株探米国株
英語
エドガーで原本を確認する
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2025
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 001-35172
NGL Energy Partners LP
(Exact Name of Registrant as Specified in Its Charter)
Delaware 27-3427920
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
6120 South Yale Avenue, Suite 1300
Tulsa, Oklahoma 74136
(Address of Principal Executive Offices) (Zip Code)
(918) 481-1119
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered
Common units representing Limited Partner Interests NGL New York Stock Exchange
Fixed-to-floating rate cumulative redeemable perpetual preferred units NGL-PB New York Stock Exchange
Fixed-to-floating rate cumulative redeemable perpetual preferred units NGL-PC New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:   None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   Yes ☒   No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.   Yes ☐   No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes ☒   No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes ☒   No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o Accelerated filer x
Non-accelerated filer o Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.   ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.  ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).   ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).   Yes ☐   No ☒
The aggregate market value at September 30, 2024 of the Common Units held by non-affiliates of the registrant, based on the reported closing price of the Common Units on the New York Stock Exchange on such date ($4.50 per Common Unit) was $465.3 million. For purposes of this computation, all executive officers, directors and 10% beneficial owners of the registrant are deemed to be affiliates. Such a determination should not be deemed an admission that such executive officers, directors and 10% beneficial owners are affiliates.
At May 27, 2025, there were 132,012,766 common units issued and outstanding.


TABLE OF CONTENTS
 
 

i

Forward-Looking Statements

This Annual Report on Form 10-K (“Annual Report”) contains various forward-looking statements and information that are based on NGL Energy Partners LP’s (“we,” “us,” “our,” or the “Partnership”) beliefs and those of our general partner (“GP”), as well as assumptions made by and information currently available to us. These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. Certain words in this Annual Report such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “plan,” “project,” “will,” and similar expressions and statements regarding our plans and objectives for future operations, identify forward-looking statements. Although we and our GP believe such forward-looking statements are reasonable, neither we nor our GP can assure they will prove to be correct. Forward-looking statements are subject to a variety of risks, uncertainties and assumptions. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may vary materially from those expected. Among the key risk factors that may affect our consolidated financial position and results of operations are:

•the prices of crude oil, natural gas liquids, gasoline, diesel, and energy prices generally;
•the general level of demand, and the availability of supply, for crude oil, natural gas liquids, gasoline, and diesel;
•the level of crude oil and natural gas drilling and production in areas where we have operations and facilities;
•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;
•the effect of weather conditions on supply and demand for crude oil, natural gas liquids, gasoline, and diesel;
•the effect of natural disasters, earthquakes, hurricanes, tornados, lightning strikes, or other significant weather events;
•the availability of local, intrastate, and interstate transportation infrastructure with respect to our transportation services;
•the availability, price, and marketing of competing fuels;
•the effect of energy conservation efforts on product demand;
•energy efficiencies and technological trends;
•the issuance of executive orders, changes in applicable laws, regulations and policies, including tax, environmental, transportation, and employment regulations, or new interpretations by regulatory agencies concerning such laws and regulations and the effect of such laws, regulations and policies (now existing or in the future) on our business operations;
•the effect of executive orders and legislative and regulatory actions on hydraulic fracturing, water disposal and transportation, the treatment of flowback and produced water, seismic activity, and drilling and right-of-way access on federal and state lands;
•delays or restrictions in obtaining, utilizing or maintaining permits and/or rights-of-way by us or our customers;
•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 and natural gas liquids industries and competition from other markets;
•loss of key personnel;
•the impact of competition on our operations, including our ability to renew contracts with key customers;
•the ability to maintain or increase the margins we realize for our services;
•the ability to renew leases for our leased equipment and storage facilities;
•inflation, interest rates, tariffs and general economic conditions (including recessions and other future disruptions and volatility in the global credit markets, as well as the impact of these events on customers and suppliers);
•the nonpayment, nonperformance or bankruptcy 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;
1

•the ability to successfully identify and complete accretive organic growth projects;
•the costs and effects of legal and administrative proceedings;
•changes in general economic conditions, including market and macroeconomic disruptions resulting from global pandemics and related governmental responses, and international military conflicts (such as the war in Ukraine and conflicts in the Middle East);
•political pressure and influence of environmental groups upon policies and decisions related to the production, gathering, refining, processing, fractionation, transportation and sale of crude oil, natural gas and natural gas liquids;
•information technology risks including the risk from cyberattacks, cybersecurity breaches, and other disruptions to our information systems; and
•other risks and uncertainties, including those discussed under Part I, Item 1A–“Risk Factors.”

You should not put undue reliance on any forward-looking statements. All forward-looking statements speak only as of the date of this Annual Report. Except as may be required by state and federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements as a result of new information, future events, or otherwise. When considering forward-looking statements, please review the risks discussed under Part I, Item 1A–“Risk Factors.”

2

PART I

References in this Annual Report to (i) “NGL Energy Partners LP,” “we,” “us,” “our,” or the “Partnership” or similar terms refer to NGL Energy Partners LP and its operating subsidiaries, (ii) “NGL Energy Holdings LLC” or “general partner” refers to NGL Energy Holdings LLC, our general partner (“GP”), (iii) “NGL Energy Operating LLC” refers to NGL Energy Operating LLC, the direct operating subsidiary of NGL Energy Partners LP, and (iv) the “NGL Energy GP Investor Group” refers to, collectively, the 43 individuals and entities that own all of the outstanding membership interests in our GP.

We have presented operational data in Part I, Item 1–“Business” for the year ended March 31, 2025. Unless otherwise indicated, this data is as of March 31, 2025.

Item 1.    Business

Overview

We are a diversified midstream energy partnership that transports, treats, recycles and disposes of produced and flowback water generated as part of the energy production process as well as transports, stores, markets and provides other logistics services for crude oil and liquid hydrocarbons. Originally formed in September 2010, we are a Delaware master limited partnership and our business is currently organized into the following three segments:

•Our Water Solutions segment transports, treats, recycles and disposes of produced and flowback water generated from crude oil and natural gas production. We also sell produced water for reuse and recycle and brackish non-potable water to our producer customers to be used in their crude oil exploration and production activities. As part of processing water, we aggregate and sell recovered crude oil, also known as skim oil. We also dispose of solids such as tank bottoms, drilling fluids and drilling muds and perform other ancillary services such as truck and frac tank washouts. Our activities in this segment are underpinned by long-term, fixed fee contracts and acreage dedications, some of which contain minimum volume commitments with leading oil and gas companies including large, investment grade producer customers.
•Our Crude Oil Logistics segment purchases crude oil from producers and marketers and transports it to refineries or for resale at pipeline injection stations, storage terminals, barge loading facilities, rail facilities and other trade hubs, and provides storage, terminaling and transportation services through its owned assets. Our activities in this segment are supported by certain long-term, fixed rate contracts with acreage dedications and which include minimum volume commitments on our storage tanks and owned and leased pipelines.
•Our Liquids Logistics segment conducts supply operations for natural gas liquids to commercial, retail and industrial customers across the United States and Canada. These operations are conducted through our five owned terminals, third-party storage and terminal facilities, nine common carrier pipelines and a fleet of leased railcars (updated for the transactions discussed below). We also provide services for marine exports of butane through our facility located in Chesapeake, Virginia and we also own a propane pipeline in Michigan. We attempt to reduce our exposure to price fluctuations by using back-to-back physical contracts and pre-sale agreements that allow us to lock in a margin on a percentage of our winter volumes. We also enter into financially settled derivative contracts as economic hedges of our physical inventory, physical sales and physical purchase contracts.

Sale of Refined Products Business and Exiting Biodiesel Business

As of March 31, 2025, we completed winding down our biodiesel business (see Note 1 to our consolidated financial statements included in this Annual Report for a further discussion).

On March 17, 2025, we signed a purchase and sale agreement to sell our refined products business, including certain working capital items, to a third-party (see Note 1 to our consolidated financial statements included in this Annual Report for a further discussion). This sale closed on April 30, 2025.

The sale of our refined products business and winding down of our biodiesel business 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 for our refined products and biodiesel businesses within our Liquids Logistics segment have been classified as discontinued operations for all periods presented and prior periods have been retrospectively adjusted in the consolidated statements of operations and consolidated statements of cash flows. In addition, the assets and liabilities related to our refined products and biodiesel businesses have been classified as either held for sale or discontinued operations within our March 31, 2025 and 2024 consolidated balance sheets (see Note 18 to our consolidated financial statements included in this Annual Report for a further discussion).
3


Sale of Certain Natural Gas Liquids Terminals and Most of Our Wholesale Propane Business

On February 5, 2025, we signed a purchase and sale agreement to sell 17 of our natural gas liquids terminals, most of our wholesale propane business, our interest in an unconsolidated entity and working capital to a third-party (see Note 1 to our consolidated financial statements included in this Annual Report for a further discussion). This sale closed on April 30, 2025. The assets and liabilities of this portion of our Liquids Logistics segment have been classified as held for sale within our March 31, 2025 consolidated balance sheet (see Note 18 to our consolidated financial statements included in this Annual Report for a further discussion).

As this sale transaction did not represent a strategic shift that will have a major effect on our operations or financial results, operations related to this portion of our Liquids Logistics segment have not been classified as discontinued operations.

Business Repositioning

Over the past several years, we have undertaken a number of important strategic actions in an effort to capitalize on the Partnership’s core areas of competitive strength and focus on generating stable, growing and predictable cash flows, while improving our credit profile. We believe our actions have simplified our business mix and have allowed us to focus on what we believe are the core areas of our business and improved our overall financial position.

For more information regarding our results of operations and reportable segments, see Part II, Item 7–“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 11 to our consolidated financial statements included in this Annual Report. For more information regarding our dispositions and acquisitions transactions and the impact to our operations, see Note 1 and Note 17 to our consolidated financial statements included in this current Annual Report and our Annual Reports on Form 10-K for the years ended March 31, 2024 and 2023.

Debt Refinancing

On February 2, 2024, we closed a debt refinancing transaction of $2.9 billion. The refinancing consisted of a private offering of $2.2 billion of senior secured notes, which includes $900.0 million of 8.125% senior secured notes due 2029 (“2029 Senior Secured Notes”) and $1.3 billion of 8.375% senior secured notes due 2032 (“2032 Senior Secured Notes”). We also entered into a new seven-year $700.0 million senior secured term loan “B” credit facility (“Term Loan B”).

In addition, in connection with the closing of the refinancing, our asset-based revolving credit facility (“ABL Facility”) was amended to extend the maturity and to make certain other changes to the terms thereof.

For additional information related to the 2029 Senior Secured Notes, 2032 Senior Secured Notes, Term Loan B and ABL Facility, see Note 7 to our consolidated financial statements included in this Annual Report.

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Primary Service Areas

The following map shows the primary service areas of our businesses at May 29, 2025:NGL Asset Map -5-29-25.jpg
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Organizational Chart

The following chart provides a summarized overview of our legal entity structure at May 29, 2025:


orgchartimagea04.jpg

(1)    Includes (i) NGL Water Solutions, LLC, which includes the operations of our Water Solutions segment, (ii) NGL Crude Assets and Marketing, LLC, which includes the operations of our Crude Oil Logistics segment and (iii) NGL Liquids, LLC, which includes the remaining operations of our Liquids Logistics segment.

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Our Business Strategies

Our principal business objectives are to maximize the profitability and stability of our businesses, grow our businesses in an accretive and prudent manner, and maintain a strong balance sheet. We intend to accomplish these business objectives by executing the following strategies:

•Prudently managing our balance sheet to provide us with maximum financial flexibility for funding our operations, capital projects and strategic acquisitions. Our primary focus is to reduce our 9.00% Class D Preferred Units (“Class D Preferred Units”) and debt, lower our leverage and maintain sufficient liquidity to finance growth projects and eventually reinstate the payment of common unit distributions. We are also focused on maintaining credit metrics to manage existing and future capital requirements as well as to take advantage of market opportunities. We expect to continue to evaluate the capital markets and may opportunistically pursue financing transactions to optimize our capital structure.
•Building a midstream master limited partnership focusing on providing water solutions to upstream customers. We continue to enhance our ability to transport produced water from the wellhead to treatment for disposal, recycle, or discharge. To a lesser extent, we move crude oil from the wellhead to refineries, and natural gas liquids from processing plants and supply hubs to end users.
•Operating in a safe and environmentally responsible manner. We seek to operate our business in a safe and environmentally responsible manner by working with our employees, customers, vendors and local communities to minimize our environmental impact and comply with local, state and federal environmental laws and regulations.
•Focusing on consistent annual cash flows from operations under multi-year contracts that minimize commodity price risk and generate fee-based revenues. We intend to focus on generating revenues under long-term fixed fee contracts in addition to back-to-back contracts which minimize commodity price exposure. We seek to continue to increase cash flows that are supported by certain fixed fee, multi-year contracts, some of which include acreage dedications or minimum volume commitments from producers.
•Achieving growth by utilizing our existing footprint of assets, investing in new assets, customers and ventures that increase volume and enhance our operations, and generate attractive rates of return. We have available capacity in many of the assets that we own and operate that can be utilized to increase cash flows with minimal incremental capital investment. We have invested and expect to continue to invest within our existing businesses to capitalize on accretive, organic growth opportunities. We also continue to pursue strategic transactions and ventures that complement and enhance our existing footprint.

Our Competitive Strengths

We believe that we are well positioned to successfully execute our business strategies and achieve our principal business objectives because of the following competitive strengths:

•Our water processing facilities, which are strategically located near areas of high crude oil and natural gas production. Our water processing facilities are located among the most prolific crude oil and natural gas producing areas in the United States, including the Delaware Basin, the Denver-Julesburg (“DJ”) Basin and the Eagle Ford Basin. These assets are underpinned by long-term, fixed fee contracts and acreage dedications, some of which contain minimum volume commitments. Additionally, we believe that the technological capabilities of our Water Solutions business can be quickly implemented at new facilities and locations as needed. Our system located in the Northern Delaware Basin is an integrated network of large diameter produced water pipelines, recycling facilities and disposal wells that collectively provides reliable service to producer customers and would be difficult for competitors to replicate at this time.

•Our network of crude oil transportation and storage assets located in the DJ Basin and Cushing, Oklahoma. Our strategically deployed terminals, as well as our owned and contracted pipeline capacity, provide access to producers in the DJ Basin. These operations are supported by certain long-term, fixed rate contracts and acreage dedications with producers, refiners and marketers and include minimum volume commitments on our owned and leased pipelines and storage tanks.
•Our network of natural gas liquids transportation, terminal, and storage assets, which allows us to provide multiple services across the United States and Canada. Our strategically located natural gas liquid supply terminals, propane pipeline in Michigan, large leased railcar fleet, shipper status on common carrier pipelines, and leased storage enable us to be a preferred purchaser and seller of butane and other natural gas liquids. We have a diverse base of long-standing customers and believe that our performance metrics allow us to reliably supply, store and transport products throughout the United States and Canada.
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•Our contracted operations allow us to generate more predictable and stable cash flows on a year-to-year basis. Our ability to provide multiple services to customers enhances our competitive position. Our three business segments are diversified by geography, customer base and commodity sensitivities, which we believe provides us with more stable cash flows through the typical commodity cycles.
•Our seasoned management team with extensive midstream industry experience and a track record of acquiring, integrating, operating and growing successful businesses. Our management team has significant experience managing companies in the energy industry, including master limited partnerships. In addition, through decades of experience, our management team has developed strong business relationships with key industry participants throughout the United States. We believe that our management’s knowledge of the industry, relationships within the industry, and experience provide us with the opportunities to optimize our existing assets. Our management team also has experience in identifying and evaluating other ventures that provide us with additional opportunities to complement, grow and expand our existing operations.

Our Businesses

Water Solutions

Overview. Our Water Solutions segment transports, treats, recycles and disposes of produced and flowback water generated from crude oil and natural gas production. We also sell produced water for reuse and recycle and brackish non-potable water to our producer customers to be used in their crude oil exploration and production activities. As part of processing water, we aggregate and sell recovered crude oil, also known as skim oil. We also dispose of solids such as tank bottoms, drilling fluids and drilling muds and perform other ancillary services such as truck and frac tank washouts. Our activities in this segment are underpinned by long-term, fixed fee contracts and acreage dedications, some of which contain minimum volume commitments with leading oil and gas companies including large, investment grade producer customers.

We operate in a number of the most prolific crude oil and natural gas producing areas in the United States including the Delaware Basin in New Mexico and Texas, the DJ Basin in Colorado and the Eagle Ford Basin in Texas. With a system that handled approximately 958.3 million barrels of produced water across its areas of operation during the year ended March 31, 2025, we believe that we are the largest independent produced water transportation and disposal company in the United States. Our core asset in the Water Solutions segment is our system located in the Northern Delaware Basin, where we own and operate the largest integrated network of large diameter produced water pipelines, recycling facilities and disposal wells. This system spans six counties in New Mexico and Texas that represent one of the most prolific crude oil producing regions in the United States with some of the most economic hydrocarbon resources and lowest break-even economics for producers. Our system has over 800 miles of newly-built, in-service large diameter produced water pipelines connected to 58 active saltwater disposal facilities and 132 active disposal wells. We currently have approximately 765,000 acres dedicated to our Northern Delaware system under long-term agreements providing a multi-decade drilling inventory and significant growth opportunity. In addition, we have several minimum volume commitments and other commercial agreements covering the Delaware, DJ and Eagle Ford Basins. Our focus in building our Water Solutions business has been to secure long-term, fixed fee contracts that contain minimum volume commitments, acreage dedications or similarly strong contractual relationships with large, well-capitalized producer customers.

During the quarter ended December 31, 2024, we completed the expansion of our Lea County Express Pipeline System (“LEX II Expansion”) from a capacity of 140,000 barrels of water per day to 340,000 barrels of water per day. The addition of a second large-diameter pipeline, disposal wells, and facilities has expanded the capabilities of our existing produced water super-system and created a significantly larger outlet for produced water disposal within the Delaware Basin. The 27-mile, 30-inch produced water pipeline will transport water to areas outside the core of the basin thereby further diversifying the geographic location of our disposal operations. The LEX II Expansion is fully underwritten by a minimum volume commitment contract that includes an acreage dedication extension with an investment grade oil and gas producer. The LEX II Expansion includes an incremental increase in committed acreage and volumes under dedication from the producer. Additionally, the LEX II Expansion is expandable up to 500,000 barrels of water per day.

As part of our operations, we also recycle water, which includes the sale of produced water and recycled water for use in our customers’ completion activities. During the year ended March 31, 2025, we sold approximately 42.4 million barrels of recycled water.

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Operations. Our customers bring produced and flowback water generated by crude oil and natural gas exploration and production operations to our facilities for treatment through pipeline gathering systems and by truck. During the year ended March 31, 2025, in the Delaware Basin, we received approximately 98% of produced and flowback water via pipelines. Once we take delivery of the water, the level of processing is determined by the ultimate disposition of the water.

Our facilities dispose of produced water primarily into deep underground formations via injection wells. At our disposal facilities, we use proprietary well maintenance programs to enhance injection rates and extend the useful lives of the wells.

We own 90 water treatment and disposal facilities, including 194 injection wells. The location and permitted processing capacities of these facilities are summarized below.
Number of Number of Permitted Processing Capacity (barrels per day)
Location Facilities (1) Wells Own (2) Lease (3) Total
Delaware Basin (4) - Texas and New Mexico 58  132  1,369,000  3,767,300  5,136,300 
Eagle Ford Basin (4)(5) - Texas 18  31  424,000  362,000  786,000 
DJ Basin - Colorado 13  30  373,000  142,500  515,500 
Other Basins - Texas 1  1  20,000  —  20,000 
Total - All Facilities 90  194  2,186,000  4,271,800  6,457,800 
(1)    We own the land on which 39 of the 90 water treatment and disposal facilities are located and we either have easements or lease the land on which the remaining water treatment and disposal facilities are located.
(2)    These facilities are located on lands we own.
(3)    These facilities are located on lands we lease.
(4)    Certain facilities can dispose of both produced water and solids such as tank bottoms, drilling fluids and drilling muds.
(5)    Includes one facility with a permitted processing capacity of 40,000 barrels per day in which we own a 75% interest and two facilities, one with a permitted processing capacity of 60,000 barrels per day and the other with a permitted processing capacity of 65,000 barrels per day, in which we own a 50% interest.

On March 31, 2023, we sold certain saltwater disposal assets in the Midland Basin (see Note 17 to our consolidated financial statements included in this Annual Report).

On July 25, 2023, we entered into an agreement in which we terminated a minimum volume water disposal contract and sold certain saltwater disposal assets and intangible assets in the Pinedale Anticline Basin (see Note 17 to our consolidated financial statements included in this Annual Report).

On April 5, 2024, we sold approximately 122,250 acres of real estate on two ranches located in Eddy and Lea Counties, New Mexico. In addition, the assets and liabilities related to these ranches were classified as held for sale within our March 31, 2024 consolidated balance sheet (see Note 17 to our consolidated financial statements included in this Annual Report).

Customers. The primary customers of our operations consist mainly of large publicly traded, oil and gas companies with diversified acreage positions across multiple leading oil and gas plays. During the year ended March 31, 2025, 73% of the revenues of our Water Solutions segment were generated from our ten largest customers of the segment. Additionally, certain key customers of the Water Solutions segment contribute significantly to the cash flows and profitability of the Partnership. Any loss of those customers or their contracts could have an adverse impact on our financial results.

Competition. The principal elements of competition are system reliability, project execution capability and reputation, system capacity and flexibility, rates for services and system location relative to the producer’s operations. Our competitors include independent produced water transportation and disposal companies and the water transportation and disposal operations owned by oil and gas production companies themselves. Location can be an important consideration for our customers, who seek to minimize the cost of transporting the produced water to disposal facilities. Many of our facilities are strategically located near areas of high crude oil and natural gas production which provides us with a distinct advantage over a competitor that must build a system that can compete with our assets.

Pricing Policy. We charge customers a fee per barrel of produced water received. Our contractual agreements can consist of: (a) minimum volume commitments requiring the customer to deliver a specified minimum volume of produced water over a specified period of time; (b) acreage dedications requiring the customer to deliver all volumes produced from the dedicated acreage with us; and (c) produced water pipeline and trucked disposal agreements providing interruptible service in exchange for a fee per barrel of produced water received.
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We also generate revenue from the sale of crude oil we recover in processing the produced water. In addition, we may charge fees for the sale of produced water for reuse by our customers, pipeline transportation fees, pipeline interconnection fees and solids disposal fees.

Trade Names. Our Water Solutions segment operates under the NGL Water Solutions trade name.

Technology. We hold multiple patents for processing technologies. We believe that the technological capabilities of our Water Solutions business can be quickly implemented at new facilities and locations.

Crude Oil Logistics

Overview. 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 and other trade hubs, and provides storage, terminaling and transportation services through its owned assets. Our activities in this segment are supported by certain long-term, fixed rate contracts with acreage dedications and which include minimum volume commitments on our storage tanks and owned and leased pipelines. Our operations are concentrated in and around four prolific crude oil producing regions in the United States, including the DJ Basin in Colorado, the Delaware Basin in Texas and New Mexico, the Eagle Ford Basin in Texas and the United States Gulf Coast.

Our foundational asset in this segment is the Grand Mesa Pipeline, a 550-mile pipeline that transports crude oil from its origin in Weld County, Colorado to our terminal in Cushing, Oklahoma. The main line portion of this pipeline is comprised of a 34.09% undivided interest with Saddlehorn Pipeline Company, LLC (“Saddlehorn”) in which we have ownership of 150,000 barrels per day of capacity. During the year ended March 31, 2025, approximately 61,000 barrels per day of crude oil were transported on the Grand Mesa Pipeline. Operating costs associated with the Grand Mesa Pipeline are allocated to us based on our proportionate ownership interest and throughput. We also own and operate origin terminals at Lucerne and Riverside, Colorado, where we aggregate crude oil volumes of different types and grades and store them until they are ready for transfer to the Grand Mesa Pipeline. The Lucerne terminal has approximately 950,000 barrels of storage and a 12 bay truck loading facility. The Riverside terminal has approximately 20,000 barrels of storage and a four bay truck loading facility.

Through our ownership in the Grand Mesa Pipeline, we have sufficient capacity to service our customer contracts at the same origin and termination points with the ability to accept additional volume commitments. We retained ownership of our previously acquired easements for the potential future development of transportation projects involving petroleum commodities other than crude oil and condensate. With the consent and participation of Saddlehorn, we and Saddlehorn may consider future opportunities using these easements, to the extent such easements remain in effect, for projects involving the transportation of crude oil and condensate.

We own and operate a large scale crude oil terminal located in Cushing, Oklahoma with 3,626,000 barrels of storage capacity, seven off-loading lease automatic custody transfer units (“LACTs”), a full control room, on-site quality management building, and three 24-inch bi-directional pipelines each capable of moving 360,000 barrels per day. The terminal features advantaged connectivity to other terminals and pipelines including important connections to the Grand Mesa Pipeline and to TC Energy’s terminal with access to the United States Gulf Coast via Marketlink. Our terminal is situated on 200 acres and is designed to be expanded based on customer demand. Cushing is one of the most liquid crude oil trading hubs in the world and is the delivery point for Light Sweet Crude Oil futures contracts.

We own and operate a crude oil marine terminal in Point Comfort, Texas with 370,000 barrels of storage capacity and six off-loading LACTs. Our tanks connect to three docks at the port (two for ocean-going barges and ships and one for inland barges).

We own and operate a crude oil pipeline and marine terminal in Houma, Louisiana with 288,000 barrels of storage capacity, two off-loading LACTs, a brown water barge dock and two 12-inch bi-directional pipelines each capable of moving 120,000 barrels per day with connectivity to Shell’s Zydeco System.

Operations. We purchase crude oil from producers and marketers and transport it to refineries or for resale. Our strategically deployed terminals, as well as our owned and contracted pipeline capacity, provide access to producers in the DJ Basin.

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We currently transport crude oil on the Grand Mesa Pipeline, which is described above, and 19 other common carrier pipelines owned by third parties.

As of May 29, 2025, all railcars have been sold or are under purchase and sale agreements.

We also own 25 pipeline injection stations, the locations of which are summarized below.
State Number of Pipeline Injection Stations
Texas 11 
New Mexico 6 
Oklahoma 5 
Kansas 3 
Total 25 

See Note 17 to our consolidated financial statements included in this Annual Report for all related dispositions in the current and prior years for the Crude Oil Logistics segment.

Customers. Our customers include crude oil refiners, producers, and marketers. During the year ended March 31, 2025, 79% of the revenues of our Crude Oil Logistics segment were generated from our ten largest customers of the segment. Additionally, certain key customers of the Crude Oil Logistics segment contribute significantly to the cash flows and profitability of the Partnership. Any loss of those customers or their contracts could have an adverse impact on our financial results.

Competition. Our Crude Oil Logistics segment faces significant competition, as many entities are engaged in the crude oil logistics business, some of which are larger and have greater financial resources than we do. The primary factors on which we compete are:

•price;
•availability of supply and refinery demand;
•reliability of service;
•open credit;
•logistics capabilities, including the availability of railcars, proprietary terminals, and owned pipeline; and
•long-term customer relationships.

Supply. We obtain crude oil from a large base of suppliers, which consists primarily of crude oil producers. We currently purchase crude oil from 80 producers at 496 leases.

Pricing Policy. Most of our contracts to purchase or sell crude oil are at floating prices that are indexed to published rates in active markets such as Cushing, Oklahoma, St. James, Louisiana, and Magellan East Houston. We attempt to reduce our exposure to price fluctuations by using back-to-back physical contracts whenever possible. When back-to-back physical contracts are not optimal, we enter into financially settled derivative contracts as economic hedges of our physical inventory, physical sales and physical purchase contracts.

Our profitability is impacted by forward crude oil prices. Crude oil markets can either be in contango (a condition in which forward crude oil prices are higher than spot prices) or can be in backwardation (a condition in which forward crude oil prices are lower than spot prices). Our Crude Oil Logistics segment benefits when the market is in contango, as increasing prices result in inventory value gains during the time between when we purchase the inventory and when we sell it. In addition, we are able to better utilize our storage assets when contango markets justify storing barrels. When markets are in backwardation, our inventory values decrease during the time period between when we purchase inventory and when we sell it and the declining prices also typically have an unfavorable impact on our storage tank lease rates. To help mitigate the impact of changing prices, we enter into derivative instruments to hedge our inventory.

Trade Names. Our Crude Oil Logistics segment operates primarily under the NGL Crude Assets and Marketing, NGL Crude Transportation, NGL Crude Terminals and NGL Crude Cushing trade names.

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Liquids Logistics

Overview. Our Liquids Logistics segment conducts supply operations for natural gas liquids to commercial, retail and industrial customers across the United States and Canada. These operations are conducted through our five owned terminals, third-party storage and terminal facilities, nine common carrier pipelines and a fleet of leased railcars. We also provide services for marine exports of butane through our facility located in Chesapeake, Virginia and we also own a propane pipeline in Michigan. We attempt to reduce our exposure to price fluctuations by using back-to-back physical contracts and pre-sale agreements that allow us to lock in a margin on a percentage of our winter volumes. We also enter into financially settled derivative contracts as economic hedges of our physical inventory, physical sales and physical purchase contracts. We employ a number of contractual and hedging strategies to minimize commodity exposure and maximize earnings stability of this segment. During the year ended March 31, 2025, we sold approximately 1.6 billion gallons of natural gas liquids or 4.26 million gallons (approximately 101,000 barrels) per day.

Operations. We procure natural gas liquids from refiners, natural gas processing plants, producers and other resellers for delivery to leased or owned storage space, common carrier pipelines, railcar terminals, and direct to certain customers. Our customers take delivery by loading natural gas liquids into transport vehicles from common carrier pipeline terminals, private terminals, our terminals, directly from refineries and rail terminals, and by railcar.

A portion of our wholesale propane gallons are presold to third-party retailers and wholesalers at a fixed price under back-to-back contracts. Back-to-back contracts, in which we balance our contractual portfolio by buying physical propane supply or derivatives when we have a matching purchase commitment from our wholesale customers, protect our margins and mitigate commodity price risk. Presales also reduce the impact of warm weather because the customer is required to take delivery of the propane regardless of the weather or any other factors. We generally require cash deposits from these customers. In addition, on a daily basis we have the ability to balance our inventory by buying or selling propane, butanes, and natural gasoline to refiners, resellers, and propane producers through pipeline inventory transfers at major storage hubs.

In order to secure consistent supply during the heating season, we are often required to purchase volumes of propane during the entire fiscal year. In order to mitigate storage costs and price risk, we may sell those volumes at a lesser margin in lower demand months than we earn in our other wholesale operations.

We purchase butane from refiners during the summer months, when refiners have a greater butane supply than they need, and sell butane to refiners during the winter blending season, when demand for butane is higher. We utilize a portion of our railcar fleet and a portion of our leased underground storage to store butane for this purpose. We also transport customer-owned natural gas liquids on our leased railcars and charge the customers a transportation service fee as well as sublease railcars to certain customers. Our owned and leased terminals and railcar fleet give us the opportunity to access markets throughout the United States, and to move product to locations where demand is highest. We provide transportation, storage, and throughput services to third parties at our facilities in Port Hudson, Louisiana, Chesapeake, Virginia and Shelton, Washington.

The following table summarizes the location of our facilities and respective storage capacity and interconnects to those facilities.
Storage Capacity (in gallons)
Location Number of Facilities Own (1) Lease (2) Total Terminal Interconnects
Virginia 2  20,888,000  —  20,888,000  Rail, Truck and Marine Facility
Louisiana 1  720,000  —  720,000  Truck Facility
Michigan 1  480,000  —  480,000  Truck and Pipeline Facility
Washington 1  —  120,000  120,000  Rail and Truck Facility
Total 5  22,088,000  120,000  22,208,000 
(1)    These facilities are located on lands we own.
(2)    These facilities are located on lands we lease.

We own the land on which four of the five natural gas liquids terminals are located and we lease the land on which the remaining terminal is located.

We own a natural gas liquids terminal that supports refined products blending in Port Hudson, Louisiana, and a marine export/import terminal in Chesapeake, Virginia. The Port Hudson terminal is located near Baton Rouge, Louisiana, and is in proximity to other refined products infrastructure along the Colonial pipeline.
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This truck unloading and storage facility allows for the aggregation and supply of butane and naphtha for motor fuel blending and consists of storage tanks with a total capacity of 720,000 gallons. The Chesapeake facility is a marine export/import terminal situated upstream of Norfolk, Virginia on the Elizabeth River. The site includes a proprietary dock with the capacity to berth handy-sized vessels (a dry bulk carrier of an oil tanker with a capacity between 15,000 and 35,000 dead weight tonnage) to very large gas carriers (a carrier capable of loading anywhere between 100,000 cubic meters to 200,000 cubic meters of natural gas), truck loading and off-road racks along with 22 railcar spots, with service provided by Norfolk Southern Railroad. The facility has an aggregate storage capacity of 20,408,000 gallons.

See Note 1 and Note 17 to our consolidated financial statements included in this Annual Report for all related dispositions in the current and prior years for the Liquids Logistics segment.

We own 28 transloading units, which enable transfer of product from railcars to trucks. These transloading units can be moved to locations along a railroad where it is most economical to transfer product at sites which otherwise would be out of reach of this product.

We own the Ambassador Pipeline, an approximately 225-mile propane pipeline, which runs from the Kalkaska gas plant in Kalkaska County, Michigan to a termination point near Marysville in St. Clair County, Michigan. The Wheeler propane terminal, in central Michigan, is located at the mid-point of the pipeline.

We utilize a fleet of approximately 3,300 high-pressure and general purpose leased railcars of which 102 railcars are subleased by third parties.

We lease storage space to accommodate the supply requirements and contractual needs of our retail and wholesale customers.

The following table summarizes our significant leased storage space at natural gas liquids storage facilities and interconnects to those facilities:
Leased Storage Space
(in gallons)
Storage Facility Location Beginning
April 1,
2025		 At
March 31,
2025		 Storage Interconnects
Michigan 10,500,000  21,000,000  Rail and Truck Facility
Mississippi 8,400,000  3,150,000  Pipeline and Rail Facility
Utah 5,880,000  5,250,000  Rail Facility
Texas 210,000  210,000  Pipeline and Rail Facility
United States Total 24,990,000  29,610,000 
Alberta, Canada 1,323,420  1,323,420  Pipeline and Rail Facility
Ontario, Canada —  8,467,200  Rail Facility
Canada Total 1,323,420  9,790,620 
Total 26,313,420  39,400,620   

Customers. Our customers include national, regional and independent retail, industrial, wholesale, petrochemical, refiner and natural gas liquids production customers. During the year ended March 31, 2025, 36% of the revenues of our Liquids Logistics segment were generated from our ten largest customers of the segment. Additionally, certain key customers of the Liquids Logistics segment contribute significantly to the cash flows and profitability of the Partnership. Any loss of those customers or their contracts could have an adverse impact on our financial results.

Seasonality. Our wholesale liquids business is largely seasonal as the primary users of propane as heating fuel generally purchase propane during the typical fall and winter heating season, while butane seasonality is driven primarily by winter gasoline blending. However, we are able to partially mitigate the effects of seasonality by preselling a portion of our wholesale volumes to retailers and wholesalers and requiring the customer to take delivery of the product regardless of the weather.

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Competition. Our Liquids Logistics segment faces competition from other natural gas liquids wholesalers, trading companies and companies involved in the natural gas liquids midstream industry (such as terminal and refinery operations), some of which have greater financial resources than we do. The primary factors on which we compete are:

•price;
•availability of supply;
•available space on common carrier pipelines;
•storage availability;
•logistics capabilities, including the availability of railcars, and proprietary terminals; and
•long-term customer relationships.

Market Price Risk. Our philosophy is to maintain minimum commodity price exposure through a combination of purchase contracts, sales contracts and financial derivatives. For discretionary inventory, and for those instances where physical transactions cannot be appropriately matched, we utilize financial derivatives to mitigate commodity price exposure. Specific exposure limits are mandated in our market risk policy.

Pricing Policy. In our Liquids Logistics segment, we offer our customers the following categories of contracts:

•customer pre-buys, which typically require deposits based on market pricing conditions;
•market based, which can either be a posted price or an index to spot price at time of delivery; and
•load package, a firm price agreement for customers seeking to purchase specific volumes delivered during a specific time period.

We use back-to-back contracts for many of our liquids business sales to limit commodity price exposure and protect our margins. We are able to match our supply and sales commitments by offering our customers purchase contracts with flexible price, location, storage, and ratable delivery.

We can require deposits from our customers for fixed price future delivery if the delivery date is more than 30 days after the time of contractual agreement.

Trade Names. Our Liquids Logistics segment operates primarily under the Centennial Energy, Centennial Gas Liquids and NGL Supply Terminal Company trade names.

Human Capital

At March 31, 2025, we had 569 employees in 27 states and Canada. Of those employees, 212 provide work primarily for our Water Solutions segment, 56 provide work primarily for our Crude Oil Logistics segment, 139 provide work primarily for our Liquids Logistics segment, and 162 provide administrative services to the various business segments. NGL is an equal-opportunity employer, and our employee handbook underscores that commitment, with policies prohibiting discrimination, harassment, and retaliation.

We understand the importance of competitive benefits packages for the health and welfare of our employees and for our ability to recruit and retain the best talent. In that regard, at the end of fiscal year 2021, we implemented $20 per hour minimum wage for all regular, full-time employees. More than 96% of our eligible employees participated in the NGL 401(k) Plan in fiscal year 2025. As of January 1, 2023, we shortened the NGL 401(k) eligibility period from the first day after six months of employment to the first day of the month after three months of employment. In addition, we provide access to a traditional PPO or a high-deductible medical plan including a health savings account with employer contributions; a flexible spending account option for those not enrolled in the high-deductible medical plan; a dental plan; a vision plan; an Employee Assistance Plan including free counseling for employees and members of their household; company-paid short-term disability coverage; voluntary long-term disability coverage; company-paid life and AD&D coverage; and voluntary life and AD&D coverage options for employees and their family members.

Our operations are guided by specific health and safety protocols. We endeavor to conduct our business in a manner that meets or exceeds applicable health and safety regulations and minimizes risk, both to our employees and the communities where we operate. Our environmental, health and safety team:
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•    Advises on safety and industrial hygiene regulatory requirements and best practices;
•    Develops safety procedures and guidelines;
•    Conducts safety inspections;
•    Advises on strategies to improve health and safety performance; and
•    Designs and conducts safety and industrial hygiene training courses.

As part of this effort, we have implemented an enterprise management information system designed to help us achieve a better understanding of our performance, identify root causes of incidents, and where appropriate, implement necessary mitigations.

Government Regulation

Regulation of the Oil and Natural Gas Industries

Regulation of Oil and Natural Gas Exploration, Production and Sales. Sales of crude oil and natural gas liquids are not currently regulated and are transacted at market prices. In 1989, the United States Congress enacted the Natural Gas Wellhead Decontrol Act, which removed all remaining price and non-price controls affecting wellhead sales of natural gas. The Federal Energy Regulatory Commission (“FERC”), which has authority under the Natural Gas Act to regulate the prices and other terms and conditions of the sale of natural gas for resale in interstate commerce, has issued blanket authorizations for all natural gas resellers subject to its regulation, except interstate pipelines, to resell natural gas at market prices. Either Congress or the FERC (with respect to the resale of natural gas in interstate commerce), however, could re-impose price controls in the future.

Exploration and production operations and water disposal facilities are subject to various types of federal, state and local regulation, including, but not limited to, permitting, well location, methods of drilling, well operations, and conservation of resources. These regulations may affect our businesses and the businesses of certain of our customers and suppliers. It is not possible to predict how or when regulations affecting our operations or our customers’ or suppliers’ operations might change.

Regulation of the Transportation and Storage of Natural Gas and Oil and Related Facilities. The FERC regulates oil pipelines under the Interstate Commerce Act and natural gas pipeline and storage companies under the Natural Gas Act, and Natural Gas Policy Act of 1978 (“NGPA”), as amended by the Energy Policy Act of 2005. The Grand Mesa Pipeline became operational on November 1, 2016 and has several points of origin in Colorado, runs from those origin points through Kansas and terminates in Cushing, Oklahoma. The transportation services on the Grand Mesa Pipeline are subject to FERC regulation. In February 2018, the FERC issued a revised policy to disallow income tax allowance cost recovery in rates charged by pipeline companies organized as master limited partnerships. The FERC’s revised policy impacts cost-of-service rates on oil pipelines. Currently, the volumes of crude oil that are transported on the Grand Mesa Pipeline are subject to contractual agreements. Therefore, the FERC’s revised policy has not impacted the Grand Mesa Pipeline at the present time. Additionally, contracts we enter into for the interstate transportation or storage of crude oil or natural gas may be subject to FERC regulation including reporting or other requirements. In addition, the intrastate transportation and storage of crude oil and natural gas is subject to regulation by the state in which such facilities are located, and such regulation can affect the availability and price of our supply and have both a direct and indirect effect on our business.

Anti-Market Manipulation. We are subject to the anti-market manipulation provisions in the Natural Gas Act and the NGPA, which authorizes the FERC to impose fines of up to $1 million per day per violation of the Natural Gas Act, the NGPA, or their implementing regulations. In addition, the Federal Trade Commission (“FTC”) holds statutory authority under the Energy Independence and Security Act of 2007 to prevent market manipulation in petroleum markets, including the authority to request that a court impose fines of up to $1 million per violation. These agencies have promulgated broad rules and regulations prohibiting fraud and manipulation in oil and gas markets. The Commodity Futures Trading Commission (“CFTC”) is directed under the Commodity Exchange Act to prevent price manipulations in the commodity and futures markets, including the energy futures markets. Pursuant to statutory authority, the CFTC has adopted anti-market manipulation regulations that prohibit fraud and price manipulation in the commodity and futures markets. The CFTC also has statutory authority to seek civil penalties of up to the greater of $1 million per day per violation or triple the monetary gain to the violator for violations of the anti-market manipulation sections of the Commodity Exchange Act. We are also subject to various reporting requirements that are designed to facilitate transparency and prevent market manipulation.

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Environmental Regulation

General. Our operations are subject to federal, state and local laws and regulations relating to the protection of the environment. Existing regulatory requirements inform our decision-making and business activities in many ways, such as:

•informing decisions regarding what types of pollution-control equipment to deploy and how a facility should be designed;
•informing decision-making regarding construction activities, such as where to locate and where not to locate a facility; e.g., locating construction activities away from sensitive environmental, cultural or historic areas, including wetlands, coastal regions or areas inhabited by endangered or threatened species, and limiting or prohibiting construction activities during certain sensitive periods, such as when threatened or endangered species are breeding/nesting;
•informing decision-making regarding the timing of activities, for example, we will delay construction or system modification or upgrades during the issuance or renewal periods of certain permits;
•informing decision-making pertaining to our approach to investigating, mitigating and remediating unplanned releases from our facilities and operations or attributable to former facilities or operations, as necessary and appropriate; and
•informing our decision-making about whether a facility or operation should be temporarily halted to address potential non-compliance with relevant permit requirements.

Failure to comply with these laws and regulations may trigger a variety of administrative, civil, and criminal enforcement measures, including the assessment of monetary penalties. Certain environmental statutes impose strict and/or joint and several liability for costs required to clean up and restore sites where substances such as crude oil or wastes have been disposed or otherwise released. The trend in environmental regulation is to place more restrictions and limitations on activities that may adversely affect human health and the environment and to commit greater financial and other resources to inspection, compliance and enforcement activities. Thus, there can be no assurance as to the amount or timing of future expenditures for environmental compliance or remediation, and actual future expenditures may be different from the amounts we currently anticipate.

The following is a discussion of the material environmental laws and regulations that relate to our businesses.

Hazardous Substances and Waste. We are subject to various federal, state, and local environmental laws and regulations governing the storage, distribution, and transportation of natural gas liquids and the operation of bulk storage liquefied petroleum gas (LPG) terminals, as well as laws and regulations governing hazardous substances and waste, including those addressing the discharge of materials into the environment or otherwise relating to protection of the environment. Generally, these laws (i) regulate air and water quality, impose limitations on the discharge of pollutants and establish standards for the use, handling, storage, treatment, transport and disposal of solid and hazardous wastes; (ii) subject our operations to certain permitting, registration and reporting requirements; (iii) may result in the suspension or revocation of necessary permits, licenses and authorizations; (iv) impose substantial liabilities on us for pollution resulting from our operations; (v) require remedial measures to mitigate any violation of environmental laws and regulations or pollution from former or ongoing operations; and (vi) may result in the assessment of administrative, civil and criminal penalties for failure to comply with such laws. These laws include, among others, the Resource Conservation and Recovery Act (“RCRA”), the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), the federal Clean Air Act (“CAA”), the Homeland Security Act of 2002, the Emergency Planning and Community Right to Know Act (“EPCRA”), the Clean Water Act (“CWA”), the Safe Drinking Water Act, the Oil Spills Prevention and Preparedness Regulations, each as amended, and comparable state statutes.

CERCLA, also known as the “Superfund” law, and similar state laws, impose liability on certain classes of potentially responsible persons that are considered to have contributed to the release of a “hazardous substance” into the environment. These persons include the current and past owner or operator of the site where the release occurred and anyone who disposed or arranged for the disposal of a hazardous substance released at the site. While natural gas liquids are not a hazardous substance within the meaning of CERCLA, other chemicals used in or generated by our operations may be classified as a hazardous substance. Persons who are or were liable for releases of hazardous substances under CERCLA may be subject to strict and/or joint and several liability for the costs of investigating and cleaning up the hazardous substances that have been released into the environment and for damages to natural resources and for the costs of certain health studies. It is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the release of hazardous substances into the environment.
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RCRA, and comparable state statutes and their implementing regulations, regulate the generation, transportation, treatment, storage, disposal and cleanup of solid and hazardous wastes. Under a delegation of authority from the United States Environmental Protection Agency (“EPA”), most states administer some or all of the provisions of RCRA, sometimes in conjunction with their own, more stringent requirements. Federal and state regulatory agencies can seek to impose administrative, civil and criminal penalties for alleged non-compliance with RCRA and analogous state requirements. Certain wastes associated with the production of oil and natural gas, as well as certain types of petroleum-contaminated media and debris, are excluded from regulation as hazardous waste under Subtitle C of RCRA. These wastes, instead, are regulated as solid waste under RCRA’s less stringent Subtitle D, state laws or other federal laws. It is possible, however, that certain wastes now classified as non-hazardous solid waste could be classified as hazardous wastes in the future and thereby be subject to more rigorous and costly disposal requirements. Legislation has been proposed from time to time in Congress to regulate certain oil and natural gas wastes as “hazardous wastes under RCRA.” Any such change could result in an increase in our costs to manage and dispose of wastes, which could have a material adverse effect on our consolidated results of operations and financial position.

Wastes containing naturally occurring radioactive materials (“NORM”) and technologically enhanced naturally occurring radioactive material (“TENORM”) may also be generated or concentrated, respectively, in connection with our operations. Certain processes used to produce oil and gas may enhance the radioactivity of NORM or concentrations of TENORM, which may be present in oilfield wastes. NORM and TENORM are subject primarily to individual state radiation control regulations. Texas, New Mexico and Colorado have enacted regulations governing the handling, treatment, storage and disposal of NORM and TENORM. In addition, NORM and TENORM handling and management activities are governed by regulations promulgated by the federal Occupational Safety and Health Act (“OSHA”). These state and OSHA regulations impose certain requirements concerning worker protection, the treatment, storage and disposal of NORM and TENORM waste, the management of waste piles, containers and tanks containing NORM and TENORM, as well as restrictions on the uses of land with NORM or TENORM contamination.

We currently own or lease properties where crude oil is being or has been handled for many years. Although previous operators have utilized operating and disposal practices that were standard in the industry at the time, crude oil or other wastes, including Per- and Polyfluoroalkyl Substances (“PFAS”), may have been disposed of or released on or under the properties owned or leased by us or on or under the other locations where the crude oil and wastes have been transported for treatment or disposal. These properties and the wastes disposed or released thereon may be subject to CERCLA, RCRA and analogous state laws. Under these laws, we could be required to remove or remediate previously disposed wastes (including wastes disposed of or released by prior owners or operators), to clean up contaminated property (including contaminated groundwater) or to implement remedial measures to prevent or mitigate future contamination. We are not currently aware of any facts, events or conditions relating to such requirements that could materially impact our consolidated results of operations or financial position.

Oil Pollution Prevention. In 1973, the EPA adopted oil pollution prevention regulations under the CWA. These oil pollution prevention regulations, as amended several times since their original adoption, require the preparation of either a Spill Prevention Control and Countermeasure (“SPCC”) plan or Facility Response Plan (“FRP”), depending on the site specific substantial harm criteria, for facilities engaged in drilling, producing, gathering, storing, processing, refining, transferring, distributing, using, or consuming crude oil and oil products, and which due to their location, could reasonably be expected to discharge oil in harmful quantities into or upon the navigable waters of the United States. SPCC and FRP requirements under the CWA require appropriate containment berms and similar structures to help prevent the discharge of pollutants into regulated waters in the event of a crude oil or other constituent tank spill, rupture or leak. The owner or operator of an SPCC or FRP-regulated is required to prepare a written, site-specific plan, which details how a facility’s operations comply with the spill prevention and control requirements. To be in compliance, the facility’s plan must satisfy all of the applicable requirements for drainage, bulk storage tanks, tank car and truck loading and unloading, transfer operations (intra-facility piping), inspections and records, security, and training. Most importantly, the facility must fully implement the plan and train personnel in its execution. Where applicable, we strive to maintain and implement SPCC plans and/or FRP plans for our facilities. Violation of SPCC and FRC requirements could subject us to monetary penalties, injunctions, conditions or restrictions on operations and, potentially, criminal enforcement actions.

Air Emissions. Our operations are subject to the CAA and comparable state and local laws and regulations, which regulate emissions of air pollutants from various industrial sources and mandate certain permitting, monitoring, recordkeeping and reporting requirements. Under a delegation of authority from the EPA, most states administer some or all of the provisions of the CAA, sometimes in conjunction with their own, more stringent requirements. The CAA and its implementing regulations on the federal and state level may require that we obtain permits prior to the construction, modification or operation of certain projects or facilities expected to emit or increase air emissions above certain threshold levels, that we obtain and strictly comply with air permits containing emissions and operational limitations, or utilize specific emission control technologies to limit emissions, any of which could impose significant costs on our business.
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Violation of CAA requirements could subject us to monetary penalties, injunctions, conditions or restrictions on operations and, potentially, criminal enforcement actions. Furthermore, we may make certain future capital expenditures for air pollution control equipment in connection with obtaining and maintaining operating permits and approvals for air emissions.

