-Price Commodity Sale Commitments:
2020 (three months)		$	817,155			13,294			$	337,627			481,567
2021		23,367				390			28,365				46,659
Total		$	840,522			13,684			$	365,992			528,226

We account for the contracts shown in the tables above using the normal purchase and normal sale election. Under this accounting policy election, we do not record the physical contracts at fair value at each balance sheet date; instead, we record the purchase or sale at the contracted value once the delivery occurs. Contracts in the tables above may have offsetting derivative contracts (described in Note 11) or inventory positions (described in Note 2).

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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 unaudited condensed consolidated balance sheet and are not included in the tables above. These contracts are included in the derivative disclosures in Note 11, and represent $8.3 million of our prepaid expenses and other current assets and $5.3 million of our accrued expenses and other payables at December 31, 2019.

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 and obligations. As of December 31, 2019, 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 the warrants that were exercised for common units during the nine months ended December 31, 2019, we issued 3,844 notional units to our general partner for less than $0.1 million in order to maintain its 0.1% interest in us.

Equity Issuances

On August 24, 2016, we entered into an equity distribution agreement in connection with an at-the-market program (the “ATM Program”) pursuant to which we may issue and sell up to $200.0 million of common units. We did not sell any common units under the ATM Program during the nine months ended December 31, 2019, and approximately $134.7 million remained available for sale under the ATM Program at December 31, 2019. The registration statement applicable to this program expired in July 2019.

Common Unit Repurchase Program

On August 30, 2019, the board of directors of our general partner authorized a common unit repurchase plan, under which we may repurchase up to $150.0 million of our outstanding common units through September 30, 2021 from time to time in the open market or in other privately negotiated transactions. We did not repurchase any units under this plan during the three months ended December 31, 2019.

Our Distributions

The following table summarizes distributions declared on our common units during the last four quarters:

Date Declared		Record Date		Payment Date		Amount Per Unit				Amount Paid/Payable to Limited Partners				Amount Paid/Payable to General Partner
										(in thousands)				(in thousands)
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

Class A Convertible Preferred Units

In 2016, 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 Convertible Preferred Units (“Class A Preferred Units”) and 4,375,112 warrants.

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. There was no accretion for the beneficial conversion feature, recorded as a deemed distribution, for the three months ended December 31, 2019 as all Class A Preferred units have been redeemed,

compared to $18.6 million for the three months ended December 31, 2018 and $36.5 million and $40.4 million during the nine months ended December 31, 2019 and 2018, respectively.

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, 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 (see Note 4).

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 four quarters:

										Amount Paid to Class B
Date Declared		Record Date		Payment Date		Amount Per Unit				Preferred Unitholders
										(in thousands)
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

The distribution amount paid on January 15, 2020 is included in accrued expenses and other payables in our unaudited condensed consolidated balance sheet at December 31, 2019.

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 offering costs of $0.7 million).

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 three quarters:

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										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

The distribution amount paid on January 15, 2020 is included in accrued expenses and other payables in our unaudited condensed consolidated balance sheet at December 31, 2019.

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 (see Note 4).

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 distributions declared on our Class D Preferred Units during the last two quarters:

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

The distributions for the nine months ended December 31, 2019 of $10.5 million represented 50% of the Class D Preferred Units distribution amount. In accordance with the terms of our Partnership Agreement, the value of each Class D Preferred Unit shall automatically increase by the non-cash accretion, which is approximately $10.5 million in the aggregate with respect to the distributions for the nine months ended December 31, 2019.

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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.

Registration Rights Agreement

In connection with the issuance of the Class D Preferred Units, we entered into a registration rights agreement (“Registration Rights Agreement”) with the purchasers of the Class D Preferred Units (“Purchasers”), pursuant to which we are required to prepare and file a registration statement (the “Registration Statement”) within 180 days of the Closing Date, to permit the public resale of (i) the Class D Preferred Units, (ii) the common units issued or issuable upon the exercise of the warrants, (iii) the common units that are issuable pursuant to the terms of the Class D Preferred Units in connection with a redemption of the Class D Preferred Units and (iv) any common units issued in lieu of cash as liquidated damages under the Registration Rights Agreement. The Partnership is also required to use its commercially reasonable efforts to cause the Registration Statement to become effective no later than 360 days after the Closing Date. The Registration Rights Agreement provides that if the Registration Statement is not declared effective on or prior to the Registration Statement Deadline, the Partnership will be liable to the Purchasers for liquidated damages in accordance with a formula, subject to the limitations set forth in the Registration Rights Agreement. Such liquidated damages would be payable in cash, or if payment in cash would breach any covenant or a cause a default under a credit facility or any other debt instrument filed by the Partnership as an exhibit to a periodic report filed with the SEC, then such liquidated damages would be payable in the form of newly issued common units. In addition, the Registration Rights Agreement grants the Purchasers piggyback registration rights. These registration rights are transferable to affiliates of the Purchasers and, in certain circumstances, to third parties. The Registration Statement was filed with the SEC on December 27, 2019.

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Board Rights Agreement

In connection with the issuance of the Class D Preferred Units, we entered into a board rights agreement pursuant to which affiliates of the Purchasers will have the right to designate one director on the board of directors of our general partner, so long as the Purchasers and their respective affiliates, in the aggregate, own either at least (i) (A) 50% of the number of Class D Preferred Units issued on the Closing Date or (B) 50% of the aggregate liquidation preference of any class or series of Class D Parity Securities (as defined in the Amended and Restated Partnership Agreement), or (ii) warrants and/or common units that, in the aggregate, comprise 10% or more of the then-outstanding common units.

Amended and Restated Partnership Agreement

On 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.

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. The awards may also vest upon a change of control, at the discretion of the board of directors of our general partner. No distributions accrue to or are paid on the restricted units during the vesting period.

The restricted units vest contingent on the continued service of the recipients through the vesting date (the “Service Awards”).

The following table summarizes the Service Award activity during the nine months ended December 31, 2019:

Unvested Service Award units at March 31, 2019		2,308,400
Units granted		2,095,681
Units vested and issued		(2,470,756	)
Units forfeited		(152,425	)
Unvested Service Award units at December 31, 2019		1,780,900

In connection with the vesting of certain restricted units during the nine months ended December 31, 2019, we canceled 88,718 of the newly-vested common units in satisfaction of $1.2 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.

The following table summarizes the scheduled vesting of our unvested Service Award units at December 31, 2019:

Fiscal Year Ending March 31,
2020 (three months)		443,725
2021		890,200
2022		446,975
Total		1,780,900

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 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.

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During the three months ended December 31, 2019 and 2018, we recorded compensation expense related to Service Award units of $1.8 million and $3.4 million, respectively. During the nine months ended December 31, 2019 and 2018, we recorded compensation expense related to Service Award units of $6.6 million and $8.5 million, respectively.

Of the restricted units granted and vested during the nine months ended December 31, 2019, 1,886,131 units were granted for performance bonuses. The total amount of these bonus payments was $24.5 million, of which we had accrued $8.7 million as of March 31, 2019.

The following table summarizes the estimated future expense we expect to record on the unvested Service Award units at December 31, 2019 (in thousands):

Fiscal Year Ending March 31,
2020 (three months)		$	1,697
2021		4,640
2022		1,579
Total		$	7,916

As of December 31, 2019, there are approximately 2.7 million common units remaining available for issuance under the LTIP.

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.

Commodity Derivatives

The following table summarizes the estimated fair values of our commodity derivative assets and liabilities reported in our unaudited condensed consolidated balance sheet at the dates indicated:

		December 31, 2019								March 31, 2019
		Derivative Assets				Derivative Liabilities				Derivative Assets				Derivative Liabilities
		(in thousands)
Level 1 measurements		$	3,671			$	(9,877	)		$	3,754			$	(1,349	)
Level 2 measurements		8,819				(5,469		)		8,882				(5,119		)
		12,490				(15,346		)		12,636				(6,468		)
Netting of counterparty contracts (1)		(3,824		)		3,824				(1,577		)		1,577
Net cash collateral provided (held)		14,460				6,105				1,740				(208		)
Commodity derivatives		$	23,126			$	(5,417	)		$	12,799			$	(5,099	)

(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.

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The following table summarizes the accounts that include our commodity derivative assets and liabilities in our unaudited condensed consolidated balance sheets at the dates indicated:

		December 31, 2019				March 31, 2019
		(in thousands)
Prepaid expenses and other current assets		$	23,126			$	12,799
Accrued expenses and other payables		(5,353		)		(4,960		)
Other noncurrent liabilities		(64		)		(139		)
Net commodity derivative asset		$	17,709			$	7,700

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 December 31, 2019:
Crude oil fixed-price (1)		January 2020–December 2020		(4,359	)		$	(5,330	)
Propane fixed-price (1)		January 2020–March 2021		271			(1,332		)
Refined products fixed-price (1)		January 2020–January 2021		(327	)		(1,103		)
Other		January 2020–March 2022					4,909
							(2,856		)
Net cash collateral provided							20,565
Net commodity derivative asset							$	17,709
At March 31, 2019:
Crude oil fixed-price (1)		April 2019–December 2020		(1,961	)		979
Propane fixed-price (1)		April 2019–March 2020		198			608
Refined products fixed-price (1)		April 2019–January 2021		(177	)		376
Other		April 2019–March 2022					4,205
							6,168
Net cash collateral provided							1,532
Net commodity derivative asset							$	7,700

(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.

Amounts as of December 31, 2019 and March 31, 2019 in the tables above do not include commodity derivative contract positions related to Mid-Con and Gas Blending, as these amounts have been classified as current and noncurrent assets and liabilities held for sale within our December 31, 2019 and March 31, 2019 unaudited condensed consolidated balance sheets (see Note 16). Amounts as of March 31, 2019 in the tables above do not include commodity derivative contract positions related to TPSL, as these amounts have been classified as current assets and liabilities held for sale within our March 31, 2019 unaudited condensed consolidated balance sheet (see Note 16).

During the three months and nine months ended December 31, 2019, we recorded a net loss of $15.1 million and a net gain of $0.8 million, respectively, from our commodity derivatives to revenues and cost of sales in our unaudited condensed consolidated statements of operations. During the three months and nine months ended December 31, 2018, we recorded net gains of $69.7 million and $30.0 million, respectively, from our commodity derivatives to revenues and cost of sales in our unaudited condensed consolidated statements of operations. These amounts do not include net gains and losses related to Mid-

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Con, Gas Blending, TPSL and our former Retail Propane segment, as these amounts have been classified within discontinued operations in our unaudited condensed consolidated statements of operations (see Note 16).

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 December 31, 2019, 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 unaudited condensed consolidated balance sheets and recognized in our net income.

Interest Rate Risk

The Revolving Credit Facility is variable-rate debt with interest rates that are generally indexed to bank prime or LIBOR interest rates. At December 31, 2019, we had $1.4 billion of outstanding borrowings under the Revolving Credit Facility at a weighted average interest rate of 4.07%.

The Term Credit Agreement is variable-rate debt with interest rates that are generally indexed to bank prime or LIBOR interest rates. At December 31, 2019, we had $250.0 million of outstanding borrowings under the Term Credit Agreement at an interest rate of 4.74%.

Fair Value of Fixed-Rate Notes

The following table provides fair value estimates of our fixed-rate notes at December 31, 2019 (in thousands):

Senior Unsecured Notes:
2023 Notes	$	608,272
2025 Notes	$	366,273
2026 Notes	$	436,478

For the Senior Unsecured Notes, the fair value estimates were developed based on publicly traded quotes and would be classified as Level 1 in the fair value hierarchy.

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The following table summarizes revenues related to our segments. 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.

		Three Months Ended December 31,								Nine Months Ended December 31,
		2019				2018				2019				2018
		(in thousands)
Revenues:
Crude Oil Logistics:
Topic 606 revenues
Crude oil sales		$	646,296			$	718,621			$	1,925,039			$	2,300,703
Crude oil transportation and other		44,613				40,003				127,767				107,032
Non-Topic 606 revenues		3,585				2,909				10,825				9,291
Elimination of intersegment sales		(3,505		)		(10,353		)		(15,330		)		(21,962		)
Total Crude Oil Logistics revenues		690,989				751,180				2,048,301				2,395,064
Water Solutions:
Topic 606 revenues
Disposal service fees		94,218				55,470				226,635				167,573
Sale of recovered hydrocarbons		16,470				17,337				45,566				56,063
Freshwater revenues		5,634				651				9,737				1,939
Other service revenues		5,285				1,986				12,701				5,753
Non-Topic 606 revenues		—				14				—				39
Total Water Solutions revenues		121,607				75,458				294,639				231,367
Liquids:
Topic 606 revenues
Propane sales		309,668				372,224				564,820				793,605
Butane sales		226,730				222,412				396,776				481,459
Other product sales		145,082				151,246				376,148				471,547
Service revenues		5,181				7,616				22,230				17,509
Non-Topic 606 revenues		5,506				6,314				14,658				16,506
Elimination of intersegment sales		(6,542		)		(10,379		)		(12,851		)		(20,854		)
Total Liquids revenues		685,625				749,433				1,361,781				1,759,772
Refined Products and Renewables:
Topic 606 revenues
Refined products sales		627,590				650,780				1,942,146				1,944,959
Non-Topic 606 revenues		100,438				68,199				255,090				233,775
Total Refined Products and Renewables revenues		728,028				718,979				2,197,236				2,178,734
Corporate and Other:
Non-Topic 606 revenues		280				319				799				1,066
Total Corporate and Other revenues		280				319				799				1,066
Total revenues		$	2,226,529			$	2,295,369			$	5,902,756			$	6,566,003

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The following tables summarize 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.

		Three Months Ended December 31,								Nine Months Ended December 31,
		2019				2018				2019				2018
		(in thousands)
Depreciation and Amortization:
Crude Oil Logistics		$	17,950			$	18,387			$	53,228			$	56,566
Water Solutions		48,184				27,561				114,438				79,212
Liquids		6,833				6,449				20,718				19,449
Refined Products and Renewables		197				233				578				699
Corporate and Other		3,752				2,975				9,651				9,340
Total depreciation and amortization		$	76,916			$	55,605			$	198,613			$	165,266
Operating Income (Loss):
Crude Oil Logistics		$	28,696			$	32,022			$	101,018			$	(36,694	)
Water Solutions		(583		)		86,737				34,380				97,476
Liquids		64,084				21,532				80,965				34,913
Refined Products and Renewables		24,954				20,552				32,242				4,516
Corporate and Other		(20,756		)		(16,394		)		(74,575		)		(69,176		)
Total operating income		$	96,395			$	144,449			$	174,030			$	31,035

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. The information below does not include goodwill by segment.

		Three Months Ended December 31,								Nine Months Ended December 31,
		2019				2018				2019				2018
		(in thousands)
Crude Oil Logistics		$	4,953			$	6,169			$	23,817			$	21,701
Water Solutions		692,826				115,928				1,838,237				463,423
Liquids		2,641				357				13,465				1,738
Refined Products and Renewables		—				—				224				—
Corporate and Other		2,427				248				5,485				846
Total		$	702,847			$	122,702			$	1,881,228			$	487,708

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:

		December 31, 2019				March 31, 2019
		(in thousands)
Long-lived assets, net:
Crude Oil Logistics		$	1,581,887			$	1,584,636
Water Solutions		3,523,877				1,600,836
Liquids (1)		616,602				498,767
Refined Products and Renewables		38,790				29,477
Corporate and Other		33,707				26,569
Total		$	5,794,863			$	3,740,285

(1)	Includes $28.9 million and $0.5 million of non-US long-lived assets at December 31, 2019 and March 31, 2019, respectively.