Water Discharges. The CWA and analogous state laws impose restrictions and strict controls regarding the discharge of pollutants into state waters as well as navigable waters, defined as waters of the United States (“WOTUS”), and impose requirements affecting our ability to conduct construction activities in waters and wetlands. Certain state regulations and the general permits issued under the CWA’s National Pollutant Discharge Elimination System program prohibit the discharge of pollutants and chemicals unless permitted to do so. The CWA prohibits the placement of dredge or fill material in wetlands or other WOTUS unless authorized by a permit issued by the U.S. Army Corps of Engineers or a delegated state agency pursuant to Section 404. In addition, the CWA and analogous state laws require individual permits or coverage under general permits for discharges of storm water runoff from certain types of facilities. We maintain a number of discharge permits, some of which may require us to monitor and sample storm water runoff or other discharges from such facilities. Some states also maintain groundwater protection programs that require permits for discharges or operations that may impact groundwater conditions. Federal and state regulatory agencies can impose administrative, civil and criminal penalties for non-compliance with discharge permits or other requirements of the CWA and analogous state laws and regulations.

Underground Injection Control. The underground injection of crude oil and natural gas wastes is regulated by the Underground Injection Control (“UIC”) Program, as authorized by the Safe Drinking Water Act, as well as by state programs focused on the conservation of hydrocarbon resources. The primary objective of injection well operating requirements is to ensure the mechanical integrity of the injection apparatus and to prevent migration of fluid from the injection zone into underground sources of drinking water, as well as to prevent communication between injected fluids and zones capable of producing hydrocarbons. The Safe Drinking Water Act establishes requirements for permitting, testing, monitoring, record keeping, and reporting of injection well activities, as well as a prohibition against the migration of fluid containing any contaminant into underground sources of drinking water. Any leakage from the subsurface portions of the injection wells could cause degradation of fresh groundwater resources, potentially resulting in suspension of our UIC permits, issuance of fines and penalties from governmental agencies, incurrence of expenditures for remediation of the affected resource and imposition of liability by third parties for property damages and personal injuries.

Under the auspices of the federal UIC program as implemented by states with UIC primacy, regulators, particularly at the state level, are becoming increasingly sensitive to possible correlations between underground injection and seismic activity. Consequently, state regulators implementing both the federal UIC program and state corollaries are heavily scrutinizing the location of injection facilities relative to faulting and are limiting both the density or injection facilities as well as the rate and volume of injection.

Hydraulic Fracturing. Hydraulic fracturing involves the injection of water, sand, and chemicals under pressure into the formation to stimulate oil and gas production. We do not conduct any hydraulic fracturing activities. However, a portion of our customers’ crude oil and natural gas production is developed from unconventional sources that require hydraulic fracturing as part of the completion process, and our Water Solutions segment treats and disposes of produced water generated from crude oil and natural gas production, including production employing hydraulic fracturing. Legislation to amend the Safe Drinking Water Act to repeal the exemption for hydraulic fracturing from the definition of underground injection and require federal permitting and regulatory control of hydraulic fracturing, as well as legislative proposals to require disclosure of the chemical constituents of the fluids used in the fracturing process, have been proposed in recent sessions of Congress. Congress will likely continue to consider legislation to amend the Safe Drinking Water Act to subject hydraulic fracturing operations to regulation under the Act’s UIC program and/or require disclosure of chemicals used in the hydraulic fracturing process. Federal agencies, including the EPA and the United States Department of the Interior, have asserted their regulatory authority to, for example, study the potential impacts of hydraulic fracturing on the environment, and initiate rulemakings to compel disclosure of the chemicals used in hydraulic fracturing operations, and establish pretreatment standards and effluent limitation guidelines for produced water from hydraulic fracturing operations. In addition, some states and local governments have also proposed or adopted legislative or regulatory restrictions on hydraulic fracturing, which include additional permit requirements, public disclosure of fracturing fluid contents, operational restrictions, and/or temporary or permanent bans on hydraulic fracturing. We expect that scrutiny of hydraulic fracturing activities will continue in the future.

Endangered Species. The Endangered Species Act (“ESA”) restricts activities that may affect endangered or threatened species or their habitats. Similar protections are offered to migratory birds under the federal Migratory Bird Treaty Act (“MBTA”) and the Bald and Golden Eagle Protection Act (“BGEPA”). To the degree that species listed under the ESA or similar state laws, or are protected under the MBTA or BGEPA, live, breed or nest in or migrate through the areas where we or our oil and gas producing customers operate, our and our customers’ abilities to conduct or expand operations and construct facilities could be limited or be forced to incur material additional costs.
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Moreover, our customers’ drilling activities may be delayed, restricted, or cancelled in protected habitat areas or during certain seasons, such as breeding and nesting seasons. Some of our operations and the operations of our customers are located in areas that are designated as habitats for protected species. In addition, the U.S. Fish and Wildlife Service (“USFWS”) may make determinations on the listing of currently unlisted species as endangered or threatened under the ESA. For example, in May 2024, the dunes sagebrush lizard, which is found in areas where we operate, was listed as endangered under the ESA which sparked allegations that the designation occurred to hinder fossil fuel production. This resulted in a federal lawsuit filed in the Western District of Texas aimed at overturning the designation. In addition, the lesser prairie-chicken, which can also be found in areas where we operate, was listed under the ESA effective March 27, 2023. The designation of previously unidentified endangered or threatened species could indirectly cause us to incur additional costs, cause our or our oil and gas producing customers’ operations to become subject to operating restrictions or bans and limit future development activity in affected areas. The USFWS and similar state agencies may also designate critical or suitable habitat areas that they believe are necessary for the survival of threatened or endangered species. Such a designation could materially restrict use of or access to federal, state, and private lands.

Greenhouse Gas Regulation

There is a growing concern, both nationally and internationally, about climate change and the contribution of greenhouse gas (“GHG”) emissions, most notably methane and carbon dioxide, to climate change. This growing concern has resulted in a steady stream of legislation considered by Congress to address climate change through a variety of mechanisms, including carbon taxes and carbon cap-and-trade programs. For example, in February 2021, the Climate Emergency Act of 2021 was introduced in the House of Representative by Rep. Earl Blumenauer (D-OR) as H.R. 795 and in the Senate by Sen. Bernie Sanders (I-VT), which would require the President of the United States to declare a national climate emergency and take various actions to address climate change. The ultimate outcome of any possible future federal legislative initiatives is uncertain. In addition, several states have already adopted legal measures to reduce emissions of GHGs, primarily through the planned development of GHG emission inventories and/or regional GHG cap-and-trade programs. For example, on October 7, 2023, California Governor Gavin Newsom signed SB 253, the Climate Corporate Data Accountability Act, and SB 261, the Climate-Related Financial Risk Act. These two bills apply to companies doing business in California and require disclosure of, among certain other climate-related financial risk information, Scope 1 and 2 GHG emissions, beginning in 2026 (on prior fiscal year information), and Scope 3 GHG emissions, beginning in 2027 (on prior fiscal year information).

On December 15, 2009, the EPA published its findings that emissions of carbon dioxide, methane and other GHGs present an endangerment to public health and the environment because emissions of such gases are, according to the EPA, contributing to warming of the earth’s atmosphere and other climatic changes. These findings allowed the EPA to adopt and implement regulations to restrict emissions of GHGs under existing provisions of the CAA. During the Obama Administration, the EPA finalized three rules that regulate GHG emissions from certain sources in the oil and natural gas industry, including New Source Performance Standards for the Oil and Natural Gas Sector (“GHG NSPS”), which became effective on August 2, 2016. During the Trump Administration, rulemaking was undertaken resulting in a substantial relaxation in the GHG NSPS’s requirements, including those relating to fugitive emissions, pneumatic pump standards, and closed vent system certification, among other things, which were finalized on August 13, 2020. The Biden Administration announced its intention to review the revisions to the GHG NSPS in former President Biden’s January 20, 2021 Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis. On November 15, 2021, the EPA issued a proposal to revise the GHG NSPS regulations. On December 2, 2023, the EPA issued its final rule, which targets the reduction of emissions of methane and other air pollutants from oil and gas operations. Specifically, the rule establishes New Source Performance Standards to reduce emissions of methane and other volatile organic compounds from new and modified sources, including produced water storage tanks. The rule became effective May 7, 2024 and requires monitoring and repair of methane leaks and certain reporting requirements.

On March 6, 2024, the Securities and Exchange Commission (“SEC”) adopted a new set of rules that require a wide range of climate-related disclosures, including material climate-related risks, information on any climate-related targets or goals that are material to the registrant’s business, results of operations, or financial condition, Scope 1 and Scope 2 GHG emissions on a phased-in basis by certain larger registrants when those emissions are material and the filing of an attestation report covering the same, and disclosure of the financial statement effects of severe weather events and other natural conditions including costs and losses. Compliance dates under the final rule are phased in by registrant category. Multiple lawsuits have been filed challenging the SEC’s new climate rules, which have been consolidated and will be heard in the U.S. Court of Appeals for the Eighth Circuit. On April 4, 2024, the SEC issued an order staying the final rules pending judicial review before ultimately voting to withdraw its defense of the rule on March 27, 2025.

Some scientists have suggested climate change could increase the severity of extreme weather, such as increased hurricanes and floods, which could damage our facilities. Another possible consequence of climate change is increased volatility in seasonal temperatures.
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The market for our natural gas liquids is generally improved by periods of colder weather and impaired by periods of warmer weather, so any changes in climate could affect the market for our products and services. If there is an overall trend of warmer temperatures, it would be expected to have an adverse effect on our business.

Because propane is considered a clean alternative fuel under the CAA, new climate change regulations may provide us with a competitive advantage over other sources of energy, such as fuel oil and coal.

The trend of more expansive and stringent environmental legislation and regulations, including GHG regulation and regulations relating to climate change, could continue, resulting in increased costs of conducting business and consequently affecting our profitability. To the extent laws are enacted or other governmental action is taken that restricts certain aspects of our business or imposes more stringent and costly operating, waste handling, disposal and cleanup requirements, our business and prospects could be adversely affected.

Safety and Transportation

All states in which we operate have adopted fire safety codes that regulate the storage and distribution of propane and distillates. In some states, state agencies administer these laws, while in other states, municipalities administer these laws. We conduct training programs to help ensure that our operations comply with applicable governmental regulations. With respect to general operations, each state in which we operate adopts National Fire Protection Association, Pamphlet Nos. 54 and 58, or comparable regulations, which establish rules and procedures governing the safe handling of propane, and Pamphlet Nos. 30, 30A, 31, 385, and 395 which establish rules and procedures governing the safe handling of distillates, such as fuel oil. We believe that the policies and procedures currently in effect at all of our facilities for the handling, storage and distribution of propane and distillates and related service and installation operations are consistent with industry standards and are in compliance in all material respects with applicable environmental, health and safety laws.

With respect to the transportation of propane, distillates, crude oil, and water, we are subject to regulations promulgated under federal legislation, including the Federal Motor Carrier Safety Act and the Homeland Security Act of 2002. Regulations under these statutes cover the security and transportation of hazardous materials and are administered by the United States Department of Transportation (“DOT”). Specifically, crude oil pipelines are subject to regulation by the DOT, through the Pipeline and Hazardous Materials Safety Administration (“PHMSA”), under the Hazardous Liquid Pipeline Safety Act of 1979 (“HLPSA”), which requires the PHMSA to develop, prescribe, and enforce minimum federal safety standards for the storage and transportation of hazardous liquids and comparable state statutes with respect to design, installation, testing, construction, operation, replacement and management of pipeline facilities. HLPSA covers petroleum and petroleum products and requires any entity that owns or operates pipeline facilities to comply with such regulations, to permit access to and copying of records and to file certain reports and provide information as required by the United States Secretary of Transportation. These regulations include potential fines and penalties for violations.

The Pipeline Safety Act of 1992 added the environment to the list of statutory factors that must be considered in establishing safety standards for hazardous liquid pipelines, established safety standards for certain “regulated gathering lines,” and mandated that regulations be issued to establish criteria for operators to use in identifying and inspecting pipelines located in high consequence areas (“HCAs”), defined as those areas that are unusually sensitive to environmental damage, that cross a navigable waterway, or that have a high population density. In the Pipeline Inspection, Protection, Enforcement, and Safety Act of 2006, Congress required mandatory inspections for certain United States crude oil and natural gas transmission pipelines in HCAs and mandated that regulations be issued for low-stress hazardous liquid pipelines and pipeline control room management. In January 2012, the federal government passed the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (“2011 Pipeline Safety Act”). This act provides for additional regulatory oversight of the nation’s pipelines, increases the penalties for violations of pipeline safety rules, and complements the DOT’s other initiatives. The 2011 Pipeline Safety Act increased the maximum fine for the most serious pipeline safety violations involving deaths, injuries or major environmental harm from $1 million to $2 million. In addition, this law established additional safety requirements for newly constructed pipelines. The law also provides for (i) additional pipeline damage prevention measures; (ii) allowing the Secretary of Transportation to require automatic and remote-controlled shut-off valves on new pipelines; (iii) requiring the Secretary of Transportation to evaluate the effectiveness of expanding pipeline integrity management and leak detection requirements; (iv) improving the way the DOT and pipeline operators provide information to the public and emergency responders; and (v) reforming the process by which pipeline operators notify federal, state and local officials of pipeline accidents. In recent years, Congress has strengthened the PHMSA’s safety authority and repeatedly extended it, most recently in the Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2020.

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Railcar Regulation

We transport a significant portion of our natural gas liquids via rail transportation, and we lease a fleet of crude oil, high-pressure and general purpose railcars for this purpose. Our railcar operations are subject to the regulatory jurisdiction of the Federal Railroad Administration of the DOT, as well as other federal and state regulatory agencies.

The adoption of additional federal, state or local laws or regulations, including any voluntary measures by the rail industry regarding railcar design or transport activities, or efforts by local communities to restrict or limit rail traffic, could similarly affect our business by increasing compliance costs and decreasing demand for our services, which could adversely affect our financial position and cash flows.

Occupational Health Regulations

The workplaces associated with our manufacturing, processing, terminal, disposal, storage and distribution facilities are subject to the requirements of OSHA and comparable state statutes. We believe we have conducted our operations in substantial compliance with OSHA requirements, including general industry standards, record keeping requirements and monitoring of occupational exposure to regulated substances. In general, we expect to increase our expenditures relating to compliance with likely higher industry and regulatory safety standards such as those described above. Although these expenditures cannot be accurately estimated at this time, we do not expect compliance with these standards to have a material adverse effect on our business.

Available Information on our Website

Our website address is www.nglenergypartners.com. We make available on our website, free of charge, the periodic reports that we file with or furnish to the SEC, as well as all amendments to these reports, as soon as reasonably practicable after such reports are filed with or furnished to the SEC. The information contained on, or connected to, our website is not incorporated by reference into this Annual Report and should not be considered part of this or any other report that we file with or furnish to the SEC.

In addition, the SEC maintains an internet site (www.sec.gov) that contains reports, proxy and information statements and other information related to issuers that file electronically with the SEC.

Item 1A.    Risk Factors

The nature of our business activities subjects us to a wide variety of hazards and risks. The following is a summary and a description of the material risks relating to our business activities that we have identified. In addition to the factors discussed elsewhere in this Annual Report, you should carefully consider the risks and uncertainties described below, which could have a material adverse effect on our business, financial condition or results of operations, including our ability to generate cash to fund our operations, repay indebtedness and pay distributions. You should also consider the interrelationship and potential compounding effects if multiple risks are realized. These risks are not the only risks that we face. Our business could be impacted by additional risks and uncertainties not currently known or that we currently believe to be immaterial.

Risk Factor Summary

Risks Related to Liquidity and Financing
•We may not have sufficient cash, which depends on cash flow rather than profitability, to enable us to fund our operations, repay indebtedness or pay distributions.
•Our substantial indebtedness and restrictions contained in our debt and preferred unit agreements may limit our flexibility to obtain financing to pursue other business opportunities and restrict our current and future operations.
•Increasing interest rates could impact our financing costs, our common unit price, distributions on our preferred units and our ability to issue equity and incur debt.
•Failure of our banking institutions.
Risks Related to the Operations of Our Business
•Our dependence on the ability and willingness of other parties to explore for and produce crude oil and natural gas.
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•Declining demand for hydrocarbons, commodity prices and production volumes, inability to acquire new pore space or loss of existing pore space, inventory risk, the availability of transportation and storage capacity, and increased transportation and leasing costs.
•Competition from other midstream, transportation, and terminaling and storage companies.
•Interruption of service at our principal storage facilities, on common carrier pipelines or railroads.
•Fees charged to customers for products and services may not cover increases in costs.
•Risk management procedures and the use of financial derivative contracts.
•Reduced demand for our products due to energy efficiency, new technologies, alternative energy sources and new regulations.
•Seasonal weather conditions, including warm winter weather and natural or man-made disasters.
•Our ability to successfully complete, integrate and operate organic growth projects.
•Constructing new transportation systems and facilities subjects us to construction risks.
•Opposition from various groups to the operation of our pipelines and facilities.
•Our dependence on the leadership, involvement and retention of key and qualified personnel.
Risks Related to Regulatory Compliance
•Impact of executive orders and federal, state, provincial and local laws and regulations with respect to environmental, including climate change, safety and other regulatory matters, including initiatives relating to our hydraulic fracturing customers and saltwater disposal wells.
•FERC jurisdiction over our current and potential future operations.
•Governmental regulation and other legal obligations related to privacy, data protection, and data security.
•Regulations related to cross-border operations.
Risks Related to Our Partnership Structure and an Investment in Us
•Our amended and restated limited partnership agreement (“Partnership Agreement”) limits the fiduciary duties of our GP to our unitholders and restricts the remedies available to our unitholders.
•Conflicts of interest by our GP and its affiliates.
•Our unitholders have limited voting rights.
•Control of our GP or the IDRs (as defined herein) may be transferred to a third party.
•Our GP has a limited call right that may require our unitholders to sell their common units at an undesirable time or price.
•Our Partnership Agreement requires that we distribute all of our available cash.
•We may issue additional units without the approval of our unitholders.
•Our GP may elect to cause us to issue common units while also maintaining its GP interest in connection with a resetting of the target distribution levels related to its IDRs.
•Our unitholders liability may not be limited if a court finds that unitholder action constitutes control of our business.
•Our unitholders may have liability to repay distributions that were wrongfully distributed to them.
•The Preferred Units (as defined herein) give the holders thereof liquidation and distribution preferences over our common unitholders.
•The issuance of common units upon exercise of certain warrants would cause dilution to existing common unitholders.
Tax Risks to Our Unitholders
•Our tax treatment depends on our status as a partnership for federal income tax purposes.
•Our unitholders may be subject to limitation on their ability to deduct interest expense incurred by us.
•Additional entity-level taxation by individual states.
•The tax treatment of publicly traded partnerships could be subject to potential changes or interpretations.
•The IRS (as defined herein) may challenge certain income tax positions, methodologies or treatments that we have taken, and pursuant to the Bipartisan Budget Act of 2015, may make audit adjustments to our income tax returns.
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•Our unitholders will be required to pay taxes on their share of our income even if they do not receive any cash distributions from us.
•Certain actions that we may take, such as issuing additional units, may increase a unitholder’s tax liability.
•Tax gain or loss on the disposition of our common units could be more or less than expected.
•Tax exempt entities and non-United States persons owning our common units face unique tax issues.
•We have subsidiaries that are treated as corporations for federal income tax purposes and subject to corporate level income taxes.
•A unitholder whose common units are loaned to a “short seller” to effect a short sale of units may be considered as having disposed of those common units.
•There are limits on the deductibility of our losses that may adversely affect our unitholders.
•Purchasers of our common units may become subject to state and local taxes and return filing requirements in jurisdictions where we operate or own or acquire properties.
•Treatment of distributions on our Preferred Units as guaranteed payments for the use of capital creates a different tax treatment for the holders of Preferred Units than the holders of our common units.
General Risks
•The default by significant customers and counterparties or the loss of one or more significant customers.
•Failure to maintain an effective system of internal control, including internal control over financial reporting.
•Pandemics, terrorism and political unrest.
•Product liability claims and litigation.
•A failure in our operational systems or cybersecurity attacks on any of our facilities, or those of third parties.

Risks Related to Liquidity and Financing

We may not have sufficient cash to enable us to fund our operations, repay indebtedness or pay distributions to our unitholders following the establishment of cash reserves by our GP and the payment of costs and expenses, including reimbursement of expenses to our GP.

We may not have sufficient cash to enable us to fund our operations, repay indebtedness or pay distributions. The distribution to our common unitholders may only be made from cash available for distribution after the preferred quarterly distribution to which our Preferred Units are entitled. The amount of cash we will have to fund our operations, repay indebtedness or pay distributions principally depends on the amount of cash we generate from our operations, not profitability, which will fluctuate from quarter to quarter based on, among other things:

•the cost of crude oil and natural gas liquids that we buy for resale and whether we are able to pass along cost increases to our customers;
•the volume of produced water delivered to our processing facilities;
•disruptions in the availability of crude oil and/or natural gas liquids supply;
•our ability to renew leases for storage and railcars;
•the effectiveness of our commodity price hedging strategy;
•weather conditions across the United States;
•the level of competition from other energy providers; and
•prevailing economic conditions.

In addition, the actual amount of cash we will have available to fund our operations, repay indebtedness or pay distributions also depends on other factors, some of which are beyond our control, including:

•fluctuations in working capital needs;
•the level of capital expenditures we make;
•the cost of acquisitions, if any;
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•restrictions contained in the ABL Facility, Term Loan B and the indenture governing our 2029 Senior Secured Notes and 2032 Senior Secured Notes (collectively, the “Indenture”);
•restrictions contained in the agreements relating to our 9.00% Class B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class B Preferred Units”), 9.625% Class C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class C Preferred Units”) and Class D Preferred Units (collectively, the “Preferred Units”);
•our ability to borrow funds and access capital markets;
•the amount, if any, of cash reserves established by our GP; and
•other business risks discussed in this Annual Report that may affect our cash levels.

The board of directors of our GP expects to evaluate the reinstatement of the common unit distributions in due course, taking into account a number of important factors, including our leverage, liquidity, the sustainability of cash flows, capital expenditures and the overall performance of our businesses. The quarterly common unit distributions were suspended with the quarter ended December 31, 2020.

Our substantial indebtedness may limit our flexibility to obtain financing and to pursue other business opportunities and our ability to service our debt could impact operations.

At March 31, 2025, the face amount of our long-term debt was $3.0 billion. Our level of indebtedness could have important consequences to us, including the following:

•our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired or such financing may not be available on favorable terms;
•our funds available for operations and future business opportunities will be reduced by that portion of our cash flow required to make principal and interest payments on our debt;
•lower availability under the ABL Facility caused by a higher level of borrowings on the ABL Facility could make it more likely that a reduction in our borrowing base following a periodic redetermination could require us to repay a portion of our then-outstanding ABL Facility borrowings;
•we may be more vulnerable to competitive pressures or a downturn in our business or the economy generally;
•our flexibility in responding to changing business and economic conditions may be limited; and
•it may make it more difficult for us to satisfy our debt obligations and increase the risk that we may default on our debt obligations.

Our ability to service our debt will depend on, among other things, our future financial and operating performance, which will be affected by prevailing economic and weather conditions, and financial, business, regulatory and other factors, some of which are beyond our control. If our operating results are not sufficient to service our future indebtedness, we would be forced to take actions such as reducing or delaying our business activities, acquisitions, investments or capital expenditures, selling assets or seeking additional equity capital. We may be unable to effect any of these actions on satisfactory terms or at all. The agreements governing our indebtedness permit us to incur additional debt under certain circumstances, and we may need to incur additional debt in order to implement our growth strategy. We may experience adverse consequences from increased levels of debt.

Our leverage could have important consequences to our debt obligations. We will require substantial cash flow to meet our principal and interest obligations with respect to our debt obligations. Our ability to make scheduled payments, to refinance our obligations with respect to our indebtedness or our ability to obtain additional financing in the future will depend on our financial and operating performance, which, in turn, is subject to prevailing economic conditions and to financial, business and other factors. We may not have sufficient cash flow from operations and available borrowings under the ABL Facility to service our indebtedness. A significant downturn in our business or other development adversely affecting our cash flow could materially impair our ability to service our indebtedness. If our cash flow and capital resources are insufficient to fund our debt service obligations, we may be forced to refinance all or a portion of our debt or sell assets. We cannot assure you that we would be able to refinance our existing indebtedness or sell assets on terms that are commercially reasonable.

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Restrictions in the ABL Facility, Term Loan B and Indenture could adversely affect our business, financial position, results of operations, and the value of our common units.

The ABL Facility, Term Loan B and Indenture limit our ability to, among other things:

•incur additional debt or issue letters of credit;
•redeem or repurchase common units;
•make certain loans, investments and acquisitions;
•incur certain liens or permit them to exist;
•engage in sale and leaseback transactions;
•enter into certain types of transactions with affiliates;
•enter into agreements limiting subsidiary distributions;
•change the nature of our business or enter into a substantially different business;
•merge or consolidate with another company; and
•transfer or otherwise dispose of assets.

We will be permitted to make distributions to our unitholders once we meet certain defined metrics and as long as no default or event of default exists both immediately before and after giving effect to the declaration and payment of the distribution and the distribution does not exceed available cash for the applicable quarterly period.

The provisions of the ABL Facility, Term Loan B and Indenture may affect our ability to obtain future financing and pursue attractive business opportunities and our flexibility in planning for, and responding to, changes in business conditions. In addition, a failure to comply with the provisions of these agreements could result in a default or an event of default that could enable our lenders, subject to the terms and conditions, to declare the outstanding principal of that debt, together with accrued and unpaid interest, to be immediately due and payable. If we were unable to repay the accelerated amounts, our lenders could proceed against the collateral we granted them to secure our debts under our 2029 Senior Secured Notes, 2032 Senior Secured Notes, ABL Facility and Term Loan B. If the payment of our debt is accelerated, defaults under our other debt instruments, if any then exist, may be triggered, and our assets may be insufficient to repay such debt in full, and our unitholders could experience a partial or total loss of their investment.

The Partnership may be required by Class D Preferred Unitholders to redeem all or a portion of the Class D Preferred Units, which could require a substantial amount of cash.

At any time on or after July 2, 2027, 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 July 2, 2027 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 our Partnership Agreement. Furthermore, upon a Class D Change of Control (as defined in our 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. We cannot assure you that we will have sufficient cash flow, liquidity or the ability to incur indebtedness or sell assets on terms that are commercially reasonable in order to redeem the Class D Preferred Units, even if required to do so. In addition, we may seek to address the outstanding balances on the Class D Preferred Units prior to when they are required to be redeemed, which may impact our ability to service our indebtedness.

Increasing interest rates could impact our financing costs, our common unit price, our ability to issue equity or incur debt, and our ability to make cash distributions at our intended levels.

Interest rates may increase in the future. As a result, interest rates on our existing and future credit facilities and debt offerings could be higher than current levels, causing our financing costs to increase accordingly. We also have exposure to increases in interest rates through variable rate provisions of our Class B Preferred Units, Class C Preferred Units and Class D Preferred Units. The distribution rates on our Class B Preferred Units converted from fixed rates to floating rates on July 1, 2022, while the distribution rates on our Class C Preferred Units converted from fixed rates to floating rates on April 15, 2024 and Class D Preferred Units converted from fixed rates to floating rates on October 15, 2024.
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Our results of operations, cash flows and financial position could be materially adversely affected by significant changes in interest rates.

Moreover, the market price of our common units, like with other yield-oriented securities, may be impacted by our level of cash distributions and implied distribution yield. The distribution yield is often used by investors to compare and rank yield-oriented securities for investment decision-making purposes. Therefore, increases or decreases in interest rates may affect the yield requirements of investors who invest in our common units. A rising interest rate environment could have an adverse impact on our common unit price and our ability to issue equity or incur debt for acquisitions or other purposes and could affect our ability to make payments on our debt obligations and cash distributions at our intended levels.

Our cash and cash equivalents may be exposed to failure of our banking institutions.

While we seek to minimize our exposure to third-party losses of our cash and cash equivalents, we hold our balances in several large banking institutions. Notwithstanding such allocation, we are subject to the risk of bank failure. For example, on March 10, 2023, Silicon Valley Bank (“SVB”) was unable to continue its operations and the Federal Deposit Insurance Corporation was appointed as receiver for SVB and created the National Bank of Santa Clara to hold the deposits of SVB. None of our cash and cash equivalents were held at SVB. However, if the banking institutions where we hold deposits were to experience a similar failure, we could experience additional risk. Any such loss or limitation on our cash and cash equivalents would adversely affect our business.

Risks Related to the Operations of Our Business

Our business depends on the availability of crude oil and natural gas liquids in the United States and Canada, which is dependent on the ability and willingness of other parties to explore for and produce crude oil and natural gas. Spending on crude oil and natural gas exploration and production may be adversely affected by industry and financial market conditions that are beyond our control.

Our business depends on domestic spending by the oil and natural gas industry, and this spending and our business have been, and may continue to be, adversely affected by industry and financial market conditions and existing or new regulations, such as those related to environmental matters, which are beyond our control.

We depend on the ability and willingness of other entities to make operating and capital expenditures to explore for, develop, and produce crude oil and natural gas in the United States and Canada, and to extract natural gas liquids from natural gas, as well as the availability of necessary pipeline transportation and storage capacity. Customers’ expectations of lower market prices for crude oil and natural gas, as well as the availability of capital for operating and capital expenditures, may cause them to curtail spending, thereby reducing business opportunities and demand for our services and equipment. Actual market conditions and producers’ expectations of market conditions for crude oil and natural gas liquids may also cause producers to curtail spending, thereby reducing business opportunities and demand for our services.

Industry conditions are influenced by numerous factors over which we have no control, such as the availability of commercially viable geographic areas in which to explore and produce crude oil and natural gas, the availability of liquids-rich natural gas needed to produce natural gas liquids, the supply of and demand for crude oil and natural gas, environmental restrictions on the exploration and production of crude oil and natural gas, such as existing and proposed regulation of hydraulic fracturing, domestic and worldwide economic conditions, political instability in crude oil and natural gas producing countries and merger and divestiture activity among our current or potential customers. The volatility of the oil and natural gas industry and the resulting impact on exploration and production activity could adversely impact the level of drilling activity. This reduction may cause a decline in business opportunities or the demand for our services, or adversely affect the price of our services. Reduced discovery rates of new crude oil and natural gas reserves in our market areas also may have a negative long-term impact on our business, even in an environment of stronger crude oil and natural gas prices, to the extent existing production is not replaced.

The crude oil and natural gas production industry tends to run in cycles and may, at any time, cycle into a downturn; if that occurs, the rate at which it returns to former levels, if ever, will be uncertain. Prior adverse changes in the global economic environment and capital markets and declines in prices for crude oil and natural gas have caused many customers to reduce capital budgets for future periods and have caused decreased demand for crude oil and natural gas. Limitations on the availability of capital, or higher costs of capital, for financing expenditures have caused and may continue to cause customers to make additional reductions to capital budgets in the future even if commodity prices increase from current levels. These cuts in spending may curtail drilling programs and other discretionary spending, which could result in a reduction in business opportunities and demand for our services, the rates we can charge and our utilization.
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In addition, certain of our customers could become unable to pay their suppliers, including us. Any of these conditions or events could materially and adversely affect our consolidated results of operations and in addition to impacting our business, financial condition and results of operations could require us to incur impairment charges against the associated assets or the write down of our goodwill.

Declining crude oil prices and crude production volumes could adversely impact our Water Solutions and Crude Oil Logistics segments.

The volume of water we process and crude oil we transport is driven in large part by the level of crude oil production in the areas in which we operate. Lower crude oil prices provide the producers with less incentive to spend on capital expenditures, which results in fewer drilling rigs and lower amounts of crude oil production, which negatively impacts our crude oil transportation and produced water disposal volumes. In addition, a portion of our profitability in our Water Solutions segment is generated from the sale of crude oil that we recover when processing produced water, and lower crude oil prices have an adverse impact on these sales if not hedged. A decline in crude oil prices or a prolonged period of low crude oil prices could have an adverse effect on our businesses.

Our Water Solutions business depends upon available pore space in subsurface geologic formations by which we can dispose of produced water through underground injection wells. Our inability to acquire new pore space or our loss of existing pore space may negatively impact our ability to service new and existing customers.

We dispose of produced water generated by our customers during oil and gas operations by drilling disposal wells and injecting such produced water into porous subsurface geologic formations. The amount of subsurface pore space that is capable of permanently storing injected produced water is finite and requires constant replenishment. As we continue to inject produced water into our existing produced water disposal wells, we may exhaust the geologic or technical limits of the subsurface strata for produced water injection. Furthermore, state regulatory bodies in Texas and New Mexico, which have permitting authority over disposal wells, have imposed new requirements in the permitting of produced water disposal wells to assess any relationship between induced seismicity and the use of such wells. State regulators may deny, modify, suspend or terminate permits on grounds that a disposal well is likely to be, or determined to be, causing seismic activity or would be operating at impermissible pressure levels. States have also issued, and may in the future issue, orders to temporarily shut down or to curtail the injection depth, injection capacity or injection rate of existing wells because of concerns over induced seismicity.

Any loss of pore space or injection capacity for technical, geological or regulatory reasons could require us to spend significant time and capital expenditures to locate, apply for, permit, drill, complete and place into service new disposal wells and to build pipeline infrastructure to transport produced water to such new wells. Our customers’ oil and gas production growth plans may also require us to secure additional pore space and disposal wells and build new pipeline infrastructure. Permits for new disposal wells could be challenged for a variety of reasons by our competitors, oil and gas producers, landowners or non-governmental organizations. Such regulatory challenges could be successful and prevent us from being able to secure additional disposal capacity. New disposal wells may also subject us to higher royalty rates. Furthermore, we may not have contractual or real property rights to dispose of produced water at locations that are in geographic proximity to our customers’ existing or new oil and gas production wells or our existing injection wells and pipeline infrastructure. In such cases, we would be required to spend significant amounts of capital to build new pipeline infrastructure to transport produced water to distant disposal locations.

If we are unable to accept all of the produced water delivered to us by our customers because we lack available pore space for underground injection, we could be subject to contractual penalties for alternative disposal solutions, including trucking, and such penalties could be significant. Any curtailment of our customers’ oil and gas production due to a lack of available pore space or injection capacity would result in lost revenue to us and could trigger contractual termination rights. Any of these events, either individually or in aggregate, could result in a material adverse effect on our business, financial condition or results of operations.

Our profitability could be negatively impacted by price and inventory risk related to our business.

The Crude Oil Logistics and Liquids Logistics segments are “margin-based” businesses in which our realized margins depend on the differential of sales prices over our supply costs. Our profitability is therefore sensitive to changes in product prices caused by changes in supply, pipeline transportation and storage capacity or other market conditions.

Generally, we attempt to maintain an inventory position that is substantially balanced between our purchases and sales, including our future delivery obligations. We attempt to obtain a certain margin for our purchases by selling our product to our customers, which include third-party consumers, other wholesalers and retailers, and others.
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However, market, weather or other conditions beyond our control may disrupt our expected supply of product, and we may be required to obtain supply at increased prices that cannot be passed through to our customers. In general, product supply contracts permit suppliers to charge posted prices at the time of delivery or the current prices established at major storage points, creating the potential for sudden and drastic price fluctuations. Sudden and extended wholesale price increases could reduce our margins. Conversely, a prolonged decline in product prices could potentially result in a reduction of the borrowing base under the ABL Facility, and we could be required to liquidate inventory that we have already presold.

We are affected by competition from other midstream, transportation and terminaling and storage companies, some of which are larger, more firmly established and may have greater resources than we do.

We experience competition in all of our segments. In our Liquids Logistics segment, we compete for natural gas liquids supplies and also for customers for our services. Our competitors include major integrated oil companies, other midstream or wholesale marketing companies, interstate and intrastate pipelines and companies that gather, compress, treat, process, transport, store and market natural gas. Our natural gas liquids terminals compete with other terminaling and storage providers in the transportation and storage of natural gas liquids. Natural gas and natural gas liquids also compete with other forms of energy, including electricity, coal, fuel oil and renewable or alternative energy. Our Liquids Logistics segment is also seeing increased competition for supply from international markets.

Our Crude Oil Logistics segment faces significant competition for crude oil supplies and customers for our services. These operations also face competition from transportation companies for incremental and marginal volumes in the areas we serve. Further, our crude oil terminals compete with terminals owned by integrated petroleum companies, refining and marketing companies, independent terminal companies and distribution companies with marketing and trading operations.

Our Water Solutions segment is in direct and indirect competition with other businesses, including disposal and other produced water treatment businesses.

We can make no assurance that we will compete successfully in each of our businesses. If a competitor attempts to increase market share by reducing prices, we may lose customers, which would reduce our revenues.

Our business would be adversely affected if service at our principal storage facilities, common carrier pipelines or railroads we use is interrupted.

We use third-party common carrier pipelines to transport our products and we use third-party facilities to store our products. Any significant interruption in the service at these storage facilities or on common carrier pipelines we use would adversely affect our ability to obtain and deliver products. We transport natural gas liquids by railcar. We do not own or operate the railroads on which these railcars are transported. Any disruptions in the operations of these railroads would adversely impact our ability to deliver product to our customers.

We lease certain facilities and equipment and therefore are subject to the possibility of increased costs to retain necessary land and equipment use.

We do not own all of the land on which our facilities are located, and we are therefore subject to the possibility of more onerous terms and/or increased costs to retain necessary land use if we do not have valid rights-of-way or if our facilities are not properly located within the boundaries of such rights-of-way. Additionally, our loss of rights, through our inability to renew right-of-way contracts or otherwise, could materially and adversely affect our business, consolidated results of operations and financial position.

Additionally, certain facilities and equipment (or parts thereof) used by us are leased from third parties for specific periods, including most of our railcars. Our inability to renew facility or equipment leases or otherwise maintain the right to utilize such facilities and equipment on acceptable terms, or the increased costs to maintain such rights, could have a material and adverse effect on our consolidated results of operations and cash flows.

Our operations depend on various forms of storage and transportation for receipt and delivery of crude oil and natural gas liquids.

We own natural gas liquids and crude oil terminals and lease storage capacity from third-party natural gas liquids. The facilities depend on pipelines, railroads, truck transports, and storage systems that are owned and operated by third parties. Any interruption of service at the terminals, or on pipeline, railroad or lateral connections or adverse change in the terms and conditions of services could have a material adverse effect on our ability, and the ability of our customers, to transport product to and from our facilities and have a corresponding material adverse effect on our revenues.
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In addition, the rates charged by the interconnected pipelines for transportation to and from our facilities impact the utilization and value of our terminals. We have historically been able to pass through the costs of pipeline transportation to our customers. However, if competing pipelines do not have similar annual tariff increases or service fee adjustments, such increases could affect our ability to compete, thereby adversely affecting our revenues.

The fees charged to customers under our agreements with them for the transportation and sale of crude oil, condensate, natural gas liquids and the disposal of produced water may not escalate sufficiently to cover increases in costs and the agreements may be suspended in some circumstances, which would affect our profitability.

Our costs may increase more rapidly than the fees that we charge to customers pursuant to our contracts with them. Additionally, some customers’ obligations under their agreements with us may be permanently or temporarily reduced upon the occurrence of certain events, some of which are beyond our control, including force majeure events wherein the production of or the supply of crude oil, condensate, and/or natural gas liquids are curtailed or cut off. Force majeure events include (but are not limited to) revolutions, wars, acts of enemies, embargoes, import or export restrictions, strikes, lockouts, fires, storms, floods, acts of God, explosions, mechanical or physical failures of our equipment or facilities of our customers. If the escalation of fees is insufficient to cover increased costs, or if any customer suspends or terminates its contracts with us, our profitability could be materially and adversely affected.

Risk management procedures, including the use of financial derivative contracts, cannot eliminate all commodity price risk, basis risk, or risk of adverse market conditions which can adversely affect our financial position and results of operations. In addition, any non-compliance with our market risk policy could result in significant financial losses.

Pursuant to the requirements of our market risk policy, we attempt to lock in a margin for a portion of the commodities we purchase by selling such commodities for physical delivery to our customers, such as independent refiners or major oil companies, or by entering into future delivery obligations under contracts for forward sale. We also enter into financial derivative contracts, such as futures, to protect against commodity price risk and, as a component of our overall business strategy, we may increase or decrease from time to time our use of such financial derivative contracts in the future. Our use of such financial derivative contracts could cause us to forego the economic benefits we would otherwise realize if commodity prices or interest rates were to change in our favor. Through these transactions, we seek to maintain a position that is substantially balanced between purchases on the one hand, and sales or future delivery obligations on the other hand. These policies and practices cannot, however, eliminate all risks. Although we monitor such activities in our risk management processes and procedures, such activities could result in losses, which could adversely affect our consolidated results of operations and impair our ability to make payments on our debt obligations or distributions to our unitholders. For example, any event that disrupts our anticipated physical supply of commodities could expose us to risk of loss resulting from the need to cover obligations required under contracts for forward sale.

Basis risk describes the inherent market price risk created when a commodity of a certain grade or location is purchased, sold or exchanged as compared to a purchase, sale or exchange of a like commodity at a different time or place. Transportation costs and timing differentials are components of timing risk. In a backwardated market (when prices for future deliveries are lower than current prices), timing risk is created. In these instances, physical inventory generally loses value as the price of such physical inventory declines over time. Timing risk cannot be entirely eliminated, and basis risk exposure, particularly in backwardated or other adverse market conditions, can adversely affect our consolidated financial position and results of operations.

Competition from alternative energy sources, energy efficiency and new technology may reduce the demand for propane and adversely affect our operating results.

Propane competes with other sources of energy, some of which are less costly for equivalent energy value. Competition from alternative energy sources, including electricity, natural gas and renewables, has increased from reduced regulation of many utilities. The gradual expansion of the nation’s natural gas distribution systems has resulted in natural gas being available in areas that previously depended on propane. In addition, the national trend toward increased conservation and technological advances, such as installation of improved insulation and the development of more efficient furnaces and other appliances, has adversely affected the demand for propane. Future expansion of alternative energy sources, conservation measures or technological advances in appliance efficiency, power generation or other devices may reduce demand for propane and cause us to lose customers.

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We cannot predict the effect that development of alternative energy sources, increased conservation or new technology may have on our operations, including whether subsidies of alternative energy sources by local, state, and federal governments might be expanded, or what impact this might have on the supply of or the demand for crude oil, natural gas, and natural gas liquids.

The Inflation Reduction Act of 2022 (“IRA”) could impact demand for hydrocarbon fuel products and impose new costs on certain customers.

In August 2022, former President Biden signed the IRA, which contains, among other things, numerous incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles and supporting infrastructure and carbon capture and sequestration. In addition, the IRA imposes a federal fee on the emission of methane from sources required to report their GHG emissions to the EPA, including certain sources in the onshore petroleum and natural gas production categories. Some of our producer customers face exposure to the IRA pay to emit methane program. In addition, the multiple incentives offered for various clean energy industries referenced above could decrease demand for crude oil and natural gas, increase our compliance and operating costs and consequently adversely affect our business.

Seasonal weather conditions and natural or man-made disasters could severely disrupt normal operations and have an adverse effect on our business, financial position and results of operations.

We operate in various locations across the United States and Canada which may be adversely affected by seasonal weather conditions and natural or man-made disasters. During periods of heavy snow, ice, rain or extreme weather conditions such as high winds, tornados and hurricanes or after other natural disasters such as earthquakes or wildfires, we may be unable to move our trucks or railcars between locations and our facilities may be damaged, thereby reducing our ability to provide services and generate revenues. In addition, hurricanes or other severe weather in the Gulf Coast region could seriously disrupt the supply of products and cause serious shortages in various areas, including the areas in which we operate. These same conditions may cause serious damage or destruction to homes, business structures and the operations of customers. Such disruptions could potentially have a material adverse impact on our business, consolidated financial position, results of operations and cash flows.

Weather conditions, including warm winters or dry or warm weather in the harvest season, may reduce the demand for propane, which could have a material adverse effect on our results of operations, cash flows, financial condition or liquidity.

Weather conditions have a significant impact on the demand for propane for heating and agriculture purposes. Accordingly, our sales volumes of propane are highest during the winter-heating season of November through March and are directly affected by the temperatures during these months. Actual weather conditions can vary substantially from year to year, which may significantly affect our financial performance or condition. Furthermore, variations in weather in one or more regions in which we operate can significantly affect our total propane sales volume and therefore our financial performance or condition. The agricultural demand for propane is affected by weather, as dry or warm weather during the harvest season may reduce the demand for propane used in some crop drying applications.

Growing our business by constructing new transportation systems and facilities subjects us to construction risks and risks that supplies for such systems and facilities will not be available upon completion thereof.

One of the ways we intend to grow our business is through the construction of additions to our systems and/or the construction of new terminaling, transportation, and produced water treatment facilities. These expansion projects require the expenditure of significant amounts of capital, which may exceed our resources, and involve numerous regulatory, environmental, political and legal uncertainties, including political opposition by landowners, environmental activists and others. There can be no assurance that we will complete these projects on schedule or at all or at the budgeted cost. Our revenues may not increase upon the expenditure of funds on a particular project. Moreover, we may undertake expansion projects to capture anticipated future growth in production in a region in which anticipated production growth does not materialize or for which we are unable to acquire new customers. We may also rely on estimates of proved, probable or possible reserves in our decision to undertake expansion projects, which may prove to be inaccurate. As a result, our new facilities and infrastructure may not be able to attract enough product to achieve our expected investment return, which could materially and adversely affect our consolidated results of operations and financial position.

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We may face opposition to the operation of our pipelines and facilities from various groups.

We may face opposition to the operation of our pipelines and facilities from environmental groups, landowners, environmental justice communities, tribal groups, local groups and other advocates. Such opposition could take many forms, including the delay or denial of required governmental permits, organized protests, attempts to block or sabotage our operations, intervention in regulatory or administrative proceedings involving our assets, or lawsuits or other actions designed to prevent, disrupt or delay the operation of our assets and business. For example, repairing our pipelines often involves securing consent from individual landowners to access their property; one or more landowners may resist our efforts to make needed repairs, which could lead to an interruption in the operation of the affected pipeline or facility for a period of time that is significantly longer than would have otherwise been the case. In addition, acts of sabotage or eco-terrorism could cause significant damage or injury to people, property or the environment or lead to extended interruptions of our operations. Moreover, governmental authorities exercise considerable discretion in the timing and scope of permit issuance and the public may engage in the permitting process, including through intervention in the courts. Negative public perception could cause the permits we require to conduct our operations to be withheld, delayed or burdened by requirements that restrict our ability to profitably conduct our business. Any such event that interrupts the revenues generated by our operations, or which causes us to make significant expenditures not covered by insurance, could reduce our cash available for paying distributions to our unitholders and, accordingly, adversely affect our financial condition and the market price of our securities.

Our business plans are based upon the assumption that societal sentiment will continue to enable, and existing regulations will stay intact for, the future development, transportation and use of hydrocarbon-based fuels. Policy decisions relating to the production, refining, transportation and sale of hydrocarbon-based fuels are subject to political pressures, the negative portrayal of the industry in which we operate by the media and others, and the influence and protests of environmental and other special interest groups. Such negative sentiment regarding the hydrocarbon energy industry could influence consumer preferences and government or regulatory actions, which could have an adverse impact on our business.

Recently, activists concerned about the potential effects of climate change have directed their attention towards sources of funding for hydrocarbon energy companies, which has resulted in certain financial institutions, funds and other sources of capital restricting or eliminating their investment in energy-related activities. Ultimately, this could make it more difficult to secure funding for exploration and production activities or energy infrastructure related projects and ongoing operations, and consequently could both indirectly affect demand for our services and directly affect our ability to fund construction or other capital projects, as well as properly run our ongoing operations.

We depend on the leadership and involvement of key personnel for the success of our businesses, and we compete with other businesses to attract and retain qualified personnel.

We have certain key individuals in our senior management who we believe are critical to the success of our business. The loss of leadership and involvement of those key management personnel could potentially have a material adverse impact on our business and possibly on the market value of our common units. Further, we compete with other businesses to attract and retain qualified employees and a tight labor market may cause our labor costs to increase. No assurance can be given that our labor costs will not increase, or that such increases can be recovered through increased prices charged to customers.

Risks Related to Regulatory Compliance

Our sales of crude oil, condensate, natural gas liquids and related transportation and hedging activities, and our processing of produced water, expose us to potential regulatory risks.

The FTC, the FERC, and the CFTC hold statutory authority to monitor certain segments of the physical and financial energy commodity markets. With regard to our physical sales of energy commodities, and any related transportation and/or hedging activities that we undertake, we are required to observe the market-related regulations enforced by these agencies, which hold substantial enforcement authority. Our sales may also be subject to certain reporting and other requirements. Additionally, some of our operations are currently subject to FERC regulations obligating us to comply with the FERC’s regulations and policies applicable to those assets and operations. Other of our operations may become subject to the FERC’s jurisdiction in the future (see “–Some of our operations are subject to the jurisdiction of the FERC and other operations may become subject in the future,” below). Any failure on our part to comply with the FERC’s regulations and policies at that time could result in the imposition of civil and criminal penalties. Failure to comply with such regulations, as interpreted and enforced, could have a material and adverse effect on our business, consolidated results of operations and financial position.