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		December 31, 2019				March 31, 2019
		(in thousands)
Total assets:
Crude Oil Logistics		$	2,155,695			$	2,237,612
Water Solutions		3,676,248				1,668,292
Liquids (1)		967,024				721,008
Refined Products and Renewables		264,468				383,026
Corporate and Other		84,027				77,019
Assets held for sale		95,093				815,536
Total		$	7,242,555			$	5,902,493

(1)	Includes $48.7 million and $12.0 million of non-US total assets at December 31, 2019 and March 31, 2019, respectively.

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 within discontinued operations in our unaudited condensed consolidated statements of operations and held for sale within our March 31, 2019 unaudited condensed consolidated balance sheet and December 31, 2019 balance sheet for Mid-Con and Gas Blending (see Note 16).

A member of the board of directors of our general partner is 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 unaudited condensed consolidated statement of operations). We also treat and dispose of produced water and solids received from WPX.

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 unaudited condensed 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 disclosed in prior periods have been retained but we have not disclosed any information related to transactions for the three months ended December 31, 2019.

The following table summarizes these related party transactions for the periods indicated:

		Three Months Ended December 31,								Nine Months Ended December 31,
		2019				2018				2019				2018
		(in thousands)
Sales to WPX		$	13,888			$	8,779			$	36,716			$	18,550
Purchases from WPX (1)		$	81,578			$	91,391			$	247,745			$	248,718
Sales to SemGroup						$	257			$	458			$	926
Purchases from SemGroup						$	—			$	—			$	1,337
Sales to entities affiliated with management		$	3,642			$	4,691			$	5,362			$	10,336
Purchases from entities affiliated with management		$	953			$	675			$	3,068			$	2,481
Purchases from equity method investees		$	188			$	—			$	317			$	—

(1)	Amount primarily relates to purchases of crude oil under the definitive agreement we signed with WPX.

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Accounts receivable from affiliates consist of the following at the dates indicated:

		December 31, 2019				March 31, 2019
		(in thousands)
Receivables from NGL Energy Holdings LLC		$	8,332			$	7,277
Receivables from WPX		3,573				5,185
Receivables from SemGroup						71
Receivables from entities affiliated with management		540				334
Total		$	12,445			$	12,867

Accounts payable to affiliates consist of the following at the dates indicated:

		December 31, 2019				March 31, 2019
		(in thousands)
Payables to WPX		$	28,509			$	27,844
Payables to entities affiliated with management		629				625
Payables to equity method investees		236				—
Total		$	29,374			$	28,469

Other Related Party Transactions

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 three months ended June 30, 2019, we purchased, in two transactions, a 1.89% interest in our general partner, NGL Energy Holdings LLC, for $2.4 million in cash and accounted for this as a deduction within limited partners’ equity in our unaudited condensed consolidated balance sheet.

During the three months ended September 30, 2019, we purchased a 5.73% interest in our general partner, NGL Energy Holdings LLC, for $11.5 million in cash and accounted for this as a deduction within limited partners’ equity in our unaudited condensed 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.

During the three months ended December 31, 2019, we purchased a 1.08% interest in our general partner, NGL Energy Holdings LLC, for $1.4 million in cash and accounted for this as a deduction within limited partners’ equity in our unaudited condensed consolidated balance sheet.

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 contracts with multiple performance obligations. Actual results can vary from those judgments and assumptions. We do not

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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 December 31, 2019.

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 Refined Products and Renewables segment includes $1.2 million of net losses related to changes in the mark-to-market value of these arrangements recorded during the nine months ended December 31, 2019.

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 December 31, 2019 (in thousands):

Fiscal Year Ending March 31,
2020 (three months)	$	69,796
2021	217,453
2022	208,223
2023	202,046
2024	171,541
Thereafter	305,061
Total	$	1,174,120

Contract Assets and Liabilities

The following tables summarize the balances of our contract assets and liabilities at the dates indicated:

		Balance at
		March 31, 2019				December 31, 2019
		(in thousands)
Accounts receivable from contracts with customers		$	613,827			$	602,350

Contract liabilities at March 31, 2019		$	8,461
Payment received and deferred		49,098
Payment recognized in revenue		(27,566		)
Contract liabilities at December 31, 2019		$	29,993

Amounts as of March 31, 2019 in the tables above do not include contract assets and liabilities related to TPSL, as these amounts have been classified as current assets and current liabilities held for sale within our March 31, 2019 unaudited condensed consolidated balance sheet (see Note 16).

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. 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.

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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.

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 leases 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 unaudited condensed 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 condensed 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 December 31, 2019, we had operating lease right-of-use assets of $183.1 million and current and noncurrent operating lease obligations of $57.1 million and $122.8 million, respectively, on our unaudited condensed consolidated balance sheet. At December 31, 2019, the weighted-average remaining lease term and weighted-average discount rate for our operating leases was 6.46 years and 5.81%, respectively.

The following table summarizes the components of our lease expense for the periods indicated:

	Three Months Ended December 31,				Nine Months Ended December 31,
	2019				2019
	(in thousands)
Operating lease cost	$	22,320			$	66,707
Variable lease cost	6,170				11,835
Short-term lease cost	219				478
Total lease cost	$	28,709			$	79,020

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 unaudited condensed consolidated statements of operations (see Note 16).

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Rental expense relating to operating leases was $22.0 million and $69.1 million during the three months and nine months ended December 31, 2018, respectively. These amounts do not include rental expense related to Mid-Con, Gas Blending, TPSL and our former Retail Propane segment, as these amounts have been classified within discontinued operations in our unaudited condensed consolidated statements of operations (see Note 16).

The following table summarizes maturities of our operating lease liabilities at December 31, 2019 (in thousands):

Fiscal Year Ending March 31,
2020 (three months)	$	17,154
2021	60,126
2022	41,674
2023	28,974
2024	17,139
Thereafter	59,910
Total lease payments	224,977
Less imputed interest	(45,088		)
Total operating lease liabilities	$	179,889

The following table summarizes future minimum lease payments under various noncancelable operating lease agreements at March 31, 2019 (in thousands):

Fiscal Year Ending March 31,
2020	$	78,348
2021	60,417
2022	43,259
2023	29,252
2024	18,341
Thereafter	41,845
Total	$	271,462

Amounts in the table above do not include future minimum lease payments related to Mid-Con, Gas Blending and TPSL, which have been classified as discontinued operations in our unaudited condensed consolidated statements of operations (see Note 16).

The following table summarizes supplemental cash flow and non-cash information related to our operating leases for the period indicated:

	Nine Months Ended December 31,
	2019
	(in thousands)
Cash paid for amounts included in the measurement of operating lease liabilities	$	81,779
Operating lease right-of-use assets obtained in exchange for operating lease obligations	$	584,538

 

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 three months ended December 31, 2019, fixed rental revenue was $4.9 million, which includes $1.3 million of sublease revenue. During the nine months ended December 31, 2019, fixed rental revenue was $15.8 million, which includes $3.7 million of sublease revenue.

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The following table summarizes future minimum lease payments receivable under various noncancelable operating lease agreements at December 31, 2019 (in thousands):

Fiscal Year Ending March 31,
2020 (three months)	$	4,814
2021	16,190
2022	6,634
2023	5,387
2024	5,057
Thereafter	16,282
Total	$	54,364

As discussed in Note 1, we have classified certain assets and liabilities of the Mid-Con and Gas Blending businesses as held for sale and the operations as discontinued. On January 3, 2020, we completed the sale of Mid-Con to a third-party. See Note 1 for a further discussion.

As discussed in Note 1, the assets and liabilities of TPSL have been classified as held for sale and the operations as discontinued. On September 30, 2019, we completed the sale of TPSL and associated assets to Trajectory. See Note 1 for a further discussion.

As discussed in Note 1, on July 10, 2018, we completed the sale of virtually all of our remaining Retail Propane segment to Superior and on August 14, 2018, we sold our previously held interest in Victory Propane, and the operations of our Retail Propane segment have been classified as discontinued. See Note 1 for a further discussion.

---

The following table summarizes the major classes of assets and liabilities of Mid-Con, Gas Blending and TPSL classified as held for sale at the dates indicated:

		December 31, 2019				March 31, 2019
		(in thousands)
Current Assets Held for Sale
Accounts receivable-trade, net		$	—			$	164,716
Inventories		44,500				327,015
Operating lease right-of-use assets		19,873				—
Prepaid expenses and other current assets		28,027				89,254
Goodwill		2,693				—
Total current assets held for sale		95,093				580,985
Noncurrent Assets Held for Sale
Property, plant and equipment, net		—				15,553
Goodwill		—				35,405
Intangible assets, net		—				137,446
Other noncurrent assets (1)		—				46,147
Total noncurrent assets held for sale		—				234,551
Total assets held for sale		$	95,093			$	815,536
Current Liabilities Held for Sale
Accounts payable-trade		$	—			$	85,602
Accrued expenses and other payables		21,026				140,691
Advance payments received from customers		—				460
Operating lease obligations		19,873				—
Total current liabilities held for sale		40,899				226,753
Noncurrent Liabilities Held for Sale
Other noncurrent liabilities		—				33
Total noncurrent liabilities held for sale		—				33
Total liabilities held for sale		$	40,899			$	226,786

(1)

Primarily comprised of tank bottoms, which are product volumes required for the operation of storage tanks, that are recorded at historical cost. We recover tank bottoms when the storage tanks are removed from service. At March 31, 2019, tank bottoms held in third party terminals consisted of 389,737 barrels of refined products. Tank bottoms held in terminals we own are included within property, plant and equipment.

---

The following table summarizes the results of operations from discontinued operations for the periods indicated:

		Three Months Ended December 31,								Nine Months Ended December 31,
		2019				2018				2019				2018
		(in thousands)
Revenues		$	1,938,398			$	4,081,451			$	10,493,630			$	12,380,744
Cost of sales		1,936,324				4,065,723				10,497,492				12,310,152
Operating expenses		397				2,587				5,898				34,572
General and administrative expense		—				20				53				2,699
Depreciation and amortization		—				153				749				9,164
Loss (gain) on disposal or impairment of assets, net (1)		7,791				(263		)		182,240				(407,646		)
Operating (loss) income from discontinued operations		(6,114		)		13,231				(192,802		)		431,803
Equity in earnings of unconsolidated entities		—				—				—				1,183
Interest expense		(1		)		—				(111		)		(126		)
Other income, net		—				105				133				773
(Loss) income from discontinued operations before taxes (2)		(6,115		)		13,336				(192,780		)		433,633
Income tax expense		—				(7		)		(20		)		(132		)
(Loss) income from discontinued operations, net of tax		$	(6,115	)		$	13,329			$	(192,800	)		$	433,501

(1)

Amount for the nine months ended December 31, 2019 includes a loss of $181.2 million on the sale of TPSL 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 nine months ended December 31, 2018 includes a gain of $408.9 million on the sale of virtually all of our remaining Retail Propane segment to Superior on July 10, 2018, partially offset by a loss of $1.3 million on the sale of a portion of our Retail Propane segment to DCC on March 30, 2018 related to a working capital adjustment.

(2)	Amount includes a loss attributable to redeemable noncontrolling interests of $0.4 million for the nine months ended December 31, 2018.

Continuing Involvement

As of December 31, 2019, we have commitments to purchase 1.1 million gallons of finished gasoline, valued at $1.7 million (based on the contract price), from Trajectory, the purchaser of TPSL, through January 2020. During the three months and nine months ended December 31, 2019, we received $3.6 million and $3.6 million, respectively, from Trajectory for finished gasoline sold to them during the period. During the three months and nine months ended December 31, 2019, we paid $1.8 million and $1.8 million, respectively, to Trajectory for finished gasoline purchased from them during the period.

As of December 31, 2019, we have commitments to sell up to 30.9 million gallons of propane, valued at $18.1 million (based on the contract price), to Superior and DCC LPG, the purchasers of our former Retail Propane segment, through March 2021. During the three months and nine months ended December 31, 2019, we received a combined $3.8 million and $7.5 million, respectively, from Superior and DCC LPG for propane sold to them during the period.

On January 3, 2020, we completed the sale of our Mid-Con business. The business was sold to a third-party whom purchased the inventory and open derivative positions and assumed the Partnership’s obligations under certain system storage agreements. The Partnership retained all of the outstanding accounts receivable and accounts payable balances associated with this business that related to transactions prior to the closing date. To facilitate the assignment of the system storage agreements, the Partnership paid $6.3 million. See Note 1 and Note 16 for a further discussion of the transaction.

On January 31, 2020, we paid Trajectory $41.7 million, which includes interest charges through the date of payment, related to the final working capital adjustment for the sale of TPSL. See Note 1 and Note 16 for a further discussion of the transaction.

---

Certain of our wholly owned subsidiaries have, jointly and severally, fully and unconditionally guaranteed the Senior Unsecured Notes (see Note 8). Pursuant to Rule 3-10 of Regulation S-X, we have presented in columnar format the unaudited condensed consolidating financial information for NGL Energy Partners LP (Parent), NGL Energy Finance Corp., the guarantor subsidiaries on a combined basis, and the non-guarantor subsidiaries on a combined basis in the tables below. NGL Energy Partners LP and NGL Energy Finance Corp. are co-issuers of the Senior Unsecured Notes. Since NGL Energy Partners LP received the proceeds from the issuance of the Senior Unsecured Notes, this activity has been included in the NGL Energy Partners LP (Parent) column in the tables below.

During the periods presented in the tables below, the status of certain subsidiaries changed, in that they either became guarantors of or ceased to be guarantors of the Senior Unsecured Notes. For purposes of the tables below, when the status of a subsidiary changes, all subsidiary activity is included in either the guarantor subsidiaries column or non-guarantor subsidiaries column based on the status of the subsidiary at the balance sheet date regardless of activity during the year.

There are no significant restrictions that prevent the parent or any of the guarantor subsidiaries from obtaining funds from their respective subsidiaries by dividend or loan. None of the assets of the guarantor subsidiaries (other than the investments in non-guarantor subsidiaries) are restricted net assets pursuant to Rule 4-08(e)(3) of Regulation S-X under the Securities Act of 1933, as amended.

For purposes of the tables below, (i) the unaudited condensed consolidating financial information is presented on a legal entity basis, (ii) investments in consolidated subsidiaries are accounted for as equity method investments, and (iii) contributions, distributions, and advances to (from) consolidated entities are reported on a net basis within net changes in advances with consolidated entities in the unaudited condensed consolidating statement of cash flow tables below.

As discussed further in Note 1 and Note 16, certain assets and liabilities related to Mid-Con and Gas Blending and the assets and liabilities related to TPSL have been classified as held for sale within our March 31, 2019 unaudited condensed consolidated balance sheet and December 31, 2019 unaudited condensed consolidated balance sheet for Mid-Con and Gas Blending and the results of operations and cash flows related to Mid-Con, Gas Blending, TPSL and our former Retail Propane segment (including equity in earnings of Victory Propane) have been classified as discontinued operations for all periods presented and prior periods have been retrospectively adjusted in the unaudited condensed consolidated statements of operations and unaudited condensed consolidated statements of cash flows.