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The intrastate transportation or storage of crude oil is subject to regulation by the state in which the facilities are located and transactions occur. Compliance with these state regulations could have a material and adverse effect on that portion of our business, consolidated results of operations and financial position.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) which was enacted on July 21, 2010, established federal oversight and regulation of the over-the-counter derivatives market and of entities, such as us, that participate in that market. The Dodd-Frank Act requires the CFTC and the SEC to promulgate rules and regulations implementing the Dodd-Frank Act. The Dodd-Frank Act provides for statutory and regulatory requirements for derivative transactions, including crude oil, and natural gas hedging transactions. Certain transactions will be required to be cleared on exchanges and cash collateral will have to be posted. The Dodd-Frank Act provides for a potential exemption from these clearing and cash collateral requirements for commercial end users and it includes a number of defined terms that will be used in determining how this exemption applies to particular derivative transactions and the parties to those transactions. Since the Dodd-Frank Act mandates the CFTC to promulgate rules to define these terms, the full impact of the Dodd-Frank Act on our hedging activities is uncertain at this time. The CFTC has also issued new rules, which became effective on March 15, 2021, that place limits on positions in certain core futures and equivalent swaps contracts for or linked to certain physical commodities, subject to exceptions for certain bona fide hedging transactions. However, new legislation and any new regulations could significantly increase the cost of derivative contracts (including through requirements to post collateral which could adversely affect our available liquidity), materially alter the terms of derivative contracts, reduce the availability of derivatives to protect against risks that we encounter, reduce our ability to monetize or restructure our existing derivative contracts, and increase our exposure to less creditworthy counterparties. The Dodd-Frank Act may also materially affect our customers and materially and adversely affect the demand for our services.

Our business is subject to federal, state, provincial and local laws and regulations with respect to environmental, safety and other regulatory matters and the cost of compliance with, violation of or liabilities under, such laws and regulations could adversely affect our profitability.

Our operations, including those involving crude oil, condensate, natural gas liquids, crude oil and natural gas produced water, are subject to stringent federal, state, provincial and local laws and regulations relating to the protection of natural resources and the environment, health and safety, waste management, and transportation and disposal of such products and materials. We face inherent risks of incurring significant environmental costs and liabilities due to handling of produced water and hydrocarbons, such as crude oil, condensate and natural gas liquids. For instance, our Water Solutions segment carries with it environmental risks, including the risk of leakage from the treatment plants to surface or subsurface soils, surface water or groundwater, or accidental spills. Our Crude Oil Logistics and Liquids Logistics segments carry similar risks of leakage and sudden or accidental spills of crude oil, natural gas liquids, and hydrocarbons. Liability under, or violation of, environmental laws and regulations could result in, among other things, the restriction or cancellation of operations, injunctions, fines and penalties, reputational damage, expenditures for remediation and liability for natural resource damages, property damage and personal injuries.

We use various modes of transportation to carry natural gas liquids, crude oil and produced water, including trucks, railcars, barges, and pipelines, each of which is subject to regulation. With respect to transportation by truck, we are subject to regulations promulgated under federal legislation, including the Federal Motor Carrier Safety Act and the Homeland Security Act of 2002, which cover the security and transportation of hazardous materials and are administered by the DOT. We also lease a fleet of railcars, the operation of which is subject to the regulatory jurisdiction of the Federal Railroad Administration of the DOT, as well as other federal and state regulatory agencies. Railcar accidents within the industry involving trains carrying crude oil from the Bakken region (none of which directly involved any of our business operations), have led to increased legislative and regulatory scrutiny over the safety of transporting crude oil by railcar. The introduction of regulations that result in new requirements addressing the type, design, specifications or construction of railcars used to transport crude oil could result in severe transportation capacity constraints during the periods in which new railcars are constructed to meet new specifications or in which the railcars already placed in service are being retrofitted.

In addition, under certain environmental laws, we could be subject to strict and/or joint and several liability for the investigation, removal or remediation of previously released materials. As a result, these laws could cause us to become liable for the conduct of others, such as prior owners or operators of our facilities, or for consequences of our or our predecessor’s actions, regardless of whether we were responsible for the release or if such actions were in compliance with all applicable laws at the time of those actions. Also, upon closure of certain facilities, such as at the end of their useful life, we have been and may be required to undertake environmental evaluations or cleanups.

Additionally, in order to conduct our operations, we must obtain and maintain numerous permits, approvals and other authorizations from various federal, state, provincial and local governmental authorities relating to produced water handling, discharge and disposal, air emissions, transportation and other environmental matters.
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These authorizations subject us to terms and conditions which may be onerous or costly to comply with, and that may require costly operational modifications to attain and maintain compliance. The renewal, amendment or modification of these permits, approvals and other authorizations may involve the imposition of even more stringent and burdensome terms and conditions with higher costs and more significant effects upon our operations.

Changes in environmental laws and regulations occur frequently. New laws or regulations, changes to existing laws or regulations, such as more stringent pollution control requirements or additional safety requirements, or more stringent interpretation or enforcement of existing laws and regulations, may adversely impact us, and could result in increased operating costs and have a material and adverse effect on our activities and profitability. For example, new or proposed laws or regulations governing the withdrawal, storage and use of surface water or groundwater necessary for hydraulic fracturing of wells may increase our costs for treatment of hydraulic fracturing flowback water (or affect our hydraulic fracturing customers’ ability to operate) and cause delays, interruption or termination of our water treatment operations, all of which could have a material and adverse effect on our consolidated results of operations and financial position.

Furthermore, our customers in the oil and gas production industry are subject to certain environmental laws and regulations that may impose significant costs and liabilities on them. In April 2022, the state of New Mexico adopted new air quality rules that aim to eliminate hundreds of millions of pounds of harmful emissions annually from oil and gas production in New Mexico. Any significant increased costs or restrictions placed on our customers to comply with environmental laws and regulations could affect their production output significantly. Such an effect on our customers could materially and adversely affect our utilization and profitability by reducing demand for our services. The adoption or implementation of any new regulations imposing additional reporting obligations on GHG emissions, or limiting GHG emissions from our equipment and operations, could require us to incur significant costs. As is generally understood regarding the regulatory landscape, there can be no guarantee that these or future rules affecting our operations will not have material effects on our consolidated results of operations and financial position.

Our, our customers’ and our suppliers’ operations are subject to a series of risks arising out of the threat of climate change that could result in increased operating costs, adversely impacting our results of operations and ability to make cash distributions to unitholders, limit the areas in which oil and natural gas production may occur, and reduce demand for the products and services we provide.

The threat of climate change continues to attract considerable attention in the United States and in foreign countries. Numerous proposals have been made and could continue to be made at the international, national, regional and state levels of government to monitor and limit existing emissions of GHGs as well as to restrict or eliminate such future emissions. As a result, our operations as well as the operations of our crude oil and natural gas exploration and production customers and suppliers are subject to a series of regulatory, political, litigation, and financial risks associated with the production and processing of fossil fuels and emission of GHGs.

In the United States, no comprehensive climate change legislation has been implemented at the federal level. However, following the U.S. Supreme Court finding that GHG emissions constitute a pollutant under the CAA, the EPA has adopted regulations that, among other things, establish construction and operating permit reviews for GHG emissions from certain large stationary sources, require the monitoring and annual reporting of GHG emissions from certain petroleum and natural gas system sources in the United States, and together with the DOT, implement GHG emissions limits on vehicles manufactured for operation in the United States. The regulation of methane from oil and gas facilities has been subject to uncertainty in recent years, but most recently, in December 2023, the EPA finalized its rulemaking establishing New Source Performance Standards to reduce emissions of methane and other volatile organic compounds from new and modified sources. Additionally, various states and groups of states have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions. Internationally, the United Nations-sponsored “Paris Agreement” requires member states to individually determine and submit non-binding emissions reduction targets every five years after 2020. The United States withdrew from the Paris Agreement on November 4, 2020, and although former President Biden signed executive orders on January 20, 2021 recommitting the United States to the agreement and calling on the federal government to begin formulating the United States’ nationally determined emissions reduction targets under the agreement, on January 20, 2025, President Trump issued an Executive Order for the United States to again withdraw from the Paris Agreement. Such withdrawal is expected to take effect in 2026.

Governmental, scientific, and public concern over the threat of climate change arising from GHG emissions has resulted in increasing political risks in the United States, including climate change related pledges made by certain candidates recently elected to public office. These have included promises to limit emissions and curtail the production of oil and gas, such as through the cessation of leasing public land for hydrocarbon development.
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For example, on January 27, 2021, former President Biden issued an Executive Order that commits to substantial action on climate change, calling for, among other things, the increased use of zero-emissions vehicles by the federal government, the elimination of subsidies provided to the fossil fuel industry, and increased emphasis on climate-related risk across governmental agencies and economic sectors. Separately, on January 20, 2021, the Acting Secretary of the United States Department of the Interior (“DOI”) issued an order that, among other things, imposed a 60-day moratorium on the issuance of fossil fuel authorizations, including leases and permits, on federal lands. While the DOI announced on April 15, 2022 that it will resume oil and gas leasing on public lands following a federal court’s decision, the topic of oil and gas leasing on public land remains politically fraught, as the announcement indicates that federal land available for oil and gas leasing will be reduced by 80 percent from the acreage originally nominated due to environmental and climate concerns. Other actions that could be pursued by the Biden Administration may include the imposition of more restrictive requirements for the establishment of pipeline infrastructure or the permitting of liquified natural gas export facilities. Litigation risks are also increasing, as a number of cities and other local governments have sought to bring suit against the largest oil and natural gas companies in state or federal court, alleging, among other things, that such companies created public nuisances by producing fuels that contributed to climate change. Suits have also been brought against such companies under shareholder and consumer production laws, alleging that the companies have been aware of the adverse effects of climate change but failed to adequately disclose those impacts.

There are also increasing financial risks for fossil fuel producers as shareholders currently invested in fossil-fuel energy companies may elect in the future to shift some or all of their investments into other related sectors. Institutional lenders who provide financing to fossil-fuel energy companies also have become more attentive to sustainable lending practices and some of them may elect not to provide funding for fossil-fuel energy companies. There is also a risk that financial institutions will be required to adopt policies that have the effect of reducing the funding provided to the fossil fuel sector. The U.S. Federal Reserve announced that it has applied to join the Network for Greening the Financial System, a consortium of financial regulators focused on addressing climate-related risks in the financial sector. A material reduction in the capital available to the fossil fuel industry could make it more difficult to secure funding for exploration, development, production, transportation and processing activities, which could result in decreased demand for our services.

The adoption and implementation of new or more stringent international, federal or state legislation, regulations or other regulatory initiatives that impose more stringent standards for GHG emissions from the oil and natural gas sector or otherwise restrict the areas in which this sector may produce oil and natural gas or generate GHG emissions could result in increased costs of compliance or costs of consuming, and thereby reduce demand for, oil and natural gas, which could reduce demand for our services and products. Additionally, political, litigation and financial risks may result in our oil and natural gas customers restricting or canceling production activities, incurring liability for infrastructure damages as a result of climatic changes, or impairing their ability to continue to operate in an economic manner, which also could reduce demand for our services and products. One or more of these developments could have a material adverse effect on our business, financial condition, results of operations and ability to make cash distributions to unitholders.

Finally, many scientists have concluded that increasing concentrations of GHGs in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, floods and other climatic events. If any such effects were to occur, they could adversely affect our results of operations and ability to make cash distributions to unitholders. In addition, while our consideration of changing weather conditions and inclusion of safety factors in design covers the uncertainties that climate change and other events may potentially introduce, our ability to mitigate the adverse impacts of these events depends in part on the effectiveness of our facilities and our disaster preparedness and response and business continuity planning, which may not have considered or be prepared for every eventuality.

State and federal legislation and regulatory initiatives relating to our hydraulic fracturing customers could harm our business.

Hydraulic fracturing is a common practice within the oil and gas exploration and production process, including within those fields where our Water Solutions and Crude Oil Logistics segments operate. The practice of hydraulic fracturing is a well-stimulation technique utilized to facilitate the production of oil and natural gas and other hydrocarbon condensates from shale and tight conventional formations. The exploration and production process, including the practice of hydraulic fracturing, is subject to regulation by state and federal authorities. Jurisdiction and applicable regulatory requirements can vary depending on the location of the activity. The process of hydraulic fracturing has come under considerable scrutiny from sections of the public as well as environmental and other groups asserting that the practice could be responsible for incidents of induced seismicity and that chemicals used in the hydraulic fracturing process could adversely affect drinking water supplies. New laws or regulations, or changes to existing laws or regulations in response to this perceived threat may adversely impact the oil and gas drilling industry. Any current or proposed restrictions on hydraulic fracturing could lead to operational delays or increased operating costs and regulatory burdens that could make it more difficult or costly to perform hydraulic fracturing which would negatively impact our customer base resulting in an adverse effect on our profitability.
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For example, on January 20, 2021, the Biden Administration placed a 60-day moratorium on new oil and gas leasing and drilling permits on federal lands, and on January 27, 2021, the DOI acting pursuant to an Executive Order from former President Biden suspended the federal oil and gas leasing program indefinitely. Although the DOI announced the resumption of onshore oil and gas leasing in April 2022, the program is being significantly reformed, with 80 percent less land available for leasing from the acreage originally nominated. On April 12, 2024, the DOI finalized a comprehensive update to federal onshore oil and gas leasing regulations on Bureau of Land Management-managed public lands, which increased bonding requirements, royalty rates, and minimum bids. Actions such as these could have a material adverse effect on us and our industry.

Restrictions on drilling and related activities intended to protect certain species of wildlife or their habitat may adversely affect our customers’ ability to conduct drilling and related activities in some of the areas where we operate.

Various federal and state statutes prohibit certain actions that harm endangered or threatened species and their habitats, migratory birds, wetlands and natural resources. These statutes include the ESA, the MBTA, the BGEPA, the CWA, CERCLA and the Oil Pollution Act. The USFWS may designate critical habitat and suitable habitat areas that it believes are necessary for survival of threatened or endangered species. A critical habitat or suitable habitat designation could result in further material restrictions to federal land use and private land use and could delay, restrict or prohibit our customers’ land access or oil and gas development. If an adverse impact to species or damages to wetlands, habitat or natural resources occurs or may occur as a result of our or our customers’ activities, government entities or, at times, private parties may act to prevent such activities or seek damages for harm to species, habitat or natural resources resulting from our activities or our customers’ drilling, construction or releases of oil, wastes, hazardous substances or other regulated materials, which could reduce the demand for our services.

For example, in May 2024, the dunes sagebrush lizard, which is found in areas where we operate, was listed as endangered under the ESA. In addition, the lesser prairie-chicken, which can also be found in areas where we operate, was listed under the ESA effective March 27, 2023.

To the extent species are listed under the ESA or similar state laws, or previously unprotected species are designated as threatened or endangered in areas where our assets and operations are located, operations in those areas could incur increased costs arising from species protection measures and face delays or limitations with respect to production activities thereon.

Federal and state legislation and regulatory initiatives relating to saltwater disposal wells could result in increased costs and additional operating restrictions or delays and could harm our business.

The water disposal process is primarily regulated by state oil and gas authorities. This water disposal process has come under scrutiny from sections of the public, including various state regulatory bodies, as well as environmental and other groups asserting that the operation of certain water disposal wells has contributed to specific induced seismic events. New laws or regulations, or changes to existing laws or regulations, in response to this perceived threat may adversely impact the water disposal industry.

In January 2024, the Texas Railroad Commission indefinitely suspended all deep oil and gas produced water injection in Culberson and Reeves counties, which directly impacted one of our disposal wells. While this suspension resulted in a loss of 10,000 barrels per day of disposal capacity, the suspension did not materially impact our water disposal business.

We cannot predict whether any federal, state or local laws or regulations will be enacted and, if so, what actions any such laws or regulations would require or prohibit. However, any restrictions on water disposal could lead to operational delays or increased operating costs and regulatory burdens that could make it more difficult or costly to perform water disposal operations, which would negatively impact our profitability. To date, due to the capacity of our integrated system in the affected areas, the diverse locations of our disposal facilities, and the connectivity of our system, our ability to dispose of produced water has not been materially impacted by these actions, and with our unique positioning outside of the affected areas, we have the ability to grow our asset base.

Some of our operations are subject to the jurisdiction of the FERC and other operations may become subject in the future.

The FERC regulates the transportation of crude oil on interstate pipelines, among other things. The FERC’s jurisdiction over oil pipelines derives from a 1906 amendment to the Interstate Commerce Act making oil pipelines common carriers subject to federal regulation. The FERC has regulated oil pipelines under this authority since 1977, when legislation transferred jurisdiction to the FERC from the Interstate Commerce Commission. The Energy Policy Act of 1992 directed the FERC to establish a simplified and generally applicable ratemaking methodology for oil pipelines, keeping with its statutory mandate to ensure that oil pipelines’ rates are just and reasonable.
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Intrastate transportation and gathering pipelines that do not provide interstate services are subject to regulation by state regulatory commissions, such as the Texas Railroad Commission. The distinction between the FERC-regulated interstate pipeline transportation on the one hand and intrastate pipeline transportation on the other hand, is a fact-based determination. The Grand Mesa Pipeline became operational on November 1, 2016 and has several points of origin in Colorado, runs from those origin points through Kansas and terminates in Cushing, Oklahoma. The transportation services on the Grand Mesa Pipeline are subject to FERC regulation. Other of our transportation services could in the future become subject to the jurisdiction of the FERC, which could adversely affect the terms of service, rates and revenues of such services.

The classification and regulation of our crude oil pipelines are subject to change based on future determinations by the FERC, federal courts, Congress or regulatory commissions, courts or legislatures in the states in which we operate. If the FERC’s regulatory reach was expanded to our other facilities, or if we expand our operations into areas that are subject to the FERC’s regulation, we may have to commit substantial capital to comply with such regulations and such expenditures could have a material and adverse effect on our consolidated results of operations and cash flows.

We are subject to governmental regulation and other legal obligations related to privacy, data protection, and data security. Our actual or perceived failure to comply with such obligations could harm our business.

There are numerous laws and regulations regarding privacy and the storage, sharing, use, processing, transfer, disclosure and protection of personal data, the scope of which is changing, subject to differing interpretations, and may be inconsistent between states within a country or between countries. For example, the California Consumer Privacy Act (“CCPA”), which went into effect on January 1, 2020, limits how we may collect and use personal data. The effects of the CCPA potentially are far-reaching and may require us to modify our data processing practices and policies and incur compliance-related costs and expenses. Further, in November 2020, California voters passed the California Privacy Rights and Enforcement Act (“CPRA”), which expands the CCPA with additional data privacy compliance requirements that may impact our business, and establishes a regulatory agency dedicated to enforcing those requirements. It remains unclear how various provisions of the CCPA and CPRA will be interpreted and enforced. These and other data privacy laws and their interpretations continue to develop and may be inconsistent from jurisdiction to jurisdiction. Non-compliance with these laws could result in penalties or significant legal liability. Although we take reasonable efforts to comply with all applicable laws and regulations, there can be no assurance that we will not be subject to regulatory action, including fines, in the event of an incident. We or our third-party service providers could be adversely affected if legislation or regulations are expanded to require changes in our or our third-party service providers’ business practices or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively affect our or our third-party service providers’ business, results of operations or financial condition.

Some of our operations cross the United States/Canada border and are subject to cross-border regulation.

Our cross-border activities subject us to regulatory matters, including import and export licenses, tariffs, Canadian and United States customs and tax issues, and toxic substance certifications. Such regulations include the “Short Supply Controls” of the Export Administration Act, the North American Free Trade Agreement and the Toxic Substances Control Act. Violations of these licensing, tariff and tax reporting requirements could result in the imposition of significant administrative, civil and criminal penalties.

Risks Related to Our Partnership Structure and an Investment in Us

Our Partnership Agreement limits the fiduciary duties of our GP to our unitholders and restricts the remedies available to our unitholders for actions taken by our GP that might otherwise be breaches of fiduciary duty.

Fiduciary duties owed to our unitholders by our GP are prescribed by law and our Partnership Agreement. The Delaware Revised Uniform Limited Partnership Act (“Delaware LP Act”) provides that Delaware limited partnerships may, in their partnership agreements, restrict the fiduciary duties owed by the general partner to limited partners and the partnership. Our Partnership Agreement contains provisions that reduce the standards to which our GP would otherwise be held by state fiduciary duty law. For example, our Partnership Agreement:

•limits the liability and reduces the fiduciary duties of our GP, while also restricting the remedies available to our unitholders for actions that, without these limitations, might constitute breaches of fiduciary duty. As a result of purchasing common units, our unitholders consent to some actions and conflicts of interest that might otherwise constitute a breach of fiduciary or other duties under applicable state law;
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•permits our GP to make a number of decisions in its individual capacity, as opposed to in its capacity as our GP. This entitles our GP to consider only the interests and factors that it desires, and it has no duty or obligation to give any consideration to any interest of, or factors affecting, us, our affiliates or any limited partner. Examples include the exercise of its limited call right, its voting rights with respect to the units it owns and its determination whether or not to consent to any merger or consolidation of the Partnership;
•provides that our GP shall not have any liability to us or our unitholders for decisions made in its capacity as GP so long as it acted in good faith, meaning our GP subjectively believed that the decision was in, or not opposed to, the best interests of the Partnership;
•generally provides that affiliated transactions and resolutions of conflicts of interest not approved by the conflicts committee of the board of directors of our GP and not involving a vote of our unitholders must be on terms no less favorable to us than those generally being provided to or available from unrelated third parties or be “fair and reasonable” to us and that, in determining whether a transaction or resolution is “fair and reasonable,” our GP may consider the totality of the relationships between the parties involved, including other transactions that may be particularly favorable or advantageous to us; and
•provides that our GP and its officers and directors will not be liable for monetary damages to us or our limited partners for any acts or omissions unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that our GP or those other persons acted in bad faith or engaged in fraud or willful misconduct.

By purchasing a common unit, a common unitholder will become bound by the provisions of our Partnership Agreement, including the provisions described above.

Our GP and its affiliates have conflicts of interest with us and limited fiduciary duties to our unitholders, and they may favor their own interests to the detriment of us and our unitholders.

The NGL Energy GP Investor Group owns and controls our GP and its 0.1% GP interest in us. Although our GP has certain fiduciary duties to manage us in a manner beneficial to us and our unitholders, the executive officers and directors of our GP have a fiduciary duty to manage our GP in a manner beneficial to its owners. Furthermore, since certain executive officers and directors of our GP are executive officers or directors of affiliates of our GP, conflicts of interest may arise between the NGL Energy GP Investor Group and its affiliates, including our GP, on the one hand, and us and our unitholders, on the other hand. As a result of these conflicts, our GP may favor its own interests and the interests of its affiliates over the interests of our unitholders (see “–Our Partnership Agreement limits the fiduciary duties of our GP to our unitholders and restricts the remedies available to our unitholders for actions taken by our GP that might otherwise be breaches of fiduciary duty,” above). The risk to our unitholders due to such conflicts may arise because of the following factors, among others:

•our GP is allowed to take into account the interests of parties other than us, such as members of the NGL Energy GP Investor Group, in resolving conflicts of interest;
•neither our Partnership Agreement nor any other agreement requires owners of our GP to pursue a business strategy that favors us;
•except in limited circumstances, our GP has the power and authority to conduct our business without unitholder approval;
•our GP determines the amount and timing of asset purchases and sales, borrowings, issuance of additional partnership securities and the creation, reduction or increase of reserves, each of which can affect the amount of cash that is distributed to our unitholders;
•our GP determines the amount and timing of any capital expenditures and whether a capital expenditure is classified as a maintenance capital expenditure, which reduces operating surplus, or an expansion capital expenditure, which does not reduce operating surplus. This determination can affect the amount of cash that is distributed to our unitholders and to our GP;
•our GP determines which costs incurred by it are reimbursable by us;
•our GP may cause us to borrow funds to permit the payment of cash distributions, even if the purpose or effect of the borrowing is to make incentive distributions;
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•our Partnership Agreement permits us to classify up to $20.0 million as operating surplus, even if it is generated from asset sales, non-working capital borrowings or other sources that would otherwise constitute capital surplus. This cash may be used to fund distributions to our GP in respect of the GP interest or the incentive distribution rights (“IDRs”);
•our Partnership Agreement does not restrict our GP from causing us to pay it or its affiliates for any services rendered to us or entering into additional contractual arrangements with any of these entities on our behalf;
•our GP intends to limit its liability regarding our contractual and other obligations;
•our GP may exercise its right to call and purchase all of the common units not owned by it and its affiliates if they own more than 80% of the common units;
•our GP controls the enforcement of the obligations that it and its affiliates owe to us;
•our GP decides whether to retain separate counsel, accountants or others to perform services for us; and
•our GP may elect to cause us to issue common units to it in connection with a resetting of the target distribution levels related to our GP’s IDRs without the approval of the conflicts committee of the board of directors of our GP or our unitholders. This election may result in lower distributions to our common unitholders in certain situations.

In addition, certain members of the NGL Energy GP Investor Group and their affiliates currently hold interests in other companies in the energy and natural resource sectors. Our Partnership Agreement provides that our GP will be restricted from engaging in any business activities other than acting as our GP and those activities incidental to its ownership interest in us. However, members of the NGL Energy GP Investor Group are not prohibited from engaging in other businesses or activities, including those that might be in direct competition with us. As a result, they could potentially compete with us for acquisition opportunities and for new business or extensions of the existing services provided by us.

Pursuant to the terms of our Partnership Agreement, the doctrine of corporate opportunity, or any analogous doctrine, does not apply to our GP or any of its affiliates, including its executive officers, directors and owners. Any such person or entity that becomes aware of a potential transaction, agreement, arrangement or other matter that may be an opportunity for us will not have any duty to communicate or offer such opportunity to us. Any such person or entity will not be liable to us or to any limited partner for breach of any fiduciary duty or other duty by reason of the fact that such person or entity pursues or acquires such opportunity for itself, directs such opportunity to another person or entity or does not communicate such opportunity or information to us. This may create actual and potential conflicts of interest between us and affiliates of our GP and result in less than favorable treatment of us and our unitholders.

Even if our unitholders are dissatisfied, they have limited voting rights and are not entitled to elect our GP or its directors.

Unlike the holders of common stock in a corporation, unitholders have only limited voting rights on matters affecting our business and, therefore, limited ability to influence management’s decisions regarding our business. Unitholders will have no right on an annual or ongoing basis to elect our GP or its board of directors. The board of directors of our GP is chosen entirely by its members and not by our unitholders. Unlike publicly traded corporations, we will not conduct annual meetings of our unitholders to elect directors or conduct other matters routinely conducted at annual meetings of stockholders of corporations. Furthermore, if our unitholders are dissatisfied with the performance of our GP, they will have limited ability to remove our GP. As a result of these limitations, the price at which the common units will trade could be diminished because of the absence or reduction of a takeover premium in the trading price. Our Partnership Agreement also contains provisions limiting the ability of unitholders to call meetings or to acquire information about our operations, as well as other provisions limiting our unitholders’ ability to influence the manner or direction of management.

Our Partnership Agreement restricts the voting rights of unitholders owning 20% or more of our common units.

Unitholders’ voting rights are further restricted by a provision of our Partnership Agreement providing that any units held by a person that owns 20% or more of any class of units then outstanding, other than our GP, its affiliates, their direct transferees and their indirect transferees approved by our GP (which approval may be granted in its sole discretion) and persons who acquired such units with the prior approval of our GP, cannot vote on any matter.

Our GP interest or the control of our GP may be transferred to a third party without the consent of our unitholders.

Our GP may transfer its GP interest to a third party in a merger or in a sale of all or substantially all of its assets without the consent of our unitholders. Furthermore, our Partnership Agreement does not restrict the ability of the members of the NGL Energy GP Investor Group to transfer all or a portion of their ownership interest in our GP to a third party.
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The new owner of our GP would then be in a position to replace the board of directors and officers of our GP with its own designees and thereby exert significant control over the decisions made by the board of directors and officers.

The IDRs of our GP may be transferred to a third party.

Our GP may transfer its IDRs to a third party at any time without the consent of our unitholders. If our GP transfers its IDRs to a third party but retains its GP interest, our GP may not have the same incentive to grow our partnership and increase quarterly distributions to unitholders over time as it would if it had retained ownership of its IDRs.

Our GP has a limited call right that may require our unitholders to sell their common units at an undesirable time or price.

If at any time our GP and its affiliates own more than 80% of the common units, our GP will have the right, which it may assign to any of its affiliates or to us, but not the obligation, to acquire all, but not less than all, of the common units held by unaffiliated persons at a price that is not less than their then-current market price, as calculated pursuant to the terms of our Partnership Agreement. As a result, our unitholders may be required to sell their common units at an undesirable time or price and may not receive any return or may receive a negative return on their investment. Our unitholders may also incur a tax liability upon a sale of their units.

Our Partnership Agreement requires that we distribute all of our available cash, which could limit our ability to grow and make acquisitions.

We expect that we will distribute all of our available cash to our unitholders and will rely primarily on external financing sources, including commercial bank borrowings and the issuance of debt and equity securities, as well as reserves we have established to fund our acquisitions and expansion capital expenditures. As a result, to the extent we are unable to finance growth externally, our cash distribution policy will significantly impair our ability to grow.

In addition, because we distribute all of our available cash, our growth may not be as fast as that of businesses that reinvest their available cash to expand ongoing operations. To the extent we issue additional units in connection with any acquisitions or expansion capital expenditures, the payment of distributions on those additional units may increase the risk that we will be unable to maintain or increase our per unit distribution level. There are no limitations in our Partnership Agreement or the agreements governing our indebtedness on our ability to issue additional units, including units ranking senior to the common units. The incurrence of additional commercial borrowings or other debt to finance our growth strategy would result in increased interest expense, which, in turn, may impact the available cash that we have to distribute to our unitholders.

We may issue additional units without the approval of our unitholders, which would dilute the interests of existing unitholders.

Our Partnership Agreement does not limit the number of additional limited partner interests that we may issue at any time without the approval of our unitholders. Our issuance of additional common units or other equity securities of equal or senior rank will have the following effects:

•our existing unitholders’ proportionate ownership interest in us will decrease;
•the amount of available cash for distribution on each unit may decrease;
•the ratio of taxable income to distributions may increase;
•the relative voting strength of each previously outstanding unit may be diminished; and
•the market price of the common units may decline.

Our GP, without the approval of our unitholders, may elect to cause us to issue common units while also maintaining its GP interest in connection with a resetting of the target distribution levels related to its IDRs. This could result in lower distributions to our unitholders.

Our GP has the right to reset the initial target distribution levels at higher levels based on our distributions at the time of the exercise of the reset election. Following a reset election by our GP, the minimum quarterly distribution will be adjusted to equal the reset minimum quarterly distribution and the target distribution levels will be reset to correspondingly higher levels based on percentage increases above the reset minimum quarterly distribution.

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If our GP elects to reset the target distribution levels, it will be entitled to receive a number of common units. The number of common units to be issued to our GP will be equal to that number of common units that would have entitled their holder to an average aggregate quarterly cash distribution in the prior two quarters equal to the average of the distributions to our GP on the IDRs in the prior two quarters. We anticipate that our GP would exercise this reset right to facilitate acquisitions or organic growth projects that would not be sufficiently accretive to cash distributions per common unit without such conversion. It is possible, however, that our GP could exercise this reset election at a time when it is experiencing, or expects to experience, declines in the cash distributions it receives related to its IDRs and may, therefore, desire to be issued common units rather than retain the right to receive distributions on its IDRs based on the initial target distribution levels. As a result, a reset election may cause our common unitholders to experience a reduction in the amount of cash distributions that our common unitholders would have otherwise received had we not issued new common units and GP interests to our GP in connection with resetting the target distribution levels.

Our unitholders’ liability may not be limited if a court finds that unitholder action constitutes control of our business.

A general partner of a partnership generally has unlimited liability for the obligations of the partnership, except for those contractual obligations of the partnership that are expressly made without recourse to the general partner. Our Partnership is organized under Delaware law, and we conduct business in a number of other states. The limitations on the liability of holders of limited partner interests for the obligations of a limited partnership have not been clearly established in some of the other states in which we do business. You could be liable for any and all of our obligations as if you were a general partner if a court or government agency were to determine that:

•we were conducting business in a state but had not complied with that particular state’s partnership statute; or
•a unitholder’s right to act with other unitholders to remove or replace our GP, to approve some amendments to our Partnership Agreement or to take other actions under our Partnership Agreement constitute “control” of our business.

Our unitholders may have liability to repay distributions that were wrongfully distributed to them.

Under certain circumstances, unitholders may have to repay amounts wrongfully returned or distributed to them. Under Section 17-607 of the Delaware LP Act, we may not make a distribution to our unitholders if the distribution would cause our liabilities to exceed the fair value of our assets. Delaware law provides that for a period of three years from the date of an impermissible distribution, limited partners who received the distribution and who knew at the time of the distribution that it violated Delaware law will be liable to the limited partnership for the distribution amount. Substituted limited partners are liable both for the obligations of the assignor to make contributions to the partnership that were known to the substituted limited partner at the time it became a limited partner and for those obligations that were unknown if the liabilities could have been determined from the partnership agreement. Neither liabilities to partners on account of their partnership interests nor liabilities that are nonrecourse to the partnership are counted for purposes of determining whether a distribution is permitted. For the purpose of determining the fair value of the assets of a limited partnership, the Delaware LP Act provides that the fair value of property subject to liability for which recourse of creditors is limited shall be included in the assets of the limited partnership only to the extent that the fair value of that property exceeds the nonrecourse liability.

The Preferred Units give the holders thereof liquidation and distribution preferences over our common unitholders.

We currently have three series of Preferred Units outstanding. All of these units rank senior to the common units with respect to distribution rights and rights upon liquidation. Subject to certain exceptions, as long as any Preferred Units remain outstanding, we may not declare any distribution on our common units unless all accumulated and unpaid distributions have been declared and paid on the Preferred Units. In the event of our liquidation, winding-up or dissolution, the holders of the Preferred Units would have the right to receive proceeds from any such transaction before the holders of the common units. The payment of the liquidation preference could result in common unitholders not receiving any consideration if we were to liquidate, dissolve or wind up, either voluntarily or involuntarily. Additionally, the existence of the liquidation preference may reduce the value of the common units, make it harder for us to sell common units in offerings in the future, or prevent or delay a change of control.

The issuance of common units upon exercise of certain warrants would cause dilution to existing common unitholders and may place downward pressure on the trading price of our common units.

We currently have outstanding exercisable warrants to purchase 2,125,000 common units at exercise prices ranging from $13.56 per unit to $16.28 per unit. Any exercise of these warrants would cause dilution to existing common unitholders and may place downward pressure on the trading price of our common units.
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All outstanding warrants are currently exercisable and any unexercised warrants will expire on the tenth anniversary of the date of issuance. The warrants will not participate in cash distributions. For additional information related to the warrants, see Note 9 to our consolidated financial statements included in this Annual Report.

Tax Risks to Our Unitholders

Our tax treatment depends on our status as a partnership for federal income tax purposes. We could lose our status as a partnership for a number of reasons, including not having enough “qualifying income.” If the Internal Revenue Service (“IRS”) were to treat us as a corporation for federal income tax purposes, our cash available for distribution to our unitholders would be substantially reduced.

The anticipated after-tax economic benefit of an investment in our common units depends largely on our being treated as a partnership for federal income tax purposes. We have not requested, and do not plan to request, a ruling from the IRS with respect to our treatment as a partnership for federal income tax purposes.

Despite the fact that we are a limited partnership under Delaware law, a publicly traded partnership such as us will be treated as a corporation for federal income tax purposes unless, for each taxable year, 90% or more of its gross income is “qualifying income” under Section 7704 of the Internal Revenue Code of 1986, as amended (“Internal Revenue Code”). “Qualifying income” includes income and gains derived from the exploration, development, production, processing, transportation, storage and marketing of natural gas, natural gas products, and crude oil or other passive types of income such as certain interest and dividends and gains from the sale or other disposition of capital assets held for the production of income that otherwise constitutes qualifying income. Although we do not believe, based upon our current operations, that we are treated as a corporation, we could be treated as a corporation for federal income tax purposes or otherwise subject to taxation as an entity if our gross income is not properly classified as qualifying income, there is a change in our business or there is a change in current law.

If we were treated as a corporation for federal income tax purposes, we would pay federal income tax on our taxable income at the corporate tax rate, which is currently 21% (changed from 35% under the Tax Cuts and Jobs Act of 2017 (“Act”)), and would likely pay state and local income tax at varying rates. Distributions to our unitholders would generally be taxed again as corporate dividends (to the extent of our current and accumulated earnings and profits), and no income, gains, losses, deductions or credits would flow through to our unitholders. Because a tax would be imposed upon us as a corporation, our cash available for distribution to our unitholders would be substantially reduced. Therefore, treatment of us as a corporation would result in a material reduction in the anticipated cash flow and after-tax return to our unitholders, likely causing a substantial reduction in the market value of our common units.

Our Partnership Agreement provides that if a law is enacted or existing law is modified or interpreted in a manner that subjects us to taxation as a corporation or otherwise subjects us to entity-level taxation for federal income tax purposes, the minimum quarterly distribution amount and the target distribution amounts may be adjusted to reflect the impact of that law on us.

Our unitholders may be subject to limitation on their ability to deduct interest expense incurred by us.

In general, our unitholders are entitled to a deduction for the interest we have paid or accrued on indebtedness properly allocable to our business during our taxable year. However, under the Act signed into law by President Trump on December 22, 2017, beginning in tax year 2018, the deductibility of net interest expense is limited to 30% of our adjusted taxable income. For tax years beginning after December 31, 2017 and before January 1, 2022, the Act calculates adjusted taxable income using an EBITDA-based calculation. For tax years beginning January 1, 2022 and thereafter, the calculation of adjusted taxable income will not add back depreciation or amortization. Any disallowed business interest expense is then generally carried forward as a deduction in a succeeding taxable year at the partner level. These limitations might cause interest expense to be deducted by our unitholders in a later period than recognized in the GAAP financial statements.

If we were subjected to a material amount of additional entity-level taxation by individual states, it would reduce our cash available for distribution to our unitholders.

Changes in current state law may subject us to additional entity-level taxation by individual states. Because of widespread state budget deficits and other reasons, several states are evaluating ways to subject partnerships to entity-level taxation through the imposition of state income, franchise and other forms of taxation. Imposition of any such taxes may substantially reduce the cash available for distribution to our unitholders. Our Partnership Agreement provides that, if a law is enacted or existing law is modified or interpreted in a manner that subjects us to entity-level taxation, the minimum quarterly distribution amount and the target distribution amounts may be adjusted to reflect the impact of that law on us.
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The tax treatment of publicly traded partnerships or an investment in our common units could be subject to potential legislative, judicial or administrative changes and differing interpretations, possibly on a retroactive basis.

The present income tax treatment of publicly traded partnerships, including us, or an investment in our common units may be modified by administrative, legislative or judicial interpretation at any time. For example, from time to time, members of Congress propose and consider substantive changes to the existing federal income tax laws that affect the tax treatment of publicly traded partnerships, including as a result of any fundamental tax reform.

We are unable to predict whether any such change or other proposals will ultimately be enacted or will affect our tax treatment. Any modification to the income tax laws and interpretations thereof may or may not be applied retroactively and could, among other things, cause us to be treated as a corporation for federal income tax purposes or otherwise subject us to entity-level taxation. Moreover, such modifications and change in interpretations may affect or cause us to change our business activities, affect the tax considerations of an investment in us, change the character or treatment of portions of our income and adversely affect an investment in our common units. Although we are unable to predict whether any of these changes, or other proposals, will ultimately be enacted, any such changes could negatively impact the value of an investment in our common units.

Changes in tax laws could adversely affect our performance.

We are subject to extensive tax laws and regulations, with respect to federal, state and foreign income taxes and transactional taxes such as excise, sales/use, payroll, franchise and ad valorem taxes. New tax laws and regulations and changes in existing tax laws and regulations are continuously being enacted that could result in increased tax expenditures in the future.

If the IRS contests the federal income tax positions we take, the market for our common units may be adversely impacted and the cost of any IRS contest will reduce our cash available for distribution to our unitholders.

We have not requested a ruling from the IRS with respect to our treatment as a partnership for federal income tax purposes. The IRS may adopt positions that differ from the positions we take. It may be necessary to resort to administrative or court proceedings to sustain some or all of the positions we take and such positions may not ultimately be sustained. A court may not agree with some or all of the positions we take. Any contest with the IRS may materially and adversely impact the market for our common units and the price at which they trade. In addition, our costs of any contest with the IRS will be borne indirectly by our unitholders and our GP because the costs will reduce our cash available for distribution.

If the IRS makes audit adjustments to our income tax returns for tax years beginning after 2017, it may collect any resulting taxes (including any applicable penalties and interest) directly from us, in which case our cash available for distribution to our unitholders could be substantially reduced.

Pursuant to the Bipartisan Budget Act of 2015, if the IRS makes audit adjustments to our income tax returns for tax years beginning after 2017, it may collect any resulting taxes (including any applicable penalties and interest) directly from us. We will generally have the ability to shift any such tax liability to our GP and our unitholders in accordance with their interests in us during the year under audit, but there can be no assurance that we will be able to do so under all circumstances. If we are required to make payments of taxes, penalties and interest resulting from audit adjustments, our cash available for distribution to our unitholders could be substantially reduced.

Our unitholders will be required to pay taxes on their share of our income even if they do not receive any cash distributions from us.

Because we expect to be treated as a partnership for federal income tax purposes, our unitholders will be treated as partners to whom we will allocate taxable income that could be different than the cash we distribute, therefore, our unitholders will be required to pay any federal income taxes and, in some cases, state and local income taxes on their share of our taxable income even if they receive no cash distributions from us. For example, if we sell assets and use the proceeds to repay existing debt or fund capital expenditures, our unitholders may be allocated taxable income and gain resulting from the sale and may not receive a common unit distribution. Similarly, taking advantage of opportunities to reduce our existing debt, such as debt exchanges, debt repurchases, or modifications of our existing debt could result in “cancellation of indebtedness income” being allocated to our unitholders as taxable income without any common unit distribution. Our unitholders may not receive cash distributions from us equal to their share of our taxable income or even equal to the actual tax liability that results from that income.
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Certain actions that we may take, such as issuing additional units, may increase the federal income tax liability of unitholders.

In the event we issue additional units or engage in certain other transactions in the future, the allocable share of nonrecourse liabilities allocated to the unitholders will be recalculated to take into account our issuance of any additional units. Any reduction in a unitholder’s share of our nonrecourse liabilities will be treated as a distribution of cash to that unitholder and will result in a corresponding tax basis reduction in a unitholder’s units. A deemed cash distribution may, under certain circumstances, result in the recognition of a taxable gain by a unitholder, to the extent that the deemed cash distribution exceeds such unitholder’s tax basis in its units.

In addition, the federal income tax liability of a unitholder could be increased if we dispose of assets or make a future offering of units and use the proceeds in a manner that does not produce substantial additional deductions, such as to repay indebtedness currently outstanding or to acquire property that is not eligible for depreciation or amortization for federal income tax purposes or that is depreciable or amortizable at a rate significantly slower than the rate currently applicable to our assets.

Tax gain or loss on the disposition of our common units could be more or less than expected.

If unitholders sell their common units, they will recognize a gain or loss equal to the difference between the amount realized and their tax basis in those common units. Because distributions in excess of the unitholder’s allocable share of our net taxable income decrease the unitholder’s tax basis in their common units, the amount, if any, of such prior excess distributions with respect to the units the unitholder sells will, in effect, become taxable income to the unitholder if they sell such units at a price greater than their tax basis in those units, even if the price they receive is less than their original cost. Furthermore, a substantial portion of the amount realized on any sale of common units, whether or not representing a gain, may be taxed as ordinary income due to potential recapture items, including depreciation recapture. In addition, because the amount realized includes a unitholder’s share of our nonrecourse liabilities, if a unitholder sells units, they may incur a tax liability in excess of the amount of cash they receive from the sale.

Tax exempt entities and non-United States persons face unique tax issues from owning our common units that may result in adverse tax consequences to them.

Investment in common units by tax exempt entities, such as employee benefit plans, individual retirement accounts (“IRAs”), Keogh plans and other retirement plans and non-United States persons raises issues unique to them. For example, virtually all of our income allocated to organizations that are exempt from federal income tax, including IRAs and other retirement plans, will be unrelated business taxable income and will be taxable to them. Distributions to non-United States persons are generally taxed and subject to income tax filing requirements by the United States on income effectively connected with a United States trade or business (“effectively connected income”). Income allocated to our unitholders and any gain from the sale of our common units will generally be considered to be “effectively connected” with a United States trade or business. As a result, distributions to a non-United States unitholder will be subject to withholding taxes at the highest applicable effective tax rate and a non-United States unitholder who sells or otherwise disposes of a common unit will also be subject to United States federal income tax on the gain realized from the sale or disposition of that common unit. Non-United States persons will be required to file federal income tax returns and pay tax on their share of our taxable income.

In addition to the withholding tax imposed on distributions of effectively connected income, distributions to a non- United States unitholder will also be subject to a 10% withholding tax on the amount of any distribution in excess of our cumulative net income. We intend to treat all of our distributions as being in excess of our cumulative net income for such purposes and subject to such 10% withholding tax. Accordingly, distributions to a non-United States unitholder will be subject to a combined withholding tax rate equal to the sum of the highest applicable effective tax rate and 10%. For a transfer of interests in a publicly traded partnership that is effected through a broker, the obligation to withhold is imposed on the transferor’s broker. We are required to issue qualified notices regarding these matters. Our qualified notices can be found on our website. If you are a tax exempt entity or a non-United States person, you should consult your tax advisor before investing in our common units.

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We treat each purchaser of common units as having the same tax benefits without regard to the actual common units purchased. The IRS may challenge this treatment, which could adversely affect the market value of the common units.

Because we cannot match transferors and transferees of common units and because of other reasons, we have adopted depreciation and amortization positions that may not conform to all aspects of existing Treasury Regulations. Any position we take that is inconsistent with applicable Treasury Regulations may have to be disclosed on our federal income tax return. This disclosure increases the likelihood that the IRS will challenge our positions and propose adjustments to some or all of our unitholders. A successful IRS challenge to those positions could adversely affect the amount of tax benefits available to our unitholders. It also could affect the timing of these tax benefits or the amount of gain from the sale of common units and could have a negative impact on the market value of our common units or result in audit adjustments to tax returns of unitholders.

We have subsidiaries that are treated as corporations for federal income tax purposes and subject to corporate level income taxes.

We conduct a portion of our operations through subsidiaries that are corporations for federal income tax purposes. We may elect to conduct additional operations in corporate form in the future. Our corporate subsidiaries will be subject to corporate level tax, which will reduce the cash available for distribution to us and, in turn, to our unitholders. If the IRS or other state or local jurisdictions were to successfully assert that our corporate subsidiaries have more tax liability than we anticipate or legislation was enacted that increased the corporate tax rate, our cash available for distribution to our unitholders would be further reduced.

We prorate our items of income, gain, loss and deduction for federal income tax purposes between transferors and transferees of our units each month based on the ownership of our units on the first business day of each month, instead of on the basis of the date a particular unit is transferred. The IRS may challenge this treatment, which could change the allocation of items of income, gain, loss and deduction among our unitholders.

We prorate our items of income, gain, loss and deduction between transferors and transferees of our units each month based on the ownership of our units on the first business day of each month, instead of on the basis of the date a particular unit is transferred. The United States Department of the Treasury adopted final Treasury Regulations allowing a similar monthly simplifying convention for taxable years beginning on or after August 3, 2015. However, such regulations do not specifically authorize all aspects of the proration method we have adopted. If the IRS were to challenge our proration method, we may be required to change the allocation of items of income, gain, loss and deduction among our unitholders.

A unitholder whose common units are loaned to a “short seller” to effect a short sale of units may be considered as having disposed of those common units. If so, such unitholder would no longer be treated for federal income tax purposes as a partner with respect to those common units during the period of the loan and may recognize a gain or loss from the disposition.

Because a unitholder whose common units are loaned to a “short seller” to effect a short sale of units may be considered as having disposed of those common units, the unitholder would no longer be treated for federal income tax purposes as a partner with respect to those common units during the period of the loan to the short seller and the unitholder may recognize a gain or loss from the disposition. Moreover, during the period of the loan to the short seller, any of our income, gain, loss or deduction with respect to those common units may not be reportable by the unitholder and any cash distributions received by the unitholder as to those common units could be fully taxable as ordinary income. Unitholders desiring to assure their status as partners and avoid the risk of gain recognition from a loan to a short seller are urged to consult a tax advisor to discuss whether it is advisable to modify any applicable brokerage account agreements to prohibit their brokers from borrowing their common units.

We have adopted certain valuation methodologies and monthly conventions for federal income tax purposes that may result in a shift of income, gain, loss and deduction between our GP and our unitholders. The IRS may challenge this treatment, which could adversely affect the value of our common units.

When we issue additional units or engage in certain other transactions, we will determine the fair market value of our assets and allocate any unrealized gain or loss attributable to our assets to the capital accounts of our unitholders and our GP. Our methodology may be viewed as understating the value of our assets. In that case, there may be a shift of income, gain, loss and deduction between certain unitholders and the GP, which may be unfavorable to such unitholders. Moreover, under our current valuation methods, subsequent purchasers of common units may have a greater portion of their Internal Revenue Code Section 743(b) adjustment allocated to our tangible assets and a lesser portion allocated to our intangible assets. The IRS may challenge our valuation methods, or our allocation of the Internal Revenue Code Section 743(b) adjustment attributable to our tangible and intangible assets, and allocations of taxable income, gain, loss and deduction between the GP and certain of our unitholders.
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A successful IRS challenge to these methods or allocations could adversely affect the amount of taxable income or loss being allocated to our unitholders. It also could affect the amount of taxable gain from our unitholders’ sale of common units and could have a negative impact on the value of the common units or result in audit adjustments to our unitholders’ tax returns without the benefit of additional deductions.

There are limits on the deductibility of our losses that may adversely affect our unitholders.

There are a number of limitations that may prevent unitholders from using their allocable share of our losses as a deduction against unrelated income. In cases where our unitholders are subject to the passive loss rules (generally, individuals and closely held corporations), any losses generated by us will only be available to offset our future income and cannot be used to offset income from other activities, including other passive activities or investments. Unused losses may be deducted when the unitholder disposes of its entire investment in us in a fully taxable transaction with an unrelated party. A unitholder’s share of our net passive income may be offset by unused losses from us carried over from prior years but not by losses from other passive activities, including losses from other publicly traded partnerships. Other limitations that may further restrict the deductibility of our losses by a unitholder include the at-risk rules and the prohibition against loss allocations in excess of the unitholder’s tax basis in its units.

Purchasers of our common units may become subject to state and local taxes and return filing requirements in jurisdictions where we operate or own or acquire properties.

In addition to federal income taxes, holders of our common units are subject to other taxes, including foreign, state and local income taxes, unincorporated business taxes and estate, inheritance or intangible taxes that are imposed by the various jurisdictions in which we conduct business or own or control property now or in the future. Holders of our common units are required to file foreign, state and local income tax returns and pay state and local income taxes in some or all of these various jurisdictions and may be subject to penalties for failure to comply with those requirements. We own assets and conduct business in a number of states, most of which impose a personal income tax on individuals. Most of these states also impose an income tax on corporations and other entities. As we make acquisitions or expand our business, we may own or control assets or conduct business in additional states that impose a personal income tax.

Treatment of distributions on our Preferred Units as guaranteed payments for the use of capital creates a different tax treatment for the holders of Preferred Units than the holders of our common units and such distributions will likely not be eligible for the 20% deduction for qualified publicly traded partnership income.

The tax treatment of distributions on our Preferred Units is uncertain. We will treat the holders of Preferred Units as partners for tax purposes and will treat distributions on the Preferred Units as guaranteed payments for the use of capital that will generally be taxable to the holders of Preferred Units as ordinary income. A holder of our Preferred Units could recognize taxable income from the accrual of such a guaranteed payment even in the absence of a contemporaneous distribution. Otherwise, the holders of Preferred Units are generally not anticipated to share in our items of income, gain, loss or deduction, nor will we allocate any share of our nonrecourse liabilities to the holders of Preferred Units. If the Preferred Units were treated as indebtedness for tax purposes, rather than as guaranteed payments for the use of capital, distributions likely would be treated as payments of interest by us to the holders of Preferred Units.

Although we expect that much of the income we earn is generally eligible for the 20% deduction for qualified publicly traded partnership income, certain Treasury Regulations, which are effective for our taxable years beginning on or after January 1, 2020, provide that a guaranteed payment for the use of capital is not eligible for the 20% deduction for qualified publicly traded partnership income. As a result, income attributable to a guaranteed payment for the use of capital recognized by holders of Preferred Units is not eligible for the 20% deduction for qualified publicly traded partnership income. All holders of our Preferred Units are urged to consult a tax advisor to determine whether they are eligible to receive the 20% deduction for qualified publicly traded partnership income with respect to their Preferred Units. Further, while unitholders of publicly traded partnerships are, subject to certain limitations, entitled to a deduction equal to 20% of their allocable share of qualified publicly traded partnership income, this deduction is scheduled to expire with respect to taxable years beginning after December 31, 2025.

A holder of Preferred Units will be required to recognize a gain or loss on a sale of Preferred Units equal to the difference between the amount realized by such holder and such holder’s tax basis in the Preferred Units sold. The amount realized generally will equal the sum of the cash and the fair market value of other property such holder receives in exchange for such Preferred Units.
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Subject to general rules requiring a blended basis among multiple partnership interests, the tax basis of a Preferred Unit will generally be equal to the sum of the cash and the fair market value of other property paid by the holder of Preferred Units to acquire such Preferred Unit. Gain or loss recognized by a holder of Preferred Units on the sale or exchange of a Preferred Unit held for more than one year generally will be taxable as a long-term capital gain or loss. Because holders of Preferred Units will generally not be allocated a share of our items of depreciation, depletion or amortization, it is not anticipated that such holders would be required to recharacterize any portion of their gain as ordinary income as a result of the recapture rules.

Investment in the Preferred Units by tax-exempt investors, such as employee benefit plans and IRAs, and non-U.S. persons raises issues unique to them. Distributions to non-U.S. holders of Preferred Units will be subject to withholding taxes. If the amount of withholding exceeds the amount of U.S. federal income tax actually due, non-U.S. holders of Preferred Units may be required to file U.S. federal income tax returns in order to seek a refund of such excess. The treatment of guaranteed payments for the use of capital to tax-exempt investors is not certain and such payments may be treated as unrelated business taxable income for U.S. federal income tax purposes. If you are a tax-exempt entity or a non-U.S. person, you should consult your tax advisor with respect to the consequences of owning our Preferred Units.

All holders of our Preferred Units are urged to consult a tax advisor with respect to the consequences of owning our Preferred Units.

General Risks

The default by significant customers and counterparties or loss of one or more significant customers could materially or adversely affect our business, financial condition, results of operations and cash flows.

The deterioration in the financial condition of one or more of our significant customers or counterparties could result in their failure to perform under the terms of their agreement with us or default in the payment owed to us. Our customers and counterparties include industrial customers, local distribution companies, crude oil and natural gas producers, financial institutions and marketers whose creditworthiness may be suddenly and disparately impacted by, among other factors, commodity price volatility, deteriorating energy market conditions, and public and regulatory opposition to energy producing activities. While we manage our credit risk exposure through credit analysis, credit approvals, establishing credit limits, requiring prepayments (partially or wholly) or other surety, requiring product deliveries over defined time periods, and credit monitoring, we are unable to completely eliminate the performance and credit risk to us associated with doing business with these parties. In a low commodity price environment, certain of our customers have been or could be negatively impacted, causing them significant economic stress resulting, in some cases, in a customer bankruptcy filing or an effort to renegotiate our contracts. The deterioration in the creditworthiness of our customers and the resulting increase in nonpayment and/or nonperformance by them could cause us to write down or write off accounts receivables or tangible and intangible assets. Such write-downs or write-offs could negatively affect our operating results in the periods in which they occur, and, if significant, could materially or adversely affect our business, financial condition, results of operations, and cash flows. We expect to continue to depend on key customers to support our revenues for the foreseeable future. The loss of key customers, failure to renew contracts upon expiration, or a sustained decrease in demand by key customers could result in a substantial loss of revenues and could have a material and adverse effect on our consolidated results of operations. Additionally, certain key customers of the Grand Mesa Pipeline contribute significantly to the cash flows and profitability of that asset. Any loss of those customers or their contracts could have an adverse impact on our financial results. To the extent one or more of our key customers commences bankruptcy proceedings, our contracts with the customers may be subject to rejection under applicable provisions of the United States Bankruptcy Code or, if we so agree, may be renegotiated. Further, during any such bankruptcy proceeding, prior to assumption, rejection or renegotiation of such contracts, the bankruptcy court may temporarily authorize the payment of value for our services less than contractually required, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. The resolution of our outstanding claims against such a customer or counterparty is dependent on the terms of the plan of reorganization but may include our claims being converted to equity in the reorganized entity and in addition to impacting our business, financial condition and results of operations could require us to incur impairment charges against the associated assets or the write down of our goodwill.

The counterparties to our commodity derivative and physical purchase and sale contracts may not be able to perform their obligations to us, which could materially affect our cash flows and results of operations.

We encounter risk of counterparty nonperformance in our businesses. Disruptions in the supply of product and in the crude oil and natural gas liquids commodities sector overall for an extended or near term period of time could result in counterparty defaults on our derivative and physical purchase and sale contracts.
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This could impair our ability to obtain supply to fulfill our sales delivery commitments or obtain supply at reasonable prices, which could result in decreased gross margins and profitability, thereby impairing our ability to make payments on our debt obligations or distributions to our unitholders.

If we fail to maintain an effective system of internal control, including internal control over financial reporting, we may be unable to report our financial results accurately or prevent fraud, which would likely have a negative impact on the market price of our common units.

We are subject to the public reporting requirements of the Securities Exchange Act of 1934, as amended. We are also subject to the obligation under Section 404(a) of the Sarbanes Oxley Act of 2002 (“Sarbanes-Oxley Act”) to annually review and report on our internal control over financial reporting, and to the obligation under Section 404(b) of the Sarbanes-Oxley Act to engage our independent registered public accounting firm to attest to the effectiveness of our internal control over financial reporting.

The Sarbanes-Oxley Act requires public companies to have and maintain effective disclosure controls and procedures to ensure timely disclosures of material information and to have management review the effectiveness of those controls on a quarterly basis. The Sarbanes-Oxley Act also requires public companies to have and maintain effective internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements and to have management review the effectiveness of those controls on an annual basis (and have the company’s independent auditors attest to the effectiveness of such internal controls).

Effective internal controls are necessary for us to provide reliable financial reports, prevent fraud, and operate successfully as a publicly traded partnership. Our efforts to maintain our internal controls may be unsuccessful, and we may be unable to maintain effective internal control over financial reporting, including our disclosure controls. Any failure to maintain effective internal control over financial reporting and disclosure controls could harm our operating results or cause us to fail to meet our reporting obligations. These risks may be heightened after a business combination, during the phase when we are implementing our internal control structure over the recently acquired business.

Given the difficulties inherent in the design and operation of internal control over financial reporting, as well as future growth of our businesses, we can provide no assurance as to either our or our independent registered public accounting firm’s conclusions about the effectiveness of internal controls in the future, and we may incur significant costs in our efforts to comply with Section 404 of the Sarbanes-Oxley Act. Ineffective internal controls could subject us to regulatory scrutiny and a loss of confidence in our reported financial information, which could have an adverse effect on our business and would likely have a negative effect on the market price of our common units.

The impact of a global public health crisis may have material adverse consequences for general economic, financial and business conditions, and could materially and adversely affect our business, financial condition, results of operations and liquidity and those of our customers, suppliers and other counterparties.

Changes in the supply of and demand for hydrocarbon products impacts both the volume of products that we purchase and sell and the level of services that we provide to customers, which in turn impacts our financial position, results of operations and cash flows.

The global and U.S. economy has generally recovered from the negative economic impacts of the COVID-19 pandemic, which disrupted global supply chains, reduced consumer activity, disrupted travel and created significant volatility and disruption of financial and commodity markets. While the World Health Organization declared an end to the global public health emergency for COVID-19 in May 2023, a future global public health crisis could lead to similar disruptions and related economic repercussions. Any resumed period of economic slowdown or recession, or the return to a period of depressed demand or prices for hydrocarbons that we handle, could have significant adverse consequences on our financial condition and the financial condition of our customers, suppliers and other counterparties, and could diminish our liquidity and negatively affect the volumes of products handled by our pipelines and other facilities.

The potential impact of these types of events on our financial condition, results of operations and cash flows depends largely on developments outside our control, including the duration of and response to a public health crisis, the related impact on overall economic activity and the potential long-term impacts on demand for crude oil and other products, all of which cannot be predicted with certainty.

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The risk of terrorism and political unrest in various energy producing regions may adversely affect the economy and the price and availability of products.

An act of terror, or political unrest, in any of the major energy producing regions of the world could potentially result in disruptions in the supply of crude oil and natural gas, which could have a material impact on both availability and price. Terrorist attacks in the areas of our operations could negatively impact our ability to transport crude oil and natural gas liquids to our locations. These risks could potentially negatively impact our consolidated results of operations.

Product liability claims and litigation could adversely affect our business and results of operations.

Our operations are subject to all operating hazards and risks incident to handling, storing, transporting and providing customers with combustible liquids. As a result, we are subject to product liability claims and litigation, including potential class actions, in the ordinary course of business. Any product liability claim or other litigation matter brought against us, with or without merit, could be costly to defend and could result in an increase of our insurance premiums. Some claims brought against us might not be covered by our insurance policies. In addition, we have self-insured retention amounts which we would have to pay in full before obtaining any insurance proceeds to satisfy a judgment or settlement and we may have insufficient reserves on our balance sheet to satisfy such self-retention obligations. Furthermore, even where the claim is covered by our insurance, our insurance coverage might be inadequate and we would have to pay the amount of any settlement or judgment that is in excess of our policy limits. Our failure to maintain adequate insurance coverage or successfully defend against product liability claims or other litigation matters could materially and adversely affect our business, consolidated results of operations, financial position and cash flows.

A failure in our operational systems or cybersecurity attacks on any of our facilities, or those of third parties, may adversely affect our financial results.

Our business is dependent upon our operational systems to process a large amount of data and complex transactions. If any of our financial or operational systems fail or have other significant shortcomings, our financial results could be adversely affected. Our financial results could also be adversely affected if an employee causes our systems to fail, either as a result of inadvertent error or by deliberately tampering with or manipulating our systems. In addition, dependence upon automated systems may further increase the risk related to operational system flaws, and employee tampering or manipulation of those systems will result in losses that are difficult to detect.

Due to increased technology advances, we have become more reliant on technology to increase efficiency in our business. We use various systems in our financial and operations sectors, and this may subject our business to increased risks. Any future cybersecurity attacks that affect our facilities, our customers and any financial data could have a material adverse effect on our business. In addition, cybersecurity attacks on our customer and employee data may result in a financial loss, including potential fines for failure to safeguard data, and may negatively impact our reputation. Third-party systems on which we rely could also suffer operational system failure. Any of these occurrences could disrupt our business, resulting in potential liability or reputational damage or otherwise have an adverse effect on our financial results.

Item 1B.    Unresolved Staff Comments

None.

Item 1C.    Cybersecurity

Cybersecurity Governance and Strategy

Our cybersecurity program is designed to provide logical and physical security protection of our infrastructure, systems and data from theft and destruction that could impact our operations, reputation, and regulatory compliance. To safeguard us from a cyber event, specific mitigating cybersecurity controls, systems and incident procedures exist based upon the United States Department of Commerce National Institute of Standards and Framework (“NIST”) Cybersecurity Framework, which is an industry recognized security framework for private and public sectors. Our commitment to cybersecurity is reflected in our extensive program and related technology investments for continual cybersecurity posture enhancements.

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Our cybersecurity governance and strategy program to prevent, detect, manage, mitigate, and remediate cyber threats is comprised of:

•Controls based upon the NIST Cybersecurity Framework for enterprise governance, critical asset management, internal and third-party risk management, segregated access control management, data security and protection, anomaly logging and general security monitoring, incident response, security training and awareness, and disaster recovery testing.
•Security Policies and Procedures for cybersecurity, incident response, acceptable use, change control, disaster recovery, backup and recovery, business continuity, business operations recovery, third-party vendor security assessments, vulnerability and patch management, data privacy, and various regulatory compliance areas.
•Enterprise Risk Management to identify, assess and mitigate internal and third-party risks in a continuous life cycle program which is also based on the NIST Cybersecurity Framework. This risk management framework incorporates corporate and business segment SCADA (Supervisory Control and Data Acquisition) system risks for an integrated enterprise approach.
•Various Cybersecurity Systems and Protocols for aggregated monitoring and behavior analytics, detection and response, network protection and segmentation, layered security methods for defense-in-depth, vulnerability and patch management, backup and recovery, and asset management.
•Employee Education for continual security awareness and threat diligence. The program includes a myriad of monthly and quarterly required cyber training for high-risk areas plus mandatory semi-annual training for all employees and third parties with access to our network. Additionally, monthly simulated phishing campaigns and newsletters reinforce cyber risks and general security awareness.

Cybersecurity Risk and Threat Management

Our Enterprise Cybersecurity Risk Management program is a continuous life cycle approach with a formal annual risk assessment followed by internal and third-party risk assessments throughout the year. Annually, an independent security expert vendor is engaged to conduct a cybersecurity risk assessment based upon industry and technology standards. The assessment results are prioritized then tracked within our Governance, Risk and Control system which derives the specific risk likelihood and impact mitigated risk score. Cybersecurity projects, controls and practices are then developed to mitigate the identified risks. Monthly, the Compliance and Security Steering Committee meets to review risk register, current threat assessments and related mitigation efforts for risk management tracking. Additionally, on a quarterly basis, our Chief Information Officer (“CIO”) presents the risk score and mitigation updates to the board of directors of our GP for risk oversight.

Event management of a cyber incident follows our Cybersecurity Policy Incident Response Procedure (“Incident Response Policy”) which is based upon the NIST framework. The procedure includes incident identification, isolation and containment, investigation, impact analysis, communication, materiality assessment including in aggregate with previous events, and reporting steps and associated ownership. Annually, the Incident Response Policy is tested with the key owners to validate the procedure and for training purposes.

Impact of Risks from Cybersecurity Threats

While we have not, as of the date of this Annual Report, experienced a cybersecurity threat or incident that resulted in a material adverse impact to our business or operations, there can be no guarantee that we will not experience such an incident in the future due to the increasing global cyberattack volume, frequency, and sophistication. Such incidents, whether or not successful, could result in us incurring significant costs related to, for example, implementing additional threat protection measures, providing modifications or replacements to our products and services, defending against litigation, responding to regulatory inquiries or actions, providing customers with incentives to maintain a business relationship with us, or taking other remedial steps with respect to third parties, as well as incurring reputational harm. In addition, these threats are constantly evolving, thereby increasing the difficulty of successfully defending against them or implementing adequate preventive measures even with our various cybersecurity protection and resilience protocols.

Management’s Cyber Expertise

Our cybersecurity program is led by our CIO who is also our Chief Information Security Officer. Our CIO has been with us since 2014 and has over 30 years of information technology and compliance experience. Our CIO has a Bachelor of Science in Management Information Systems and holds the Certified Information Systems Audit security certification as well. Our security members are comprised of various industry technology skilled resources in cybersecurity, business continuity and system recovery, event management, system administration, network engineering, and regulatory compliance with a collective 100 plus years of experience.
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Security operations partners are also leveraged for 24x7x365 managed detection and response support plus provide expert cybersecurity resources as an extension of our team.

Board of Director’s Cyber Oversight

For cybersecurity oversight, the board of directors of our GP training program is designed to inform members of the current cyber threat tactics and provide relevant, periodic educational security technology information. The cybersecurity training program includes:

•An annual presentation overview of our cyber controls and related systems for a comprehensive understanding of our cybersecurity protection and resilience;
•Quarterly cybersecurity training on topics such as ransomware, phishing, impersonation, social engineering, third-party security risks, business email compromise, and artificial intelligence to reinforce general security knowledge; and
•Monthly cybersecurity newsletter distribution for current threat tactics and general security awareness.

Additionally, the CIO presents a quarterly cyber update to the board of directors of our GP for an overview of cyber program key metrics and trends, cyber event executive summaries (based upon occurrence), fiscal year security goals and tracking progression, risk register scoring, and status updates on cyber related projects.

Item 2.    Properties

We believe that we have satisfactory title or valid rights to use all of our material properties. Although some of these properties are subject to liabilities and leases, liens for taxes not yet due and payable, encumbrances, easements and restrictions, we do not believe that any of these burdens will materially interfere with our continued use of these properties in our business, taken as a whole. Our obligations under the ABL Facility, Term Loan B and Indenture are secured by liens and mortgages on substantially all of our real and personal property.

We believe that we have all required material approvals, authorizations, orders, licenses, permits, franchises and consents of, and have obtained or made all required material registrations, qualifications and filings with, the various state and local governmental and regulatory authorities that relate to ownership of our properties or the operations of our business.

Our corporate headquarters are in Tulsa, Oklahoma and are leased. We also lease corporate offices in Denver, Colorado and Houston, Texas.

For additional information regarding our properties and the reportable segments in which they are used, see Part I, Item 1–“Business.”

Item 3.    Legal Proceedings

We are involved from time to time in various legal proceedings and claims arising in the ordinary course of business. For information related to legal proceedings, see the discussion under the caption “Legal Contingencies” in Note 8 to our consolidated financial statements included in this Annual Report, which is incorporated by reference into this Item 3.

Item 103 of SEC Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that we reasonably believe will exceed a specified threshold. Pursuant to SEC regulations, we use a threshold of $1 million for such proceedings. We believe that such threshold is reasonably designed to result in disclosure of environmental proceedings that are material to our business or financial condition. Applying this threshold, there are no environmental matters to disclose for the three years ended March 31, 2025.

Item 4.    Mine Safety Disclosures

Not applicable.
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PART II

Item 5.    Market for Registrant’s Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common units are listed on the New York Stock Exchange (“NYSE”) under the symbol “NGL.” At May 27, 2025, there were approximately 70 common unitholders of record which does not include unitholders for whom common units may be held in “street name.”

Cash Distribution Policy

Available Cash

Our Partnership Agreement requires that, within 45 days after the end of each quarter, we distribute all of our available cash (as defined in our Partnership Agreement) to unitholders as of the record date. Available cash for any quarter generally consists of all cash on hand at the end of that quarter, less the amount of cash reserves established by our GP, to (i) provide for the proper conduct of our business, (ii) comply with applicable law, any of our debt instruments or other agreements, and (iii) provide funds for distributions to our unitholders and to our GP for any one or more of the next four quarters.

General Partner Interest

Our GP is entitled to 0.1% of all quarterly distributions that we make prior to our liquidation. Our GP has the right, but not the obligation, to contribute a proportionate amount of capital to us to maintain its 0.1% GP interest. Our GP’s interest in our distributions may be reduced if we issue additional limited partner units in the future (other than the issuance of common units upon a reset of the IDRs) and our GP does not contribute a proportionate amount of capital to us to maintain its 0.1% GP interest. As of March 31, 2025, we owned 8.69% of our GP.

Incentive Distribution Rights

The GP will also receive, in addition to distributions on its 0.1% GP interest, additional distributions based on the level of distributions to the limited partners. These distributions are referred to as “incentive distributions” or “IDRs.” Our GP currently holds the IDRs, but may transfer these rights separately from its GP interest.

The following table illustrates the percentage allocations of available cash from operating surplus between our limited partner unitholders and our GP based on the specified target distribution levels. The amounts set forth under “Marginal Percentage Interest In Distributions” are the percentage interests of our GP and our limited partner unitholders in any available cash from operating surplus we distribute up to and including the corresponding amount in the column “Total Quarterly Distribution Per Unit,” until available cash from operating surplus we distribute reaches the next target distribution level, if any. The percentage interests shown for our limited partner unitholders and our GP for the minimum quarterly distribution are also applicable to quarterly distribution amounts that are less than the minimum quarterly distribution. The percentage interests set forth below for our GP include its 0.1% GP interest, and assume that our GP has contributed any additional capital necessary to maintain its 0.1% GP interest and has not transferred its IDRs.
Marginal Percentage Interest In Distributions
Total Quarterly Distribution Per Unit Limited Partner Unitholders General 
Partner (1)
Minimum quarterly distribution $ 0.337500  99.9  % 0.1  %
First target distribution above $ 0.337500  up to $ 0.388125  99.9  % 0.1  %
Second target distribution above $ 0.388125  up to $ 0.421875  86.9  % 13.1  %
Third target distribution above $ 0.421875  up to $ 0.506250  76.9  % 23.1  %
Thereafter above $ 0.506250  51.9  % 48.1  %
(1)    The maximum distribution of 48.1% does not include distributions that our GP may receive on common units that it owns.
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Restrictions on the Payment of Distributions

As described in Note 7 to our consolidated financial statements included in this Annual Report, the ABL Facility, Term Loan B and Indenture contain covenants limiting our ability to pay distributions if we are in default under these agreements. Also, the Term Loan B and Indenture restrict us from paying distributions if our total leverage ratio (as defined within the Indenture and Term Loan B agreement) for the most recently ended four full fiscal quarters at the time of the distribution is greater than 4.75 to 1.00, while the ABL Facility restricts the payment of distributions if certain payment conditions (as defined in the ABL Facility) are below certain thresholds. In addition, quarterly distributions on the Preferred Units must be fully paid for all preceding fiscal quarters before we are permitted to declare or pay any distributions on our common units.

Securities Authorized for Issuance Under Equity Compensation Plan

In connection with the completion of our initial public offering, our GP adopted the NGL Energy Partners LP Long-Term Incentive Plan. See Part III, Item 12–“Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters –Securities Authorized for Issuance Under Equity Compensation Plan,” which is incorporated by reference into this Item 5.

Item 6.    [Reserved]

Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

NGL Energy Partners LP, a Delaware master limited partnership (“we,” “us,” “our,” or the “Partnership”), is a diversified midstream energy partnership that transports, treats, recycles and disposes of produced and flowback water generated as part of the energy production process as well as transports, stores, markets and provides other logistics services for crude oil and liquid hydrocarbons. NGL Energy Holdings LLC serves as our general partner (“GP”). At March 31, 2025, our operations included three segments as discussed below.

Sale of Refined Products Business and Exiting Biodiesel Business

As of March 31, 2025, we completed winding down our biodiesel business (see Note 1 to our consolidated financial statements included in this Annual Report for a further discussion).

On March 17, 2025, we signed a purchase and sale agreement to sell our refined products business, including certain working capital items, to a third-party (see Note 1 to our consolidated financial statements included in this Annual Report for a further discussion). This sale closed on April 30, 2025.

The sale of our refined products business and winding down of our biodiesel business 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 for our refined products and biodiesel businesses within our Liquids Logistics segment have been classified as discontinued operations for all periods presented and prior periods have been retrospectively adjusted in the consolidated statements of operations and consolidated statements of cash flows (see Note 18 to our consolidated financial statements included in this Annual Report for a further discussion).

Sale of Certain Natural Gas Liquids Terminals and Most of Our Wholesale Propane Business

On February 5, 2025, we signed a purchase and sale agreement to sell 17 of our natural gas liquids terminals, most of our wholesale propane business, our interest in an unconsolidated entity and working capital to a third-party (see Note 1 to our consolidated financial statements included in this Annual Report for a further discussion). This sale closed on April 30, 2025.

As this sale transaction did not represent a strategic shift that will have a major effect on our operations or financial results, operations related to this portion of our Liquids Logistics segment have not been classified as discontinued operations.

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Water Solutions

Our Water Solutions segment transports, treats, recycles and disposes of produced and flowback water generated from crude oil and natural gas production. We also sell produced water for reuse and recycle and brackish non-potable water to our producer customers to be used in their crude oil exploration and production activities. As part of processing water, we aggregate and sell recovered crude oil, also known as skim oil. We also dispose of solids such as tank bottoms, drilling fluids and drilling muds and perform other ancillary services such as truck and frac tank washouts. Our activities in this segment are underpinned by long-term, fixed fee contracts and acreage dedications, some of which contain minimum volume commitments with leading oil and gas companies including large, investment grade producer customers.

We operate in a number of the most prolific crude oil and natural gas producing areas in the United States including the Delaware Basin in New Mexico and Texas, the Denver-Julesburg (“DJ”) Basin in Colorado and the Eagle Ford Basin in Texas. With a system that handled approximately 958.3 million barrels of produced water across its areas of operation during the year ended March 31, 2025, we believe that we are the largest independent produced water transportation and disposal company in the United States.

The opportunity to generate revenue in our Water Solutions segment is driven in large part by the level of crude oil production in the areas where our facilities are located. Recently, our disposal volumes have been positively impacted by the increase in the level of crude oil production, particularly in the Delaware and Eagle Ford Basins, due to stable crude oil prices. Lower crude oil prices provide producers with less incentive to drill and complete new wells, which results in lower production and negatively impacts our disposal volumes.

Our Water Solutions segment generated operating income of $311.5 million during the year ended March 31, 2025, compared to operating income of $231.3 million during the year ended March 31, 2024.

Crude Oil Logistics

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 and other trade hubs, and provides storage, terminaling and transportation services through its owned assets. Our activities in this segment are supported by certain long-term, fixed rate contracts with acreage dedications and which include minimum volume commitments on our storage tanks and owned and leased pipelines.

Most of our contracts to purchase or sell crude oil are at floating prices that are indexed to published rates in active markets such as Cushing, Oklahoma, St. James, Louisiana, and Magellan East Houston. We attempt to reduce our exposure to price fluctuations by using back-to-back physical contracts whenever possible. When back-to-back physical contracts are not optimal, we enter into financially settled derivative contracts as economic hedges of our physical inventory, physical sales and physical purchase contracts. We use our transportation assets to move crude oil from the wellhead to the highest value market. Spreads between crude oil prices in different markets can fluctuate, which may expand or limit our opportunity to generate margins by transporting crude oil to different markets.

The following table summarizes the range of low and high crude oil spot prices per barrel of New York Mercantile Exchange (“NYMEX”) West Texas Intermediate Crude Oil at Cushing, Oklahoma for the periods indicated and the prices at period end:
Crude Oil Spot Price Per Barrel
Year Ended March 31, Low High At Period End
2025 $ 66.75  $ 86.91  $ 71.48 
2024 $ 67.12  $ 93.68  $ 83.17 
2023 $ 66.74  $ 122.11  $ 75.67 

We believe volatility in commodity prices will continue, and our ability to adjust to and manage this volatility may impact our financial results.

Our Crude Oil Logistics segment generated operating income of $46.1 million during the year ended March 31, 2025, compared to operating income of $52.1 million during the year ended March 31, 2024.

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Liquids Logistics

Our Liquids Logistics segment conducts supply operations for natural gas liquids to commercial, retail and industrial customers across the United States and Canada. These operations are conducted through our five owned terminals, third-party storage and terminal facilities, nine common carrier pipelines and a fleet of leased railcars (updated for the transactions discussed above). We also provide services for marine exports of butane through our facility located in Chesapeake, Virginia and we also own a propane pipeline in Michigan. We attempt to reduce our exposure to price fluctuations by using back-to-back physical contracts and pre-sale agreements that allow us to lock in a margin on a percentage of our winter volumes. We also enter into financially settled derivative contracts as economic hedges of our physical inventory, physical sales and physical purchase contracts.

Our wholesale liquids business is a “cost-plus” business that can be affected by both price fluctuations and volume variations. We establish our selling price based on a pass-through of our product supply, transportation, handling, storage, and capital costs plus a margin.

Weather conditions and gasoline blending can have a significant impact on the demand for propane and butane, and sales volumes and prices are typically higher during the colder months of the year. Consequently, our revenues, operating profits, and operating cash flows are typically lower in the first and second quarters of our fiscal year.

The following table summarizes the range of low and high propane spot prices per gallon at Conway, Kansas, and Mt. Belvieu, Texas, two of our main pricing hubs, for the periods indicated and the prices at period end:
Conway, Kansas Mt. Belvieu, Texas
Propane Spot Price Per Gallon Propane Spot Price Per Gallon
Year Ended March 31, Low High At Period End Low High At Period End
2025 $ 0.61  $ 0.99  $ 0.83  $ 0.49  $ 1.01  $ 0.90 
2024 $ 0.49  $ 0.91  $ 0.78  $ 0.53  $ 0.97  $ 0.84 
2023 $ 0.63  $ 1.34  $ 0.74  $ 0.64  $ 1.39  $ 0.78 

The following table summarizes the range of low and high butane spot prices per gallon at Mt. Belvieu, Texas for the periods indicated and the prices at period end:
Butane Spot Price Per Gallon
Year Ended March 31, Low High At Period End
2025 $ 0.79  $ 1.26  $ 0.95 
2024 $ 0.58  $ 1.14  $ 0.98 
2023 $ 0.85  $ 1.65  $ 0.92 

We believe volatility in commodity prices will continue, and our ability to adjust to and manage this volatility may impact our financial results.

Our Liquids Logistics segment generated operating income of $14.1 million during the year ended March 31, 2025, compared to an operating loss of $13.2 million during the year ended March 31, 2024.

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Consolidated Results of Operations

The following table summarizes our consolidated statements of operations for the periods indicated:
Year Ended March 31,
2025 2024 2023
(in thousands)
Revenues $ 3,469,186  $ 4,153,307  $ 5,679,020 
Cost of sales 2,507,077  3,185,434  4,689,414 
Operating expenses 297,686  299,605  304,589 
General and administrative expense 55,593  121,625  71,483 
Depreciation and amortization 254,732  266,114  273,108 
Loss on disposal or impairment of assets, net 31,448  115,936  86,776 
Revaluation of liabilities (6,705) 2,680  9,665 
Operating income 329,355  161,913  243,985 
Equity in earnings of unconsolidated entities 6,565  4,120  4,120 
Interest expense (280,078) (269,804) (275,438)
(Loss) gain on early extinguishment of liabilities, net —  (55,281) 6,177 
Other income, net 4,262  2,782  30,410 
Income (loss) from continuing operations before income taxes 60,104  (156,270) 9,254 
Income tax benefit (expense) 4,885  (1,458) (219)
Income (loss) from continuing operations 64,989  (157,728) 9,035 
(Loss) income from discontinued operations, net of tax (21,826) 14,604  43,457 
Net income (loss) 43,163  (143,124) 52,492 
Less: Net income from continuing operations attributable to nonredeemable noncontrolling interests (3,749) (631) (1,106)
Less: Net income from continuing operations attributable to redeemable noncontrolling interests (46) —  — 
Net income (loss) attributable to NGL Energy Partners LP $ 39,368  $ (143,755) $ 51,386 

Items Impacting the Comparability of Our Financial Results

Our current and future results of operations may not be comparable to our historical results of operations for the periods presented due to commodity price volatility, demand fluctuations, acquisitions, dispositions and other transactions.

Recent Developments

Dispositions

Disposition transactions impact the comparability of our results of operations between our current and prior fiscal years. See Note 1 and Note 17 to our consolidated financial statements included in this Annual Report for a discussion of dispositions that occurred during the current and prior fiscal years.

Other Developments

Seismic Activity

The subsurface injection of produced water for disposal has been associated with induced seismic events in Texas and New Mexico. While these events have been of relatively low magnitude, industry and relevant state regulators are, nevertheless, taking proactive measures to attempt to prevent similar induced seismic events. More specifically, we are engaged in various collaborative industry efforts with other disposal operators and relevant state regulatory agencies, working to collect and review data, enhance understanding of regional fault systems, and ultimately develop and implement appropriate longer-term mitigation strategies. As part of this effort, we have implemented reductions in injected volumes at certain facilities, and where appropriate have temporarily shut-in facilities. To date, due to the capacity of our integrated system in the affected areas, the diverse locations of our disposal facilities, and the connectivity of our system, our ability to dispose of produced water has not been materially impacted by these actions, and with our unique positioning outside of the affected areas, we have the ability to grow our asset base.

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Seasonality

Seasonality impacts our Liquids Logistics segment. Consequently, for our Liquids Logistics segment, revenues, operating profits and operating cash flows are generated mostly in the third and fourth quarters of our fiscal year. We generally borrow under our asset-based revolving credit facility (“ABL Facility”) to supplement our operating cash flows during the periods in which we are building inventory (see “–Liquidity, Sources of Capital and Capital Resource Activities–General”).

Subsequent Events

See Note 20 to our consolidated financial statements included in this Annual Report for a discussion of transactions that occurred subsequent to March 31, 2025.

Segment Operating Results for the Years Ended March 31, 2025 and 2024

Water Solutions

The following table summarizes the operating results of our Water Solutions segment for the periods indicated.
Year Ended March 31,
2025 2024 Change
(in thousands, except per barrel and per day amounts)
Revenues:
Water disposal service fees $ 599,870  $ 572,972  $ 26,898 
Sale of recovered crude oil 109,008  107,367  1,641 
Recycled water 7,544  9,785  (2,241)
Other revenues 39,265  40,694  (1,429)
Total revenues 755,687  730,818  24,869 
Expenses:
Cost of sales-excluding impact of derivatives 7,848  10,146  (2,298)
Derivative (gain) loss (5,001) 1,148  (6,149)
Operating expenses 214,928  212,052  2,876 
General and administrative expenses 6,120  5,417  703 
Depreciation and amortization expense 217,227  214,480  2,747 
Loss on disposal or impairment of assets, net 9,813  53,639  (43,826)
Revaluation of liabilities (6,705) 2,680  (9,385)
Total expenses 444,230  499,562  (55,332)
Segment operating income $ 311,457  $ 231,256  $ 80,201 
Produced water processed (barrels per day)
Delaware Basin 2,303,142  2,123,337  179,805 
Eagle Ford Basin 175,251  142,374  32,877 
DJ Basin 146,956  150,426  (3,470)
Other Basins —  740  (740)
Total 2,625,349  2,416,877  208,472 
Recycled water (barrels per day) 116,058  84,212  31,846 
Total (barrels per day) 2,741,407  2,501,089  240,318 
Skim oil sold (barrels per day) (1) 4,268  3,992  276 
Service fees for produced water processed ($/barrel) (2)(3) $ 0.63  $ 0.65  $ (0.02)
Recovered crude oil for produced water processed ($/barrel) (2) $ 0.11  $ 0.12  $ (0.01)
Operating expenses for produced water processed ($/barrel) (2) $ 0.22  $ 0.24  $ (0.02)
(1)    As of March 31, 2023, approximately 34,380 barrels of skim oil were stored and were sold during the year ended March 31, 2024.
(2)    Total produced water barrels processed during the years ended March 31, 2025 and 2024 were 958,252,275 and 884,576,981, respectively. These amounts do not include 49,861,950 barrels and 63,968,944 barrels for the years ended March 31, 2025 and 2024, respectively, related to payments made by certain producers for committed volumes not delivered, as discussed further below. In addition, water pipeline revenue, which is included in Other Revenues, includes payments from a producer for 19,257,873 committed barrels not delivered during the year ended March 31, 2025.
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(3)    Excluding payments made by certain producers for committed volumes not delivered and the one-time item discussed below, service fees for produced water processed ($/barrel) would have been $0.60/barrel and $0.61/barrel during the years ended March 31, 2025 and 2024, respectively.

Water Disposal Service Fee Revenues. The increase was due primarily to an increase in produced water volumes processed from contracted customers and higher fees charged for interruptible spot volumes. These increases were partially offset by the expiration of certain higher fee per barrel contracts which were replaced with lower fee per barrel contracts with an extended term and higher volumes received under contracts with lower fees per barrel. There was also a decrease in payments made by certain producers for committed volumes not delivered. In addition, during July 2023, we entered into a transaction in which a portion of the total consideration received was allocated to revenue due to the termination of a minimum volume water disposal contract (see Note 17 to our consolidated financial statements included in this Annual Report).

Recovered Crude Oil Revenues. The increase was due primarily to an increase in skim oil barrels sold due to more skim oil recovered from receiving more water in higher oil cut basins, partially offset by lower realized crude oil prices received from the sale of skim oil barrels. Also, during the year ended March 31, 2024, we sold approximately 34,380 barrels of skim oil that were stored as of March 31, 2023 due to tighter pipeline specifications.

Recycled Water Revenues. Revenue from recycled water includes the sale of produced water and recycled water for use in our customers’ completion activities. The decrease was due primarily to lower pricing for recycled water, partially offset by higher recycled water volumes related to timing of water to be used in completions.

Other Revenues. Other revenues primarily include reimbursements from construction projects, booster operating fees and generator rentals, water pipeline revenues, solids disposal revenues, land surface use revenues and brackish non-potable water revenues. The decrease was due primarily to lower land surface use revenues, mining revenues and lease revenue from certain surface use and compensation agreements primarily due to the sale of our ranches in April 2024 (see Note 17 to our consolidated financial statements included in this Annual Report). We also had lower reimbursements from construction projects, booster operating fees and generator rentals. These decreases were partially offset by higher water pipeline revenue, including payments from a producer for committed volumes not delivered, due to our expanded Lea County Express Pipeline system (“LEX II”) commencing operations during the three months ended December 31, 2024.

Cost of Sales-Excluding Impact of Derivatives. The decrease was due primarily to lower recycling costs and a decrease in disposal fees paid to third-parties, partially offset by costs incurred that will be reimbursed by producers for generator and fuel costs at various booster stations.

Derivative (Gain) Loss. We enter into derivatives in our Water Solutions segment to protect against the risk of a decline in the market price of the crude oil we expect to recover when processing produced water and selling recovered skim oil. During the year ended March 31, 2025, we had $5.0 million of net unrealized losses on derivatives and $10.0 million of net realized gains on derivatives. During the year ended March 31, 2024, we had $0.4 million of net unrealized losses on derivatives and $0.8 million of net realized losses on derivatives.

Operating and General and Administrative Expenses. The increase was due primarily to higher royalty expense due to volumes related to the LEX II pipeline commencing operations and increased volumes at certain other saltwater disposal wells, higher business insurance expense for remediation costs incurred and lower severance taxes in the prior year as a result of a severance tax refund in September 2023 related to prior periods. These increases were partially offset by lower chemical expense due to purchasing fewer chemicals and using them more efficiently and lower repairs and maintenance expense due to the timing of repairs and tank cleaning.

Depreciation and Amortization Expense. The increase was due primarily to depreciation of newly developed facilities and infrastructure, partially offset by certain long-term assets being fully amortized, impaired or sold during the fiscal years ended March 31, 2024 and 2025.

Loss on Disposal or Impairment of Assets, Net. During the year ended March 31, 2025, we recorded a net loss of $15.1 million primarily related to the write down of the value of certain saltwater disposal wells and other assets as well as abandonment of certain capital projects and the retirement of certain other assets. We also recorded a loss of $8.0 million related to the write down of certain investments in unconsolidated entities and related assets to fair value less cost to sell (see Note 18 to our consolidated financial statements included in this Annual Report). In addition, we recorded a $3.4 million loss from the settlement of a dispute related to a force majeure event, which resulted in the plugging and abandoning of a disposal well in a prior period. Lastly, we recorded a net gain of $10.1 million primarily related to the sale of certain assets (see Note 17 to our consolidated financial statements included in this Annual Report) and a gain of $6.5 million from insurance recoveries for certain saltwater disposal facilities and boosters damaged in a prior period.
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During the year ended March 31, 2024, we recorded a net loss of $37.5 million primarily related to the write down of the value of certain saltwater disposal wells as well as the abandonment of certain capital projects and the retirement of certain assets, a net loss of $17.6 million primarily related to the sale of certain assets and an impairment of $2.4 million for certain leases due to underutilization of certain freshwater wells. In addition, we recorded a gain of $3.9 million from insurance recoveries for certain saltwater disposal facilities and boosters damaged in a prior period.

Revaluation of Liabilities. During the year ended March 31, 2025, there was a decrease in expense for the valuation of our contingent consideration liabilities related to royalty agreements acquired as part of certain business combinations due primarily to lower expected produced water volumes from our customers, resulting in a decrease to the expected future royalty payment. During the year ended March 31, 2024, there was an increase in expense for the valuation of our contingent consideration liabilities related to royalty agreements acquired as part of certain business combinations due primarily to higher expected production from new customers, resulting in an increase to the expected future royalty payment.

Crude Oil Logistics

The following table summarizes the operating results of our Crude Oil Logistics segment for the periods indicated:
Year Ended March 31,
2025 2024 Change
(in thousands, except per barrel amounts)
Revenues:
Crude oil sales $ 806,653  $ 1,597,238  $ (790,585)
Crude oil transportation and other sales 73,249  59,373  13,876 
Total revenues 879,902  1,656,611  (776,709)
Expenses:      
Cost of sales-excluding impact of derivatives 771,526  1,514,370  (742,844)
Derivative (gain) loss (2,872) 7,367  (10,239)
Operating expenses 38,408  39,004  (596)
General and administrative expenses 2,673  3,780  (1,107)
Depreciation and amortization expense 25,070  36,922  (11,852)
(Gain) loss on disposal or impairment of assets, net (1,004) 3,094  (4,098)
Total expenses 833,801  1,604,537  (770,736)
Segment operating income $ 46,101  $ 52,074  $ (5,973)
Crude oil sold (barrels) 10,412  20,068  (9,656)
Crude oil transported on owned pipelines (barrels) 22,238  25,611  (3,373)
Crude oil storage capacity - owned and leased (barrels) (1) 5,232  5,232  — 
Crude oil storage capacity leased to third-parties (barrels) (1) 1,650  2,250  (600)
Crude oil inventory (barrels) (1) 339  573  (234)
Crude oil sold ($/barrel) $ 77.473  $ 79.591  $ (2.118)
Cost per crude oil sold ($/barrel) (2) $ 74.100  $ 75.462  $ (1.362)
Crude oil product margin ($/barrel) (2) $ 3.373  $ 4.129  $ (0.756)
(1)    Information is presented as of March 31, 2025 and March 31, 2024, respectively.
(2)    Cost and product margin per barrel excludes the impact of derivatives.

Crude Oil Sales and Cost of Sales-Excluding Impact of Derivatives. The decreases in sales and cost of sales, excluding the impact of derivatives, were due primarily to lower sales volumes due to lower production on acreage dedicated to us in the DJ Basin during the year ended March 31, 2025, compared to the year ended March 31, 2024. Lower crude oil prices also contributed to the decrease.

During the year ended March 31, 2025, the crude oil product margin decreased primarily due to lower volumes as discussed further above. Contributing to the decrease in product margin and margin per barrel was the expiration of certain higher-margin purchase contracts during the year ended March 31, 2024, which resulted in lower margin realized on barrels purchased during the year ended March 31, 2025. The decrease in margin per barrel for the year ended March 31, 2025, compared to the year ended March 31, 2024 was partially offset by higher price and quality differentials realized, and the sale of the remaining pipeline transportation deficiency credits included in gross margin during the year ended March 31, 2025.
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Crude oil product margin calculations do not include gains and losses from derivatives that may offset the movement in the physical margin.

Derivative (Gain) Loss. Our cost of sales during the year ended March 31, 2025 included $1.1 million of net realized losses on derivatives and $4.0 million of net unrealized gains on derivatives. Our cost of sales during the year ended March 31, 2024 included $58.4 million of net realized gains on derivatives and $65.8 million of net unrealized losses on derivatives. The amounts in the previous sentence for the year ended March 31, 2024 includes net realized gains of $60.9 million and net unrealized losses of $61.4 million associated with derivative instruments related to our hedge of the CMA Differential Roll, defined and discussed below under “–Non-GAAP Financial Measures.”

Crude Oil Transportation and Other Sales. The increase was primarily due to higher tariff revenue on the Grand Mesa Pipeline as a result of signing a new shipper during the open season that ended January 5, 2024. Additionally, the year ended March 31, 2025 benefited from higher terminaling revenue from an acreage dedication in the Eagle Ford Basin and higher throughput revenue from crude oil transported on third-party pipelines. These increases were partially offset by lower storage fees at our Cushing terminal during the year ended March 31, 2025.

During the year ended March 31, 2025, physical volumes on the Grand Mesa Pipeline averaged approximately 61,000 barrels per day, compared to approximately 70,000 barrels per day for the year ended March 31, 2024. Lower contracted volumes were shipped on the Grand Mesa Pipeline due to lower production on acreage dedicated to us in the DJ Basin.

Operating and General and Administrative Expenses. The decrease was primarily due to lower utilities expense and lower materials and supplies expense on the Grand Mesa Pipeline and at our Cushing terminal from lower volumes flowing through the system during the year ended March 31, 2025, compared to the year ended March 31, 2024. In addition, the year ended March 31, 2025 benefited from lower cleaning, repairs and maintenance costs on our owned railcars, lower environmental costs at one of our terminals, and lower corporate cost allocations. These decreases were partially offset by higher incentive compensation expenses and higher ad valorem taxes assessed on the Grand Mesa Pipeline by the State of Colorado.

Depreciation and Amortization Expense. The decrease was primarily due to certain assets becoming fully depreciated during the year ended March 31, 2024.

(Gain) Loss on Disposal or Impairment of Assets, Net. During the year ended March 31, 2025, we recorded a net gain of $1.0 million primarily due to the gain on the sale of railcars (see Note 17 to our consolidated financial statements included in this Annual Report), partially offset by the write-down in value of linefill expected to be sold over the next four months and the loss on the sale of certain other assets. During the year ended March 31, 2024, we recorded a net loss of $3.1 million primarily due to the retirement or sale of certain assets.
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Liquids Logistics

The following table summarizes the operating results of our Liquids Logistics segment for the periods indicated. As discussed above, the operating results of our refined products and biodiesel businesses have been classified as discontinued operations for all periods presented and prior periods have been retrospectively adjusted.
Year Ended March 31,
2025 2024 Change
(in thousands, except per gallon amounts)
Propane:
Sales $ 755,646  $ 739,591  $ 16,055 
Cost of sales-excluding impact of derivatives 721,372  692,649  28,723 
Derivative (gain) loss (1,509) 2,463  (3,972)
Product margin 35,783  44,479  (8,696)
Butane:
Sales 649,452  628,685  20,767 
Cost of sales-excluding impact of derivatives 606,694  587,307  19,387 
Derivative loss 14,136  2,771  11,365 
Product margin 28,622  38,607  (9,985)
Other products:
Sales-excluding impact of derivatives 414,985  383,998  30,987 
Cost of sales-excluding impact of derivatives 393,935  367,293  26,642 
Derivative (gain) loss (272) 25  (297)
Product margin 21,322  16,680  4,642 
Service:
Sales 13,529  14,151  (622)
Cost of sales 1,636  1,379  257 
Product margin 11,893  12,772  (879)
Expenses:
Operating expenses 44,350  48,549  (4,199)
General and administrative expenses 7,208  7,281  (73)
Depreciation and amortization expense 9,408  9,963  (555)
Loss on disposal or impairment of assets, net 22,596  59,923  (37,327)
Total expenses 83,562  125,716  (42,154)
Segment operating income (loss) $ 14,058  $ (13,178) $ 27,236 
Natural gas liquids storage capacity - owned and leased (gallons) (1) 52,721  122,831  (70,110)
Propane sold (gallons) 760,287  811,035  (50,748)
Propane sold ($/gallon) $ 0.994  $ 0.912  $ 0.082 
Cost per propane sold ($/gallon) (2) $ 0.949  $ 0.854  $ 0.095 
Propane product margin ($/gallon) (2) $ 0.045  $ 0.058  $ (0.013)
Propane inventory (gallons) (1) 11,833  35,177  (23,344)
Butane sold (gallons) 516,202  537,015  (20,813)
Butane sold ($/gallon) $ 1.258  $ 1.171  $ 0.087 
Cost per butane sold ($/gallon) (2) $ 1.175  $ 1.094  $ 0.081 
Butane product margin (loss) ($/gallon) (2) $ 0.083  $ 0.077  $ 0.006 
Butane inventory (gallons) (1) 21,871  17,790  4,081 
Other products sold (gallons) 277,495  263,422  14,073 
Other products sold ($/gallon) $ 1.495  $ 1.458  $ 0.037 
Cost per other products sold ($/gallon) (2) $ 1.420  $ 1.394  $ 0.026 
Other products product margin ($/gallon) (2) $ 0.075  $ 0.064  $ 0.011 
Other products inventory (gallons) (1) 8,556  5,623  2,933 
(1)    Information is presented as of March 31, 2025 and March 31, 2024, respectively.
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(2)    Cost and product margin (loss) per gallon excludes the impact of derivatives.

Propane Sales and Cost of Sales-Excluding Impact of Derivatives. The increases in sales and cost of sales, excluding the impact of derivatives, were primarily due to higher prices during the quarter ended March 31, 2025 due to the cold weather experienced throughout the United States during the first two months of the quarter. Propane volumes decreased during the year ended March 31, 2025 due to lower contracted volumes and reduced retail customer demand.