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Unaudited Condensed Consolidating Balance Sheet

(in Thousands)

		December 31, 2019
		NGL Energy Partners LP (Parent)				NGL Energy Finance Corp.				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Consolidating Adjustments				Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	182,635			$	—			$	(174,771	)		$	4,144			$	—			$	12,008
Accounts receivable-trade, net of allowance for doubtful accounts		—				—				947,307				227				—				947,534
Accounts receivable-affiliates		—				—				12,445				—				—				12,445
Inventories		—				—				182,977				761				—				183,738
Prepaid expenses and other current assets		—				—				90,239				455				—				90,694
Assets held for sale		—				—				95,093				—				—				95,093
Total current assets		182,635				—				1,153,290				5,587				—				1,341,512
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation		—				—				2,510,670				193,442				—				2,704,112
GOODWILL		—				—				1,301,880				5,175				—				1,307,055
INTANGIBLE ASSETS, net of accumulated amortization		—				—				1,530,120				70,435				—				1,600,555
INVESTMENTS IN UNCONSOLIDATED ENTITIES		—				—				22,236				—				—				22,236
NET INTERCOMPANY RECEIVABLES (PAYABLES)		1,768,795				—				(1,699,213		)		(69,582		)		—				—
INVESTMENTS IN CONSOLIDATED SUBSIDIARIES		2,019,081				—				123,793				—				(2,142,874		)		—
OPERATING LEASE RIGHT-OF-USE ASSETS		—				—				178,607				4,534				—				183,141
OTHER NONCURRENT ASSETS		—				—				83,944				—				—				83,944
Total assets		$	3,970,511			$	—			$	5,205,327			$	209,591			$	(2,142,874	)		$	7,242,555
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable-trade		$	—			$	—			$	846,667			$	100			$	—			$	846,767
Accounts payable-affiliates		1				—				29,373				—				—				29,374
Accrued expenses and other payables		30,537				—				321,126				1,185				—				352,848
Advance payments received from customers		—				—				27,108				2,885				—				29,993
Current maturities of long-term debt		—				—				4,835				—				—				4,835
Operating lease obligations		—				—				56,747				344				—				57,091
Liabilities held for sale		—				—				40,899				—				—				40,899
Total current liabilities		30,538				—				1,326,755				4,514				—				1,361,807
LONG-TERM DEBT, net of debt issuance costs and current maturities		1,429,027				—				1,639,178				—				—				3,068,205
OPERATING LEASE OBLIGATIONS		—				—				118,847				3,951				—				122,798
OTHER NONCURRENT LIABILITIES		—				—				101,466				2,594				—				104,060
CLASS D 9.00% PREFERRED UNITS		531,768				—				—				—				—				531,768
EQUITY:
Partners’ equity		1,979,178				—				2,019,081				198,780				(2,217,613		)		1,979,426
Accumulated other comprehensive loss		—				—				—				(248		)		—				(248		)
Noncontrolling interests		—				—				—				—				74,739				74,739
Total equity		1,979,178				—				2,019,081				198,532				(2,142,874		)		2,053,917
Total liabilities and equity		$	3,970,511			$	—			$	5,205,327			$	209,591			$	(2,142,874	)		$	7,242,555

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Unaudited Condensed Consolidating Balance Sheet

(in Thousands)

		March 31, 2019
		NGL Energy Partners LP (Parent)				NGL Energy Finance Corp.				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Consolidating Adjustments				Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	12,798			$	—			$	3,728			$	2,046			$	—			$	18,572
Accounts receivable-trade, net of allowance for doubtful accounts		—				—				996,192				2,011				—				998,203
Accounts receivable-affiliates		—				—				12,867				—				—				12,867
Inventories		—				—				135,094				1,034				—				136,128
Prepaid expenses and other current assets		—				—				65,443				475				—				65,918
Assets held for sale		—				—				580,985				—				—				580,985
Total current assets		12,798				—				1,794,309				5,566				—				1,812,673
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation		—				—				1,620,084				208,856				—				1,828,940
GOODWILL		—				—				1,105,281				5,175				—				1,110,456
INTANGIBLE ASSETS, net of accumulated amortization		—				—				725,542				75,347				—				800,889
INVESTMENTS IN UNCONSOLIDATED ENTITIES		—				—				1,127				—				—				1,127
NET INTERCOMPANY RECEIVABLES (PAYABLES)		862,186				—				(808,610		)		(53,576		)		—				—
INVESTMENTS IN CONSOLIDATED SUBSIDIARIES		2,503,848				—				170,690				—				(2,674,538		)		—
OTHER NONCURRENT ASSETS		—				—				113,857				—				—				113,857
ASSETS HELD FOR SALE		—				—				234,551				—				—				234,551
Total assets		$	3,378,832			$	—			$	4,956,831			$	241,368			$	(2,674,538	)		$	5,902,493
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable-trade		$	—			$	—			$	872,122			$	6,941			$	—			$	879,063
Accounts payable-affiliates		1				—				28,468				—				—				28,469
Accrued expenses and other payables		25,497				—				80,765				1,497				—				107,759
Advance payments received from customers		—				—				7,550				911				—				8,461
Current maturities of long-term debt		—				—				648				—				—				648
Liabilities held for sale		—				—				226,753				—				—				226,753
Total current liabilities		25,498				—				1,216,306				9,349				—				1,251,153
LONG-TERM DEBT, net of debt issuance costs and current maturities		984,450				—				1,175,683				—				—				2,160,133
OTHER NONCURRENT LIABILITIES		—				—				60,961				2,581				—				63,542
NONCURRENT LIABILITIES HELD FOR SALE		—				—				33				—				—				33
CLASS A 10.75% CONVERTIBLE PREFERRED UNITS		149,814				—				—				—				—				149,814
EQUITY:
Partners’ equity		2,219,070				—				2,503,848				229,693				(2,733,286		)		2,219,325
Accumulated other comprehensive loss		—				—				—				(255		)		—				(255		)
Noncontrolling interests		—				—				—				—				58,748				58,748
Total equity		2,219,070				—				2,503,848				229,438				(2,674,538		)		2,277,818
Total liabilities and equity		$	3,378,832			$	—			$	4,956,831			$	241,368			$	(2,674,538	)		$	5,902,493

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Unaudited Condensed Consolidating Statement of Operations

(in Thousands)

		Three Months Ended December 31, 2019
		NGL Energy Partners LP (Parent)				NGL Energy Finance Corp.				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Consolidating Adjustments				Consolidated
REVENUES		$	—			$	—			$	2,223,900			$	5,127			$	(2,498	)		$	2,226,529
COST OF SALES		—				—				1,937,767				36				(2,331		)		1,935,472
OPERATING COSTS AND EXPENSES:
Operating		—				—				92,180				2,399				(167		)		94,412
General and administrative		—				—				28,952				198				—				29,150
Depreciation and amortization		—				—				70,396				3,330				—				73,726
Gain on disposal or impairment of assets, net		—				—				(12,626		)		—				—				(12,626		)
Revaluation of liabilities		—				—				10,000				—				—				10,000
Operating Income (Loss)		—				—				97,231				(836		)		—				96,395
OTHER INCOME (EXPENSE):
Equity in earnings of unconsolidated entities		—				—				534				—				—				534
Interest expense		(26,664		)		—				(20,241		)		(26		)		11				(46,920		)
Other (expense) income, net		—				—				(229		)		14				(11		)		(226		)
(Loss) Income From Continuing Operations Before Income Taxes		(26,664		)		—				77,295				(848		)		—				49,783
INCOME TAX EXPENSE		—				—				(677		)		—				—				(677		)
EQUITY IN NET INCOME (LOSS) FROM CONTINUING OPERATIONS OF CONSOLIDATED SUBSIDIARIES		69,821				—				(682		)		—				(69,139		)		—
Income (Loss) From Continuing Operations		43,157				—				75,936				(848		)		(69,139		)		49,106
Loss From Discontinued Operations, Net of Tax		—				—				(6,115		)		—				—				(6,115		)
Net Income (Loss)		43,157				—				69,821				(848		)		(69,139		)		42,991
LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS																		166				166
NET INCOME (LOSS) ATTRIBUTABLE TO NGL ENERGY PARTNERS LP		$	43,157			$	—			$	69,821			$	(848	)		$	(68,973	)		$	43,157

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Unaudited Condensed Consolidating Statement of Operations

(in Thousands)

		Three Months Ended December 31, 2018
		NGL Energy Partners LP (Parent)				NGL Energy Finance Corp.				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Consolidating Adjustments				Consolidated
REVENUES		$	—			$	—			$	2,292,268			$	4,286			$	(1,185	)		$	2,295,369
COST OF SALES		—				—				2,049,328				518				(1,185		)		2,048,661
OPERATING COSTS AND EXPENSES:
Operating		—				—				58,389				2,076				—				60,465
General and administrative		—				—				24,599				160				—				24,759
Depreciation and amortization		—				—				50,724				2,557				—				53,281
Gain on disposal or impairment of assets, net		—				—				(36,246		)		—				—				(36,246		)
Operating Income (Loss)		—				—				145,474				(1,025		)		—				144,449
OTHER INCOME (EXPENSE):
Equity in earnings of unconsolidated entities		—				—				1,777				—				—				1,777
Interest expense		(24,026		)		—				(15,124		)		(12		)		11				(39,151		)
Loss on early extinguishment of liabilities, net		(10,083		)		—				—				—				—				(10,083		)
Other income, net		—				—				1,198				—				(11		)		1,187
(Loss) Income From Continuing Operations Before Income Taxes		(34,109		)		—				133,325				(1,037		)		—				98,179
INCOME TAX EXPENSE		—				—				(980		)		—				—				(980		)
EQUITY IN NET INCOME (LOSS) FROM CONTINUING OPERATIONS OF CONSOLIDATED SUBSIDIARIES		144,944				—				(730		)		—				(144,214		)		—
Income (Loss) From Continuing Operations		110,835				—				131,615				(1,037		)		(144,214		)		97,199
Income From Discontinued Operations, Net of Tax		—				—				13,329				—				—				13,329
Net Income (Loss)		110,835				—				144,944				(1,037		)		(144,214		)		110,528
LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS																		307				307
NET INCOME (LOSS) ATTRIBUTABLE TO NGL ENERGY PARTNERS LP		$	110,835			$	—			$	144,944			$	(1,037	)		$	(143,907	)		$	110,835

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Unaudited Condensed Consolidating Statement of Operations

(in Thousands)

		Nine Months Ended December 31, 2019
		NGL Energy Partners LP (Parent)				NGL Energy Finance Corp.				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Consolidating Adjustments				Consolidated
REVENUES		$	—			$	—			$	5,869,693			$	38,501			$	(5,438	)		$	5,902,756
COST OF SALES		—				—				5,218,841				535				(4,771		)		5,214,605
OPERATING COSTS AND EXPENSES:
Operating		—				—				217,662				13,615				(667		)		230,610
General and administrative		—				—				92,730				670				—				93,400
Depreciation and amortization		—				—				180,630				9,963				—				190,593
Gain on disposal or impairment of assets, net		—				—				(10,478		)		(4		)		—				(10,482		)
Revaluation of liabilities		—				—				10,000				—				—				10,000
Operating Income		—				—				160,308				13,722				—				174,030
OTHER INCOME (EXPENSE):
Equity in earnings of unconsolidated entities		—				—				277				—				—				277
Interest expense		(79,119		)		—				(52,680		)		(49		)		34				(131,814		)
Other income, net		—				—				947				54				(34		)		967
(Loss) Income From Continuing Operations Before Income Taxes		(79,119		)		—				108,852				13,727				—				43,460
INCOME TAX EXPENSE		—				—				(996		)		—				—				(996		)
EQUITY IN NET (LOSS) INCOME FROM CONTINUING OPERATIONS OF CONSOLIDATED SUBSIDIARIES		(70,654		)		—				14,290				—				56,364				—
(Loss) Income From Continuing Operations		(149,773		)		—				122,146				13,727				56,364				42,464
Loss From Discontinued Operations, Net of Tax		—				—				(192,800		)		—				—				(192,800		)
Net (Loss) Income		(149,773		)		—				(70,654		)		13,727				56,364				(150,336		)
LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS																		563				563
NET (LOSS) INCOME ATTRIBUTABLE TO NGL ENERGY PARTNERS LP		$	(149,773	)		$	—			$	(70,654	)		$	13,727			$	56,927			$	(149,773	)

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Unaudited Condensed Consolidating Statement of Operations

(in Thousands)

		Nine Months Ended December 31, 2018
		NGL Energy Partners LP (Parent)				NGL Energy Finance Corp.				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Consolidating Adjustments				Consolidated
REVENUES		$	—			$	—			$	6,558,089			$	10,768			$	(2,854	)		$	6,566,003
COST OF SALES		—				—				6,049,032				495				(2,854		)		6,046,673
OPERATING COSTS AND EXPENSES:
Operating		—				—				166,013				6,206				—				172,219
General and administrative		—				—				85,737				691				—				86,428
Depreciation and amortization		—				—				150,093				7,678				—				157,771
Loss on disposal or impairment of assets, net		—				—				71,077				—				—				71,077
Revaluation of liabilities		—				—				800				—				—				800
Operating Income (Loss)		—				—				35,337				(4,302		)		—				31,035
OTHER INCOME (EXPENSE):
Equity in earnings of unconsolidated entities		—				—				2,375				—				—				2,375
Interest expense		(83,011		)		—				(43,764		)		(35		)		34				(126,776		)
Loss on early extinguishment of liabilities, net		(10,220		)		—				—				—				—				(10,220		)
Other expense, net		—				—				(31,196		)		—				(219		)		(31,415		)
Loss From Continuing Operations Before Income Taxes		(93,231		)		—				(37,248		)		(4,337		)		(185		)		(135,001		)
INCOME TAX EXPENSE		—				—				(2,322		)		—				—				(2,322		)
EQUITY IN NET INCOME (LOSS) FROM CONTINUING OPERATIONS OF CONSOLIDATED SUBSIDIARIES		391,025				—				(3,750		)		—				(387,275		)		—
Income (Loss) From Continuing Operations		297,794				—				(43,320		)		(4,337		)		(387,460		)		(137,323		)
Income (Loss) From Discontinued Operations, Net of Tax		—				—				434,345				(1,029		)		185				433,501
Net Income (Loss)		297,794				—				391,025				(5,366		)		(387,275		)		296,178
LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS																		1,170				1,170
LESS: NET LOSS ATTRIBUTABLE TO REDEEMABLE NONCONTROLLING INTERESTS																		446				446
NET INCOME (LOSS) ATTRIBUTABLE TO NGL ENERGY PARTNERS LP		$	297,794			$	—			$	391,025			$	(5,366	)		$	(385,659	)		$	297,794

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Unaudited Condensed Consolidating Statements of Comprehensive Income (Loss)

(in Thousands)

		Three Months Ended December 31, 2019
		NGL Energy Partners LP (Parent)				NGL Energy Finance Corp.				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Consolidating Adjustments				Consolidated
Net income (loss)		$	43,157			$	—			$	69,821			$	(848	)		$	(69,139	)		$	42,991
Other comprehensive (loss) income		—				—				(1		)		17				—				16
Comprehensive income (loss)		$	43,157			$	—			$	69,820			$	(831	)		$	(69,139	)		$	43,007

		Three Months Ended December 31, 2018
		NGL Energy Partners LP (Parent)				NGL Energy Finance Corp.				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Consolidating Adjustments				Consolidated
Net income (loss)		$	110,835			$	—			$	144,944			$	(1,037	)		$	(144,214	)		$	110,528
Other comprehensive loss		—				—				—				(3		)		—				(3		)
Comprehensive income (loss)		$	110,835			$	—			$	144,944			$	(1,040	)		$	(144,214	)		$	110,525

		Nine Months Ended December 31, 2019
		NGL Energy Partners LP (Parent)				NGL Energy Finance Corp.				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Consolidating Adjustments				Consolidated
Net (loss) income		$	(149,773	)		$	—			$	(70,654	)		$	13,727			$	56,364			$	(150,336	)
Other comprehensive income (loss)		—				—				17				(10		)		—				7
Comprehensive (loss) income		$	(149,773	)		$	—			$	(70,637	)		$	13,717			$	56,364			$	(150,329	)

		Nine Months Ended December 31, 2018
		NGL Energy Partners LP (Parent)				NGL Energy Finance Corp.				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Consolidating Adjustments				Consolidated
Net income (loss)		$	297,794			$	—			$	391,025			$	(5,366	)		$	(387,275	)		$	296,178
Other comprehensive loss		—				—				(1		)		(26		)		—				(27		)
Comprehensive income (loss)		$	297,794			$	—			$	391,024			$	(5,392	)		$	(387,275	)		$	296,151

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Unaudited Condensed Consolidating Statement of Cash Flows

(in Thousands)