Propane product margins, excluding the impact of derivatives, decreased during the year ended March 31, 2025 primarily due to lower volumes. For most of the year ended March 31, 2025, we sold higher priced inventory into a market of declining prices, compared to the year ended March 31, 2024, when we were selling lower priced inventory into a market with rising prices. In addition, during the quarter ended March 31, 2025, due to an increase in demand due to the colder than normal weather, we were short product and had to purchase spot barrels at higher prices to fulfill term obligations, resulting in lower margins.

Propane Derivative (Gain) Loss. Our cost of propane sales included $3.0 million of net unrealized losses on derivatives and $4.5 million of net realized gains on derivatives during the year ended March 31, 2025. During the year ended March 31, 2024, our cost of propane sales included $4.6 million of net unrealized gains on derivatives and $7.0 million of net realized losses on derivatives.

Butane Sales and Cost of Sales-Excluding Impact of Derivatives. The increases in sales and cost of sales, excluding the impact of derivatives, were due primarily to higher butane prices during the year ended March 31, 2025.

Butane product margins, excluding the impact of derivatives, increased during the year ended March 31, 2025, as compared to the year ended March 31, 2024, primarily due to higher prices, partially offset by lower volumes due to a weak gasoline blending season.

Butane Derivative Loss. Our cost of butane sales during the year ended March 31, 2025 included $0.6 million of net unrealized gains on derivatives and $14.7 million of net realized losses on derivatives. Our cost of butane sales included $3.2 million of net unrealized losses on derivatives and $0.5 million of net realized gains on derivatives during the year ended March 31, 2024.

Other Products Sales and Cost of Sales-Excluding Impact of Derivatives. The increases in sales and cost of sales, excluding the impact of derivatives, were primarily due to an increase in prices and volumes. Strong spot markets led to an increase in isobutane and natural gasoline sales and asphalt sales increased due to a consistent supply during the year ended March 31, 2025.

Other products sales product margins, excluding the impact of derivatives, increased during the year ended March 31, 2025 due to the increase in volumes and prices, as discussed further above.

Other Products Derivative (Gain) Loss. Our derivatives of other products included $0.3 million of net realized gains on derivatives during the year ended March 31, 2025. Our derivatives of other products during the year ended March 31, 2024 included $0.1 million of net realized gains on derivatives and $0.1 million of net unrealized losses on derivatives.

Service Sales and Cost of Sales. The sales include storage, terminaling and transportation services income. Sales and cost of sales during the year ended March 31, 2025 remained consistent with the year ended March 31, 2024.

Operating and General and Administrative Expenses. The decrease during the year ended March 31, 2025 compared to the year ended March 31, 2024 was primarily due to a decrease in incentive compensation due to lower than expected earnings, a decrease in travel and entertainment expenses due to our efforts in the prior year to visit all customers and lower office lease expense due to the sale of certain terminals in the prior year.

Depreciation and Amortization Expense. The decrease was due to a customer relationship intangible asset being fully amortized as of June 30, 2023.

Loss on Disposal or Impairment of Assets, Net. During the year ended March 31, 2025, we recorded a net loss of $22.6 million. The net loss was due to a goodwill impairment loss of $17.9 million in our Wholesale/Terminal reporting unit (see Note 5 to our consolidated financial statements included in this Annual Report). We also recorded a net loss of $7.3 million due to costs incurred related to the sale of certain natural gas liquid terminals and a net gain of $2.0 million for the sale of the Green Bay terminal discussed in Note 17 to our consolidated financial statements included in this Annual Report. During the year ended March 31, 2024, we recorded a goodwill impairment loss of $69.2 million in our Wholesale/Terminal reporting unit (see Note 5 to our consolidated financial statements included in this Annual Report).
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In addition, we recorded a net gain of $8.5 million due to the sale of three natural gas liquids terminals and we recorded a net gain of $0.8 million related to the retirement or sale of certain other assets.

Corporate and Other

The operating loss within “Corporate and Other” includes the following components for the periods indicated:
Year Ended March 31,
2025 2024 Change
(in thousands)
Other revenues:  
Service revenues $ 401  $ —  $ 401 
Cost of sales:
Derivative gain —  (937) 937 
Expenses:  
General and administrative expenses 39,592  105,147  (65,555)
Depreciation and amortization expense 3,027  4,749  (1,722)
Loss (gain) on disposal or impairment of assets, net 43  (720) 763 
Total expenses 42,662  109,176  (66,514)
Operating loss $ (42,261) $ (108,239) $ 65,978 

Service Revenues. These revenues relate to billings to the noncontrolling interest holders for usage of the airplanes acquired in June and October 2024.

Cost of Sales - Derivative Gain. Our cost of sales during the year ended March 31, 2024 included $0.2 million of net realized losses on derivatives and $1.2 million of net unrealized gains on derivatives. We entered into economic hedges to protect our liquidity positions and leverage from a significant increase in commodity prices that drive our working capital demands. There were no open hedge positions that would impact cost of sales as of March 31, 2025.

General and Administrative Expenses. The decrease during the year ended March 31, 2025 is primarily due to the increase in our accrual as of March 31, 2024, related to the LCT Capital, LLC (“LCT”) legal matter (see Note 8 to our consolidated financial statements included in this Annual Report and also in the section below discussing the segment operating results for the years ended March 31, 2024 and 2023). The decrease also relates to lower legal expenses as several large cases ended and lower business insurance expense as we paid an insurance company in the prior year for the release of any supplementary calls related to our former crude marine business. Compensation expense was also lower due to the elimination of the share-based compensation expense due to all outstanding long-term incentive plan awards being fully vested in November 2023.

Depreciation and Amortization Expense. The decrease during the year ended March 31, 2025 was due to software that became fully depreciated during the year ended March 31, 2024.

Loss (Gain) on Disposal or Impairment of Assets, Net. During the year ended March 31, 2025, we recorded a net loss of less than $0.1 million due to the write-off of information technology equipment. During the year ended March 31, 2024, we sold an airplane for a gain of $0.7 million.

Equity in Earnings of Unconsolidated Entities

Equity in earnings of unconsolidated entities was $6.6 million during the year ended March 31, 2025, compared to $4.1 million during the year ended March 31, 2024. The increase of $2.5 million during the year ended March 31, 2025 was due primarily to higher earnings from certain membership interests related to specific land and water services operations.

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Interest Expense

The following table summarizes the components of our consolidated interest expense for the periods indicated:
Year Ended March 31,
2025 2024 Change
(in thousands)
Senior secured notes $ 182,000  $ 160,088  $ 21,912 
Senior secured term loan “B” credit facility (“Term Loan B”) 63,118  11,275  51,843 
ABL Facility 20,893  15,645  5,248 
Senior unsecured notes —  40,829  (40,829)
Other indebtedness 1,630  26,781  (25,151)
Total debt interest expense 267,641  254,618  13,023 
Amortization of debt issuance costs 12,010  15,701  (3,691)
Unrealized loss (gain) on interest rate swaps 3,054  (515) 3,569 
Realized gain on interest rate swaps (2,627) —  (2,627)
Total interest expense $ 280,078  $ 269,804  $ 10,274 

The debt interest expense increased $13.0 million during the year ended March 31, 2025 primarily due to higher interest rates on the Term Loan B, the 8.125% senior secured notes due 2029 (“2029 Senior Secured Notes”) and the 8.375% senior secured notes due 2032 (“2032 Senior Secured Notes”). This was partially offset by the repurchase/redemption of the 6.125% senior unsecured notes due 2025 (“2025 Notes”) and the redemption of the 7.5% senior unsecured notes due 2026 (“2026 Notes”) (collectively, the “Senior Unsecured Notes”) during the year ended March 31, 2024. Also, in the prior year we had an interest accrual of $26.1 million, included in other indebtedness, related to the LCT legal matter (see Note 8 to our consolidated financial statements included in this Annual Report).

Loss on Early Extinguishment of Liabilities, Net

Loss on early extinguishment of liabilities, net was $55.3 million during the year ended March 31, 2024. During the year ended March 31, 2024, the net loss (inclusive of debt issuance costs written off) primarily relates to the call premium of $38.4 million paid for the early extinguishment of the outstanding 7.5% senior secured notes due 2026 (“2026 Senior Secured Notes”), the write-off of debt issuance costs and other expenses related to the repurchase/redemption of the 2026 Senior Secured Notes and Senior Unsecured Notes during the fiscal year. We did not repurchase any debt during the year ended March 31, 2025. See Note 7 to our consolidated financial statements included in this Annual Report for a further discussion of the debt instruments repurchased and redeemed.

Other Income, Net

Other income, net of $4.3 million during the year ended March 31, 2025 consisted primarily of a gain on the expiration of an option, realized and unrealized gains on marketable securities, interest income on loan receivables (see Note 2 to our consolidated financial statements included in this Annual Report for a further discussion) and unrealized losses on investments. Other income, net of $2.8 million during the year ended March 31, 2024 consisted primarily of interest income on loan receivables and cash on hand, income from the settlement of a dispute and income from excess distributions received from an equity method investee.

Income Tax Benefit (Expense)

Income tax benefit was $4.9 million during the year ended March 31, 2025, compared to income tax expense of $1.5 million during the year ended March 31, 2024. See Note 2 to our consolidated financial statements included in this Annual Report for a further discussion.

Noncontrolling Interests - Redeemable and Nonredeemable

Noncontrolling interests represent the portion of certain consolidated subsidiaries that are owned by third-parties. Noncontrolling interest income was $3.8 million during the year ended March 31, 2025, compared to $0.6 million during the year ended March 31, 2024. The increase of $3.2 million during the year ended March 31, 2025 was due primarily to higher income from certain water solutions operations.

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Segment Operating Results for the Years Ended March 31, 2024 and 2023

Water Solutions

The following table summarizes the operating results of our Water Solutions segment for the periods indicated.
  Year Ended March 31,
  2024 2023 Change
  (in thousands, except per barrel and per day amounts)
Revenues:      
Water disposal service fees $ 572,972  $ 524,689  $ 48,283 
Sale of recovered crude oil 107,367  120,705  (13,338)
Recycled water 9,785  13,841  (4,056)
Other revenues 40,694  37,803  2,891 
Total revenues 730,818  697,038  33,780 
Expenses:      
Cost of sales-excluding impact of derivatives 10,146  9,737  409 
Derivative loss 1,148  4,363  (3,215)
Operating expenses 212,052  212,115  (63)
General and administrative expenses 5,417  8,722  (3,305)
Depreciation and amortization expense 214,480  207,081  7,399 
Loss on disposal or impairment of assets, net 53,639  46,431  7,208 
Revaluation of liabilities 2,680  9,665  (6,985)
Total expenses 499,562  498,114  1,448 
Segment operating income $ 231,256  $ 198,924  $ 32,332 
Produced water processed (barrels per day)
Delaware Basin 2,123,337  2,042,777  80,560 
Eagle Ford Basin 142,374  119,458  22,916 
DJ Basin 150,426  150,619  (193)
Other Basins 740  14,483  (13,743)
Total 2,416,877  2,327,337  89,540 
Recycled water (barrels per day) 84,212  118,847  (34,635)
Total (barrels per day) 2,501,089  2,446,184  54,905 
Skim oil sold (barrels per day) (1) 3,992  3,764  228 
Service fees for produced water processed ($/barrel) (2)(3) $ 0.65  $ 0.62  $ 0.03 
Recovered crude oil for produced water processed ($/barrel) (2) $ 0.12  $ 0.14  $ (0.02)
Operating expenses for produced water processed ($/barrel) (2) $ 0.24  $ 0.25  $ (0.01)
(1)    As of March 31, 2023, approximately 34,380 barrels of skim oil were stored and were sold during the year ended March 31, 2024.
(2)    Total produced water barrels processed during the years ended March 31, 2024 and 2023 were 884,576,981 and 849,477,938, respectively. These amounts do not include 63,968,944 barrels and 36,143,594 barrels for the years ended March 31, 2024 and 2023, respectively, related to payments made by certain producers for committed volumes not delivered, as discussed further below.
(3)    Excluding payments made by certain producers for committed volumes not delivered and the one-time item discussed below, service fees for produced water processed ($/barrel) would have been $0.61/barrel and $0.59/barrel during the years ended March 31, 2024 and 2023, respectively.

Water Disposal Service Fee Revenues. The increase was due primarily to an increase in produced water volumes processed from contracted customers mainly in the Delaware Basin, increased fees from new contracts and higher fees charged for interruptible spot volumes. There was also an increase in payments made by certain producers for committed volumes not delivered. Service fees for produced water processed ($/barrel) also benefited from these deficiency payments. In addition, during July 2023, we entered into a transaction in which a portion of the total consideration received was allocated to revenue due to the termination of a minimum volume water disposal contract (see Note 17 to our consolidated financial statements included in this Annual Report).

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Recovered Crude Oil Revenues. The decrease was due primarily to lower realized crude oil prices received from the sale of skim oil barrels, partially offset by an increase in skim oil barrels sold as a result of higher skim oil recovered from increased produced water processed. In addition, during the current fiscal year we sold 34,380 barrels of skim oil that were stored as of March 31, 2023 due to tighter pipeline specifications.

Recycled Water Revenues. The decrease was due primarily to lower recycled water volumes related to timing of water to be used in completions.

Other Revenues. The increase was due primarily to higher reimbursements from construction projects, booster operating fees and generator rentals, higher land surface use revenues and higher lease revenue from certain surface use and compensation agreements. These increases were partially offset by lower water pipeline revenues due to the expiration of certain pipeline commitment revenue in December 2022 and lower sales of brackish non-potable water related to the timing of our customers transitioning from brackish non-potable water to recycled water.

Cost of Sales-Excluding Impact of Derivatives. The increase was due primarily to costs incurred that will be reimbursed by producers for generator and fuel costs at various booster stations. In addition, we incurred increased trucking expenses for skim oil sales during the year ended March 31, 2024. These increases were partially offset by lower recycling costs due to a decrease in recycling activity and lower purchases of brackish non-potable water from third-parties to meet customer needs.

Derivative Loss. We enter into derivatives in our Water Solutions segment to protect against the risk of a decline in the market price of the crude oil we expect to recover when processing produced water and selling recovered skim oil. During the year ended March 31, 2024, we had $0.4 million of net unrealized losses on derivatives and $0.8 million of net realized losses on derivatives. During the year ended March 31, 2023, we had $4.5 million of net unrealized gains on derivatives and $8.8 million of net realized losses on derivatives.

Operating and General and Administrative Expenses. The decrease was due primarily to lower chemical expense due to purchasing fewer chemicals and using chemicals more efficiently, lower overhead costs, lower generator rental expense due to renting fewer generators and lower severance taxes due to a decrease in revenue from recovered crude oil and a severance tax refund in September 2023 related to prior periods. These decreases were partially offset by higher operating expenses due to increased produced water volumes processed.

Depreciation and Amortization Expense. The increase was due primarily to depreciation of newly developed facilities and infrastructure, partially offset by certain long-term assets being fully amortized or impaired during the fiscal years ended March 31, 2023 and 2024.

Loss on Disposal or Impairment of Assets, Net. During the year ended March 31, 2024, we recorded a net loss of $37.5 million primarily related to the write down of the value of certain saltwater disposal wells as well as the abandonment of certain capital projects and the retirement of certain assets, a net loss of $17.6 million primarily related to the sale of certain assets and an impairment of $2.4 million for certain leases due to underutilization of certain freshwater wells. In addition, we recorded a gain of $3.9 million from insurance recoveries for certain saltwater disposal facilities and boosters damaged in a prior period. During the year ended March 31, 2023, we recorded a net loss of $26.3 million primarily related to the sale of certain assets and a net loss of $21.8 million to write down the value of an inactive saltwater disposal facility and damaged equipment at another saltwater disposal facility, as well as the abandonment of certain capital projects and the retirement of certain assets. We also recorded a loss of $0.5 million related to the termination of a joint marketing agreement. In addition, we recorded a gain of $2.1 million from an insurance recovery for a saltwater disposal facility damaged in a prior period.

Revaluation of Liabilities. During the years ended March 31, 2024 and 2023, there was an increase in expense for the valuation of our contingent consideration liabilities related to royalty agreements acquired as part of certain business combinations due primarily to higher expected produced water volumes from our customers, resulting in an increase to the expected future royalty payment.

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Crude Oil Logistics

The following table summarizes the operating results of our Crude Oil Logistics segment for the periods indicated:
Year Ended March 31,
2024 2023 Change
(in thousands, except per barrel amounts)
Revenues:
Crude oil sales $ 1,597,238  $ 2,376,434  $ (779,196)
Crude oil transportation and other sales 59,373  96,978  (37,605)
Total revenues 1,656,611  2,473,412  (816,801)
Expenses:      
Cost of sales-excluding impact of derivatives 1,514,370  2,274,089  (759,719)
Derivative loss (gain) 7,367  (14,565) 21,932 
Operating expenses 39,004  50,154  (11,150)
General and administrative expenses 3,780  4,547  (767)
Depreciation and amortization expense 36,922  46,577  (9,655)
Loss on disposal or impairment of assets, net 3,094  31,086  (27,992)
Total expenses 1,604,537  2,391,888  (787,351)
Segment operating income $ 52,074  $ 81,524  $ (29,450)
Crude oil sold (barrels) 20,068  25,497  (5,429)
Crude oil transported on owned pipelines (barrels) 25,611  27,714  (2,103)
Crude oil storage capacity - owned and leased (barrels) (1) 5,232  5,232  — 
Crude oil storage capacity leased to third-parties (barrels) (1) 2,250  1,501  749 
Crude oil inventory (barrels) (1) 573  684  (111)
Crude oil sold ($/barrel) $ 79.591  $ 93.204  $ (13.613)
Cost per crude oil sold ($/barrel) (2) $ 75.462  $ 89.190  $ (13.728)
Crude oil product margin ($/barrel) (2) $ 4.129  $ 4.014  $ 0.115 
(1)    Information is presented as of March 31, 2024 and March 31, 2023, respectively.
(2)    Cost and product margin per barrel excludes the impact of derivatives.

Crude Oil Sales and Cost of Sales-Excluding Impact of Derivatives. The decreases in sales and cost of sales, excluding the impact of derivatives, were due primarily to lower sales volumes due to lower production on acreage dedicated to us in the DJ Basin during the year ended March 31, 2024, compared to the year ended March 31, 2023 and a decrease in crude oil prices year over year.

Crude oil product margin from the sale of crude oil decreased from $102.3 million for the year ended March 31, 2023 to $82.9 million during the year ended March 31, 2024, primarily due to lower volumes and lower crude oil prices year over year. The lower crude oil prices resulted in lower contracted rates with certain producers, compared to the prior year when the contracted rates were higher due to the higher crude oil prices. We also realized lower contract differentials on certain other sales contracts.

Crude oil product margin per barrel increased during the year ended March 31, 2024, compared to the year ended March 31, 2023, due to the sale of lower priced inventory into a market in which prices were increasing during certain periods of 2024. Whereas during the year ended March 31, 2023, we were selling higher priced inventory into a market in which prices were generally declining throughout the fiscal year. Crude oil product margin calculations does not include gains and losses from derivatives that may offset the movement in the physical margin.

Derivative Loss (Gain). Our cost of sales during the year ended March 31, 2024 included $58.4 million of net realized gains on derivatives and $65.8 million of net unrealized losses on derivatives. The amounts in the previous sentence for the year ended March 31, 2024 included net realized gains of $60.9 million and net unrealized losses of $61.4 million associated with derivative instruments related to our hedge of the CMA Differential Roll, defined and discussed below under “–Non-GAAP Financial Measures.” Our cost of sales during the year ended March 31, 2023 included $35.5 million of net realized losses on derivatives and $50.1 million of net unrealized gains on derivatives. The amounts in the previous sentence for the year ended March 31, 2023 includes net realized losses of $13.1 million and net unrealized gains of $23.8 million associated with derivative instruments related to our hedge of the CMA Differential Roll.
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Crude Oil Transportation and Other Sales. The decrease was primarily due to the sale of our marine assets on March 30, 2023, and lower pipeline tariff revenue due to the assignment of our commitment on a third-party pipeline.

During the year ended March 31, 2024, physical volumes on the Grand Mesa Pipeline averaged approximately 70,000 barrels per day, compared to approximately 76,000 barrels per day for the year ended March 31, 2023. Lower contracted volumes were shipped on the Grand Mesa Pipeline due to lower production on acreage dedicated to us in the DJ Basin.

Operating and General and Administrative Expenses. The decrease was primarily due to the sale of our marine assets on March 30, 2023. Additionally, the current year benefited from lower incentive compensation expense, as well as lower repairs and maintenance expense on leased railcars returned to the lessor in the prior year.

Depreciation and Amortization Expense. The decrease was primarily due to the sale of our marine assets on March 30, 2023, lower depreciation expense due to certain of our railcar assets becoming fully depreciated during the year ended March 31, 2024 and the impairment of certain terminal assets in the prior year, which lowered their depreciable base.

Loss on Disposal or Impairment of Assets, Net. During the year ended March 31, 2024, we recorded a net loss of $3.1 million primarily due to the retirement or sale of certain assets. During the year ended March 31, 2023, we recorded an impairment of $23.1 million related to an underperforming crude oil terminal and a loss of $8.0 million on the sale of our marine assets.
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Liquids Logistics

The following table summarizes the operating results of our Liquids Logistics segment for the periods indicated. As discussed above, the operating results of our refined products and biodiesel businesses have been classified as discontinued operations for all periods presented and prior periods have been retrospectively adjusted.
Year Ended March 31,
2024 2023 Change
(in thousands, except per gallon amounts)
Propane:
Sales $ 739,591  $ 1,161,129  $ (421,538)
Cost of sales-excluding impact of derivatives 692,649  1,103,786  (411,137)
Derivative loss 2,463  11,642  (9,179)
Product margin 44,479  45,701  (1,222)
Butane:
Sales 628,685  773,633  (144,948)
Cost of sales-excluding impact of derivatives 587,307  776,845  (189,538)
Derivative loss (gain) 2,771  (22,976) 25,747 
Product margin 38,607  19,764  18,843 
Other products:
Sales -excluding impact of derivatives 383,998  568,180  (184,182)
Cost of sales-excluding impact of derivatives 367,293  551,053  (183,760)
Derivative loss 25  1,246  (1,221)
Product margin 16,680  15,881  799 
Service:
Sales 14,151  14,218  (67)
Cost of sales 1,379  1,603  (224)
Product margin 12,772  12,615  157 
Expenses:
Operating expenses 48,549  42,320  6,229 
General and administrative expenses 7,281  7,236  45 
Depreciation and amortization expense 9,963  12,788  (2,825)
Loss on disposal or impairment of assets, net 59,923  10,171  49,752 
Total expenses 125,716  72,515  53,201 
Segment operating (loss) income $ (13,178) $ 21,446  $ (34,624)
Natural gas liquids storage capacity - owned and leased (gallons) (1) 122,831  152,719  (29,888)
Propane sold (gallons) 811,035  1,018,937  (207,902)
Propane sold ($/gallon) $ 0.912  $ 1.140  $ (0.228)
Cost per propane sold ($/gallon) (2) $ 0.854  $ 1.083  $ (0.229)
Propane product margin ($/gallon) (2) $ 0.058  $ 0.057  $ 0.001 
Propane inventory (gallons) (1) 35,177  48,379  (13,202)
Butane sold (gallons) 537,015  539,658  (2,643)
Butane sold ($/gallon) $ 1.171  $ 1.434  $ (0.263)
Cost per butane sold ($/gallon) (2) $ 1.094  $ 1.440  $ (0.346)
Butane product margin (loss) ($/gallon) (2) $ 0.077  $ (0.006) $ 0.083 
Butane inventory (gallons) (1) 17,790  17,409  381 
Other products sold (gallons) 263,422  318,511  (55,089)
Other products sold ($/gallon) $ 1.458  $ 1.784  $ (0.326)
Cost per other products sold ($/gallon) (2) $ 1.394  $ 1.730  $ (0.336)
Other products product margin ($/gallon) (2) $ 0.064  $ 0.054  $ 0.010 
Other products inventory (gallons) (1) 5,623  3,889  1,734 
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(1)    Information is presented as of March 31, 2024 and March 31, 2023, respectively.
(2)    Cost and product margin (loss) per gallon excludes the impact of derivatives.

Propane Sales and Cost of Sales-Excluding Impact of Derivatives. The decreases in sales and cost of sales, excluding the impact of derivatives, were due to lower propane volumes and lower prices during the year ended March 31, 2024. Propane volumes decreased during the year ended March 31, 2024 due to the sale of three natural gas liquids terminals, the loss of a certain supply contract, lower performing natural gas liquids terminals being idled and a focus on more profitable markets and customers. Also, demand was lower during the year ended March 31, 2024 due to the warmer than normal winter.

Propane product margins, excluding the impact of derivatives, decreased during the year ended March 31, 2024 primarily due to lower volumes and lower prices.

Propane Derivative Loss. Our cost of propane sales included $4.6 million of net unrealized gains on derivatives and $7.0 million of net realized losses on derivatives during the year ended March 31, 2024. During the year ended March 31, 2023, our cost of propane sales included $6.9 million of net unrealized losses on derivatives and $4.7 million of net realized losses on derivatives.

Butane Sales and Cost of Sales-Excluding Impact of Derivatives. The decreases in sales and cost of sales, excluding the impact of derivatives, were due primarily to lower butane prices. The decrease was also due to lower volumes during the first six months of the year ended March 31, 2024 as a result of weak spot demand, weak export demand and a change in strategy by a significant customer. These decreases were partially offset by strong blending demand from October 2023 through February 15, 2024.

Butane product margins, excluding the impact of derivatives, increased during the year ended March 31, 2024, as compared to the year ended March 31, 2023, primarily due to higher demand for butane blending which has tightened up the butane supply, causing sales differentials to increase. Also, in the prior year, we were negatively impacted by lower location differentials as the product we contracted to purchase in the beginning of the season was continuing to compete with product purchased in the discounted market.

Butane Derivative Loss (Gain). Our cost of butane sales during the year ended March 31, 2024 included $3.2 million of net unrealized losses on derivatives and $0.5 million of net realized gains on derivatives. Our cost of butane sales included $3.9 million of net unrealized gains on derivatives and $19.1 million of net realized gains on derivatives during the year ended March 31, 2023.

Other Products Sales and Cost of Sales-Excluding Impact of Derivatives. The decreases in sales and cost of sales, excluding the impact of derivatives, were due primarily to the decrease in market prices during the year ended March 31, 2024 as compared to the year ended March 31, 2023. The decrease was also the result of lower natural gasoline volumes due to the loss of certain supply contracts. These decreases were partially offset by increased sales of asphalt due to increased supply.

Other products sales product margins, excluding the impact of derivatives, decreased during the year ended March 31, 2024, mainly due to loss of certain supply contracts for natural gasoline as well as decreased market prices for natural gasoline.

Other Products Derivative Loss. Our derivatives of other products included $0.1 million of net realized gains on derivatives and $0.1 million of net unrealized losses on derivatives during the year ended March 31, 2024. Our derivatives of other products during the year ended March 31, 2023 included $1.3 million of net realized losses on derivatives and $0.1 million of net unrealized gains on derivatives.

Service Sales and Cost of Sales. The sales include storage, terminaling and transportation services income. Sales during the year ended March 31, 2024 remained consistent with the year ended March 31, 2023 but cost of sales decreased due to lower third-party costs.

Operating and General and Administrative Expenses. The increase was due to higher incentive compensation due to improved margins in certain of our businesses year over year.

Depreciation and Amortization Expense. The decrease was due to a customer relationship intangible asset being fully amortized as of June 30, 2023.

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Loss on Disposal or Impairment of Assets, Net. During the year ended March 31, 2024, we recorded a goodwill impairment loss of $69.2 million in our Wholesale/Terminal reporting unit (see Note 5 to our consolidated financial statements included in this Annual Report). In addition, we recorded a net gain of $8.5 million due to the sale of three natural gas liquids terminals and we recorded a net gain of $0.8 million related to the retirement or sale of certain other assets. During the year ended March 31, 2023, we recorded a net loss of $10.1 million due to the impairment of several underperforming natural gas liquids terminals. In addition, during the year ended March 31, 2023, we recorded a net loss of $0.1 million related to the sale and retirement of other assets.

Corporate and Other

The operating loss within “Corporate and Other” includes the following components for the periods indicated:
Year Ended March 31,
2024 2023 Change
(in thousands)
Cost of sales:  
Derivative (gain) loss $ (937) $ 1,181  $ (2,118)
Expenses:  
General and administrative expenses 105,147  50,978  54,169 
Depreciation and amortization expense 4,749  6,662  (1,913)
Gain on disposal or impairment of assets, net (720) (912) 192 
Total expenses 109,176  56,728  52,448 
Operating loss $ (108,239) $ (57,909) $ (50,330)

Cost of Sales - Derivative (Gain) Loss. Our cost of sales during the year ended March 31, 2024 included $0.2 million of net realized losses on derivatives and $1.2 million of net unrealized gains on derivatives. We entered into economic hedges to protect our liquidity positions and leverage from a significant increase in commodity prices that drive our working capital demands, as we experienced in the prior fiscal year, thus impacting our ability to reduce absolute indebtedness until commodity prices weakened. There were no open hedge positions that would impact cost of sales as of March 31, 2024.

General and Administrative Expenses. The increase during the year ended March 31, 2024 relates primarily to the increase in our accrual related to the LCT legal matter from $2.5 million to $36.0 million (see Note 8 to our consolidated financial statements included in this Annual Report), and the write-off of $14.2 million of legal costs related to the LCT legal matter that were originally allocated to the GP. In addition, we also incurred increased business insurance expense as we paid the insurance company to be released from any future supplementary calls on our indemnity policy related to our former crude marine business (which we sold on March 30, 2023), increased insurance premiums and a reduction in our corporate overhead allocation to the other business segments. These increases were partially offset by a decrease in equity-based incentive compensation as our final service award vested on November 15, 2023.

Depreciation and Amortization Expense. The decrease during the year ended March 31, 2024 was due to software that became fully depreciated during the year ended March 31, 2024.

Gain on Disposal or Impairment of Assets, Net. During the year ended March 31, 2024, we sold an airplane for a gain of $0.7 million. During the year ended March 31, 2023, we sold an airplane for a gain of $1.3 million, which was partially offset by a loss recorded to write-off the remaining amount of a loan receivable, due July 31, 2023, that was prepaid by the debtor and an impairment loss recorded on the sublease of a building we were no longer using.

Equity in Earnings of Unconsolidated Entities

Equity in earnings of unconsolidated entities of $4.1 million during the year ended March 31, 2024 consisted primarily of earnings from certain membership interests related to specific land and water services operations and earnings from another entity due to a gain recognized on the sale of an airplane during the three months ended December 31, 2023. Equity in earnings of unconsolidated entities of $4.1 million during the year ended March 31, 2023 consisted primarily of earnings from certain membership interests related to specific land and water services operations and a loss from our interest in an aircraft company.

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Interest Expense

The following table summarizes the components of our consolidated interest expense for the periods indicated:
Year Ended March 31,
2024 2023 Change
(in thousands)
Senior secured notes $ 160,088  $ 153,750  $ 6,338 
Senior unsecured notes 40,829  76,288  (35,459)
ABL Facility 15,645  17,111  (1,466)
Term Loan B 11,275  —  11,275 
Other indebtedness 26,781  11,552  15,229 
Total debt interest expense 254,618  258,701  (4,083)
Amortization of debt issuance costs 15,701  16,737  (1,036)
Unrealized gain on interest rate swaps (515) —  (515)
Total interest expense $ 269,804  $ 275,438  $ (5,634)

The debt interest expense decreased $4.1 million during the year ended March 31, 2024 primarily due to the repurchase of the 7.5% senior unsecured notes due 2023 (“2023 Notes”) throughout the prior year and the redemption of the remaining 2023 Notes on March 31, 2023. In addition, we repurchased a portion of the outstanding 2025 Notes during the three months ended June 30, 2023. Also, in the prior year, we had an accrual of the settlement of a claim for the failure to pay interest on royalty payments. These decreases were partially offset by $26.1 million of interest accrued related to the LCT legal matter (see Note 8 to our consolidated financial statements included in this Annual Report) and an increase due to higher interest rates on the new debt instruments.

(Loss) Gain on Early Extinguishment of Liabilities, Net

Loss on early extinguishment of liabilities, net was $55.3 million during the year ended March 31, 2024, compared to a gain on early extinguishment of liabilities, net of $6.2 million during the year ended March 31, 2023. During the year ended March 31, 2024, the net loss (inclusive of debt issuance costs written off) primarily relates to the call premium of $38.4 million paid for the early extinguishment of the outstanding 2026 Senior Secured Notes, the write-off of debt issuance costs and other expenses related to the repurchase/redemption of the 2026 Senior Secured Notes and Senior Unsecured Notes during the fiscal year. During the year ended March 31, 2023, the net gain (inclusive of debt issuance costs written off) primarily related to the early extinguishment of a portion of the outstanding Senior Unsecured Notes partially offset by the write-off of debt issuance costs. In addition, we paid a prepayment premium of $1.6 million and wrote off debt issuance costs of less than $0.1 million related to the payoff of an outstanding equipment loan. See Note 7 to our consolidated financial statements included in this Annual Report for a further discussion of the debt instruments repurchased and redeemed.

Other Income, Net

Other income, net of $2.8 million during the year ended March 31, 2024 consisted primarily of interest income on loan receivables (see Note 2 to our consolidated financial statements included in this Annual Report for a further discussion) and cash on hand, income from the settlement of a dispute and income from excess distributions received from an equity method investee. Other income, net of $30.4 million during the year ended March 31, 2023 consisted primarily of a settlement of a dispute associated with commercial activities not occurring in the current reporting periods (see Note 17 to our consolidated financial statements included in this Annual Report for a further discussion).

Income Tax Expense

Income tax expense was $1.5 million during the year ended March 31, 2024, compared to income tax expense of $0.2 million during the year ended March 31, 2023. See Note 2 to our consolidated financial statements included in this Annual Report for a further discussion.

Noncontrolling Interests - Redeemable and Nonredeemable

Noncontrolling interest income was $0.6 million during the year ended March 31, 2024, compared to $1.1 million during the year ended March 31, 2023. The decrease of $0.5 million during the year ended March 31, 2024 was due primarily to lower income from certain water solutions operations during the year ended March 31, 2024.
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Non-GAAP Financial Measures

In addition to financial results reported in accordance with accounting principles generally accepted in the United States (“GAAP”), we have provided the non-GAAP financial measures of EBITDA and Adjusted EBITDA. These non-GAAP financial measures are not intended to be a substitute for those reported in accordance with GAAP. These measures may be different from non-GAAP financial measures used by other entities, even when similar terms are used to identify such measures.

We define EBITDA as net income (loss) attributable to NGL Energy Partners LP, plus interest expense, income tax expense (benefit), and depreciation and amortization expense. We define Adjusted EBITDA as EBITDA excluding net unrealized gains and losses on derivatives, lower of cost or net realizable value adjustments, gains and losses on disposal or impairment of assets, gains and losses on early extinguishment of liabilities, equity-based compensation expense, revaluation of liabilities and other. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income (loss), income (loss) from continuing operations before income taxes, cash flows from operating activities, or any other measure of financial performance calculated in accordance with GAAP, as those items are used to measure operating performance, liquidity or the ability to service debt obligations. We believe that EBITDA provides additional information to investors for evaluating our ability to make quarterly distributions to our unitholders and is presented solely as a supplemental measure. We believe that Adjusted EBITDA provides additional information to investors for evaluating our financial performance without regard to our financing methods, capital structure and historical cost basis. Further, EBITDA and Adjusted EBITDA, as we define them, may not be comparable to EBITDA, Adjusted EBITDA, or similarly titled measures used by other entities.

For purposes of our Adjusted EBITDA calculation, we make a distinction between realized and unrealized gains and losses on derivatives. During the period when a derivative contract is open, we record changes in the fair value of the derivative as an unrealized gain or loss. When a derivative contract matures or is settled, we reverse the previously recorded unrealized gain or loss and record a realized gain or loss. In our Crude Oil Logistics segment, we purchase certain crude oil barrels using the West Texas Intermediate (“WTI”) calendar month average (“CMA”) price and sell the crude oil barrels using the WTI CMA price plus the Argus CMA Differential Roll Component (“CMA Differential Roll”) per our contracts. To eliminate the volatility of the CMA Differential Roll, we entered into derivative instrument positions in January 2021 to secure a margin of approximately $0.20 per barrel on 1.5 million barrels per month from May 2021 through December 2023. Due to the nature of these positions, the cash flow and earnings recognized on a GAAP basis differed from period to period depending on the current crude oil price and future estimated crude oil price which were valued utilizing third-party market quoted prices. We recognized in Adjusted EBITDA the gains and losses from the derivative instrument positions entered into in January 2021 to properly align with the physical margin we hedged each month through the term of this transaction. This representation aligns with management’s evaluation of the transaction. The derivative instrument positions we entered into related to the CMA Differential Roll expired as of December 31, 2023, and we have not entered into any new derivative instrument positions related to the CMA Differential Roll.

As previously reported, for purposes of our Adjusted EBITDA calculation, we did not draw a distinction between realized and unrealized gains and losses on derivatives of certain businesses within our Liquids Logistics segment, which are included in discontinued operations. The primary hedging strategy of these businesses is to hedge against the risk of declines in the value of inventory over the course of the contract cycle, and many of the hedges cover extended periods of time. The “inventory valuation adjustment” row in the reconciliation table reflects the difference between the market value of the inventory of these businesses at the balance sheet date and its cost. We include this in Adjusted EBITDA because the unrealized gains and losses for derivative contracts associated with the inventory of this segment, which are intended primarily to hedge inventory holding risk and are included in net income, also affect Adjusted EBITDA. Beginning April 1, 2024, and going forward, we will now be drawing a distinction between realized and unrealized gains and losses on derivatives and will no longer include the activity on the “inventory valuation adjustment” row in the reconciliation table for these certain businesses within our Liquids Logistics segment, which are included in discontinued operations. This change aligns with how management now views and evaluates the transactions within these businesses and is also consistent with the calculation of Adjusted EBITDA used in our other businesses. If this change was made as of April 1, 2022, Adjusted EBITDA for the years ended March 31, 2023 and 2024 would have been $638.8 million and $609.5 million, respectively.
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The following table reconciles net income (loss) to EBITDA and Adjusted EBITDA for the periods indicated:
Year Ended March 31,
2025 2024 2023
(in thousands)
Net income (loss) $ 43,163  $ (143,124) $ 52,492 
Less: Net income from continuing operations attributable to nonredeemable noncontrolling interests (3,749) (631) (1,106)
Less: Net income from continuing operations attributable to redeemable noncontrolling interests (46) —  — 
Net income (loss) attributable to NGL Energy Partners LP 39,368  (143,755) 51,386 
Interest expense 280,241  270,004  275,505 
Income tax (benefit) expense (4,775) 2,405  271 
Depreciation and amortization 253,190  266,287  273,544 
EBITDA 568,024  394,941  600,706 
Net unrealized losses (gains) on derivatives 21,782  63,762  (50,438)
Lower of cost or net realizable value adjustments (1) (1,619) 1,337  (11,534)
Loss on disposal or impairment of assets, net (2) 33,705  115,555  86,872 
Revaluation of liabilities (6,705) 2,680  9,665 
CMA Differential Roll net losses (gains) (3) —  (71,285) 3,547 
Inventory valuation adjustment (4) —  (3,419) (7,795)
Loss (gain) on early extinguishment of liabilities, net —  55,281  (6,177)
Equity-based compensation expense —  1,098  2,718 
Other (5) 2,572  50,131  5,111 
Adjusted EBITDA $ 617,759  $ 610,081  $ 632,675 
Adjusted EBITDA - Discontinued Operations (6) $ (5,133) $ 16,667  $ 39,066 
Adjusted EBITDA - Continuing Operations $ 622,892  $ 593,414  $ 593,609 
(1)    Lower of cost or net realizable value adjustments in the table above differ from lower of cost or net realizable value adjustments reported in our consolidated statements of cash flows, as the amounts reported in the table above represent the change in lower of cost or net realizable value adjustments recorded in the consolidated statements of operations, which includes reversals, whereas the amounts reported in our consolidated statements of cash flows represent the lower of cost or net realizable value adjustments recorded at the balance sheet date.
(2)    Excludes amounts related to unconsolidated entities and noncontrolling interests.
(3)    Adjustment to align, within Adjusted EBITDA, the net gains and losses of the Partnership’s CMA Differential Roll derivative instruments positions with the physical margin being hedged. See “Non-GAAP Financial Measures” section above for a further discussion.
(4)    Amounts represent the difference between the market value of the inventory at the balance sheet date and its cost. See “Non-GAAP Financial Measures” section above for a further discussion.
(5)    Amounts represent accretion expense for asset retirement obligations, unrealized gains and losses on investments and marketable securities and expenses incurred related to legal and advisory costs associated with acquisitions and dispositions, including the accrued judgment related to the LCT legal matter, excluding interest (see Note 8 to our consolidated financial statements included in this Annual Report), and the write-off of the legal costs related to the LCT legal matter that were originally allocated to the GP. Also, the amount for the year ended March 31, 2023 includes the write off of an asset acquired in a prior period acquisition and non-cash operating expenses related to our Grand Mesa Pipeline.
(6)    Amounts include our refined products and biodiesel businesses.

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The following tables reconcile depreciation and amortization amounts per the EBITDA table above to depreciation and amortization amounts reported in our consolidated statements of operations and consolidated statements of cash flows for the periods indicated:
Year Ended March 31,
2025 2024 2023
(in thousands)
Depreciation and amortization per EBITDA table $ 253,190  $ 266,287  $ 273,544 
Intangible asset amortization recorded to cost of sales (257) —  (14)
Depreciation and amortization attributable to unconsolidated entities (426) (686) (783)
Depreciation and amortization attributable to noncontrolling interests 2,708  1,182  1,134 
Depreciation and amortization attributable to discontinued operations (483) (669) (773)
Depreciation and amortization per consolidated statements of operations $ 254,732  $ 266,114  $ 273,108 
Depreciation and amortization per EBITDA table $ 253,190  $ 266,287  $ 273,544 
Amortization of debt issuance costs recorded to interest expense 12,010  15,701  16,737 
Amortization of royalty expense recorded to operating expense 247  247  247 
Depreciation and amortization attributable to unconsolidated entities (426) (686) (783)
Depreciation and amortization attributable to noncontrolling interests 2,708  1,182  1,134 
Depreciation and amortization attributable to discontinued operations (483) (669) (773)
Depreciation and amortization per consolidated statements of cash flows $ 267,246  $ 282,062  $ 290,106 

The following table reconciles interest expense per the EBITDA table above to interest expense reported in our consolidated statements of operations for the periods indicated:
Year Ended March 31,
2025 2024 2023
(in thousands)
Interest expense per EBITDA table $ 280,241  $ 270,004  $ 275,505 
Interest expense attributable to noncontrolling interests 63  —  — 
Interest expense attributable to unconsolidated entities (1) (81) (60)
Interest expense attributable to discontinued operations (225) (119) (7)
Interest expense per consolidated statements of operations $ 280,078  $ 269,804  $ 275,438 

The following table summarizes additional amounts attributable to discontinued operations in the EBITDA and Adjusted EBITDA table above for the periods indicated:
Year Ended March 31,
2025 2024 2023
(in thousands)
Income tax expense $ 110  $ 947  $ 52 
Net unrealized losses on derivatives $ 18,416  $ —  $ — 
Lower of cost or realizable value adjustments $ (4,535) $ 3,745  $ 790 
Loss on disposal or impairment of assets, net $ 1,995  $ —  $ 112 
Inventory valuation adjustment $ —  $ (3,419) $ (7,795)
Other $ —  $ 1  $ 1,670 

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The following tables reconcile operating income (loss) to Adjusted EBITDA by segment for the periods indicated.
Year Ended March 31, 2025
Water
Solutions		 Crude Oil
Logistics		 Liquids Logistics Corporate
and Other		 Continuing Operations Discontinued Operations Consolidated
(in thousands)
Operating income (loss) $ 311,457  $ 46,101  $ 14,058  $ (42,261) $ 329,355  $ —  $ 329,355 
Depreciation and amortization 217,227  25,070  9,408  3,027  254,732  —  254,732 
Amortization recorded to cost of sales —  —  257  —  257  —  257 
Net unrealized losses (gains) on derivatives 4,953  (4,011) 2,424  —  3,366  —  3,366 
Lower of cost or net realizable value adjustments —  —  2,916  —  2,916  —  2,916 
Loss (gain) on disposal or impairment of assets, net 9,813  (1,004) 22,596  43  31,448  —  31,448 
Other income, net 485  1  1,518  2,258  4,262  —  4,262 
Adjusted EBITDA attributable to unconsolidated entities 7,044  —  (51) —  6,993  —  6,993 
Adjusted EBITDA attributable to noncontrolling interest (6,196) —  —  (178) (6,374) —  (6,374)
Revaluation of liabilities (6,705) —  —  —  (6,705) —  (6,705)
Other 3,918  216  243  (1,735) 2,642  —  2,642 
Discontinued operations —  —  —  —  —  (5,133) (5,133)
Adjusted EBITDA $ 541,996  $ 66,373  $ 53,369  $ (38,846) $ 622,892  $ (5,133) $ 617,759 
Year Ended March 31, 2024
Water
Solutions		 Crude Oil
Logistics		 Liquids Logistics Corporate
and Other		 Continuing Operations Discontinued Operations Consolidated
(in thousands)
Operating income (loss) $ 231,256  $ 52,074  $ (13,178) $ (108,239) $ 161,913  $ —  $ 161,913 
Depreciation and amortization 214,480  36,922  9,963  4,749  266,114  —  266,114 
Net unrealized losses (gains) on derivatives 385  65,786  (1,230) (1,179) 63,762  —  63,762 
CMA Differential Roll net losses (gains) —  (71,285) —  —  (71,285) —  (71,285)
Lower of cost or net realizable value adjustments —  —  (2,408) —  (2,408) —  (2,408)
Loss (gain) on disposal or impairment of assets, net 53,639  3,094  59,923  (720) 115,936  —  115,936 
Equity-based compensation expense —  —  —  1,098  1,098  —  1,098 
Other income, net 1,110  105  1  1,566  2,782  —  2,782 
Adjusted EBITDA attributable to unconsolidated entities 4,393  —  (12) 124  4,505  —  4,505 
Adjusted EBITDA attributable to noncontrolling interest (1,821) —  —  —  (1,821) —  (1,821)
Revaluation of liabilities 2,680  —  —  —  2,680  —  2,680 
Other 2,186  191  228  47,533  50,138  —  50,138 
Discontinued operations —  —  —  —  —  16,667  16,667 
Adjusted EBITDA $ 508,308  $ 86,887  $ 53,287  $ (55,068) $ 593,414  $ 16,667  $ 610,081 
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Year Ended March 31, 2023
Water
Solutions		 Crude Oil
Logistics		 Liquids Logistics Corporate
and Other		 Continuing Operations Discontinued Operations Consolidated
(in thousands)
Operating income (loss) $ 198,924  $ 81,524  $ 21,446  $ (57,909) $ 243,985  $ —  $ 243,985 
Depreciation and amortization 207,081  46,577  12,788  6,662  273,108  —  273,108 
Amortization recorded to cost of sales —  —  14  —  14  —  14 
Net unrealized (gains) losses on derivatives (4,464) (50,104) 2,951  1,179  (50,438) —  (50,438)
CMA Differential Roll net losses (gains) —  3,547  —  —  3,547  —  3,547 
Lower of cost or net realizable value adjustments —  (2,247) (10,077) —  (12,324) —  (12,324)
Loss (gain) on disposal or impairment of assets, net 46,431  31,086  10,171  (912) 86,776  —  86,776 
Equity-based compensation expense —  —  —  2,718  2,718  —  2,718 
Other income (expense), net 70  330  (3) 30,013  30,410  —  30,410 
Adjusted EBITDA attributable to unconsolidated entities 4,759  —  27  176  4,962  —  4,962 
Adjusted EBITDA attributable to noncontrolling interest (2,269) —  —  —  (2,269) —  (2,269)
Revaluation of liabilities 9,665  —  —  —  9,665  —  9,665 
Other 2,894  203  263  95  3,455  —  3,455 
Discontinued operations —  —  —  —  —  39,066  39,066 
Adjusted EBITDA $ 463,091  $ 110,916  $ 37,580  $ (17,978) $ 593,609  $ 39,066  $ 632,675 

Liquidity, Sources of Capital and Capital Resource Activities

General

Our principal sources of liquidity and capital resource requirements are cash flows from our operations, borrowings under the ABL Facility, issuing long-term notes, common and/or preferred units, loans from financial institutions, asset securitizations or asset sales. We expect our primary cash outflows to be related to capital expenditures, interest, repayment of debt maturities and distributions.

We believe that our anticipated cash flows from operations and the borrowing capacity under the ABL Facility will be sufficient to meet our liquidity needs. Our borrowing needs vary during the year due in part to the seasonal nature of certain businesses within our Liquids Logistics segment. Our greatest working capital borrowing needs generally occur during the period of June through December, when we are building our natural gas liquids inventories in anticipation of the butane blending and propane heating seasons. Our working capital borrowing needs generally decline during the period of January through March, when the cash inflows from our Liquids Logistics segment are the greatest. In addition, our working capital borrowing needs vary with changes in commodity prices. A significant increase in commodity prices could drive up our working capital demands and limit our ability to continue to delever our balance sheet and restrict our financial flexibility. To protect our liquidity and leverage, we have in the past and may in the future enter into economic hedges that mitigate this exposure when we are building inventory. There were no open hedge positions as of March 31, 2025.

Cash Management

We manage cash by utilizing a centralized cash management program that concentrates the cash assets of our operating subsidiaries in joint accounts for the purposes of providing financial flexibility and lowering the cost of borrowing, transaction costs and bank fees. Our centralized cash management program provides that funds in excess of the daily needs of our operating subsidiaries are concentrated, consolidated or otherwise made available for use within our consolidated group. All of our wholly-owned operating subsidiaries participate in this program. Under the cash management program, depending on whether a participating subsidiary has short-term cash surpluses or cash requirements, we provide cash to the subsidiary or the subsidiary provides cash to us.
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Short-Term Liquidity

Our principal sources of short-term liquidity consist of cash flows from our operations and borrowings under the ABL Facility, which we believe will provide liquidity to operate our business, manage our working capital requirements and repay current maturities.