		Nine Months Ended December 31, 2019
		NGL Energy Partners LP (Parent)				NGL Energy Finance Corp.				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Consolidated
OPERATING ACTIVITIES:
Net cash (used in) provided by operating activities-continuing operations		$	(74,889	)		$	—			$	308,905			$	39,572			$	273,588
Net cash provided by operating activities-discontinued operations		—				—				59,890				—				59,890
Net cash (used in) provided by operating activities		(74,889		)		—				368,795				39,572				333,478
INVESTING ACTIVITIES:
Capital expenditures		—				—				(380,050		)		(47,203		)		(427,253		)
Acquisitions, net of cash acquired		—				—				(1,262,853		)		—				(1,262,853		)
Net settlements of commodity derivatives		—				—				2,735				—				2,735
Proceeds from sales of assets		—				—				17,052				4				17,056
Investments in unconsolidated entities		—				—				(21,272		)		—				(21,272		)
Distributions of capital from unconsolidated entities		—				—				440				—				440
Repayments on loan for natural gas liquids facility		—				—				3,022				—				3,022
Net cash used in investing activities-continuing operations		—				—				(1,640,926		)		(47,199		)		(1,688,125		)
Net cash provided by investing activities-discontinued operations		—				—				281,908				—				281,908
Net cash used in investing activities		—				—				(1,359,018		)		(47,199		)		(1,406,217		)
FINANCING ACTIVITIES:
Proceeds from borrowings under Revolving Credit Facility		—				—				3,461,000				—				3,461,000
Payments on Revolving Credit Facility		—				—				(3,240,000		)		—				(3,240,000		)
Issuance of senior unsecured notes and term credit agreement		450,000				—				250,000				—				700,000
Payments on other long-term debt		—				—				(489		)		—				(489		)
Debt issuance costs		(8,034		)		—				(5,164		)		—				(13,198		)
Distributions to general and common unit partners and preferred unitholders		(180,021		)		—				—				—				(180,021		)
Distributions to noncontrolling interest owners		—				—				—				(570		)		(570		)
Proceeds from sale of preferred units, net of offering costs		622,965				—				—				—				622,965
Payments for redemption of preferred units		(265,128		)		—				—				—				(265,128		)
Common unit repurchases and cancellations		(1,205		)		—				—				—				(1,205		)
Payments for settlement and early extinguishment of liabilities		—				—				(1,953		)		—				(1,953		)
Investment in NGL Energy Holdings LLC		(15,226		)		—				—				—				(15,226		)
Net changes in advances with consolidated entities		(358,625		)		—				348,330				10,295				—
Net cash provided by financing activities		244,726				—				811,724				9,725				1,066,175
Net increase (decrease) in cash and cash equivalents		169,837				—				(178,499		)		2,098				(6,564		)
Cash and cash equivalents, beginning of period		12,798				—				3,728				2,046				18,572
Cash and cash equivalents, end of period		$	182,635			$	—			$	(174,771	)		$	4,144			$	12,008

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Unaudited Condensed Consolidating Statement of Cash Flows

(in Thousands)

		Nine Months Ended December 31, 2018
		NGL Energy Partners LP (Parent)				NGL Energy Finance Corp.				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Consolidating Adjustments				Consolidated
OPERATING ACTIVITIES:
Net cash (used in) provided by operating activities-continuing operations		$	(92,619	)		$	—			$	92,240			$	3,759			$	(185	)		$	3,195
Net cash provided by operating activities-discontinued operations		—				—				109,242				3,221				—				112,463
Net cash (used in) provided by operating activities		(92,619		)		—				201,482				6,980				(185		)		115,658
INVESTING ACTIVITIES:
Capital expenditures		—				—				(301,883		)		(2,106		)		—				(303,989		)
Acquisitions, net of cash acquired		—				—				(194,044		)		(3,927		)		—				(197,971		)
Net settlements of commodity derivatives		—				—				5,066				—				—				5,066
Proceeds from sales of assets		—				—				8,335				—				—				8,335
Proceeds from divestitures of businesses and investments, net		—				—				103,594				—				—				103,594
Investments in unconsolidated entities		—				—				(92		)		—				—				(92		)
Repayments on loan for natural gas liquids facility		—				—				8,371				—				—				8,371
Loan to affiliate		—				—				(1,515		)		—				—				(1,515		)
Net cash used in investing activities-continuing operations		—				—				(372,168		)		(6,033		)		—				(378,201		)
Net cash provided by investing activities-discontinued operations		—				—				929,709				6,982				—				936,691
Net cash provided by investing activities		—				—				557,541				949				—				558,490
FINANCING ACTIVITIES:
Proceeds from borrowings under Revolving Credit Facility		—				—				2,956,500				—				—				2,956,500
Payments on Revolving Credit Facility		—				—				(3,037,000		)		—				—				(3,037,000		)
Repayment and repurchase of senior unsecured notes		(395,471		)		—				—				—				—				(395,471		)
Payments on other long-term debt		—				—				(488		)		—				—				(488		)
Debt issuance costs		(16		)		—				(899		)		—				—				(915		)
Contributions from noncontrolling interest owners, net		—				—				—				169				—				169
Distributions to general and common unit partners and preferred unitholders		(177,003		)		—				—				—				—				(177,003		)
Repurchase of warrants		(14,988		)		—				—				—				—				(14,988		)
Common unit repurchases and cancellations		(162		)		—				—				—				—				(162		)
Payments for settlement and early extinguishment of liabilities		—				—				(3,534		)		—				—				(3,534		)
Net changes in advances with consolidated entities		669,236				—				(661,753		)		(7,668		)		185				—
Net cash provided by (used in) financing activities-continuing operations		81,596				—				(747,174		)		(7,499		)		185				(672,892		)
Net cash used in financing activities-discontinued operations		—				—				(295		)		(30		)		—				(325		)
Net cash provided by (used in) financing activities		81,596				—				(747,469		)		(7,529		)		185				(673,217		)
Net (decrease) increase in cash and cash equivalents		(11,023		)		—				11,554				400				—				931
Cash and cash equivalents, beginning of period		16,915				—				3,329				1,850				—				22,094
Cash and cash equivalents, end of period		$	5,892			$	—			$	14,883			$	2,250			$	—			$	23,025

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•	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, trucking, marine and pipeline transportation services through its owned assets.

•

Our Water Solutions segment provides services for the treatment and disposal of produced water generated from crude oil and natural gas production and for the disposal of solids such as tank bottoms, drilling fluids and drilling muds and performs truck and frac tank washouts. In addition, our Water Solutions segment sells the recovered hydrocarbons that result from performing these services and sells freshwater to producers for exploration and production activities.

•

Our Liquids segment supplies natural gas liquids to retailers, wholesalers, refiners, and petrochemical plants throughout the United States and in Canada using its leased underground storage and fleet of leased railcars, markets regionally through its 27 owned terminals throughout the United States, and provides terminaling and storage services at its salt dome storage facility joint venture in Utah.

•

Our Refined Products and Renewables segment conducts diesel, ethanol, and biodiesel marketing operations, purchases refined petroleum and renewable products primarily in the Gulf Coast, West Coast and Midwest regions of the United States and schedules them for delivery at various locations throughout the country. See Note 1 and Note 16 to our unaudited condensed consolidated financial statements included in this Quarterly Report for a discussion of the accounting for the sale of a portion of our Refined Products and Renewables segment.

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(1)	Revenues include $3.5 million and $10.4 million of intersegment sales during the three months ended December 31, 2019 and 2018, respectively, that are eliminated in our unaudited condensed consolidated statements of operations.

(2)	Information is presented as of December 31, 2019 and December 31, 2018, respectively.

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(1)	Barrels per day of produced water processed by the assets acquired in the Hillstone transaction are calculated by the number of days in which we owned the assets during the period presented.

(2)	Total produced water barrels processed during the three months ended December 31, 2019 and 2018 were 137,572,510 and 91,864,213, respectively.

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(1)	Revenues include $6.5 million and $10.4 million of intersegment sales during the three months ended December 31, 2019 and 2018, respectively, that are eliminated in our unaudited condensed consolidated statements of operations.