On February 2, 2024, we amended the ABL Facility to, among other things, (i) extend the maturity to the earliest of (a) February 2, 2029 and (b) 91 days prior to the earliest maturity date in respect to any of our indebtedness in an aggregate principal amount of $50.0 million or greater, subject to certain exceptions, (ii) provide for a sub-limit of $200.0 million for letters of credit and a $200.0 million incremental facility, subject to the receipt of commitments from lenders and customary borrowing conditions, (iii) modify the applicable margin for loans under the ABL Facility based on a secured overnight financing rate (“SOFR”) or the alternative base rate to provide for a 0.25% decrease based on our consolidated net leverage ratio, and (iv) provide for a mandatory prepayment under the ABL Facility while any loans are outstanding under the ABL Facility if aggregate “excess cash” (as defined in the ABL Facility) exceeds $50.0 million, subject to certain exceptions.

Total commitments under the ABL Facility are $550.0 million. At March 31, 2025, $109.0 million was outstanding under the ABL Facility, letters of credit outstanding were $60.9 million, and we had a borrowing base of $397.7 million.

For additional information related to the ABL Facility and the amendment, see Note 7 to our consolidated financial statements included in this Annual Report.

As of March 31, 2025, our current assets exceeded our current liabilities by approximately $222.8 million.

Long-Term Financing

We expect to fund our long-term financing requirements by issuing long-term notes, common units and/or preferred units, loans from financial institutions, asset securitizations or asset sales.

Senior Secured Notes

On February 2, 2024, we closed on our private offering of $900.0 million of 2029 Senior Secured Notes that mature on February 15, 2029 and $1.3 billion of 2032 Senior Secured Notes that mature on February 15, 2032. Interest on the 2029 Senior Secured Notes and 2032 Senior Secured Notes is payable on February 15, May 15, August 15 and November 15 of each year.

Term Loan B

On February 2, 2024, we entered into a new seven-year $700.0 million Term Loan B. The Term Loan B matures on February 2, 2031 and will amortize in equal quarterly installments in aggregate annual amounts equal to 1.0% of the original principal amount, with the balance payable on maturity. The amount outstanding at March 31, 2025 is $693.0 million.

For additional information related to our long-term debt, see Note 7 to our consolidated financial statements included in this Annual Report.

Capital Expenditures, Acquisitions and Other Investments

The following table summarizes expansion, maintenance and other non-cash capital expenditures (which excludes additions for tank bottoms and linefill and has been prepared on the accrual basis), acquisitions and other investments for the periods indicated.
Capital Expenditures Other
Year Ended March 31, Expansion Maintenance Other (1) Acquisitions (2) Investments (3)
(in thousands)
2025 $ 175,730  $ 69,500  $ 20  $ —  $ 106 
2024 $ 99,533  $ 54,854  $ 15,680  $ —  $ 258 
2023 $ 79,091  $ 61,649  $ —  $ —  $ 88 
(1) Amount for the year ended March 31, 2025 is related to a transaction classified as an acquisition of assets in a prior period. Amount for the year ended March 31, 2024 includes $9.2 million of equipment and other assets received in connection with contracts with customers and $6.4 million for a transaction classified as an acquisition of assets. See Note 17 to our consolidated financial statements included in this Annual Report for information regarding the acquisition of assets.
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(2)    There were no acquisitions during the years ended March 31, 2025, 2024 or 2023.
(3)    Amounts relate to contributions made to unconsolidated entities.

Capital expenditures for the year ending March 31, 2026 are expected to be approximately $105 million.

Distributions Declared

On March 19, 2025, the board of directors of our GP declared a cash distribution for the quarter ended March 31, 2025 to the holders of the Class B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class B Preferred Units”), the Class C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class C Preferred Units”) and the 9.00% Class D Preferred Units (“Class D Preferred Units”). The total distribution of $29.8 million was made on April 15, 2025 to the holder of record at the close of trading on April 1, 2025.

The board of directors of our GP expects to evaluate the reinstatement of the common unit distributions in due course, taking into account a number of important factors, including our leverage, liquidity, the sustainability of cash flows, upcoming debt maturities, capital expenditures and the overall performance of our businesses.

See further discussion of our cash distribution policy in Part II, Item 5–“Market for Registrant’s Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities” included in this Annual Report. For further discussion of the distributions, see Note 9 to our consolidated financial statements included in this Annual Report.

Contractual Obligations

Our contractual obligations primarily consist of purchase commitments, outstanding debt principal and interest obligations, operating lease obligations, asset retirement obligations and other commitments. The amounts below do not include obligations related to liabilities classified as either held for sale or discontinued operations within our March 31, 2025 and 2024 consolidated balance sheets (see Note 18 to our consolidated financial statements included in this Annual Report).

Purchase Commitments

Our fixed-price and index-price commodity purchase commitments result from contracts we have entered into for which we expect the parties to physically settle and deliver the inventory in future periods. As of March 31, 2025, our purchase commitments totaled $2.8 billion, with $2.5 billion due within one year. See Note 8 to our consolidated financial statements included in this Annual Report for information regarding our commodity purchase commitments and timing of our expected purchase commitments payments.

Debt Principal and Interest Obligations

As of March 31, 2025, our aggregate principal amount of outstanding debt was $3.0 billion, with $8.8 million due within one year. Our interest obligation on the debt was $1.4 billion, with $239.4 million due within one year, based on our outstanding balances and interest rates as of March 31, 2025. See Note 7 to our consolidated financial statements included in this Annual Report for information regarding our outstanding debt principal and interest obligations and timing of our expected debt principal and interest payments.

Operating Lease Obligations

As of March 31, 2025, our undiscounted operating lease obligation was $142.8 million, with $35.7 million due within one year. See Note 15 to our consolidated financial statements included in this Annual Report for information regarding our lease obligations and timing of our expected lease payments.

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. As of March 31, 2025, our asset retirement obligations were $69.6 million, of which we expect to settle $2.5 million during fiscal year 2026. See Note 8 to our consolidated financial statements included in this Annual Report for information regarding our asset retirement obligations.
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Other Commitments

We have noncancelable agreements for product storage, railcar spurs, capital projects and real estate. As of March 31, 2025, our commitment obligations were $30.0 million, with $9.7 million due within one year. See Note 8 to our consolidated financial statements included in this Annual Report for information regarding our other commitments and timing of our expected commitment payments.

Sources (Uses) of Cash

The following table summarizes the sources (uses) of cash and cash equivalents for the periods indicated related to continuing operations (see the footnotes to our consolidated financial statements included in this Annual Report for the footnotes referenced in the table):
Cash Flow Year Ended March 31,
Category 2025 2024 2023
(in thousands)
Sources of cash and cash equivalents:
Net cash provided by operating activities-continuing operations Operating $ 256,850  $ 361,818  $ 355,685 
Net proceeds from borrowings under ABL Facility (see Note 7)
 Financing 109,000  —  22,000 
Proceeds from divestitures of businesses and investments, net (see Note 17)
 Investing 72,246  16,000  111,633 
Proceeds from sales of assets (see Note 17)
 Investing 42,819  53,246  45,848 
Proceeds from borrowings on other long-term debt (see Note 7)
 Financing 12,720  —  — 
Issuance of secured debt (see Note 7)
 Financing —  2,894,873  — 
Net settlements of derivatives (see Note 10)
 Investing —  —  56,005 
Uses of cash and cash equivalents:
Distributions to preferred unitholders (see Note 9)
 Financing (305,291) (178,299) — 
Capital expenditures (see Note 11)
 Investing (245,816) (152,295) (147,765)
Payments on Term Loan B (see Note 7)
 Financing (7,000) —  — 
Warrant repurchases (see Note 9)
 Financing (6,929) —  — 
Debt issuance costs (see Note 6 and Note 7)
 Financing (5,258) (53,170) (3,294)
Payments on other long-term debt (see Note 7)
 Financing (1,068) —  (43,278)
Net settlements of derivatives (see Note 10)
 Investing (246) (6,185) — 
Repayment and repurchase of Senior Unsecured Notes (see Note 7)
 Financing —  (2,781,067) (479,302)
Net payments on borrowings under ABL Facility (see Note 7)
 Financing —  (138,000) — 
Other sources / (uses) – net Investing and Financing (2,192) (2,952) (3,979)
Net (decrease) increase in cash and cash equivalents-continuing operations $ (80,165) $ 13,969  $ (86,447)

Operating Activities-Continuing Operations. The decrease in net cash provided by operating activities during the year ended March 31, 2025 was due primarily to fluctuations in working capital, particularly accounts receivable and accounts payable, due to lower crude oil volumes and lower crude oil prices and the timing of invoices and payments on construction projects, partially offset by higher earnings from operations. Also, on June 13, 2024, we paid LCT $63.3 million related to the legal judgment against us, of which $27.2 million represented interest and $0.1 million of costs awarded to LCT (see Note 8 to our consolidated financial statements included in this Annual Report). The increase in net cash provided by operating activities during the year ended March 31, 2024 was due primarily to fluctuations in working capital, particularly accounts receivable and accounts payable, due to open derivative positions, partially offset by lower crude oil volumes and prices, lower inventory due to decreased sales and purchases of natural gas liquids, and decreased earnings from operations.

Environmental Legislation

See Part I, Item 1–“Business–Government Regulation–Greenhouse Gas Regulation” for a discussion of proposed environmental legislation and regulations that, if enacted, could result in increased compliance and operating costs. However, at this time we cannot predict the structure or outcome of any future legislation or regulations or the eventual cost we could incur in compliance.
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Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements that are applicable to us, see Note 2 to our consolidated financial statements included in this Annual Report.

Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with GAAP requires the selection and application of appropriate accounting principles to the relevant facts and circumstances of our operations and the use of estimates made by management. We have identified the following more critical judgment areas in the application of our accounting policies that are most important to the portrayal of our consolidated financial position and results of operations. The application of these accounting policies, which requires subjective or complex judgments regarding estimates and projected outcomes of future events, and changes in these accounting policies, could have a material effect on our consolidated financial statements.

Impairment of Goodwill

The goodwill relating to each of our reporting units is tested for impairment annually as well as when an event or change in circumstances indicates an impairment may have occurred. For each reporting unit, we perform a qualitative assessment of relevant events and circumstances about the likelihood of goodwill impairment. If it is deemed more likely than not that the fair value of the reporting unit is less than its carrying value, we calculate the fair value of the reporting unit. Otherwise, further testing is not required. The qualitative assessment is based on reviewing several factors, including macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, other entity specific events (for example, changes in management) or other events such as selling or disposing of a reporting unit. The determination of a reporting unit’s fair value is predicated on our assumptions regarding the future economic prospects of the reporting unit. Such assumptions include (i) discrete financial forecasts for the assets contained within the reporting unit, which rely on management’s estimates of operating margins, (ii) long-term growth rates for cash flows beyond the discrete forecast period, (iii) appropriate discount rates and (iv) estimates of the cash flow multiples to apply in estimating the market value of our reporting units. An estimate of the sensitivity to changes in underlying assumptions of a fair value calculation is not practicable, given the numerous assumptions that can materially affect our estimates. If the fair value of the reporting unit (including its inherent goodwill) is less than its carrying value, an impairment loss is recognized to the extent that the implied fair value of the goodwill of the reporting unit is less than its carrying value, limited to the total amount of goodwill for the reporting unit. If future results are not consistent with our estimates, we could be exposed to future impairment losses that could be material to our results of operations. During the years ended March 31, 2025 and 2024, we recorded goodwill impairments of $17.9 million and $69.2 million, respectively. We did not record a goodwill impairment during the year ended March 31, 2023. See Note 5 to our consolidated financial statements included in this Annual Report for a further discussion of our goodwill impairment assessment.

Impairment of Long-Lived Assets

We evaluate the carrying value of our long-lived assets (property, plant and equipment and amortizable intangible assets) for potential impairment when events and circumstances warrant such a review. A long-lived asset group is considered impaired when the anticipated undiscounted future cash flows from the use and eventual disposition of the asset group is less than its carrying value. Individual assets are grouped at the lowest level for which the related identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Estimates of future net cash flows include estimating future volumes, future margins or tariff rates, future operating costs and other estimates and assumptions consistent with our business plans as well as external factors such as industry and economic trends. An estimate of the sensitivity to changes in underlying assumptions of a fair value calculation is not practicable, given the numerous assumptions that can materially affect our estimates. If the carrying value is not recoverable, an impairment loss is measured as the excess of the asset’s carrying value over its estimated fair value. When we cease to use an acquired trade name, we test the trade name for impairment using the relief from royalty method and we begin amortizing the trade name over its estimated useful life as a defensive asset. If future results are not consistent with our estimates, we could be exposed to future impairment losses that could be material to our results of operations. See Note 4 and Note 6 to our consolidated financial statements included in this Annual Report for a further discussion of our impairments of long-lived assets.

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We evaluate our investments in unconsolidated entities for impairment whenever events or changes in circumstances indicate, in management’s judgment, that the fair value of such investment may have experienced a decline to less than its carrying value and the decline is other than temporary.

Depreciation and Amortization Methods and Estimated Useful Lives of Property, Plant and Equipment and Intangible Assets

Depreciation and amortization expense is the systematic write-off of the cost of our property, plant and equipment (net of residual or salvage value, if any) and the cost of our amortizable intangible assets to the results of operations for the quarterly and annual periods during which the assets are used. We depreciate our property, plant and equipment and amortize the majority of our intangible assets using the straight-line method, which results in our recording depreciation and amortization expense evenly over the estimated life of the individual asset. The estimate of depreciation and amortization expense requires us to make assumptions regarding the estimated useful lives and residual values of our assets. When we acquire and place our property, plant and equipment in service or acquire intangible assets, we develop assumptions about the estimated useful lives and residual values of such assets that we believe to be reasonable; however, circumstances may develop that could require us to change these assumptions in future periods, which would change our depreciation and amortization expense prospectively and have a material impact on our results of operations. Examples of such circumstances include changes in laws and regulations that limit the estimated economic life of an asset, changes in technology that render an asset obsolete, changes in expected salvage values or changes in customer attrition rates. See Note 2, Note 4 and Note 6 to our consolidated financial statements included in this Annual Report for a further discussion.

Derivative Financial Instruments

We record all derivative financial instrument contracts at fair value in our consolidated balance sheets except for normal purchase and normal sale transactions that are expected to result in physical delivery. All changes in the fair value of our physical contracts that do not qualify as normal purchases and normal sales and settlements (whether cash transactions or non-cash mark-to-market adjustments) are reported either within revenue (for sales contracts) or cost of sales (for purchase contracts) in our consolidated statements of operations, regardless of whether the contract is physically or financially settled, and within cash flows from operations in our consolidated statements of cash flows. The change in the fair value of our interest rate swaps is recorded as a net gain or loss within interest expense in our consolidated statement of operations and within cash flows from operations in our consolidated statements of cash flows. We determine the fair value of our exchange traded derivative financial instruments utilizing publicly available prices, and for non-exchange traded derivative financial instruments, we utilize pricing models for similar instruments including publicly available prices and forward curves generated from a compilation of data gathered from third parties. Actual amounts could vary materially from estimated fair values due to changes in market prices. In addition, changes in the methods or assumptions used to determine the fair value of our derivative financial instruments could have a material effect on our consolidated financial statements. See “Item 7A. Quantitative and Qualitative Disclosures About Market Risk–Commodity Price Risk” for the impact of a 10% increase in the underlying commodity value, “Item 7A. Quantitative and Qualitative Disclosures About Market Risk–Interest Rate Risk” for the impact of a 10% increase in the underlying interest rate swap value and Note 2 and Note 10 to our consolidated financial statements included in this Annual Report for a further discussion of our derivative financial instruments.

Revenue Recognition

Our Water Solutions segment has certain long-term contracts with customers that include variable consideration that must be estimated at contract inception and re-assessed at each reporting period. Total consideration for these arrangements is recognized as revenue over the applicable contract period and is based on our measure of satisfaction of our corresponding performance obligation, and the difference in timing of revenue recognition and billings results in contract assets and liabilities. The estimated performance obligation over the life of a contract includes significant judgments by management including volume and forecasted production information. Changes in these assumptions or a contract modification could have a material effect on the amount of variable consideration recognized as revenue. See Note 14 to our consolidated financial statements included in this Annual Report for a further discussion of our revenue recognition policies.

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 largest asset retirement obligations involve the abandonment or removal of pipelines and saltwater and freshwater disposal wells. We are required to recognize the fair value of a liability for an asset retirement obligation if a reasonable estimate of fair value can be made. In order to determine the fair value of such a liability, we must make certain estimates and assumptions including, among other things, projected cash flows, the estimated timing of retirement, a credit-adjusted risk-free interest rate, and an assessment of market conditions, which could significantly impact the estimated fair value of the asset retirement obligation.
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Most of these asset retirement obligations are many years, or decades, in the future and the contracts and regulations often have vague descriptions of what removal practices and criteria must be met when the removal event actually occurs. These estimates and assumptions are very subjective and can vary over time. Our consolidated balance sheet at March 31, 2025 includes a liability of $69.6 million related to asset retirement obligations, which is reported within other noncurrent liabilities.

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.

Contingent Consideration Liabilities

Certain business combinations in our Water Solutions segment included future royalty payments to the seller, which we recorded as contingent consideration liabilities as part of our purchase price allocation. The initial fair value was calculated based on an estimate of the activity related to the assets acquired in the transaction, either volumes or revenue, and an estimate of the expected useful life of the assets and discounted to its present value using an appropriate discount rate. The fair value of the contingent consideration liabilities is assessed each reporting period and the updated fair value is calculated using the same process used to calculate the initial fair value. Changes in our assumptions and estimates may occur as a result of the passage of time and the occurrence of future events. Our consolidated balance sheet at March 31, 2025 includes a liability of $15.8 million related to contingent consideration liabilities, which is recorded within accrued expenses and other payables and other noncurrent liabilities.

Acquisitions

Fair values of assets acquired and liabilities assumed are based upon available information and may involve engaging an independent third party to perform an appraisal. Estimating fair values can be complex and subject to significant business judgment. We must also identify and include in the allocation all acquired tangible and intangible assets that meet certain criteria, including assets that were not previously recorded by the acquired entity. The estimates most commonly involve property, plant and equipment and intangible assets, including those with indefinite lives. The estimates also include the fair value of contracts including commodity purchase and sale agreements, storage contracts, and transportation contracts. The judgments made in the determination of the estimated fair value assigned to the assets acquired, the liabilities assumed and any noncontrolling interest in the investee, as well as the estimated useful life of each asset and the duration of each liability, can materially impact the financial statements in periods after the acquisition, such as through depreciation and amortization expense. While we believe we have made reasonable assumptions to calculate the fair value, if future results are not consistent with our estimates, we could be exposed to future impairment losses that could be material to our results of operations. 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.

Inventories

Our inventories consist of crude oil and natural gas liquids. 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. At the end of each fiscal year, we also perform a “lower of cost or net realizable value” analysis; if the cost basis of the inventories would not be recoverable based on the net realizable value at the end of the year, we reduce the book value of the inventories to the recoverable amount. When performing this analysis during interim periods within a fiscal year, accounting standards do not require us to record a lower of cost or net realizable value write-down if we expect the net realizable value to recover by our fiscal year end. The net realizable values of these commodities change on a daily basis as supply and demand conditions change. We are unable to control changes in the net realizable value of these commodities and are unable to determine whether write-downs will be required in future periods.




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Item 7A.    Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

Long-Term Debt

A portion of our long-term debt is variable-rate debt. Changes in interest rates impact the interest payments of our variable-rate debt but generally do not impact the fair value of the liability. Conversely, changes in interest rates impact the fair value of our fixed-rate debt but do not impact its cash flows.

The ABL Facility is variable-rate debt with interest rates that are generally indexed to the prime rate or SOFR. At March 31, 2025, $109.0 million was outstanding under the ABL Facility at a weighted average interest rate of 9.50%. A change in interest rates of 0.125% would result in an increase or decrease of our annual interest expense of $0.1 million, based on borrowings outstanding at March 31, 2025.

The Term Loan B is variable-rate debt with interest rates that are generally indexed to the SOFR. At March 31, 2025, $693.0 million was outstanding under the Term Loan B with an interest rate of SOFR of 4.32% plus a margin of 3.75%. A change in interest rates of 0.125% would result in an increase or decrease of our annual interest expense of $0.9 million, based on borrowings outstanding at March 31, 2025.

Interest Rate Swaps

In March and April 2024, we entered into interest rate swaps totaling $400.0 million to reduce the variability of cash outflows associated with our floating-rate, SOFR-based borrowings, including borrowings on the Term Loan B. In September 2024, for the $200.0 million interest rate swap entered into in April 2024, we entered into a transaction to extend the original maturity date and to blend the existing swap rate (see Note 10 to our consolidated financial statements included in this Annual Report for a further discussion). An increase of 10% in the value of the underlying interest rate swaps would result in a net change in the fair value of our interest rate swaps of $0.3 million at March 31, 2025.

Preferred Unit Distributions

The current distribution rate for the Class B Preferred Units is a floating rate of the three-month CME Term SOFR plus a tenor spread adjustment plus a spread of 7.213% (see Note 9 to our consolidated financial statements included in this Annual Report for a further discussion). A change in interest rates of 0.125% would result in an increase or decrease of our Class B Preferred Unit distribution of $0.1 million, based on the Class B Preferred Units outstanding at March 31, 2025.

The current distribution rate for the Class C Preferred Units is a floating rate of the three-month CME Term SOFR plus a spread of 7.384% (see Note 9 to our consolidated financial statements included in this Annual Report for a further discussion). A change in interest rates of 0.125% would result in an increase or decrease of our Class C Preferred Unit distribution of less than $0.1 million, based on the Class C Preferred Units outstanding at March 31, 2025.

The current distribution rate for the Class D Preferred Units is a floating rate of the three-month CME Term SOFR plus a spread of 7.00%, as well as a 1.0% rate increase as we exceeded the adjusted total leverage ratio (as defined in the amended and restated limited partnership agreement) for the quarter ended March 31, 2025 (see Note 9 to our consolidated financial statements included in this Annual Report for a further discussion). A change in interest rates of 0.125% would result in an increase or decrease of our Class D Preferred Unit distribution of $0.2 million, based on the Class D Preferred Units outstanding at March 31, 2025.

Commodity Price Risk

Our operations are subject to certain business risks, including commodity price risk. Commodity price risk is the risk that the market value of crude oil or natural gas liquids will change, either favorably or unfavorably, in response to changing market conditions. Procedures and limits for managing commodity price risks are specified in our market risk policy. Open commodity positions and market price changes are monitored daily and are reported to senior management and to marketing operations personnel.

The crude oil and natural gas liquids industries are “margin-based” and “cost-plus” businesses in which our realized margins depend on the differential of sales prices over our supply costs. We have no control over market conditions. As a result, our profitability may be impacted by sudden and significant changes in the price of crude oil and natural gas liquids.
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We engage in various types of forward contracts and financial derivative transactions to reduce the effect of price volatility on our product costs, to protect the value of our inventory positions, and to help ensure the availability of product during periods of short supply. We attempt to balance our contractual portfolio by purchasing volumes when we have a matching purchase commitment from our wholesale and retail customers. We may experience net unbalanced positions from time to time. In addition to our ongoing policy to maintain a balanced position, for accounting purposes we are required, on an ongoing basis, to track and report the market value of our derivative portfolio.

Although we use financial derivative instruments to reduce the market price risk associated with forecasted transactions, we do not account for financial derivative transactions as hedges. All changes in the fair value of our physical contracts that do not qualify as normal purchases and normal sales and settlements (whether cash transactions or non-cash mark-to-market adjustments) are reported either within revenue (for sales contracts) or cost of sales (for purchase contracts) in our consolidated statements of operations, regardless of whether the contract is physically or financially settled, and within cash flows from operations in our consolidated statements of cash flows. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations–Critical Accounting Estimates” for a discussion of how we determine the fair value of our financial derivative instruments.

The following table summarizes the hypothetical impact on the March 31, 2025 fair value of our commodity derivatives of an increase of 10% in the value of the underlying commodity. Amounts in the table below do not include commodity derivatives classified as either held for sale or discontinued operations within our March 31, 2025 and 2024 consolidated balance sheets (see Note 18 to our consolidated financial statements included in this Annual Report).
Increase
(Decrease)
To Fair Value
(in thousands)
Crude oil (Crude Oil Logistics segment) $ 322 
Butane (Liquids Logistics segment) $ (5,116)
Other (Liquids Logistics segment) $ (83)

Changes in commodity prices may also impact the volumes that we are able to transport, dispose, store and market, which also impact our cash flows.

Credit Risk

Our operations are also subject to credit risk, which is the risk of loss from nonperformance by suppliers, customers or financial counterparties to a contract. Procedures and limits for managing credit risk are specified in our credit policy. Credit risk is monitored daily and we try to minimize exposure through the following:

•requiring certain customers to prepay or place deposits for our products and services;
•requiring certain customers to post letters of credit or other forms of surety;
•monitoring individual customer receivables relative to previously-approved credit limits;
•requiring certain customers to take delivery of their contracted volume ratably rather than allow them to take delivery at their discretion;
•entering into master netting agreements that allow for offsetting counterparty receivable and payable balances for certain transactions;
•reviewing the receivable aging regularly to identify issues or trends that may develop; and
•requiring marketing personnel to manage their customers’ receivable position and suspend sales to customers that have not timely paid outstanding invoices.

At March 31, 2025, our primary counterparties were retailers, resellers, energy marketers, producers, refiners, and dealers.

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Item 8.    Financial Statements and Supplementary Data

Our consolidated financial statements beginning on page F-1 of this Annual Report, together with the report of Grant Thornton LLP, our independent registered public accounting firm, are incorporated by reference into this Item 8.

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rule 13(a)-15(e) and 15(d)-15(e) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), that are designed to ensure the information required to be disclosed in our filings and submissions under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission (“SEC”) and that such information is accumulated and communicated to our management, including the principal executive officer and principal financial officer of our GP, as appropriate, to allow timely decisions regarding required disclosure.

We completed an evaluation under the supervision and with participation of our management, including the principal executive officer and principal financial officer of our GP, of the effectiveness of the design and operation of our disclosure controls and procedures at March 31, 2025. Based on this evaluation, the principal executive officer and principal financial officer of our GP have concluded that as of March 31, 2025, such disclosure controls and procedures were effective.

Management’s Report on Internal Control Over Financial Reporting

The management of our Delaware limited partnership (“Partnership”) and subsidiaries is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13(a)-15(f). Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer of our general partner, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or the COSO framework.

Based on our evaluation under the COSO framework, our management concluded that our internal control over financial reporting was effective as of March 31, 2025.

Our internal control over financial reporting as of March 31, 2025 has been audited by Grant Thornton LLP, an independent registered public accounting firm, as stated in their report, which appears below in this section of the Annual Report.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal controls over financial reporting (as defined in Rule 13(a)-15(f) of the Exchange Act) during the three months ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors of NGL Energy Holdings LLC and
Unitholders of NGL Energy Partners LP

Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of NGL Energy Partners LP (a Delaware limited partnership) and subsidiaries (the “Partnership”) as of March 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Partnership maintained, in all material respects, effective internal control over financial reporting as of March 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Partnership as of and for the year ended March 31, 2025, and our report dated May 29, 2025 expressed an unqualified opinion on those financial statements.

Basis for opinion
The Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Partnership’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ GRANT THORNTON LLP
Tulsa, Oklahoma
May 29, 2025


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Item 9B.    Other Information

During the three months ended March 31, 2025, no director or officer of the Partnership adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

Item 9C.    Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

PART III

Item 10.    Directors, Executive Officers and Corporate Governance

Board of Directors of our General Partner

NGL Energy Holdings LLC, our general partner (“GP”), manages our operations and activities on our behalf through its directors and executive officers. Unitholders are not entitled to elect the directors of our GP or directly or indirectly participate in our management or operations. The NGL Energy GP investor group, which includes 43 individuals and entities that own all of the outstanding membership interests in our GP (“NGL Energy GP Investor Group”), appoints all members to the board of directors of our GP.

The board of directors of our GP currently has six members. The board of directors of our GP has determined that Mr. James M. Collingsworth, Mr. Bryan K. Guderian and Mr. Derek S. Reiners satisfy the New York Stock Exchange (“NYSE”) and Securities and Exchange Commission (“SEC”) independence requirements. The NYSE does not require a listed publicly traded limited partnership like NGL to have a majority of independent directors on the board of directors of its general partner. In addition, we are not required to have a nominating and corporate governance committee.

In evaluating director candidates, the NGL Energy GP Investor Group assesses whether a candidate possesses the integrity, judgment, knowledge, experience, skill and expertise that are likely to enhance the ability of the board of directors of our GP to manage and direct our affairs and business, including, when applicable, to enhance the ability of committees of the board to fulfill their duties. Our GP has no minimum qualifications for director candidates. In general, however, the NGL Energy GP Investor Group reviews and evaluates both incumbent and potential new directors in an effort to achieve diversity of skills and experience among the directors of our GP and in light of the following criteria:

•experience in business, government, education, technology or public interests;
•high-level managerial experience in large organizations;
•breadth of knowledge regarding our business and industry;
•specific skills, experience or expertise related to an area of importance to us, such as energy production, consumption, distribution or transportation, government, policy, finance or law;
•moral character and integrity;
•commitment to our unitholders’ interests;
•ability to provide insights and practical wisdom based on experience and expertise;
•ability to read and understand financial statements; and
•ability to devote the time necessary to carry out the duties of a director, including attendance at meetings and consultation on partnership matters.

Although our GP does not have a formal policy in regard to the consideration of diversity in identifying director nominees, qualified candidates for nomination to the board are considered without regard to race, color, religion, gender, ancestry or national origin.

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Directors and Named Executive Officers

Directors of our GP are appointed by the NGL Energy GP Investor Group and hold office until their successors have been duly elected and qualified or until the earlier of their death, resignation, removal or disqualification. Named executive officers are appointed by, and serve at the discretion of, the board of directors of our GP. The following table summarizes information regarding the directors of our GP and our named executive officers as of May 27, 2025. 
Name Age Position with NGL Energy Holdings LLC
H. Michael Krimbill 71 Chief Executive Officer and Director
Bradley P. Cooper 49 Executive Vice President and Chief Financial Officer
Lawrence J. Thuillier 54 Chief Accounting Officer
L. Ryan Collins 39 Senior Vice President and General Counsel and Secretary
Jennifer L. Kingham 53 Executive Vice President and Chief Information Officer
Shawn W. Coady 63 Director
James M. Collingsworth 70 Director
Bryan K. Guderian 65 Director
John T. Raymond 54 Director
Derek S. Reiners 54 Director

H. Michael Krimbill. Mr. Krimbill has served as our Chief Executive Officer since October 2010 and as a member of the board of directors of our GP since its formation in September 2010. Mr. Krimbill was the President and Chief Financial Officer of Energy Transfer Partners, L.P. from 2004 until his resignation in January 2007. Mr. Krimbill joined Heritage Propane Partners, L.P., the predecessor of Energy Transfer Partners, L.P., as Vice President and Chief Financial Officer in 1990. Mr. Krimbill was President of Heritage Propane Partners, L.P. from 1999 to 2000 and President and Chief Executive Officer of Heritage Propane Partners, L.P. from 2000 to 2005. Mr. Krimbill also served as a director of Energy Transfer Equity, the general partner of Energy Transfer Partners, L.P., from 2000 to January 2007, Williams Partners L.P. from 2007 to September 2012, and Pacific Commerce Bank from January 2011 to March 2015.

Mr. Krimbill brings leadership, oversight and financial experience to the board. Mr. Krimbill provides expertise in managing and operating a publicly traded partnership, including substantial expertise in successfully acquiring and integrating midstream businesses. Mr. Krimbill also brings financial expertise to the board, including his prior service as a chief financial officer. Mr. Krimbill’s experience serving on other public company boards is also a valuable asset to the board of directors of our GP.

Bradley P. Cooper. Mr. Cooper has served as our Executive Vice President and Chief Financial Officer since January 13, 2023. Mr. Cooper served as our Senior Vice President, Administration and Risk from June 2021, when he joined NGL, to January 2023. Mr. Cooper spent 10 years with WPX Energy, Inc. (“WPX”) where he was Vice President of Finance and Treasurer. Prior to WPX, he was at The Williams Companies (“Williams”) where he held various corporate finance and risk management leadership roles.

Lawrence J. Thuillier. Mr. Thuillier has served as our Chief Accounting Officer since January 2016. Prior to joining NGL, Mr. Thuillier served in various roles at Eagle Rock Energy Partners, L.P. from December 2007 through October 2015, most recently as Vice President of Financial Reporting and Corporate Controller. Mr. Thuillier served as Assistant Corporate Controller for Exterran Holdings, Inc. (formerly Universal Compression) from November 2006 through November 2007. Prior to that, Mr. Thuillier served in various roles at Deloitte & Touche LLP, most recently as Audit Senior Manager.

L. Ryan Collins. Mr. Collins has served as our Senior Vice President and General Counsel and Secretary since October 2024. Mr. Collins joined NGL in August 2015 and previously served as our Senior Vice President and Assistant General Counsel. Prior to joining NGL, Mr. Collins practiced law in the Tulsa, Oklahoma area, during which time his practice specialized in complex business transactions, real estate, banking, corporate governance, corporate management, and management of litigation.

Jennifer L. Kingham. Ms. Kingham has served as our Executive Vice President and Chief Information Officer since March 2024. Ms. Kingham served as our Senior Vice President and Chief Information Officer from February 2018 to March 2024 and as our Chief Information Officer from April 2014 to February 2018. Prior to joining NGL, Ms. Kingham was the Chief Information Officer and held Information Technology (“IT”) Audit Management positions at a professional advisory firm for nine years. Additionally, Ms. Kingham spent nine years of her career at Williams in various IT technical and successive management positions.
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Shawn W. Coady. Dr. Coady served as our President and Chief Operating Officer, Retail Division, from April 2012 to March 2018, when we sold a portion of our Retail Propane segment to DCC LPG (“DCC”), and previously served as our Co-President and Chief Operating Officer, Retail Division from October 2010 through April 2012. Dr. Coady served as an executive officer of DCC from April 2018 until his retirement in December 2020. Dr. Coady served as a member of the board of directors of our GP since its formation in September 2010. Dr. Coady has served as an officer of Hicks Oils & Hicksgas, Incorporated (“HOH”), from March 1989 to September 2010 when HOH contributed its propane and propane related assets to Hicksgas LLC, and the membership interests in Hicksgas LLC were contributed to us as part of our formation transactions. Dr. Coady was also the President of Hicksgas Gifford, Inc. from March 1989 until the membership interests in the company were contributed to us as part of our formation transactions. Dr. Coady has served as a director for the National Propane Gas Association from 2004 to 2015 and as a member of the executive committee of the Illinois Propane Gas Association from 2004 to March 2015.

Dr. Coady brings valuable operational experience to the board. Dr. Coady has over 25 years of experience in the retail propane industry, and provides expertise in both acquisition and organic growth strategies. Dr. Coady also provides insight into developments and trends in the propane industry through his leadership roles in industry associations.

James M. Collingsworth. Mr. Collingsworth has served on the board of directors of our GP since January 2015. Mr. Collingsworth previously served as a Senior Vice President of the general partner of Enterprise Products Partners L.P. from November 2001 through January 2014. Prior to that, Mr. Collingsworth served as a board member of Texaco Canada Petroleum Inc. from July 1998 to October 2001 and was employed by Texaco from 1991 to 2001 in various management positions, including Senior Vice President of NGL Assets and Business Services from July 1998 to October 2001. Prior to joining Texaco, Mr. Collingsworth was director of feedstocks for Rexene Petrochemical Company from 1988 to 1991 and served in the MAPCO, Inc. organization from 1973 to 1988 in various capacities, including customer service and business development manager of the Mid-America and Seminole pipelines. Mr. Collingsworth served as a director of American Ethane Co. Mr. Collingsworth currently serves on the board of directors of Martin Midstream Partners L.P.

Mr. Collingsworth brings a wealth of in-depth industry experience to the board. Mr. Collingsworth has worked in all facets of the midstream and petrochemical industry for more than 40 years.

Bryan K. Guderian. Mr. Guderian joined the board of directors of our GP in May 2012. Mr. Guderian currently serves as a Principal of BKG Consulting LLC, an energy related consulting firm. Mr. Guderian has served as Executive Vice President of Business Development of WPX from February 2018 until his retirement in January 2021. Mr. Guderian served as Senior Vice President of Business Development of WPX from October 2014 to February 2018 and as Senior Vice President of Operations of WPX from August 2011 to October 2014. Mr. Guderian previously served as Vice President of the Exploration & Production unit of Williams from 1998 until August 2011, where he had responsibility for overseeing international operations. Mr. Guderian served as a director of Apco Oil & Gas International Inc., from 2002 to 2015 and as a director of Petrolera Entre Lomas S.A. from 2003 to 2015.

Mr. Guderian brings considerable upstream experience to the board including executive, operational and financial expertise from 40 years of petroleum industry involvement, the majority of which has been focused in exploration and production.

John T. Raymond. Mr. Raymond joined the board of directors of our GP in August 2013. Mr. Raymond is the Founder and Majority Owner of The Energy & Minerals Group (“EMG”) of which he has been a Managing Partner and the Chief Executive Officer since its September 2006 inception. Mr. Raymond has held executive leadership positions with various energy companies, including President and Chief Executive Officer of Plains Resources Inc. (the predecessor entity of Vulcan Energy Corporation), President and Chief Operating Officer of Plains Exploration and Production Company and was a Director of Plains All American Pipeline, LP. Mr. Raymond also currently serves as a director of Ferus Inc., Ferus Natural Gas Fuels Inc., MarkWest Utica EMG, LLC, Medallion Midstream, LLC and PAA GP Holdings LLC. Mr. Raymond manages various private investments through personally held Lynx Holdings, LLC.

Mr. Raymond brings extensive financial and industry experience to the board. As a director for other public companies, Mr. Raymond also provides cross board experience.

Derek S. Reiners. Mr. Reiners joined the board of directors of our GP in December 2019. Mr. Reiners currently serves as the President of Contango Energy Capital LLC, a privately held investment and consulting firm. Prior to that, Mr. Reiners served in various senior financial and accounting roles at ONEOK, Inc. and ONEOK Partners, L.P. from August 2009 to May 2019, including Senior Vice President and Chief Accounting Officer from August 2009 to December 2012, Senior Vice President, Chief Financial Officer and Treasurer from January 2013 to May 2017 and Senior Vice President, Finance and Treasurer from June 2017 to May 2019.
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Prior to joining ONEOK, Mr. Reiners was a partner at Grant Thornton LLP from August 2004 to July 2009. Mr. Reiners currently serves on the board of directors of a community bank in Oklahoma. Mr. Reiners is a certified public accountant.

Mr. Reiners brings extensive executive, financial and operational experience to the board. With over ten years of experience in the natural gas liquids industry in numerous positions, Mr. Reiners provides valuable insight into our business and industry.

Director Appointment Rights

The Limited Liability Company Agreement of NGL Energy Holdings LLC grants certain parties the right to designate a specified number of persons to serve on the board of directors of our GP. EMG NGL HC LLC has the right to designate one person to serve on the board of directors of our GP, and has designated John T. Raymond. The Coady Group (which consists of certain entities controlled by Shawn W. Coady and his brother Todd M. Coady) and the investors who formed the Partnership (“IEP Parties”) (which consists of certain entities controlled by H. Michael Krimbill, and two other investors) each have the right to designate one person to serve on the board of directors of our GP. The Coady Group has designated Shawn W. Coady and the IEP Parties have designated H. Michael Krimbill.

Board Leadership Structure and Role in Risk Oversight

The board of directors of our GP believes that whether the offices of chairman of the board and chief executive officer are combined or separated should be decided by the board, from time to time, in its business judgment after considering relevant circumstances. The board of directors of our GP currently does not have a chairman, although our chief executive officer, Mr. Krimbill, presides over the meetings.

The board of directors of our GP and its committees regularly review material operational, financial, compensation and compliance risks with senior management. In particular, the audit committee is responsible for risk oversight with respect to financial and compliance risks and risks relating to our audit and independent registered public accounting firm. Our compensation committee considers risk in connection with its design and evaluation of compensation programs for our senior management. Each committee regularly reports to the board of directors of our GP regarding its respective risk oversight role.

Audit Committee

The board of directors of our GP has established an audit committee. The audit committee assists the board in its oversight of the integrity of our financial statements and our compliance with legal and regulatory requirements and partnership policies and controls. The audit committee has the sole authority to, among other things:

•retain and terminate our independent registered public accounting firm;
•approve all auditing services and related fees and the terms thereof performed by our independent registered public accounting firm; and
•establish policies and procedures for the pre-approval of all non-audit services and tax services to be rendered by our independent registered public accounting firm.

The audit committee is also responsible for confirming the independence and objectivity of our independent registered public accounting firm. Our independent registered public accounting firm is given unrestricted access to the audit committee and our management, as necessary.

Mr. Collingsworth, Mr. Guderian and Mr. Reiners currently serve on the audit committee, and Mr. Reiners serves as the chairman. The board of directors of our GP has determined that Mr. Reiners is an “audit committee financial expert” as defined under SEC rules and that each member of the audit committee is financially literate. In compliance with the requirements of the NYSE, all of the members of the audit committee are independent directors, as defined in the applicable NYSE and Exchange Act rules.

Compensation Committee

The board of directors of our GP has established a compensation committee. The compensation committee’s responsibilities include the following, among others:
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•establishing the GP’s compensation philosophy and objectives;
•approving the compensation of the Chief Executive Officer and other officers;
•making recommendations to the board of directors with respect to the directors; and
•reviewing and making recommendations to the board of directors with respect to incentive compensation and equity-based compensation plans.

Mr. Collingsworth, Mr. Guderian and Mr. Reiners currently serve on the compensation committee, and Mr. Guderian serves as the chairman. The board of directors of our GP has determined that Mr. Collingsworth, Mr. Guderian and Mr. Reiners are independent directors, as defined in the applicable NYSE and Exchange Act rules.

Corporate Governance

The board of directors of our GP has adopted a Code of Ethics for the Chief Executive Officer and Senior Financial Officers, or Code of Ethics, which applies to the Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Corporate Controller and all other senior financial and accounting officers of our GP. Amendments to or waivers from the Code of Ethics will be disclosed on our website. The board of directors of our GP has also adopted Corporate Governance Guidelines that outline important policies and practices regarding our governance and a Code of Business Conduct and Ethics that applies to the directors, officers and employees of our GP and the Partnership.

We make available free of charge, within the “Governance” section of our website at www.nglenergypartners.com/governance, and in print to any unitholder who so requests, the Code of Ethics, the Corporate Governance Guidelines, the Code of Business Conduct and Ethics and the charters of the audit committee and the compensation committee of the board of directors of our GP. Requests for print copies may be directed to Investor Relations at investorinfo@nglep.com or to Investor Relations, NGL Energy Partners LP, 6120 South Yale Avenue, Suite 1300, Tulsa, Oklahoma 74136 or made by telephone at (918) 481-1119. The information contained on, or connected to, our website is not incorporated by reference into this Annual Report and should not be considered part of this or any other report that we file with or furnish to the SEC.

Insider Trading

The board of directors of our GP has adopted insider trading policies and procedures governing the purchase, sale and other dispositions of our securities by directors, officers and employees that are reasonably designed to promote compliance with insider trading laws, rules, and regulations, and any listing standards applicable to us. While NGL Energy Partners LP is not subject to the insider trading policy itself, NGL Energy Partners LP will not engage in transactions in its securities while aware of material nonpublic information. Our insider trading policies have been filed as Exhibit 19.1 and Exhibit 19.2 to this Annual Report.

Meeting of Non-Management Directors and Communications with Directors

At each quarterly meeting of the audit committee and/or the board of directors of our GP, our independent directors meet in an executive session without participation by management or non-independent directors. Mr. Reiners presides over these executive sessions.

Unitholders or interested parties may communicate directly with the board of directors of our GP, any committee of the board, any independent directors, or any one director, by sending written correspondence by mail addressed to the board, committee or director to the attention of our Secretary at the following address: Name of the Director(s), c/o Secretary, NGL Energy Partners LP, 6120 South Yale Avenue, Suite 1300, Tulsa, Oklahoma 74136. Communications are distributed to the board, committee, or director as appropriate, depending on the facts and circumstances outlined in the communication.

Item 11.    Executive Compensation

Compensation Discussion and Analysis

The year “2025” in the Compensation Discussion and Analysis and the summary compensation table refers to our fiscal year ended March 31, 2025.

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Introduction

The board of directors of our GP has responsibility and authority for compensation-related decisions for our executive officers. The board of directors of our GP has formed a compensation committee to develop our compensation program and to approve the compensation of the Chief Executive Officer and other officers. Our executive officers are also officers of our operating companies. While we reimburse our GP and its affiliates for all expenses they incur on our behalf, our executive officers do not receive any additional compensation for the services they provide to our GP.

Our “named executive officers” for fiscal year 2025 were:

•H. Michael Krimbill–Chief Executive Officer
•Bradley P. Cooper–Executive Vice President and Chief Financial Officer
•Lawrence J. Thuillier–Chief Accounting Officer
•Jennifer L. Kingham–Executive Vice President and Chief Information Officer
•L. Ryan Collins–Senior Vice President and General Counsel and Secretary (effective October 2, 2024)

Compensation Philosophy

Our compensation philosophy emphasizes pay-for-performance, focused primarily on the ability to reinstate sustainable quarterly distributions to our unitholders. Pay-for-performance is based on a combination of our performance and the individual executive officer’s contribution to our performance. We believe this pay-for-performance approach generally aligns the interests of our executive officers with the interests of our unitholders, and at the same time enables us to maintain a lower level of cash compensation expense in the event our operating and financial performance do not meet our expectations.

Our executive compensation program is designed to provide a total compensation package that allows us to:

•Attract and retain individuals with the background and skills necessary to successfully execute our business strategies;
•Motivate those individuals to reach short-term and long-term goals in a way that aligns their interests with the interests of our unitholders; and
•Reward success in reaching those goals.

Factors Enhancing Alignment with Unitholder Interests

•At risk incentive compensation based on annual financial performance;
•No excise tax gross-ups; and
•Compensation committee engages an independent compensation adviser.

Compensation Setting Process
 
Our compensation program for our named executive officers supports our philosophy of pay-for-performance.
•Role of Management: Our Chief Executive Officer provides periodic recommendations to the compensation committee and the board of directors of our GP regarding the compensation of our named executive officers, other than his own.
•Role of the Compensation Committee’s Consultant: In carrying out its responsibilities for establishing, implementing and monitoring the effectiveness of our executive compensation philosophy, plans and programs, our compensation committee has the authority to engage outside experts to assist in its deliberations, including the receipt of market salary information for certain executive and senior vice president positions or assistance in the design of compensation programs.

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Elements of Executive Compensation

As part of our pay-for-performance approach to executive compensation, the compensation of our executive officers includes a significant component of incentive compensation based on our performance. The following table summarizes the primary elements of compensation in our executive compensation program: 
Objective Supported
Element Primary Purpose How Amount Determined Attract &
Retain		 Motivate &
Pay-for-
Performance		 Unitholder
Alignment
Base Salary
Fixed income to compensate executive officers for their level of responsibility, expertise and experience
Based on competition in the marketplace for executive talent and abilities
 X
           
Discretionary Cash Bonus Awards
Rewards achievement of specific annual financial and operational performance goals
Based on the named executive officer’s relative contribution to the ongoing business of the Partnership
 X X X
Recognizes individual contributions to our performance
           
Long-Term Retention Award
Provides a forfeitable long-term incentive to encourage executive retention
Based on competition in the marketplace for executive talent and abilities
 X X X

Base Salary

The compensation committee periodically reviews the base salaries of our named executive officers and may recommend adjustments as necessary. We do not make automatic annual adjustments to base salary.
Our named executive officers are entitled to the following annual base salaries:
Name Fiscal Year Ended
March 31, 2024
Base Salary Rate (1)
($)		 Fiscal Year Ended
March 31, 2025
Base Salary Rate (2)
($)
H. Michael Krimbill 800,000  835,000 
Bradley P. Cooper 600,000  625,000 
Lawrence J. Thuillier 370,000  385,000 
Jennifer L. Kingham 400,000  425,000 
L. Ryan Collins —  450,000 
(1)    Base salary rates became effective on March 24, 2024 other than Mr. Collins who was not serving as a named executive officer during the relevant period.
(2)    Mr. Collins’s salary increased from $310,000 to $400,000 effective with his appointment to General Counsel and Secretary on October 2, 2024. Mr. Krimbill’s, Mr. Cooper’s, Mr. Thuillier’s, Ms. Kingham’s and Mr. Collins’s base salary rates became effective on March 23, 2025.

Discretionary Cash Bonus Awards

None of the named executive officers is subject to a formal cash bonus plan, and any cash bonuses are at the discretion of the compensation committee of the board of directors of our GP. During fiscal year 2025, cash bonuses of $2.0 million, $1.0 million, $0.3 million, $0.4 million and $0.3 million were paid to Mr. Krimbill, Mr. Cooper, Mr. Thuillier, Ms. Kingham and Mr. Collins, respectively.

Long-Term Equity Incentive Awards

Our GP adopted a long-term incentive plan (“LTIP”), which allowed for the issuance of equity-based compensation. As the LTIP expired on May 10, 2021, we had no common units available for grant during the year ended March 31, 2025, and the last of our outstanding service awards vested on November 15, 2023.
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We do not currently grant any equity awards as the Partnership’s LTIP expired on May 10, 2021 and we do not have any common units available for grant. As a general matter, we do not time the grant of equity awards in coordination with the release of material non-public information, and the release of material non-public information is not timed on the basis of option or other equity grant dates.

Long-Term Retention Award

On May 27, 2025, the compensation committee granted longer term retention awards of $1.4 million, $0.4 million, $0.5 million and $0.7 million to Mr. Cooper, Mr. Thuillier, Ms. Kingham and Mr. Collins, respectively. These awards will be paid in three equal installments over the next three years if the individual is still employed by the Partnership on the date of payment.

Severance and Change in Control Benefits

We do not provide any severance or change of control benefits to our named executive officers.

401(k) Plan

We have established a defined contribution 401(k) plan to assist our eligible employees in saving for retirement on a tax-deferred basis. The 401(k) plan permits all eligible employees, including our named executive officers, to make voluntary pre-tax contributions to the plan, subject to applicable tax limitations. For every dollar that employees contribute up to 4% of their eligible compensation (as defined in the plan), we contribute one dollar, plus 50 cents for every dollar employees contribute between 4% and 6% of their eligible compensation (as defined in the plan). Our matching contributions vest over an employee’s first two years of employment, subject to a participant’s continued service.

Other Benefits

We do not maintain a defined benefit or pension plan for our executive officers, because we believe such plans primarily reward longevity rather than performance. We offer a benefits package available to substantially all full-time employees, which includes a 401(k) plan and medical, dental, vision, disability and life insurance.

Other Officers

Certain officers who have leadership roles within our individual business segments, but who are not executive officers, participate in formulaic bonus programs that are based on the performance of the individual business segments with which they are involved. In most cases, similar programs were in place prior to our acquisition of the businesses, and we have left the programs substantially intact.

Clawback Policy

Effective October 2, 2023, we adopted a clawback policy, providing for the recoupment of certain executive compensation in the event of an accounting restatement resulting from material noncompliance with financial reporting requirements. The policy applies to incentive compensation that is granted, earned or vested based in whole or in part upon the attainment of a financial reporting measure, and the policy provides for the reimbursement or forfeiture of excess incentive compensation in the three fiscal years following the accounting restatement date. A copy of the clawback policy is filed as Exhibit 97.1 to this Form 10-K.

Employment Agreements

As of March 31, 2025, there were no employment agreements for the named executive officers.

Deductibility of Compensation

We believe that the compensation paid to the named executive officers is generally fully deductible for federal income tax purposes. We are a limited partnership and do not meet the definition of a “corporation” subject to deduction limitations under Section 162(m) of the Internal Revenue Code of 1986, as amended.


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Compensation Committee Report

The compensation committee of the board of directors of our GP has reviewed and discussed the Compensation Discussion and Analysis set forth above with management. Based on this review and discussion, the compensation committee recommended to the board of directors of our GP that the Compensation Discussion and Analysis be included in this Annual Report. 
  Members of the Compensation Committee:
 
  Bryan K. Guderian (Chairman)
James M. Collingsworth
  Derek S. Reiners

Relation of Compensation Policies and Practices to Risk Management

Our compensation arrangements contain a number of design elements that serve to minimize the incentive for taking excessive or inappropriate risk to achieve short-term, unsustainable results. This includes using restricted unit grants as a significant element of executive compensation, as the restricted units are designed to reward the executive officers based on the long-term performance of the Partnership. In combination with our risk management practices, we do not believe that risks arising from our compensation policies and practices for our employees are reasonably likely to have a material adverse effect on us.

Compensation Committee Interlocks and Insider Participation

During fiscal year 2025, James M. Collingsworth, Bryan K. Guderian and Derek S. Reiners served on the compensation committee. None of these individuals is an employee or an officer of our GP.

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Summary Compensation Table

The following table summarizes the compensation earned by our named executive officers for fiscal years 2023 through 2025. 
Name and Position  Fiscal
Year		 Salary
($)		 Bonus
($)		 All Other
Compensation (1)
($)		 Total
($)
H. Michael Krimbill 2025 772,308  2,000,000  22,304  2,794,612 
Chief Executive Officer 2024 675,769  2,000,000  19,953  2,695,722 
2023 649,038  —  17,922  666,960 
Bradley P. Cooper 2025 579,230  1,000,000  18,905  1,598,135 
Executive Vice President and 2024 482,692  600,000  17,227  1,099,919 
Chief Financial Officer 2023 413,942  375,000  17,573  806,515 
Lawrence J. Thuillier 2025 357,192  300,000  18,232  675,424 
Chief Accounting Officer 2024 323,404  335,000  17,164  675,568 
2023 324,000  225,000  16,325  565,325 
Jennifer L. Kingham (2) 2025 386,154  350,000  16,408  752,562 
Executive Vice President and 2024 376,500  300,000  16,003  692,503 
Chief Information Officer
L. Ryan Collins (3) 2025 340,115  310,000  17,796  667,911 
Senior Vice President and
General Counsel and Secretary
(1)    The amounts in this column primarily represent matching contributions to our 401(k) plan.
(2)    Ms. Kingham was not a named executive officer prior to fiscal year 2024.
(3)    Mr. Collins became Senior Vice President and General Counsel and Secretary on October 2, 2024, and thus was not a named executive officer prior to fiscal year 2025.

Pay Ratio Disclosure

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information regarding the ratio of the annual total compensation of our Chief Executive Officer, Mr. Krimbill, to the median of the annual total compensation of our employees for our last fiscal year.

For the year ended March 31, 2025:

•The median of the annual total compensation of all employees (other than the Chief Executive Officer) was $105,974; and
•The annual total compensation of Mr. Krimbill, as reported in the Summary Compensation Table above, was $2,794,612.

Based on the information for the year ended March 31, 2025, the ratio of the annual total compensation of our Chief Executive Officer to the annual total compensation of our median employee was approximately 26 to 1.

To determine our median employee, we identified each individual employed by us on January 1, 2025, our determination date. As of that date, we had 572 employees located in two countries. We identified the median employee by examining only base pay plus overtime for the period from January 1, 2024 through December 31, 2024. We included all employees, with the exception of three employees that work in Canada, whether employed on a full-time or part-time basis, and did not make any estimates, assumptions or adjustments to any base pay plus overtime amounts. After identifying the median employee, we calculated the annual total compensation for the median employee using the same methodology we use to calculate total annual compensation for our named executive officers, as set forth in the Summary Compensation Table above.

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This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above. The SEC rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.

Hedging of Partnership Common Units

Our supplemental trading policy prohibits directors, named executive officers and other designated employees from the following transactions: (i) trading puts or calls or engaging in short sales with respect to our common units, or (ii) engaging in certain hedging transactions, such as zero-cost collars, equity swaps, prepaid variable forward contracts and exchange funds, that are designed to hedge or offset a decrease in the market value of their holdings. Our supplemental trading policy also specifies that officers, certain employees and directors may not pledge our common units as collateral for any loan without prior notice and these individuals may not hold our common units in a margin account unless our common units are not taken into account in determining their margin requirements and they have given prior notice to their broker of their affiliation and status with the Partnership and any restrictions applicable to our common units with respect to their sale.

Director Compensation

Officers or employees of our GP or its affiliates who also serve as directors do not receive additional compensation for their service as a director of our GP. Each director who is not an officer or employee of our GP or its affiliates receives the following cash compensation for his board service:

•an annual retainer of $180,000;
•an annual retainer of $25,000 for the chairman of the audit committee;
•an annual retainer of $15,000 for the chairman of the compensation committee;
•an annual retainer of $15,000 for each member of the audit committee other than the chairman; and
•an annual retainer of $10,000 for each member of the compensation committee other than the chairman.

All of our directors are also reimbursed for all out-of-pocket expenses incurred in connection with attending board or committee meetings. Each director is indemnified for his actions associated with being a director to the fullest extent permitted under Delaware law.

The following table summarizes the compensation earned during fiscal year 2025 by each director who is not an officer or employee of our GP or its affiliates:
Name Total Compensation (1)
($)
Shawn W. Coady 180,000 
James M. Collingsworth 205,000 
Bryan K. Guderian 210,000 
Derek S. Reiners 215,000 
(1)    All of the compensation was paid in cash.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters

Security Ownership of Certain Beneficial Owners and Management

The following table summarizes the beneficial ownership, as of May 27, 2025, of our common units by:

•each person or group of persons known by us to be a beneficial owner of more than 5% of our outstanding common units;
•each director of our GP;
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•each named executive officer of our GP; and
•all directors and executive officers of our GP as a group.
Beneficial Owners Common Units
Beneficially
Owned		 Percentage of
Common Units
Beneficially
Owned (1)
5% or greater unitholders (other than officers and directors):    
Invesco Ltd. (2) 19,562,133  14.82  %
Bank of America Corp /DE/ (3) 9,087,128  6.88  %
RM Trading of Florida LLC (4) 7,550,000  5.72  %
Directors and named executive officers:    
Shawn W. Coady (5) 2,652,195  2.01  %
James M. Collingsworth (6) 639,870  *
L. Ryan Collins 28,733  *
Bradley P. Cooper 200,000  *
Bryan K. Guderian 122,500  *
Jennifer L. Kingham 92,687  *
H. Michael Krimbill (7) 5,025,018  3.81  %
John T. Raymond 50,000  *
Derek S. Reiners 126,000  *
Lawrence J. Thuillier 84,298  *
All directors and executive officers as a group (10 persons) (8) 9,021,301  6.83  %
* Less than 1.0%
(1)    Based on 132,012,766 common units outstanding at May 27, 2025.
(2)    The mailing address for Invesco Ltd. is 1331 Spring Street NW, Suite 2500, Atlanta, GA 30309. Invesco Ltd. reported sole voting and dispositive power with respect to all common units beneficially owned. The information related to Invesco Ltd. is based upon its Schedule 13G/A filed with the SEC on February 12, 2024.
(3)    The mailing address for Bank of America Corp /DE/ is 100 N Tyron Street, Charlotte, NC 28255. Bank of America Corporation on behalf of itself and its wholly owned subsidiaries Bank of America N.A. reported shared voting power with respect to 9,077,858 common units and shared dispositive power with respect to all common units beneficially owned. The information related to Bank of America Corp /DE/ is based upon its Schedule 13 filed with the SEC on February 14, 2025.
(4)    The mailing address for RM Trading of Florida LLC, Roger Beit and Mark Paley is 1 NO Breakers Row Apartment 141, Palm Beach, FL 33480. RM Trading of Florida LLC, Roger Beit and Mark Paley reported shared voting power and dispositive power with respect to all common units beneficially owned. The information related to RM Trading of Florida LLC, Roger Beit and Mark Paley is based upon the Schedule 13G filed with the SEC on May 28, 2025.
(5)    Dr. Coady owns 172,304 of these common units. SWC Family Partnership LP owns 2,320,391 of these common units. SWC Family Partnership LP is solely owned by SWC General Partner, LLC, of which Dr. Coady is the sole member. Dr. Coady may be deemed to have sole voting and investment power over these units, but disclaims such beneficial ownership except to the extent of his pecuniary interest therein. The 2012 Shawn W. Coady Irrevocable Insurance Trust, which was established for the benefit of Shawn W. Coady’s children, owns 135,000 of these common units. Dr. Coady may be deemed to have sole voting and investment power over these units, but disclaims such beneficial ownership except to the extent of his pecuniary interest therein. The Tara Nicole Coady Trust II, of which the reporting person is the trustee, owns 12,250 of these common units. The Colleen Blair Coady Trust, of which the reporting person is the trustee, owns 12,250 of these common units. Dr. Coady also owns a 12.27% interest in our GP through Coady Enterprises, LLC, of which he owns 100% of the membership interests.
(6)    Mr. Collingsworth owns 627,500 of these common units. Mr. Collingsworth holds 2,000 of these common units jointly with his spouse, Cindy Collingsworth. Cindy Collingsworth and her sister jointly own 9,500 of these common units. Cindy Collingsworth owns 870 of these common units.
(7) Mr. Krimbill owns 2,978,615 of these common units. Krim2010, LLC owns 904,848 of these common units. Krimbill Enterprises LP, H. Michael Krimbill and James E. Krimbill own 90.89%, 4.05%, and 5.06% of Krim2010, LLC, respectively. Krimbill Enterprises LP also owns 648,000 of these common units. Krimbill Enterprises LP is controlled by H. Michael Krimbill via his ownership of its general partner, Krimbill Holding Company. H. Michael Krimbill may be deemed to have sole voting and investment power over these units, but disclaims such beneficial ownership except to the extent of his pecuniary interest therein. KrimGP2010 LLC owns 363,555 of these common units. KrimGP2010 LLC is solely owned by H. Michael Krimbill. H. Michael Krimbill may be deemed to have sole voting and investment power over these units, but disclaims such beneficial ownership except to the extent of his pecuniary interest therein. Krimbill Enterprises LP, II also owns 130,000 of these common units. Krimbill Enterprises LP, II is controlled by H. Michael Krimbill via his ownership of its general partner, Krimbill Holding Company. H. Michael Krimbill may be deemed to have sole voting and investment power over these units, but disclaims such beneficial ownership except to the extent of his pecuniary interest therein. H. Michael Krimbill also owns a 15.10% interest in our GP through KrimGP2010, LLC, of which he owns 100% of the membership interests.
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(8)    The directors and executive officers of our GP, as of May 27, 2025, also collectively own a 33.43% interest in our GP.

Unless otherwise noted, each of the individuals listed above is believed to have sole voting and investment power with respect to the units beneficially held by them. The mailing address for each of the officers and directors of our GP listed above is 6120 South Yale Avenue, Suite 1300, Tulsa, Oklahoma 74136.

Securities Authorized for Issuance Under Equity Compensation Plan

The LTIP expired on May 10, 2021 and all of the outstanding units vested on November 15, 2023.

Item 13.    Certain Relationships and Related Transactions, and Director Independence

Our directors, executive officers, and greater than 5% unitholders collectively own an aggregate of 45,220,562 common units, representing an aggregate 28.53% limited partner interest in us. In addition, our GP owns a 0.1% GP interest in us and all of our incentive distribution rights (“IDRs”). As of March 31, 2025, we owned 8.69% of our GP.

Distributions and Payments to Our General Partner and Its Affiliates

Our GP and its affiliates do not receive any management fee or other compensation for the management of our business and affairs, but they are reimbursed for all expenses that they incur on our behalf, including general and administrative expenses. Our GP determines the amount of these expenses. In addition, our GP owns the 0.1% GP interest and all of the IDRs. Our GP is entitled to receive incentive distributions if the amount we distribute with respect to any quarter exceeds levels specified in our Partnership Agreement.

The following table summarizes the distributions and payments to be made by us to our directors, executive officers, and greater than 5% unitholders and our GP in connection with our ongoing operation and any liquidation. These distributions and payments were determined by and among affiliated entities before our initial public offering (“IPO”) and, consequently, are not the result of arm’s length negotiations.
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Operation Stage
Distributions of available cash to our directors, executive officers, and greater than 5% unitholders and our GP
We generally make cash distributions 99.9% to our unitholders pro rata, including our directors, executive officers, and greater than 5% unitholders as the holders of an aggregate 45,220,562 common units, and 0.1% to our GP. In addition, when distributions exceed the minimum quarterly distribution and other higher target distributions levels, our GP is entitled to increasing percentages of the distributions, up to 48.1% of the distributions above the highest target distribution level.
If our GP elects to reset the target distribution levels, it will be entitled to receive common units and to maintain its GP interest.
As described in Note 7 to our consolidated financial statements included in this Annual Report, the ABL Facility, Term Loan B and the indenture for the 2029 Senior Secured Notes and 2032 Senior Secured Notes contain covenants limiting our ability to pay distributions if we are in default under these agreements. In addition, quarterly distributions on the preferred units must be fully paid for all preceding fiscal quarters before we are permitted to declare or pay any distributions on our common units.
Payments to our GP and its affiliates
Our GP and its affiliates do not receive any management fee or other compensation for the management of our business and affairs, but they are reimbursed for all expenses that they incur on our behalf, including general and administrative expenses. As the sole purpose of the GP is to act as our GP, substantially all of the expenses of our GP are incurred on our behalf and reimbursed by us or our subsidiaries. Our GP determines the amount of these expenses.
Withdrawal or removal of our GP
If our GP withdraws or is removed, its GP interest and its IDRs will either be sold to the new general partner for cash or converted into common units, in each case for an amount equal to the fair market value of those interests.
Liquidation Stage
Liquidation
Upon our liquidation, our partners, including our GP, will be entitled to receive liquidating distributions according to their respective capital account balances.

Transactions with Related Persons

We sell goods and services to certain entities that are partially owned by our named executive officers. The following table summarizes these transactions from April 1, 2024 to March 31, 2025:
Entity Nature of Sales Amount Sold Ownership Interest in Entity
(in thousands)
H. Michael Krimbill
KrimAir, LLC Aircraft $ 177  10  %

Travis Krimbill, an employee of the Partnership, is the son of H. Michael Krimbill, who is a named executive officer of the Partnership and a member of the board of directors of our GP. Travis Krimbill does not report to H. Michael Krimbill and his compensation is determined by the Chief Financial Officer. During the year ended March 31, 2025, Travis Krimbill received total compensation of approximately $0.4 million.

Registration Rights Agreement

We have entered into a registration rights agreement (as amended, the “Registration Rights Agreement”) with certain third parties (“Registration Rights Parties”) pursuant to which we agreed to register for resale under the Securities Act of 1933, as amended (“Securities Act”) common units owned by the Registration Rights Parties. In connection with our IPO, we granted registration rights to the NGL Energy GP Investor Group, and subsequently, we have granted registration rights in connection with several acquisitions.
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We will not be required to register such common units if an exemption from the registration requirements of the Securities Act is available with respect to the number of common units desired to be sold. Subject to limitations specified in the Registration Rights Agreement, the registration rights of the Registration Rights Parties include the following:

•Demand Registration Rights. Certain registration rights parties deemed “Significant Holders” under the agreement may, to the extent that they continue to own more than 4% of our common units, require us to file a registration statement with the SEC registering the offer and sale of a specified number of common units, subject to limitations on the number of requests for registration that can be made in any twelve-month period as well as customary cutbacks at the discretion of the underwriters relating to a potential offering. All other Registration Rights Parties are entitled to notice of a Significant Holder’s exercise of its demand registration rights and may include their common units in such registration. We can only be required to file a total of nine registration statements upon the Significant Holders’ exercise of these demand registration rights and are only required to effect demand registration if the aggregate proposed offering price to the public is at least $10.0 million.
•Piggyback Registration Rights. If we propose to file a registration statement under the Securities Act to register our common units, the Registration Rights Parties are entitled to notice of such registration and have the right to include their common units in the registration, subject to limitations that the underwriters relating to a potential offering may impose on the number of common units included in the registration. These counterparties also have the right to include their units in our future registrations, including secondary offerings of our common units.
•Expenses of Registration. With specified exceptions, we are required to pay all expenses incidental to any registration of common units, excluding underwriting discounts and commissions.

Review, Approval or Ratification of Transactions with Related Parties

The board of directors of our GP has adopted a Code of Business Conduct and Ethics that, among other things, sets forth our policies for the review, approval and ratification of transactions with related persons. The Code of Business Conduct and Ethics provides that the board of directors of our GP or its authorized committee will periodically review all related person transactions that are required to be disclosed under SEC rules and, when appropriate, initially authorize or ratify all such transactions. In the event that the board of directors of our GP or its authorized committee considers ratification of a related person transaction and determines not to so ratify, the Code of Business Conduct and Ethics provides that our officers will make all reasonable efforts to cancel or annul the transaction.

The Code of Business Conduct and Ethics provides that, in determining whether or not to recommend the initial approval or ratification of a related person transaction, the board of directors of our GP or its authorized committee should consider all of the relevant facts and circumstances available, including (if applicable) but not limited to:

•whether there is an appropriate business justification for the transaction;
•the benefits that accrue to the Partnership as a result of the transaction;
•the terms available to unrelated third parties entering into similar transactions;
•the impact of the transaction on a director’s independence (in the event the related party is a director, an immediate family member of a director or an entity in which a director is a partner, shareholder or executive officer);
•the availability of other sources for comparable products or services;
•whether it is a single transaction or a series of ongoing, related transactions; and
•whether entering into the transaction would be consistent with the Code of Business Conduct and Ethics.

Director Independence

The NYSE does not require a listed publicly traded limited partnership like NGL to have a majority of independent directors on the board of directors of its general partner. For a discussion of the independence of the board of directors of our GP, see Part III, Item 10–“Directors, Executive Officers and Corporate Governance–Board of Directors of our General Partner.”

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Item 14.    Principal Accountant Fees and Services

We have engaged Grant Thornton LLP as our independent registered public accounting firm. The following table summarizes fees we have paid Grant Thornton LLP for the periods indicated:
Year Ended March 31,
2025 2024
(in thousands)
Audit fees (1) $ 1,912  $ 1,867 
Audit-related fees —  — 
Tax fees —  — 
All other fees —  — 
Total $ 1,912  $ 1,867 
(1)    Includes fees for audits of the Partnership’s financial statements, reviews of the related quarterly financial statements, and services that are normally provided by the independent accountants in connection with statutory and regulatory filings or engagements, including reviews of documents filed with the SEC and the preparation of letters to underwriters and other requesting parties.

In fiscal years 2025 and 2024, all of Grant Thornton LLP’s services were pre-approved by the Audit Committee.
102

PART IV
Item 15.    Exhibit and Financial Statement Schedules

(a)    The following documents are filed as part of this Annual Report:
1.    Financial Statements. See the accompanying Index to Financial Statements.
2.    Financial Statement Schedules. All schedules have been omitted because they are either not applicable, not required or the information required in such schedules appears in the financial statements or the related notes.
3.    Exhibits.
Exhibit Number Description
2.1
2.2
2.3
2.4
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
3.11
3.12
3.13
3.14
4.1
103

Exhibit Number Description
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
4.15*
4.16*
4.17
4.18
4.19
4.20*
10.1
10.2
104

Exhibit Number Description
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
19.1
19.2
105

Exhibit Number Description
21.1*
23.1*
31.1*
31.2*
32.1*
32.2*
97.1
101.INS** XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH** Inline XBRL Schema Document
101.CAL** Inline XBRL Calculation Linkbase Document
101.DEF** Inline XBRL Definition Linkbase Document
101.LAB** Inline XBRL Label Linkbase Document
101.PRE** Inline XBRL Presentation Linkbase Document
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*    Exhibits filed with this report.
**    The following documents are formatted in Inline XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets at March 31, 2025 and 2024, (ii) Consolidated Statements of Operations for the years ended March 31, 2025, 2024, and 2023, (iii) Consolidated Statements of Comprehensive Income (Loss) for the years ended March 31, 2025, 2024, and 2023, (iv) Consolidated Statements of Changes in Equity for the years ended March 31, 2025, 2024, and 2023, (v) Consolidated Statements of Cash Flows for the years ended March 31, 2025, 2024, and 2023, and (vi) Notes to Consolidated Financial Statements.

Item 16.    Form 10-K Summary

None.
106

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on May 29, 2025.
NGL Energy Partners LP
By: NGL Energy Holdings LLC, its general partner
By: /s/ H. Michael Krimbill
H. Michael Krimbill
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ H. Michael Krimbill Chief Executive Officer and Director May 29, 2025
H. Michael Krimbill (Principal Executive Officer)
/s/ Bradley P. Cooper Chief Financial Officer May 29, 2025
Bradley P. Cooper
 (Principal Financial Officer)
/s/ Lawrence J. Thuillier Chief Accounting Officer May 29, 2025
Lawrence J. Thuillier (Principal Accounting Officer)
/s/ Shawn W. Coady Director May 29, 2025
Shawn W. Coady
/s/ James M. Collingsworth Director May 29, 2025
James M. Collingsworth
/s/ Bryan K. Guderian Director May 29, 2025
Bryan K. Guderian
/s/ John T. Raymond Director May 29, 2025
John T. Raymond
/s/ Derek S. Reiners Director May 29, 2025
Derek S. Reiners
107

INDEX TO FINANCIAL STATEMENTS
 
NGL Energy Partners LP
Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248)
F-2
Consolidated Balance Sheets at March 31, 2025 and 2024
F-4
Consolidated Statements of Operations for the years ended March 31, 2025, 2024, and 2023
F-5
Consolidated Statements of Comprehensive Income (Loss) for the years ended March 31, 2025, 2024, and 2023
F-6
Consolidated Statements of Changes in Equity for the years ended March 31, 2025, 2024, and 2023
F-7
Consolidated Statements of Cash Flows for the years ended March 31, 2025, 2024, and 2023
F-8
Notes to Consolidated Financial Statements
F-9

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors of NGL Energy Holdings LLC and
Unitholders of NGL Energy Partners LP

Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of NGL Energy Partners LP (a Delaware limited partnership) and subsidiaries (the “Partnership”) as of March 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), changes in equity, and cash flows for each of the three years in the period ended March 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Partnership as of March 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Partnership’s internal control over financial reporting as of March 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated May 29, 2025 expressed an unqualified opinion.

Basis for opinion
These consolidated financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on the Partnership’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical audit matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Crude Oil Logistics reporting unit - goodwill impairment assessments
As described further in Note 5 to the consolidated financial statements, the Partnership’s goodwill balance attributable to their Crude Oil Logistics reporting unit was $310 million as of March 31, 2025. Management performed quantitative impairment assessments for the Crude Oil Logistics reporting unit as of December 31, 2024 and March 31, 2025, to test goodwill for impairment. As a result of the assessments performed, the Partnership determined that the fair value of the Crude Oil Logistics reporting unit was more likely than not greater than the carrying value of the reporting unit as of December 31, 2024 and March 31, 2025. We identified the Crude Oil Logistics reporting unit goodwill impairment assessments as a critical audit matter.

The principal consideration for our determination that the Crude Oil Logistics reporting unit goodwill impairment assessments is a critical audit matter is due to the estimation uncertainties and significant management judgment when estimating the fair value of the Crude Oil Logistics reporting unit. This in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence related to management’s forecasted future cash flows and evaluation of the reasonableness of the valuation model used. In addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.

Our audit procedures related to the Crude Oil Logistics reporting unit goodwill impairment assessments included the following, among others:

F-2

•We tested the design and operating effectiveness of internal controls relating to management’s goodwill impairment assessments, including those over the determination of the fair value of the Crude Oil Logistics reporting unit.
•With the assistance of professionals with specialized skill and knowledge, we tested management’s process for calculating the goodwill impairment assessments, including the reasonableness of the valuation methodology and certain significant assumptions used in the calculations including the discount rate applied to the estimated future cash flows.
•We evaluated the reasonableness of significant judgments including forecasted revenue and operating expenses. We tested whether these forecasts were reasonable and consistent with historical performance and industry projections and conditions found in industry reports, as applicable.

/s/ GRANT THORNTON LLP

We have served as the Partnership’s auditor since 2010.

Tulsa, Oklahoma
May 29, 2025

F-3

NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Consolidated Balance Sheets
(in Thousands, except unit amounts)
March 31,
2025 2024
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,649  $ 38,909 
Accounts receivable, net of allowance for expected credit losses of $3,689 and $1,446, respectively
 579,468  717,022 
Accounts receivable-affiliates 730  1,501 
Inventories 69,916  106,598 
Prepaid expenses and other current assets 63,651  71,315 
Assets held for sale 175,207  72,470 
Assets of discontinued operations 67,432  172,838 
Total current assets 962,053  1,180,653 
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $1,104,582 and $1,011,020, respectively
 2,066,847  2,095,441 
GOODWILL 599,348  617,231 
INTANGIBLE ASSETS, net of accumulated amortization of $340,334 and $327,574, respectively
 851,347  932,714 
INVESTMENTS IN UNCONSOLIDATED ENTITIES —  20,305 
OPERATING LEASE RIGHT-OF-USE ASSETS 109,870  95,436 
OTHER NONCURRENT ASSETS 19,975  52,128 
ASSETS HELD FOR SALE —  26,186 
Total assets $ 4,609,440  $ 5,020,094 
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable $ 461,980  $ 638,763 
Accounts payable-affiliates 102  37 
Accrued expenses and other payables 135,233  172,602 
Advance payments received from customers 10,347  17,313 
Current maturities of long-term debt 8,805  7,000 
Operating lease obligations 27,911  29,387 
Liabilities held for sale 42,103  2,064 
Liabilities of discontinued operations 52,749  110,181 
Total current liabilities 739,230  977,347 
LONG-TERM DEBT, net of debt issuance costs of $43,144 and $49,178, respectively, and current maturities
 2,961,703  2,843,822 
OPERATING LEASE OBLIGATIONS 85,240  70,573 
OTHER NONCURRENT LIABILITIES 125,897  129,185 
COMMITMENTS AND CONTINGENCIES (NOTE 8)
CLASS D 9.00% PREFERRED UNITS, 600,000 and 600,000 preferred units issued and outstanding, respectively
 551,097  551,097 
REDEEMABLE NONCONTROLLING INTERESTS 424  — 
EQUITY:
General partner, representing a 0.1% interest, 132,145 and 132,645 notional units, respectively
 (52,913) (52,834)
Limited partners, representing a 99.9% interest, 132,012,766 and 132,512,766 common units issued and outstanding, respectively
 (170,275) 134,807 
Class B preferred limited partners, 12,585,642 and 12,585,642 preferred units issued and outstanding, respectively
 305,468  305,468 
Class C preferred limited partners, 1,800,000 and 1,800,000 preferred units issued and outstanding, respectively
 42,891  42,891 
Accumulated other comprehensive income (loss) 9  (499)
Noncontrolling interests 20,669  18,237 
Total equity 145,849  448,070 
Total liabilities and equity $ 4,609,440  $ 5,020,094 

The accompanying notes are an integral part of these consolidated financial statements.
F-4

NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Consolidated Statements of Operations
(in Thousands, except unit and per unit amounts)
Year Ended March 31,
2025 2024 2023
REVENUES:
Product $ 2,742,953  $ 3,467,925  $ 5,008,999 
Service and other 726,233  685,382  670,021 
Total Revenues 3,469,186  4,153,307  5,679,020 
COST OF SALES:
Product 2,437,331  3,103,710  4,575,826 
Service and other 69,746  81,724  113,588 
Total Cost of Sales 2,507,077  3,185,434  4,689,414 
OPERATING COSTS AND EXPENSES:
Operating 297,686  299,605  304,589 
General and administrative 55,593  121,625  71,483 
Depreciation and amortization 254,732  266,114  273,108 
Loss on disposal or impairment of assets, net 31,448  115,936  86,776 
Revaluation of liabilities (6,705) 2,680  9,665 
Operating Income 329,355  161,913  243,985 
OTHER INCOME (EXPENSE):
Equity in earnings of unconsolidated entities 6,565  4,120  4,120 
Interest expense (280,078) (269,804) (275,438)
(Loss) gain on early extinguishment of liabilities, net —  (55,281) 6,177 
Other income, net 4,262  2,782  30,410 
Income (Loss) From Continuing Operations Before Income Taxes 60,104  (156,270) 9,254 
INCOME TAX BENEFIT (EXPENSE) 4,885  (1,458) (219)
Income (Loss) From Continuing Operations 64,989  (157,728) 9,035 
(Loss) Income From Discontinued Operations, net of Tax (21,826) 14,604  43,457 
Net Income (Loss) 43,163  (143,124) 52,492 
LESS: NET INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO NONREDEEMABLE NONCONTROLLING INTERESTS (3,749) (631) (1,106)
LESS: NET INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO REDEEMABLE NONCONTROLLING INTERESTS (46) —  — 
NET INCOME (LOSS) ATTRIBUTABLE TO NGL ENERGY PARTNERS LP $ 39,368  $ (143,755) $ 51,386 
NET LOSS FROM CONTINUING OPERATIONS ALLOCATED TO COMMON UNITHOLDERS (NOTE 3) $ (57,096) $ (297,705) $ (116,646)
NET (LOSS) INCOME FROM DISCONTINUED OPERATIONS ALLOCATED TO COMMON UNITHOLDERS (NOTE 3) (21,804) 14,589  43,414 
NET LOSS ALLOCATED TO COMMON UNITHOLDERS (NOTE 3) $ (78,900) $ (283,116) $ (73,232)
BASIC AND DILUTED LOSS PER COMMON UNIT
Loss From Continuing Operations $ (0.43) $ (2.25) $ (0.89)
(Loss) Income From Discontinued Operations, net of Tax $ (0.16) $ 0.11  $ 0.33 
Net Loss $ (0.60) $ (2.14) $ (0.56)
BASIC AND DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING 132,204,283  132,146,477  131,007,171 

 The accompanying notes are an integral part of these consolidated financial statements.
F-5

NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Loss)
(in Thousands)
Year Ended March 31,
2025 2024 2023
Net income (loss) $ 43,163  $ (143,124) $ 52,492 
Other comprehensive income (loss) 508  (49) (142)
Comprehensive income (loss) $ 43,671  $ (143,173) $ 52,350 

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

F-6

NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Consolidated Statements of Changes in Equity
For the Years Ended March 31, 2025, 2024, and 2023
(in Thousands, except unit amounts)
Limited Partners
Preferred Common
General
Partner		 Units Amount
Units		 Amount Accumulated Other Comprehensive Income (Loss) Noncontrolling
Interests		 Total
Equity
BALANCE AT MARCH 31, 2022 $ (52,478) 14,385,642  $ 348,359  130,695,970  $ 401,486  $ (308) $ 17,394  $ 714,453 
Distributions to noncontrolling interest owners —  —  —  —  —  —  (1,993) (1,993)
Common unit repurchases and cancellations —  —  —  (55,702) (99) —  —  (99)
Equity issued pursuant to incentive compensation plan —  —  —  1,287,075  2,718  —  —  2,718 
Net (loss) income (73) —  —  —  51,459  —  1,106  52,492 
Other comprehensive loss —  —  —  —  —  (142) —  (142)
BALANCE AT MARCH 31, 2023 (52,551) 14,385,642  348,359  131,927,343  455,564  (450) 16,507  767,429 
Distributions to preferred unitholders (Note 9) —  —  —  —  (178,299) —  —  (178,299)
Distributions to noncontrolling interest owners —  —  —  —  —  —  (1,586) (1,586)
Contributions from noncontrolling interest owners (Note 17) —  —  —  —  —  —  2,685  2,685 
Common unit repurchases and cancellations —  —  —  (21,302) (84) —  —  (84)
Equity issued pursuant to incentive compensation plan —  —  —  606,725  1,098  —  —  1,098 
Net (loss) income (283) —  —  —  (143,472) —  631  (143,124)
Other comprehensive loss —  —  —  —  —  (49) —  (49)
BALANCE AT MARCH 31, 2024 (52,834) 14,385,642  348,359  132,512,766  134,807  (499) 18,237  448,070 
Contributions from noncontrolling interest owners —  —  —  —  —  —  2,605  2,605 
Distributions to preferred unitholders (Note 9) —  —  —  —  (335,136) —  —  (335,136)
Distributions to noncontrolling interest owners —  —  —  —  —  —  (5,483) (5,483)
Sale of interest in saltwater disposal assets (Note 17) —  —  —  —  (338) —  1,561  1,223 
Common unit repurchases and cancellations (Note 9) —  —  —  (500,000) (2,126) —  —  (2,126)
Warrant repurchases (Note 9) —  —  —  —  (6,929) —  —  (6,929)
Net (loss) income (79) —  —  —  39,447  —  3,749  43,117 
Other comprehensive income —  —  —  —  —  508  —  508 
BALANCE AT MARCH 31, 2025 $ (52,913) 14,385,642  $ 348,359  132,012,766  $ (170,275) $ 9  $ 20,669  $ 145,849 
    `

The accompanying notes are an integral part of these consolidated financial statements.`
F-7

NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in Thousands)
Year Ended March 31,
2025 2024 2023
OPERATING ACTIVITIES:
Net income (loss) $ 43,163  $ (143,124) $ 52,492 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Loss (income) from discontinued operations, net of tax 21,826  (14,604) (43,457)
Depreciation and amortization, including amortization of debt issuance costs 267,246  282,062  290,106 
(Gain) loss on early extinguishment or revaluation of liabilities, net (6,705) 57,961  3,488 
Equity-based compensation expense —  1,098  2,718 
Loss on disposal or impairment of assets, net 31,448  115,936  86,776 
Change in provision for expected credit losses 2,496  466  (623)
Net adjustments to fair value of derivatives 4,909  12,321  (19,111)
Equity in earnings of unconsolidated entities (6,565) (4,120) (4,120)
Distributions of earnings from unconsolidated entities 6,702  5,190  4,627 
Lower of cost or net realizable value adjustments 2,944  29  2,436 
Other (1,120) 3,238  723 
Changes in operating assets and liabilities, exclusive of acquisitions:
Accounts receivable and affiliates 114,416  221,690  82,750 
Inventories 9,940  13,629  91,221 
Other current and noncurrent assets 3,124  52,860  (5,037)
Accounts payable and affiliates (145,988) (233,701) (153,311)
Other current and noncurrent liabilities (90,986) (9,113) (35,993)
Net cash provided by operating activities-continuing operations 256,850  361,818  355,685 
Net cash provided by operating activities-discontinued operations 40,613  14,346  89,501 
Net cash provided by operating activities 297,463  376,164  445,186 
INVESTING ACTIVITIES:
Capital expenditures (245,816) (152,295) (147,765)
Net settlements of derivatives (246) (6,185) 56,005 
Proceeds from sales of assets 42,819  53,246  45,848 
Proceeds from divestitures of businesses and investments, net 72,246  16,000  111,633 
Investments in unconsolidated entities (106) (258) (88)
Distributions of capital from unconsolidated entities 2,002  568  — 
Net cash (used in) provided by investing activities-continuing operations (129,101) (88,924) 65,633 
Net cash provided by (used in) investing activities-discontinued operations 6,292  5,163  (1,445)
Net cash (used in) provided by investing activities (122,809) (83,761) 64,188 
FINANCING ACTIVITIES:
Proceeds from borrowings under ABL Facility 2,008,000  1,652,000  2,007,000 
Payments on ABL Facility (1,899,000) (1,790,000) (1,985,000)
Payments on Term Loan B (7,000) —  — 
Issuance of secured debt —  2,894,873  — 
Repayment and repurchase of senior secured and unsecured notes —  (2,781,067) (479,302)
Proceeds from borrowings on other long-term debt 12,720  —  — 
Payments on other long-term debt (1,068) —  (43,278)
Debt issuance costs (5,258) (53,170) (3,294)
Contributions from noncontrolling interest owners 2,983  —  — 
Distributions to preferred unitholders (305,291) (178,299) — 
Distributions to noncontrolling interest owners (5,483) (1,586) (1,993)
Warrant repurchases (6,929) —  — 
Common unit repurchases and cancellations (2,126) (84) (99)
Payments to settle contingent consideration liabilities (420) (1,576) (1,789)
Net settlements of derivatives 977  —  — 
Principal payments of finance lease (19) (16) (10)
Net cash used in financing activities (207,914) (258,925) (507,765)
Net (decrease) increase in cash and cash equivalents (33,260) 33,478  1,609 
Cash and cash equivalents, beginning of period 38,909  5,431  3,822 
Cash and cash equivalents, end of period $ 5,649  $ 38,909  $ 5,431 
Supplemental cash flow information:
Cash interest paid $ 298,980  $ 247,276  $ 265,413 
Income taxes paid (net of income tax refunds) $ 6,173  $ 3,213  $ 3,355 
Supplemental non-cash investing and financing activities:
Distributions declared but not paid to preferred unitholders $ 29,845  $ —  $ — 
Accrued capital expenditures $ 6,153  $ 9,626  $ 7,533 
The accompanying notes are an integral part of these consolidated financial statements.
F-8
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Note 1—Organization and Operations

NGL Energy Partners LP, a Delaware master limited partnership (“we,” “us,” “our,” or the “Partnership”), was formed in September 2010. NGL Energy Holdings LLC serves as our general partner (“GP”). At March 31, 2025, our operations included three segments:

•Our Water Solutions segment transports, treats, recycles and disposes of produced and flowback water generated from crude oil and natural gas production. We also sell produced water for reuse and recycle and brackish non-potable water to our producer customers to be used in their crude oil exploration and production activities. As part of processing water, we aggregate and sell recovered crude oil, also known as skim oil. We also dispose of solids such as tank bottoms, drilling fluids and drilling muds and perform other ancillary services such as truck and frac tank washouts. Our activities in this segment are underpinned by long-term, fixed fee contracts and acreage dedications, some of which contain minimum volume commitments with leading oil and gas companies including large, investment grade producer customers.
•Our Crude Oil Logistics segment purchases crude oil from producers and marketers and transports it to refineries or for resale at pipeline injection stations, storage terminals, barge loading facilities, rail facilities and other trade hubs, and provides storage, terminaling and transportation services through its owned assets. Our activities in this segment are supported by certain long-term, fixed rate contracts with acreage dedications and which include minimum volume commitments on our storage tanks and owned and leased pipelines.
•Our Liquids Logistics segment conducts supply operations for natural gas liquids to commercial, retail and industrial customers across the United States and Canada. These operations are conducted through our five owned terminals, third-party storage and terminal facilities, nine common carrier pipelines and a fleet of leased railcars (updated for the transactions discussed below). We also provide services for marine exports of butane through our facility located in Chesapeake, Virginia and we also own a propane pipeline in Michigan. We attempt to reduce our exposure to price fluctuations by using back-to-back physical contracts and pre-sale agreements that allow us to lock in a margin on a percentage of our winter volumes. We also enter into financially settled derivative contracts as economic hedges of our physical inventory, physical sales and physical purchase contracts.

Sale of Refined Products Business and Exiting Biodiesel Business

As of March 31, 2025, we completed winding down our biodiesel business (see Note 17 for a further discussion).

On March 17, 2025, we signed a purchase and sale agreement to sell our refined products business, including certain working capital items, to a third-party. This sale closed on April 30, 2025.

The sale of our refined products business and winding down of our biodiesel business 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 for our refined products and biodiesel businesses within our Liquids Logistics segment have been classified as discontinued operations for all periods presented and prior periods have been retrospectively adjusted in the consolidated statements of operations and consolidated statements of cash flows. In addition, the assets and liabilities related to our refined products and biodiesel businesses have been classified as either held for sale or discontinued operations within our March 31, 2025 and 2024 consolidated balance sheets (see Note 18 for a further discussion).

Sale of Certain Natural Gas Liquids Terminals and Most of Our Wholesale Propane Business

On February 5, 2025, we signed a purchase and sale agreement to sell 17 of our natural gas liquids terminals, most of our wholesale propane business, our interest in an unconsolidated entity and working capital to a third-party. This sale closed on April 30, 2025. The assets and liabilities of this portion of our Liquids Logistics segment have been classified as held for sale within our March 31, 2025 consolidated balance sheet (see Note 18 for a further discussion). We incurred $7.3 million of costs related to this transaction during the year ended March 31, 2025, and these costs have been recorded within loss on disposal or impairment of assets, net in our consolidated statement of operations.

As this sale transaction did not represent a strategic shift that will have a major effect on our operations or financial results, operations related to this portion of our Liquids Logistics segment have not been classified as discontinued operations.

F-9
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Sale of Certain Railcars

As of March 31, 2025, we entered into definitive agreements with third-parties to sell certain railcars, which have been classified as held for sale within our March 31, 2025 consolidated balance sheet (see Note 18 for a further discussion).

Note 2—Significant Accounting Policies

Basis of Presentation

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The accompanying consolidated financial statements include our accounts and those of our controlled subsidiaries. Intercompany transactions and account balances have been eliminated in consolidation. Investments we do not control, but can exercise significant influence over, are accounted for using the equity method of accounting (see further discussion below). We also own an undivided interest in a crude oil pipeline, and include our proportionate share of assets, liabilities, and expenses related to this pipeline in our consolidated financial statements.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amount of assets and liabilities reported at the date of the consolidated financial statements and the amount of revenues and expenses reported during the periods presented.

Critical accounting estimates we make in the preparation of our consolidated financial statements include, among others, determining the impairment of goodwill and long-lived assets, useful lives and recoverability of property, plant and equipment and amortizable intangible assets, the fair value of derivative instruments, estimating certain revenues, the fair value of asset retirement obligations, the fair value of assets and liabilities acquired in acquisitions, the recoverability of inventories, the collectability of accounts and notes receivable, the valuation of contingent consideration liabilities and accruals for environmental matters. Although we believe these estimates are reasonable, actual results could differ from those estimates.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Fair value is based upon assumptions that market participants would use when pricing an asset or liability. We use the following fair value hierarchy, which prioritizes valuation technique inputs used to measure fair value into three broad levels:

•Level 1: Quoted prices in active markets for identical assets and liabilities that we have the ability to access at the measurement date.
•Level 2: Inputs (other than quoted prices included within Level 1) that are either directly or indirectly observable for the asset or liability, including (i) quoted prices for similar assets or liabilities in active markets, (ii) quoted prices for identical or similar assets or liabilities in inactive markets, (iii) inputs other than quoted prices that are observable for the asset or liability, and (iv) inputs that are derived from observable market data by correlation or other means. Instruments categorized in Level 2 include non-exchange traded derivative financial instruments 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.

F-10
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Derivative Financial Instruments

We record all derivative financial instrument contracts at fair value in our consolidated balance sheets except for normal purchase and normal sale transactions that are expected to result in physical delivery. For these transactions, 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 periodically enter into interest rate swaps to hedge variability in interest rates and effectively lock in the benchmark interest rate at the inception of the swap.

We have not designated any financial instruments as hedges for accounting purposes. All changes in the fair value of our physical contracts that do not qualify as normal purchases and normal sales and settlements (whether cash transactions or non-cash mark-to-market adjustments) are reported either within revenue (for sales contracts) or cost of sales (for purchase contracts) in our consolidated statements of operations, regardless of whether the contract is physically or financially settled, and within cash flows from operations in our consolidated statements of cash flows. The change in the fair value of our interest rate swaps is recorded as a net gain or loss within interest expense in our consolidated statement of operations and within cash flows from operations in our consolidated statements of cash flows.

We utilize various commodity derivative financial instrument contracts to attempt to reduce our exposure to price fluctuations. We do not enter into such contracts for trading purposes. Changes in assets and liabilities from commodity derivative financial instruments result primarily from changes in market prices, newly originated transactions, and the timing of settlements and are reported within cost of sales on the consolidated statements of operations, along with related settlements. We attempt to balance our contractual portfolio in terms of notional amounts and timing of performance and delivery obligations. However, net unbalanced positions can exist or are established based on our assessment of anticipated market movements. Inherent in the resulting contractual portfolio are certain business risks, including commodity price risk and credit risk. Commodity price risk is the risk that the market value of crude oil or natural gas liquids 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, letters of credit, monitoring customer receivables relative to previously-approved credit limits, restrictions on product liftings, entering into master netting agreements that allow for offsetting counterparty receivable and payable balances for certain transactions, reviewing the receivable aging and suspending sales to customers that have not timely paid outstanding invoices.

Cost of Sales

We include all costs we incur to acquire products, including the costs of purchasing, terminaling, and transporting inventory, prior to delivery to our customers, in cost of sales.

Depreciation and Amortization

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

Income Taxes

We qualify as a partnership for income tax purposes. As such, we generally do not pay federal income tax. Rather, each owner reports his or her share of our income or loss on his or her individual tax return. The aggregate difference in the basis of our net assets for financial and tax reporting purposes cannot be readily determined, as we do not have access to information regarding each partner’s basis in the Partnership.

We have certain taxable corporate subsidiaries in the United States and Canada, and our operations in Texas are subject to a state franchise tax that is calculated based on revenues net of cost of sales. Our fiscal years 2021 to 2024 generally remain subject to examination by federal, state, and Canadian tax authorities. We utilize the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying value of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which these temporary differences are expected to be recovered or settled.
F-11
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Changes in tax rates are recognized in income in the period that includes the enactment date.

A publicly traded partnership is required to generate at least 90% of its gross income (as defined for federal income tax purposes) from certain qualifying sources. Income generated by our taxable corporate subsidiaries is excluded from this qualifying income calculation. Although we routinely generate income outside of our corporate subsidiaries that is non-qualifying, we believe that at least 90% of our gross income has been qualifying income for each of the calendar years since our initial public offering.

We have a net deferred tax liability of $29.9 million and $38.0 million at March 31, 2025 and 2024, respectively, as a result of acquiring corporations in connection with certain of our acquisitions, which is included within other noncurrent liabilities in our consolidated balance sheets. The decrease in the deferred tax liability during the year ended March 31, 2025 was due to the sale of our ranches in April 2024, one ranch of which was treated as a corporation for federal income tax purposes (see Note 17). The deferred tax liability is the tax effected cumulative temporary difference between the GAAP basis and tax basis of the acquired assets within the corporation. For GAAP purposes, certain of the acquired assets will be depreciated and amortized over time which will lower the GAAP basis. The deferred tax benefit recorded during the year ended March 31, 2025 was $7.1 million with an effective tax rate of 133.4%. The deferred tax benefit recorded during the year ended March 31, 2024 was $1.2 million with an effective tax rate of 31.7%. The change in the effective tax rate from March 31, 2024 to March 31, 2025 was due to the sale of our ranches in April 2024 and the associated net deferred tax liabilities.

We evaluate uncertain tax positions for recognition and measurement in the consolidated financial statements. To recognize a tax position, we determine whether it is more likely than not that the tax position will be sustained upon examination, including resolution of any related appeals or litigation, based on the technical merits of the position. A tax position that meets the more likely than not threshold is measured to determine the amount of benefit to be recognized in the consolidated financial statements. We had no uncertain tax positions that required recognition in our consolidated financial statements at March 31, 2025 or 2024.

Cash and Cash Equivalents

Management considers all highly liquid investments with a maturity of three months or less, when purchased, to be cash equivalents. We place our cash and cash equivalents with financial institutions that are insured by the Federal Deposit Insurance Corporation; however, we maintain deposits in banks which exceed the amount of deposit insurance available. Management routinely assesses the financial condition of the institutions and believes that any possible credit loss would be minimal.

Accounts Receivable and Concentration of Credit Risk

We operate in the United States and Canada. We grant unsecured credit to customers under normal industry standards and terms, and have established policies and procedures that allow for an evaluation of each customer’s creditworthiness as well as general economic conditions. Accounts receivable are generated through transactions accounted for under the guidance of contracts with customers (ASC 606), leases (ASC 842) and non-monetary transactions (ASC 845). See Note 16 for a further discussion of our allowance for expected credit losses.

We execute master netting agreements with certain customers to mitigate our credit risk. Receivables and payables are reflected at a net balance to the extent a master netting agreement is in place and we intend to settle on a net basis.

We did not have any customers that represented over 10% of our consolidated revenues for the years ended March 31, 2025, 2024 and 2023.

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.

F-12
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Inventories consist of the following at the dates indicated:
March 31,
2025 2024
(in thousands)
Crude oil $ 23,962  $ 44,056 
Butane 22,674  20,400 
Propane 11,847  34,225 
Other 11,433  7,917 
Total $ 69,916  $ 106,598 

Amounts in the table above do not include assets classified as either held for sale or discontinued operations within our March 31, 2025 and 2024 consolidated balance sheets (see Note 18).