(2)	Information is presented as of December 31, 2019 and December 31, 2018, respectively.

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(1)	Information is presented as of December 31, 2019 and December 31, 2018, respectively.

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(1)	Relates primarily to a loan receivable associated with our interest in the construction of a natural gas liquids loading/unloading facility that is utilized by a third party and a loan receivable with Victory Propane (see Note 2 to our unaudited condensed consolidated financial statements included in this Quarterly Report for a further discussion).

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(1)	Revenues include $15.3 million and $22.0 million of intersegment sales during the nine months ended December 31, 2019 and 2018, respectively, that are eliminated in our unaudited condensed consolidated statements of operations.

(2)	Information is presented as of December 31, 2019 and December 31, 2018, respectively.

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

(2)	Total produced water barrels processed during the nine months ended December 31, 2019 and 2018 were 330,589,724 and 268,276,373, respectively.

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(1)	Revenues include $12.9 million and $20.9 million of intersegment sales during the nine months ended December 31, 2019 and 2018, respectively, that are eliminated in our unaudited condensed consolidated statements of operations.

(2)	Information is presented as of December 31, 2019 and December 31, 2018, respectively.

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(1)	Information is presented as of December 31, 2019 and December 31, 2018, respectively.

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(1)	Relates primarily to a loan receivable associated with our interest in the construction of a natural gas liquids loading/unloading facility that is utilized by a third party and a loan receivable with Victory Propane (see Note 2 to our unaudited condensed consolidated financial statements included in this Quarterly Report for a further discussion).

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

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(1)	Amount reflects the difference between the market value of the inventory of our Refined Products and Renewables segment at the balance sheet date and its cost, adjusted for the impact of seasonal market movements related to our base inventory and the related hedge. See “Non-GAAP Financial Measures” section above for a further discussion.

(2)

Equity-based compensation expense in the table above may differ from equity-based compensation expense reported in Note 10 to our unaudited condensed consolidated financial statements included in this Quarterly Report. Amounts reported in the table above include expense accruals for bonuses expected to be paid in common units, whereas the amounts reported in Note 10 to our unaudited condensed consolidated financial statements only include expenses associated with equity-based awards that have been formally granted.

(3)

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

(4)

Amounts for the three months and nine months ended December 31, 2019 represent the non-cash valuation adjustment of our contingent consideration liability issued by us as part of our acquisition of Mesquite (see Note 4 to our unaudited condensed consolidated financial statements included in this Quarterly Report for a further discussion). Amount for the nine months ended December 31, 2018 represents the non-cash valuation adjustment of contingent consideration liabilities, offset by the cash payments, related to royalty agreements acquired as part of acquisitions in our Water Solutions segment.

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(5)	Represents the accrual for the estimated cost of the settlement of the Gavilon legal matter (see Note 9 to our unaudited condensed consolidated financial statements included in this Quarterly Report for a further discussion). We have excluded this amount from Adjusted EBITDA as it relates to transactions that occurred prior to our acquisition of Gavilon LLC in December 2013.

(6)	Amounts for the three months and nine months ended December 31, 2019 and 2018 represent non-cash operating expenses related to our Grand Mesa Pipeline, unrealized losses on marketable securities and accretion expense for asset retirement obligations.

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(1)	Amount reflects the intersegment transactions between the continuing businesses within the Refined Products and Renewables segment and TPSL, Mid-Con and Gas Blending that are eliminated in consolidation.

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(1)

Amounts for the three months and nine months ended December 31, 2019 include $36.1 million and $49.1 million, respectively, of transactions classified as acquisitions of assets. See Note 4 to our unaudited condensed consolidated financial statements included in this Quarterly report for a further discussion of the transactions classified as acquisitions of assets completed during the nine months ended December 31, 2019. Amounts for the three months and nine months ended December 31, 2018 include $15.0 million and $52.5 million, respectively, of transactions classified as acquisitions of assets. The amount for the nine months ended December 31, 2018 includes $0.4 million related to our former Retail Propane segment. There were no amounts for the three months and nine months ended December 31, 2019 and 2018 related to TPSL.

(2)	There was no amount for the three months ended December 31, 2018 and the amount for the nine months ended December 31, 2018 includes $3.8 million related to our former Retail Propane segment. There were no amounts for the three months and nine months ended December 31, 2019 and 2018 related to TPSL.

(3)	There was no amount for the three months ended December 31, 2018 and the amount for the nine months ended December 31, 2018 includes $31.9 million related to our former Retail Propane segment. There were no amounts for the three months and nine months ended December 31, 2019 and 2018 related to TPSL.

(4)

Amounts for the three months and nine months ended December 31, 2019 and 2018 primarily related to contributions made to unconsolidated entities and the purchase of membership interests in a water services and land company as described in Note 4 to our unaudited condensed consolidated financial statements included in this Quarterly Report. There were no amounts for the three months and nine months ended December 31, 2019 and 2018 related to TPSL. There were no amounts for the three months and nine months ended December 31, 2018 related to our former Retail Propane segment.

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•	a $1.1 billion increase in cash paid for acquisitions and investments in unconsolidated entities during the nine months ended December 31, 2019;

•	an increase in capital expenditures from $304.0 million during the nine months ended December 31, 2018 to $427.3 million during the nine months ended December 31, 2019 due primarily to expansion projects in our Water Solutions segment; and

•	$103.6 million in proceeds from the sale of our Bakken saltwater disposal business and our previously held 20% interest in E Energy Adams, LLC during the nine months ended December 31, 2018.

•	$623.0 million in net proceeds from the issuance of the 9.625% Class C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class C Preferred Units”) and Class D Preferred Units during the nine months ended December 31, 2019;

•	$450.0 million in proceeds from the issuance of the 2026 Notes during the nine months ended December 31, 2019;

•	repurchases of $395.5 million of our senior unsecured notes during the nine months ended December 31, 2018;

•	an increase of $301.5 million in borrowings on the Revolving Credit Facility (net of repayments) during the nine months ended December 31, 2019; and

•	$250.0 million in proceeds from the Term Loan Agreement during the nine months ended December 31, 2019.

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(1)	The estimated interest payments on the Revolving Credit Facility are based on principal and letters of credit outstanding at December 31, 2019. See Note 8 to our unaudited condensed consolidated financial statements included in this Quarterly Report for additional information on the Credit Agreement.

(2)

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 have extended these agreements and have an additional 5.5 years to recapture the minimum shipping deficiency fees. We also have noncancelable agreements for product storage, railcar spurs and real estate. See Note 9 to our unaudited condensed consolidated financial statements included in this Quarterly Report for additional information.

(3)	At December 31, 2019, the construction commitments relate to two new barges currently being built.

(4)

Index prices are based on a forward price curve at December 31, 2019. A theoretical change of $0.10 per gallon of natural gas liquids in the underlying commodity price at December 31, 2019 would result in a change of $42.6 million in the value of our index-price natural gas liquids purchase commitments. A theoretical change of $1.00 per barrel of crude oil in the underlying commodity price at December 31, 2019 would result in a change of $40.2 million in the value of our index-price crude oil purchase commitments. See Note 9 to our unaudited condensed consolidated financial statements included in this Quarterly Report for further detail of the commitments.

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(5)

Our crude oil index-price purchase commitments exceed our crude oil index-price sales commitments (see Note 9 to our unaudited condensed consolidated financial statements included in this Quarterly Report) 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.

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Item 4.	Controls and Procedures

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*	Exhibits filed with this report.

**

The following documents are formatted in Inline XBRL (Extensible Business Reporting Language): (i) Unaudited Condensed Consolidated Balance Sheets at December 31, 2019 and March 31, 2019, (ii) Unaudited Condensed Consolidated Statements of Operations for the three months and nine months ended December 31, 2019 and 2018, (iii) Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months and nine months ended December 31, 2019 and 2018, (iv) Unaudited Condensed Consolidated Statements of Changes in Equity for the three months and nine months ended December 31, 2019 and 2018, (v) Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2019 and 2018, and (vi) Notes to Unaudited Condensed Consolidated Financial Statements.

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