Investments in Unconsolidated Entities

Investments we do not control, but can exercise significant influence over, are accounted for using the equity method of accounting. Investments in partnerships and limited liability companies, unless our investment is considered to be minor, and investments in unincorporated joint ventures are also accounted for using the equity method of accounting. Under the equity method, we do not report the individual assets and liabilities of these entities on our consolidated balance sheets; instead, our ownership interests are reported within investments in unconsolidated entities on our consolidated balance sheets. Under the equity method, the investment is recorded at acquisition cost, increased by our proportionate share of any earnings and additional capital contributions and decreased by our proportionate share of any losses, distributions paid, and amortization of any excess investment. Excess investment is the amount by which our total investment exceeds our proportionate share of the net assets of the investee. We consider distributions received from unconsolidated entities which do not exceed cumulative equity in earnings subsequent to the date of investment to be a return on investment and are classified as operating activities in our consolidated statements of cash flows. We consider distributions received from unconsolidated entities in excess of cumulative equity in earnings subsequent to the date of investment to be a return of investment and are classified as investing activities in our consolidated statements of cash flows.

At March 31, 2025, cumulative equity earnings and cumulative distributions of our unconsolidated entities since they were acquired were $21.3 million and $23.9 million, respectively.

Our investments in unconsolidated entities consist of the following at the date indicated. As of March 31, 2025, all of our investments in unconsolidated entities have been classified as assets held for sale within our March 31, 2025 consolidated balance sheet (see Note 18).
March 31,
Entity Segment Ownership Interest 2024
(in thousands)
Water services and land company Water Solutions 50% $ 15,228 
Water services and land company Water Solutions 10% 2,926 
Water services and land company Water Solutions 50% 2,026 
Natural gas liquids terminal company Liquids Logistics 50% 125 
Total $ 20,305 

F-13
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Other Noncurrent Assets

Other noncurrent assets consist of the following at the dates indicated:
March 31,
2025 2024
(in thousands)
Linefill (1) $ 5,240  $ 37,861 
Loan receivable (2) 3,089  4,776 
Minimum shipping fees - pipeline commitments (3) —  356 
Other 11,646  9,135 
Total $ 19,975  $ 52,128 
(1)    Represents minimum volumes of product we are required to leave on certain third-party owned pipelines under long-term shipment commitments. At March 31, 2025 and 2024, linefill consisted of 90,881 and 502,686 barrels of crude oil, respectively. Linefill held in pipelines we own is included within property, plant and equipment (see Note 4).
(2)    Represents the noncurrent portion of loan receivables, net of allowances for expected credit losses, primarily related to the sale of certain saltwater disposal assets (see Note 17). At March 31, 2025 and 2024, the loan receivable balance (which includes interest receivable) was $6.1 million and $7.5 million, respectively, of which $3.0 million and $2.7 million, respectively, are recorded within prepaid expenses and other current assets in our consolidated balance sheets.
(3)    Represents the noncurrent portion of minimum shipping fees paid in excess of volumes shipped, or deficiency credits, for a contract with a crude oil pipeline operator. This amount can be recovered when volumes shipped exceed the minimum monthly volume commitment. At March 31, 2024, the deficiency credit was $4.6 million, of which $4.3 million is recorded within prepaid expenses and other current assets in our consolidated balance sheet.

Amounts in the table above do not include assets classified as either held for sale or discontinued operations within our March 31, 2025 and 2024 consolidated balance sheets (see Note 18).

Accrued Expenses and Other Payables

Accrued expenses and other payables consist of the following at the dates indicated:
March 31,
2025 2024
(in thousands)
Accrued compensation and benefits $ 45,081  $ 33,061 
Distributions payable 29,845  — 
Accrued interest (1) 25,308  58,335 
Excise and other tax liabilities 13,100  13,192 
Derivative liabilities 6,427  1,982 
Product exchange liabilities —  3,366 
Other 15,472  62,666 
Total $ 135,233  $ 172,602 
(1)    Includes amounts accrued related to the LCT Capital, LLC (“LCT”) legal matter at March 31, 2024. On June 13, 2024, we paid LCT $63.3 million related to the legal judgment against us, of which $27.2 million represented interest and $0.1 million of costs awarded to LCT.

Amounts in the table above do not include liabilities classified as either held for sale or discontinued operations within our March 31, 2025 and 2024 consolidated balance sheets (see Note 18).

Property, Plant and Equipment

We record property, plant and equipment at cost less accumulated depreciation. Acquisitions and improvements are capitalized, and maintenance and repairs are expensed as incurred. As we dispose of assets, we remove the cost and related accumulated depreciation from the accounts, and any resulting gain or loss is included within loss on disposal or impairment of assets, net. We compute depreciation expense of our property, plant and equipment using the straight-line method over the estimated useful lives of the assets (see Note 4).

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NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Intangible Assets

Our intangible assets include contracts and arrangements acquired in business combinations, including customer relationships, customer commitments, pipeline capacity rights, rights-of-way and easements, water rights, and executory contracts and other agreements. In addition, we capitalize certain debt issuance costs associated with the ABL Facility (as defined herein). We amortize the majority of our intangible assets on a straight-line basis over the estimated useful lives of the assets (see Note 6). We amortize debt issuance costs over the terms of the related debt using a method that approximates the effective interest method.

Impairment of Long-Lived Assets

We evaluate the carrying value of our long-lived assets (property, plant and equipment and amortizable intangible assets) for potential impairment when events and circumstances warrant such a review. A long-lived asset group is considered impaired when the anticipated undiscounted future cash flows from the use and eventual disposition of the asset group is less than its carrying value. If the carrying value is not recoverable, an impairment loss is measured as the excess of the asset’s carrying value over its estimated fair value. When we cease to use an acquired trade name, we test the trade name for impairment using the relief from royalty method and we begin amortizing the trade name over its estimated useful life as a defensive asset. See Note 4 and Note 6 for a further discussion of long-lived asset impairments recognized in the consolidated statements of operations.

We evaluate our investments in unconsolidated entities for impairment whenever events or changes in circumstances indicate, in management’s judgment, that the fair value of such investment may have experienced a decline to less than its carrying value and the decline is other than temporary.

Goodwill

Goodwill represents the excess of the purchase price of the acquired businesses over the net fair value of acquired assets and assumed liabilities. Business combinations are accounted for using the “acquisition method.” We expect that all of our goodwill at March 31, 2025 is deductible for federal income tax purposes.

Goodwill and indefinite-lived intangible assets are not amortized, but instead are evaluated for impairment at least annually. We perform our annual assessment of impairment on January 1 of our fiscal year, and more frequently if circumstances warrant.

For purposes of the goodwill impairment assessment, assets are grouped into “reporting units.” A reporting unit is either an operating segment or a component of an operating segment, depending on how similar the components of the operating segment are to each other in terms of operational and economic characteristics. For each reporting unit, we perform a qualitative assessment of relevant events and circumstances about the likelihood of goodwill impairment. If it is deemed more likely than not that the fair value of the reporting unit is less than its carrying value, we calculate the fair value of the reporting unit. Otherwise, further testing is not required. If the fair value of the reporting unit (including its inherent goodwill) is less than its carrying value, an impairment loss is recognized to the extent that the implied fair value of the goodwill of the reporting unit is less than its carrying value, limited to the total amount of goodwill for the reporting unit.

Estimates and assumptions used to perform the impairment evaluation are inherently uncertain and can significantly affect the outcome of the analysis. The estimates and assumptions we used in the annual goodwill impairment assessment included market participant considerations and future forecasted operating results. Changes in operating results and other assumptions could materially affect these estimates. See Note 5 for a further discussion and analysis of our goodwill impairment assessment.

Product Exchanges

Quantities of products receivable or returnable under exchange agreements are reported within prepaid expenses and other current assets and within accrued expenses and other payables in our consolidated balance sheets. We estimate the value of product exchange assets and liabilities based on the weighted-average cost basis of the inventory we have delivered or will deliver on the exchange, plus or minus location differentials.
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NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)


Variable Interest Entities

We decide at the inception of each arrangement whether an entity in which an investment is made or in which we have other variable interests is considered a variable interest entity (“VIE”). Generally, an entity is a VIE if: (1) the entity does not have sufficient equity at risk to finance its activities without additional subordinated financial support from other parties, (2) the entity’s investors lack any characteristics of a controlling financial interest or (3) the entity was established with non-substantive voting rights.

We consolidate VIEs when we are deemed to be the primary beneficiary. The primary beneficiary of a VIE is generally the party that both: (1) has the power to make decisions that most significantly affect the economic performance of the VIE and (2) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the VIE. If we are not deemed to be the primary beneficiary of a VIE, we account for the investment or other variable interests in a VIE in accordance with applicable GAAP.

During the year ended March 31, 2025, we created two new aviation entities whereby we own a 90% interest and members of management own a 10% interest (see Note 17 for a further discussion of these transactions). We also executed guarantees for the benefit of the lender that obligates us for the payment and performance of the aviation entities with respect to the repayment of the loans. Since we guaranteed the payment of the outstanding loans, we have concluded that the aviation entities are VIEs because the equity is not sufficient to fund the aviation entities activities without additional subordinated financial support. We have the power to make decisions that most significantly affect the economic performance of the aviation entities and have benefits through our ownership interest. Therefore, we have concluded that we are the primary beneficiary and will consolidate the aviation entities in our consolidated financial statements and will include the noncontrolling interest as redeemable noncontrolling interest as discussed below.

The following table summarizes the balances related to the VIEs that are consolidated in our March 31, 2025 consolidated balance sheet (excluding intercompany eliminations at the time of consolidation) as well as our equity in the VIEs (in thousands):
Cash and cash equivalents $ 14 
Accounts receivable-affiliates 135 
Prepaid expenses and other current assets 108 
Property, plant and equipment, net 15,984 
Accounts payable (24)
Accrued expenses and other payables (190)
Current maturities of long-term debt (1,805)
Long-term debt, net (9,818)
Redeemable noncontrolling interest (424)
Partnership's equity in VIEs $ 3,980 

Generally, the assets of the individual consolidated VIEs can be used only to settle liabilities of each respective individual consolidated VIE and the liabilities of the individual consolidated VIEs are liabilities for which creditors or beneficial interest holders do not have recourse to the general credit of the Partnership. In general, our maximum exposure to loss due to involvement with the VIEs is limited to the amount of capital investment in the VIEs, if any, or the potential obligation to perform on the guarantees of the outstanding loans.

Noncontrolling Interests

Noncontrolling interests represent the portion of certain consolidated subsidiaries that are owned by third-parties. Amounts are adjusted by the noncontrolling interest holder’s proportionate share of the subsidiaries’ earnings or losses each period and any distributions that are paid. Noncontrolling interests are reported as a component of equity, unless the noncontrolling interest is considered redeemable, in which case the noncontrolling interest is recorded between liabilities and equity (mezzanine or temporary equity) in our consolidated balance sheet. The redeemable noncontrolling interest is adjusted at each balance sheet date to its maximum redemption value if the amount is greater than the carrying value.
F-16
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

The following table summarizes changes in our redeemable noncontrolling interest in our consolidated balance sheets (in thousands):
Redeemable noncontrolling interests at March 31, 2024 $ — 
Contributions from redeemable noncontrolling interest owners (Note 17) 378 
Net income from continuing operations attributable to redeemable noncontrolling interests 46 
Redeemable noncontrolling interests at March 31, 2025 $ 424 

Acquisitions

To determine if a transaction should be accounted for as a business combination or an acquisition of assets, we first calculate the relative fair values of the assets acquired. If substantially all of the relative fair value is concentrated in a single asset or group of similar assets, or if not but the transaction does not include a significant process (does not meet the definition of a business), we record the transaction as an acquisition of assets. For acquisitions of assets, the purchase price is allocated based on the relative fair values and goodwill is not recorded. All other transactions are recorded as business combinations. We record the assets acquired and liabilities assumed in a business combination at their acquisition date fair values. For a business combination, the excess of the purchase price over the net fair value of acquired assets and assumed liabilities is recorded as goodwill, which is not amortized but instead is evaluated for impairment at least annually (as described above).

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

Contingent Consideration Liabilities

Certain business combinations in our Water Solutions segment included future royalty payments to the seller, which we recorded as contingent consideration liabilities as part of our purchase price allocation. The initial fair value was calculated based on an estimate of the activity related to the assets acquired in the transaction, either volumes or revenue, and an estimate of the expected useful life of the assets and discounted to its present value using an appropriate discount rate. The contingent consideration liabilities are recorded within accrued expenses and other payables and other noncurrent liabilities in our consolidated balance sheets. The fair value of the contingent consideration liabilities are assessed each period to determine if there are any changes to the estimated expected activity and the expected useful life of the assets. The same process to calculate the initial fair value of the contingent consideration liabilities is used to calculate the updated fair value. Changes in the fair value of the contingent consideration liabilities are recorded within revaluation of liabilities in our consolidated statement of operations. The fair value estimates used in the analysis of the contingent consideration liabilities were primarily based on Level 3 inputs in the fair value hierarchy.

The following table summarizes changes in our contingent consideration liabilities (in thousands):
Contingent consideration liabilities at March 31, 2023 $ 24,600 
Liabilities settled (2,470)
Valuation adjustment (1) 2,680 
Contingent consideration liabilities at March 31, 2024 (2) 24,810 
Liabilities settled (2,308)
Valuation adjustment (3) (6,705)
Contingent consideration liabilities at March 31, 2025 (4) $ 15,797 
(1)    Increase due primarily to higher expected produced water volumes from our customers, resulting in an increase to the expected future royalty payment.
(2)    Includes $3.3 million which is recorded within accrued expenses and other payables and $21.5 million which is recorded within other noncurrent liabilities in our March 31, 2024 consolidated balance sheet.
(3)    Decrease due primarily to lower expected produced water volumes from our customers, resulting in a decrease to the expected future royalty payment.
(4)    Includes $2.0 million which is recorded within accrued expenses and other payables and $13.8 million which is recorded within other noncurrent liabilities in our March 31, 2025 consolidated balance sheet.

F-17
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Reclassifications

In addition to the reclassifications related to assets and liabilities held for sale and discontinued operations discussed in Note 1, we have also reclassified certain prior period financial statement information to be consistent with the classification methods used in the current fiscal year. For the years ended March 31, 2024 and 2023, the income statement was revised to present revenues and cost of sales by product and service and other, compared to presenting revenues and cost of sales by segment in the March 31, 2024 Annual Report on Form 10-K (“Annual Report”). Also, for the years ended March 31, 2024 and 2023, the elimination of intersegment sales is included in “Corporate and Other” as discussed in Note 11. These reclassifications did not impact previously reported amounts of assets, liabilities, equity, net income or cash flows.

Recent Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40), which includes amendments requiring, among other things, disclosure of disaggregated information about specific categories of expenses (purchases of inventory, employee compensation, depreciation, amortization, and depletion) included in certain expense captions on the income statement. Additionally, the amendments require disclosure of the total amount of selling expenses and an annual disclosure of the definition of selling expenses. The ASU is effective for fiscal years beginning after December 15, 2026 (which is the Partnership’s fiscal year beginning April 1, 2027), and for interim periods within fiscal years beginning after December 15, 2027 (which is the Partnership’s fiscal year beginning April 1, 2028), with early adoption permitted. The ASU may be applied either prospectively or retrospectively to all prior periods presented in the financial statements. We are currently evaluating the ASU to determine its impact on our financial statement disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The ASU is effective for the Partnership’s fiscal year beginning April 1, 2025, with early adoption permitted. The amendments are required to be applied prospectively with retrospective application permitted. We are currently evaluating the ASU to determine its impact on our financial statement disclosures.

In December 2023, the FASB issued ASU No. 2023-08, Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets, which includes amendments intended to improve the accounting for and disclosure of crypto assets. The ASU requires crypto assets to be measured at fair value each reporting period and for changes from remeasurement to be recognized in net income. The ASU also requires enhanced disclosures for both annual and interim reporting periods to provide investors with relevant information to analyze and assess the exposure and risk of significant individual crypto asset holdings. The ASU is effective for the Partnership’s fiscal year beginning April 1, 2025, including interim periods during that fiscal year, with early adoption permitted and requires a cumulative-effect adjustment upon adoption. This ASU does not currently impact our financial statements.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which includes amendments intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The ASU is effective for the Partnership’s fiscal year beginning April 1, 2024, and interim periods within our fiscal year beginning April 1, 2025, with early adoption permitted and requires retrospective application. We adopted this ASU beginning with our March 31, 2025 Annual Report. The adoption of this ASU did not have a material effect on our consolidated financial statements but did change the presentation of the results of our reportable segments (see Note 11).

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) interest rate or another reference rate expected to be discontinued because of reference rate reform. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 which deferred the sunset date from December 31, 2022 to December 31, 2024 and left all other provisions of ASU 2020-04 unchanged. On April 13, 2022, the ABL Facility (as defined herein) was amended to replace the LIBOR benchmark with the SOFR (as defined herein) benchmark (as discussed further in Note 7). As of September 30, 2024, we no longer have any agreements outstanding that include a LIBOR reference rate.

F-18
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Note 3—(Loss) Income Per Common Unit

The following table presents our calculation of basic and diluted weighted average common units outstanding for the periods indicated:
Year Ended March 31,
2025 2024 2023
Weighted average common units outstanding during the period:
Common units - Basic 132,204,283  132,146,477  131,007,171 
Common units - Diluted 132,204,283  132,146,477  131,007,171 

For the years ended March 31, 2025, 2024 and 2023, all potential common units or convertible securities were considered antidilutive.

Our (loss) income per common unit is as follows for the periods indicated:
Year Ended March 31,
2025 2024 2023
(in thousands, except per unit amounts)
Income (loss) from continuing operations $ 64,989  $ (157,728) $ 9,035 
Less: Continuing operations income attributable to nonredeemable noncontrolling interests (3,749) (631) (1,106)
Less: Continuing operations income attributable to redeemable noncontrolling interests (46) —  — 
Net income (loss) from continuing operations attributable to NGL Energy Partners LP 61,194  (158,359) 7,929 
Less: Distributions to preferred unitholders (1) (118,347) (139,644) (124,691)
Less: Continuing operations net loss allocated to GP (2) 57  298  116 
Net loss from continuing operations allocated to common unitholders $ (57,096) $ (297,705) $ (116,646)
(Loss) income from discontinued operations, net of tax $ (21,826) $ 14,604  $ 43,457 
Less: Discontinued operations net loss (income) allocated to GP (2) 22  (15) (43)
Net (loss) income from discontinued operation allocated to common unitholders $ (21,804) $ 14,589  $ 43,414 
Net loss allocated to common unitholders $ (78,900) $ (283,116) $ (73,232)
Basic and diluted (loss) income per common unit
Loss from continuing operations $ (0.43) $ (2.25) $ (0.89)
(Loss) income from discontinued operations, net of tax $ (0.16) $ 0.11  $ 0.33 
Net loss $ (0.60) $ (2.14) $ (0.56)
Basic and diluted weighted average common units outstanding 132,204,283  132,146,477  131,007,171 
(1)    Includes distributions earned and declared for the year ended March 31, 2025. Also includes cumulative distributions for the years ended March 31, 2024 and 2023 which were earned but not declared or paid (see Note 9 for a further discussion of the suspension of common unit and preferred unit distributions).
(2)    Net loss (income) allocated to the GP includes distributions to which it is entitled as the holder of incentive distribution rights.

F-19
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Note 4—Property, Plant and Equipment

Our property, plant and equipment consists of the following at the dates indicated:
Estimated March 31,
Description Useful Lives 2025 2024
(in years) (in thousands)
Water treatment facilities and equipment 3 - 30 $ 2,240,919  $ 2,055,565 
Pipeline and related facilities 30 - 40 266,324  266,129 
Crude oil tanks and related equipment 2 - 30 230,174  226,048 
Buildings and leasehold improvements 3 - 40 124,388  122,878 
Natural gas liquids terminal and storage assets 2 - 30 99,805  167,633 
Land 64,733  70,270 
Vehicles and railcars (1) 3 - 25 33,629  91,715 
Information technology equipment 3 - 7 31,319  33,653 
Tank bottoms and linefill (2) 30,623  27,008 
Other 3 - 20 19,161  2,552 
Construction in progress 30,354  43,010 
Gross property, plant and equipment 3,171,429  3,106,461 
Accumulated depreciation (1,104,582) (1,011,020)
Net property, plant and equipment $ 2,066,847  $ 2,095,441 
(1)    Includes a finance lease right-of-use asset of $0.1 million at March 31, 2025 and 2024. The accumulated amortization related to this finance lease is included within accumulated depreciation.
(2)    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. Linefill, which represents our portion of the product volume required for the operation of the proportionate share of a pipeline we own, is recorded at historical cost.

Amounts in the table above do not include assets classified as either held for sale or discontinued operations within our March 31, 2025 and 2024 consolidated balance sheets (see Note 18).

The following table summarizes depreciation expense and capitalized interest expense for the periods indicated:
Year Ended March 31,
2025 2024 2023
(in thousands)
Depreciation expense $ 198,859  $ 198,542  $ 196,120 
Capitalized interest expense $ 2,121  $ 1,561  $ 945 

Amounts in the table above do not include depreciation expense related to our refined products and biodiesel businesses, as these amounts have been classified within discontinued operations within our consolidated statements of operations (see Note 18).

We record (gains) losses from the sales of property, plant and equipment and any write-downs in value due to impairment within loss on disposal or impairment of assets, net in our consolidated statement of operations. The following table summarizes (gains) losses on the disposal or impairment of property, plant and equipment by segment for the periods indicated:
Year Ended March 31,
2025 2024 2023
(in thousands)
Water Solutions (1) $ 9,007  $ 38,938  $ 56,644 
Crude Oil Logistics (2) (335) 2,910  18,944 
Liquids Logistics (3) (628) (810) 10,023 
Corporate and Other 43  (720) (1,214)
Total $ 8,087  $ 40,318  $ 84,397 
F-20
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

(1)    Amounts do not include the gain recognized on the sale of certain freshwater water solutions facilities and certain saltwater disposal assets during the year ended March 31, 2025 discussed in Note 17. Amounts do not include the loss recognized on the sale of certain saltwater disposal assets during the year ended March 31, 2024 discussed in Note 17.
(2)    Amounts do not include the gain recognized on the sale of certain railcars during the year ended March 31, 2025 discussed in Note 17.
(3)    Amounts do not include the gain recognized on the sale of our natural gas liquids terminal in Green Bay, Wisconsin during the year ended March 31, 2025 discussed in Note 17. Amounts do not include the gain recognized on the sale of three natural gas liquids terminals during the year ended March 31, 2024 discussed in Note 17.

During the year ended March 31, 2025, the following transactions were recorded:

•A net loss of $15.2 million primarily related to the write down of the value of certain saltwater disposal wells as well as the abandonment of certain capital projects and the retirement of certain assets in our Water Solutions segment.
•A gain of $6.5 million from insurance recoveries for certain saltwater disposal facilities and boosters damaged in a prior period in our Water Solutions segment.
•A gain of $0.6 million primarily related to the sale of certain assets in our Liquids Logistics segment.
•A net loss of $0.4 million primarily related to the sale of certain assets in our Water Solutions segment.
•A gain of $0.3 million primarily related to the retirement or sale of certain assets in our Crude Oil Logistics segment.

During the year ended March 31, 2024, the following transactions were recorded:

•A net loss of $35.9 million primarily related to the write down of the value of certain saltwater disposal wells as well as the abandonment of certain capital projects and the retirement of certain assets in our Water Solutions segment.
•A net loss of $6.9 million primarily related to the sale of certain assets in our Water Solutions segment.
•A gain of $3.9 million from insurance recoveries for certain saltwater disposal facilities and boosters damaged in a prior period in our Water Solutions segment.
•A loss of $2.9 million related to the retirement or sale of certain assets in our Crude Oil Logistics segment.
•A gain of $0.8 million on the sale of land in our Liquids Logistics segment.
•A gain of $0.7 million on the sale of our plane in Corporate and Other.

During the year ended March 31, 2023, the following transactions were recorded:

•A net loss of $26.3 million primarily related to the sale of certain assets in our Water Solutions segment.
•A net loss of $21.8 million to write down the value of an inactive saltwater disposal facility and damaged equipment at another saltwater disposal facility, as well as the abandonment of certain capital projects and the retirement of certain assets in our Water Solutions segment.
•A net loss of $20.0 million related to the impairment of an underperforming crude oil terminal in our Crude Oil Logistics segment.
•A net loss of $10.0 million related to the impairment of several underperforming natural gas liquids terminals in our Liquids Logistics segment.
•A gain of $2.1 million from an insurance recovery for a saltwater disposal facility damaged in a prior period in our Water Solutions segment.

F-21
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Note 5—Goodwill

The following table summarizes changes in goodwill by segment for the periods indicated:
Water
Solutions		 Crude Oil
Logistics		 Liquids
Logistics		 Total
(in thousands)
Goodwill at March 31, 2023 $ 283,310  $ 309,971  $ 119,083  $ 712,364 
Disposal (1) —  —  (4,781) (4,781)
Assets held for sale (2) (4,108) —  (17,051) (21,159)
Impairment —  —  (69,193) (69,193)
Goodwill at March 31, 2024 279,202  309,971  28,058  617,231 
Impairment —  —  (17,883) (17,883)
Goodwill at March 31, 2025 $ 279,202  $ 309,971  $ 10,175  $ 599,348 
(1)    Relates to the sale of two natural gas liquids terminals within our Liquids Logistics segment on July 24, 2023 (see Note 17).
(2)    Relates to goodwill classified as held for sale for the sale of certain freshwater water solutions facilities within our Water Solutions segment and our refined products business within our Liquids Logistics segment (see Note 18).

Fiscal Year 2025 Goodwill Impairment Assessment

Due to lower than expected operating results in our Crude Oil Logistics reporting unit, it was decided that the goodwill within the Crude Oil Logistics reporting unit should be tested for impairment as of December 31, 2024 and March 31, 2025. We estimated the fair value of the Crude Oil Logistics reporting unit based on the income approach, also known as the discounted cash flow method, which utilizes the present value of future expected cash flows to estimate the fair value. The future cash flows of the Crude Oil Logistics reporting unit were projected based upon estimates as of the test date of future revenues, operating expenses and cash outflows necessary to support these cash flows, including working capital and maintenance capital expenditures. We also considered expectations regarding: (i) the crude oil price environment as reflected in crude oil forward prices as of the test date, (ii) volumes based on historical information and estimates of future drilling and completion activity, as well as expectations for future demand recovery and (iii) estimated fixed and variable costs. The discounted cash flows for the Crude Oil Logistics reporting unit were based on five years of projected cash flows and we applied a discount rate and terminal multiple that we believe would be applied by a theoretical market participant in similar market transactions. Based on this testing, we concluded that as of December 31, 2024, the fair value of the Crude Oil Logistics reporting unit exceeded its carrying value by approximately 2% and as of March 31, 2025, the fair value of the Crude Oil Logistics reporting unit exceeded its carrying value by approximately 3%.

Due to the decision to wind-down our biodiesel business, it was decided that the goodwill within the Refined Products and Renewables reporting unit should be tested for impairment as of December 31, 2024. We estimated the fair value of the Refined Products and Renewables reporting unit based on the income approach, also known as the discounted cash flow method, which utilizes the present value of future expected cash flows to estimate the fair value. The future cash flows of the Refined Products and Renewables reporting unit were projected based upon estimates as of the test date of future revenues, operating expenses and cash outflows necessary to support these cash flows, including working capital and maintenance capital expenditures. We also considered expectations regarding: (i) volumes based on historical information and future demand and (ii) estimated fixed and variable costs. The discounted cash flows for the Refined Products and Renewables reporting unit were based on five years of projected cash flows and we applied a discount rate and terminal multiple that we believe would be applied by a theoretical market participant in similar market transactions. Based on this test, we concluded that the fair value of the Refined Products and Renewables reporting unit exceeded its carrying value by approximately 75%.

We performed a qualitative assessment as of January 1, 2025 to determine whether it was more likely than not that the fair value of each reporting unit was greater than the carrying value of the reporting unit. Based on these qualitative assessments, we determined that the fair value of each of our reporting units was more likely than not greater than the carrying value of the reporting units as of January 1, 2025, with the exception of our Wholesale/Terminal reporting unit. See below for a further discussion of the testing.

Due to lower than expected operating results and the expected sale of a significant amount of the reporting units’ assets (see Note 1), it was decided that the goodwill within the Wholesale/Terminal reporting unit should be tested for impairment as of January 1, 2025. We estimated the fair value of the Wholesale/Terminal reporting unit based on both the market approach, which utilizes quoted prices, and the income approach, also known as the discounted cash flow method, which utilizes the present value of future expected cash flows to estimate the fair value.
F-22
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

The market approach was used for the assets we expected to sell and the fair value was based on the negotiated sales price to be received for the transactions. The income approach was used to determine the fair value of the portion of the reporting units we were retaining. The future cash flows of the portion of the business being retained reporting unit were projected based upon estimates as of the test date of future revenues, operating expenses and cash outflows necessary to support these cash flows, including working capital and maintenance capital expenditures. We also considered expectations regarding: (i) the margins to be generated on product sold, (ii) estimated volumes based on historical information and estimates of future growth, (iii) renewal of certain customer contracts and (iv) estimated fixed and variable costs. The discounted cash flows for the portion of the reporting unit to be retained were based on five years of projected cash flows and we applied a discount rate and terminal multiple that we believe would be applied by a theoretical market participant in similar market transactions. The fair value calculated by the market approach and by the income approach were added together to calculate the fair value of the entire reporting unit. Based on this test, we concluded that the fair value of the Wholesale/Terminal reporting unit was less than its carrying value by approximately 27%.

During the three months ended March 31, 2025, in our Wholesale/Terminal reporting unit, we recorded a goodwill impairment charge of $17.9 million within loss on disposal or impairment of assets, net in our consolidated statement of operations.

Fiscal Year 2024 Goodwill Impairment Assessment

We performed a qualitative assessment as of January 1, 2024 to determine whether it was more likely than not that the fair value of each reporting unit was greater than the carrying value of the reporting unit. Based on these qualitative assessments, we determined that the fair value of each of our reporting units was more likely than not greater than the carrying value of the reporting units as of January 1, 2024, with the exception of our Crude Oil Logistics and Wholesale/Terminal reporting units. See below for a further discussion of the testing.

Due to lower than expected operating results, it was decided that the goodwill within the Crude Oil Logistics reporting unit should be tested for impairment as of January 1, 2024. We estimated the fair value of the Crude Oil Logistics reporting unit based on the income approach, also known as the discounted cash flow method, which utilizes the present value of future expected cash flows to estimate the fair value. The future cash flows of the Crude Oil Logistics reporting unit were projected based upon estimates as of the test date of future revenues, operating expenses and cash outflows necessary to support these cash flows, including working capital and maintenance capital expenditures. We also considered expectations regarding: (i) the crude oil price environment as reflected in crude oil forward prices as of the test date, (ii) volumes based on historical information and estimates of future drilling and completion activity, as well as expectations for future demand recovery and (iii) estimated fixed and variable costs. The discounted cash flows for the Crude Oil Logistics reporting unit were based on five years of projected cash flows and we applied a discount rate and terminal multiple that we believe would be applied by a theoretical market participant in similar market transactions. Based on this test, we concluded that the fair value of the Crude Oil Logistics reporting unit exceeded its carrying value by approximately 4%.

Due to lower than expected operating results, it was decided that the goodwill within the Wholesale/Terminal reporting unit should be tested for impairment as of January 1, 2024. We estimated the fair value of the Wholesale/Terminal reporting unit based on the income approach, also known as the discounted cash flow method, which utilizes the present value of future expected cash flows to estimate the fair value. The future cash flows of the Wholesale/Terminal reporting unit were projected based upon estimates as of the test date of future revenues, operating expenses and cash outflows necessary to support these cash flows, including working capital and maintenance capital expenditures. We also considered expectations regarding: (i) the margins to be generated on product sold, (ii) estimated volumes based on historical information and estimates of future growth, (iii) renewal of certain customer contracts and (iv) estimated fixed and variable costs. The discounted cash flows for the Wholesale/Terminal reporting unit were based on five years of projected cash flows and we applied a discount rate and terminal multiple that we believe would be applied by a theoretical market participant in similar market transactions. Based on this test, we concluded that the fair value of the Wholesale/Terminal reporting unit was less than its carrying value by approximately 23%.

During the three months ended March 31, 2024, in our Wholesale/Terminal reporting unit, we recorded a goodwill impairment charge of $69.2 million within loss on disposal or impairment of assets, net in our consolidated statement of operations.

Fiscal Year 2023 Goodwill Impairment Assessment

We performed a qualitative assessment as of January 1, 2023 to determine whether it was more likely than not that the fair value of each reporting unit was greater than the carrying value of the reporting unit.
F-23
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Based on these qualitative assessments, we determined that the fair value of each of our reporting units was more likely than not greater than the carrying value of the reporting units as of January 1, 2023, with the exception of our Crude Oil Logistics and Wholesale/Terminal reporting units. See below for a further discussion of the testing.

Due to lower than expected operating results, it was decided that the goodwill within the Crude Oil Logistics reporting unit should be tested for impairment as of January 1, 2023. We estimated the fair value of the Crude Oil Logistics reporting unit based on the income approach, also known as the discounted cash flow method, which utilizes the present value of future expected cash flows to estimate the fair value. The future cash flows of the Crude Oil Logistics reporting unit were projected based upon estimates as of the test date of future revenues, operating expenses and cash outflows necessary to support these cash flows, including working capital and maintenance capital expenditures. We also considered expectations regarding: (i) the crude oil price environment as reflected in crude oil forward prices as of the test date, (ii) volumes based on historical information and estimates of future drilling and completion activity, as well as expectations for future demand recovery and (iii) estimated fixed and variable costs. The discounted cash flows for the Crude Oil Logistics reporting unit were based on five years of projected cash flows and we applied a discount rate and terminal multiple that we believe would be applied by a theoretical market participant in similar market transactions. Based on this test, we concluded that the fair value of the Crude Oil Logistics reporting unit exceeded its carrying value by approximately 18%.

Due to lower than expected operating results, it was decided that the goodwill within the Wholesale/Terminal reporting unit should be tested for impairment as of January 1, 2023. We estimated the fair value of the Wholesale/Terminal reporting unit based on the income approach, also known as the discounted cash flow method, which utilizes the present value of future expected cash flows to estimate the fair value. The future cash flows of the Wholesale/Terminal reporting unit were projected based upon estimates as of the test date of future revenues, operating expenses and cash outflows necessary to support these cash flows, including working capital and maintenance capital expenditures. We also considered expectations regarding: (i) the margins to be generated on product sold, (ii) estimated volumes based on historical information and estimates of future growth, (iii) renewal of certain customer contracts and (iv) estimated fixed and variable costs. The discounted cash flows for the Wholesale/Terminal reporting unit were based on five years of projected cash flows and we applied a discount rate and terminal multiple that we believe would be applied by a theoretical market participant in similar market transactions. Based on this test, we concluded that the fair value of the Wholesale/Terminal reporting unit exceeded its carrying value by approximately 5%.

The fair value estimates used in these impairment assessments were primarily based on Level 3 inputs in the fair value hierarchy.

Note 6—Intangible Assets

Our intangible assets consist of the following at the dates indicated:
March 31, 2025 March 31, 2024
Description Weighted-
Average
Remaining
Useful Life		 Gross Carrying
Amount		 Accumulated
Amortization		 Net Gross Carrying
Amount		 Accumulated
Amortization		 Net
(in years) (in thousands)
Customer relationships 17.9 $ 857,903  $ (264,675) $ 593,228  $ 900,662  $ (263,322) $ 637,340 
Customer commitments 19.3 192,000  (44,160) 147,840  192,000  (36,480) 155,520 
Rights-of-way and easements 28.5 99,964  (21,645) 78,319  95,231  (18,187) 77,044 
Debt issuance costs (1) 3.9 21,841  (4,748) 17,093  18,473  (605) 17,868 
Executory contracts and other agreements 23.7 19,973  (5,106) 14,867  17,854  (3,670) 14,184 
Water rights —  —  —  —  36,068  (5,310) 30,758 
Total $ 1,191,681  $ (340,334) $ 851,347  $ 1,260,288  $ (327,574) $ 932,714 
(1)    Includes debt issuance costs related to the ABL Facility. Debt issuance costs related to the fixed-rate notes and Term Loan B (as defined herein) are reported as a reduction of the carrying amount of long-term debt.

Amounts in the table above do not include assets classified as either held for sale or discontinued operations within our March 31, 2025 and 2024 consolidated balance sheets (see Note 18).

Write off of Intangible Assets

For intangible assets other than debt issuance costs, we record (gains) losses from the sales of intangible assets and any write-downs in value due to impairment within loss on disposal or impairment of assets, net in our consolidated statements of operations.
F-24
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

We record the write-off of debt issuance costs within (loss) gain on early extinguishment of liabilities, net in our consolidated statements of operations. Intangible assets sold as part of the dispositions disclosed in Note 17 are not described below.

During the year ended March 31, 2024, we recorded an impairment charge of $0.3 million to write down the value of a trade name in conjunction with the sale of certain saltwater disposal assets in the Pinedale Anticline Basin as we are no longer using the trade name (see Note 17).

During the year ended March 31, 2023, we recorded an impairment charge of $1.6 million against certain intangible assets related to an underperforming crude oil terminal.

Amortization expense is as follows for the periods indicated:
Year Ended March 31,
Recorded In 2025 2024 2023
(in thousands)
Depreciation and amortization $ 55,873  $ 67,572  $ 76,988 
Cost of sales 257  —  14 
Interest expense 4,142  5,541  4,866 
Operating expenses 247  247  247 
Total $ 60,519  $ 73,360  $ 82,115 

Amounts in the table above do not include amortization expense related to our refined products and biodiesel businesses, as these amounts have been classified within discontinued operations within our consolidated statements of operations (see Note 18).

The following table summarizes expected amortization of our intangible assets at March 31, 2025 (in thousands):
Year Ending March 31,  
2026 $ 56,968 
2027 56,631 
2028 54,267 
2029 51,553 
2030 44,291 
Thereafter 587,637 
Total $ 851,347 

F-25
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Note 7—Long-Term Debt

Our long-term debt consists of the following at the dates indicated:
March 31, 2025 March 31, 2024
Face
Amount		 Unamortized
Debt Issuance
Costs (1)		 Book
Value		 Face
Amount		 Unamortized
Debt Issuance
Costs (1)		 Book
Value
(in thousands)
Asset-based revolving credit facility (“ABL Facility”) $ 109,000  $ 109,000  $ —  $ — 
Senior secured term loan “B” credit facility (“Term Loan B”) 693,000  $ (16,479) 676,521  700,000  $ (17,549) 682,451 
Senior secured notes:
8.125% Notes due 2029 (“2029 Senior Secured Notes”)
 900,000  (10,219) 889,781  900,000  (12,845) 887,155 
8.375% Notes due 2032 (“2032 Senior Secured Notes”)
 1,300,000  (16,416) 1,283,584  1,300,000  (18,784) 1,281,216 
Other long-term debt 11,652  (30) 11,622  —  —  — 
Total long-term debt 3,013,652  (43,144) 2,970,508  2,900,000  (49,178) 2,850,822 
Less: Current maturities 8,805  —  8,805  7,000  —  7,000 
Long-term debt $ 3,004,847  $ (43,144) $ 2,961,703  $ 2,893,000  $ (49,178) $ 2,843,822 
(1)    Debt issuance costs related to the ABL Facility are reported within intangible assets, rather than as a reduction of the carrying amount of long-term debt. The unamortized debt issuance costs for Term Loan B include a $4.4 million discount.

ABL Facility

Total commitments under the ABL Facility are $550.0 million, which we reduced from $600.0 million effective February 13, 2025, and it includes a $200.0 million sub-limit for letters of credit. Availability under the ABL Facility is subject to a borrowing base that is determined by calculating the amount equal to the sum of our eligible cash, outstanding accounts receivable balances with investment and non-investment grade counterparties, certain inventory, including inventory on railcars and unsettled derivative contracts. These amounts are subject to certain percentage and dollar amount caps, as described within the ABL Facility. The borrowing base is calculated monthly pursuant to a borrowing base certificate we deliver to the administrative agent. Availability under the ABL Facility is based on the lower of the current borrowing base and the total commitments, less borrowings and outstanding letters of credit. At March 31, 2025, $109.0 million was outstanding under the ABL Facility, letters of credit outstanding were $60.9 million, and we had a borrowing base of $397.7 million. The ABL Facility is scheduled to mature at the earliest of (a) February 2, 2029, or (b) 91 days prior to the earliest maturity date in respect to any of our indebtedness in an aggregate principal amount of $50.0 million or greater, subject to certain exceptions.

All borrowings under the ABL Facility bear interest at a secured overnight financing rate (“SOFR”) or the alternative base rate to provide for a 0.25% decrease based on our consolidated net leverage ratio. The applicable margin for alternate base rate loans varies from 1.50% to 2.00% and the applicable margin for SOFR varies from 2.50% to 3.00%. In addition, a commitment fee will be charged and payable quarterly in arrears based on the average daily unused portion of the revolving commitments under the ABL Facility. Such commitment fee will be 0.50% per year, subject to a reduction to 0.375% in the event our fixed charge coverage ratio is greater than or equal to 1.75 to 1.00.

At March 31, 2025, the borrowings under the ABL Facility had an average interest rate of 9.50% calculated as the prime rate of 7.50% plus a margin of 2.00% on the alternate base rate borrowings. On March 31, 2025, the interest rate in effect on letters of credit was 3.00%.

The ABL Facility contains various affirmative and negative covenants, including financial reporting requirements and limitations on indebtedness, liens, mergers, consolidations, liquidations and dissolutions, sales of assets, distributions and other restricted payments, investments (including acquisitions) and transactions with affiliates. The ABL Facility contains, as the only financial covenant, a fixed charge coverage ratio that is tested based on the financial statements for the most recently ended fiscal quarter upon the occurrence and during the continuation of a Cash Dominion Event (as defined in the ABL Facility). At March 31, 2025, no Cash Dominion Event had occurred.

F-26
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Compliance

At March 31, 2025, we were in compliance with the covenants under the ABL Facility.

Term Loan B

The Term Loan B was issued at 99.25% of par for gross proceeds of $694.8 million. The Term Loan B was issued pursuant to a credit agreement dated February 2, 2024 (“Term Loan Credit Agreement”).

The Term Loan B bears interest at a SOFR-based rate or an alternate base rate, in each case plus an applicable margin. The applicable margin for alternate base rate loans varies from 3.25% to 3.50% and the applicable margin for SOFR-based loans varies from 4.25% to 4.50%, in each case, depending on our consolidated first lien net leverage ratio (as defined in the Term Loan Credit Agreement). On August 5, 2024, we amended the Term Loan B agreement to reduce the SOFR margin from 4.50% to 3.75%.

The Term Loan B matures on February 2, 2031 and will amortize in equal quarterly installments in aggregate annual amounts equal to 1.0% of the original principal amount beginning with the fiscal quarter ended June 30, 2024, with the balance payable on maturity. We have the ability to prepay the Term Loan B at any time without premium or penalty, other than customary breakage costs and a premium of 1% of the principal amount prepaid, if the prepayment occurs prior to the six-month anniversary of the closing date. The Term Loan Credit Agreement contains customary mandatory prepayment requirements, including mandatory prepayments as a result of (a) excess cash flow (subject to certain customary exceptions and thresholds), (b) asset sales (subject to reinvestment rights and certain customary exceptions and thresholds) and (c) the incurrence of non-permitted indebtedness.

Under the Term Loan Credit Agreement, we are permitted to request, from time to time, (i) increases in the Term Loan B, and/or (ii) the establishment of new tranches of incremental term loans, in an aggregate principal amount of up to the greater of $150 million and 20% of consolidated EBITDA plus such additional amounts depending upon satisfaction of certain ratio tests and other conditions, in each case subject to commitments from lenders and customary conditions.

The Term Loan B is secured by first priority liens on substantially all of our assets other than our accounts receivable, inventory, pledged deposit accounts, cash and cash equivalents, renewable energy tax credits and related assets and second priority liens on our accounts receivable, inventory, pledged deposit accounts, cash and cash equivalents, renewable energy tax credits and related assets.

At March 31, 2025, the borrowings under the Term Loan B had an interest rate of SOFR of 4.32% plus a margin of 3.75%.

The Term Loan Credit Agreement contains various affirmative and negative covenants, including financial reporting requirements and limitations on indebtedness, liens, mergers, consolidations, liquidations and dissolutions, sales of assets, distributions and other restricted payments, investments (including acquisitions) and transactions with affiliates. The Term Loan Credit Agreement requires that we maintain, on a quarterly basis, beginning with the quarter ended June 30, 2024, a debt service coverage rate (as defined in the Term Loan Credit Agreement) of no less than 1.1 to 1.0. At March 31, 2025, our debt service coverage rate was approximately 2.15 to 1.0.

The Term Loan Credit Agreement contains other customary terms, events of default and covenants.

Compliance

At March 31, 2025, we were in compliance with the covenants under Term Loan B.

Senior Secured Notes

Senior Secured Notes Issuances

On February 2, 2024, we closed on our private offering of $900.0 million of 2029 Senior Secured Notes. Interest is payable on February 15, May 15, August 15 and November 15 of each year, beginning on May 15, 2024. The 2029 Senior Secured Notes mature on February 15, 2029.

F-27
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

On February 2, 2024, we closed on our private offering of $1.3 billion of 2032 Senior Secured Notes. Interest is payable on February 15, May 15, August 15 and November 15 of each year, beginning on May 15, 2024. The 2032 Senior Secured Notes mature on February 15, 2032.

2029 Senior Secured Notes and 2032 Senior Secured Notes

The 2029 Senior Secured Notes and 2032 Senior Secured Notes were issued pursuant to an indenture dated February 2, 2024 (“Indenture”). The 2029 Senior Secured Notes and 2032 Senior Secured Notes are secured by first priority liens on substantially all of our assets other than our accounts receivable, inventory, pledged deposit accounts, cash and cash equivalents, renewable energy tax credits and related assets and second priority liens on our accounts receivable, inventory, pledged deposit accounts, cash and cash equivalents, renewable energy tax credits and related assets.

The Indenture contains covenants that, among other things, limit our ability to: pay distributions or make other restricted payments or repurchase stock; incur or guarantee additional indebtedness or issue disqualified stock or certain preferred stock; make certain investments; create or incur liens; sell assets; enter into restrictions affecting the ability of restricted subsidiaries to make distributions, make loans or advances or transfer assets to the guarantors (including the Partnership); enter into certain transactions with our affiliates; designate restricted subsidiaries as unrestricted subsidiaries; and consolidate, merge or transfer or sell all or substantially all of our assets. These covenants are subject to a number of important exceptions and qualifications.

We have the option to redeem all or part of the 2029 Senior Secured Notes, at any time on or after February 15, 2026 at the redemption prices specified in the Indenture. Prior to such time, we have the option to redeem up to 40% of the principal amount of the 2029 Senior Secured Notes with an amount of cash not greater than the amount equal to the net cash proceeds from certain equity offerings at the redemption price specified in the Indenture. In addition, before February 15, 2026, we have the option to redeem all or part of the 2029 Senior Secured Notes at a redemption price equal to 100% of the aggregate principal amount of the 2029 Senior Secured Notes redeemed, plus an applicable “make-whole” premium as specified in the Indenture and accrued and unpaid interest, if any, to, but excluding, the redemption date.

We have the option to redeem all or part of the 2032 Senior Secured Notes, at any time on or after February 15, 2027 at the redemption prices specified in the Indenture. Prior to such time, we have the option to redeem up to 40% of the principal amount of the 2032 Senior Secured Notes with an amount of cash not greater than the amount equal to the net cash proceeds from certain equity offerings at the redemption price specified in the Indenture. In addition, before February 15, 2027, we have the option to redeem all or part of the 2032 Senior Secured Notes at a redemption price equal to 100% of the aggregate principal amount of the 2032 Senior Secured Notes redeemed, plus an applicable “make-whole” premium as specified in the Indenture and accrued and unpaid interest, if any, to, but excluding, the redemption date.

If we sell certain of our assets, or experience specific kinds of changes of control followed by a rating decline, each holder of the 2029 Senior Secured Notes and 2032 Senior Secured Note will have the right to require us to offer to repurchase all or any part of that holder’s 2029 Senior Secured Notes and 2032 Senior Secured Notes at 101% of the aggregate principal amount of the 2029 Senior Secured Notes and 2032 Senior Secured Notes to be repurchased plus accrued and unpaid interest on the 2029 Senior Secured Notes and 2032 Senior Secured Notes repurchased to, but excluding, the date of purchase.

The Indenture contains other customary terms, events of default and covenants.

Senior Secured Notes Redemptions

The following table summarizes redemptions of Senior Secured Notes for the year ended March 31, 2024 (in thousands):

2026 Senior Secured Notes (1)
Notes redeemed $ 2,050,000 
Cash paid (excluding payments of accrued interest) $ 2,088,438 
Loss on early extinguishment of debt $ 59,014 
(1)    On February 4, 2021, we closed on our private offering of $2.05 billion of 7.500% senior secured notes due 2026 (“2026 Senior Secured Notes”). On February 6, 2024, we redeemed all of the outstanding 2026 Senior Secured Notes. Loss on the early extinguishment of debt for the 2026 Senior Secured Notes during the year ended March 31, 2024 includes the write off of debt issuance costs and other expenses of $20.6 million and a call premium of $38.4 million. The loss is reported within (loss) gain on early extinguishment of liabilities, net within our consolidated statement of operations.
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NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)


Compliance

At March 31, 2025, we were in compliance with the covenants under the Indenture.

Senior Unsecured Notes

Senior Unsecured Notes Issuances

On October 24, 2016, we issued $700.0 million of 7.5% senior unsecured notes due 2023 (“2023 Notes”).

On February 22, 2017, we issued $500.0 million of our 6.125% senior unsecured notes due 2025 (“2025 Notes”). Interest is payable on March 1 and September 1 of each year. The 2025 Notes mature on March 1, 2025. On January 19, 2024, we delivered notice to the holders of the 2025 Notes that we intend to redeem the 2025 Notes on February 20, 2024. We redeemed all of the remaining outstanding 2025 Notes on February 20, 2024 (see “Redemptions” below).

On April 9, 2019, we issued $450.0 million of our 7.5% senior unsecured notes due 2026 (“2026 Notes”) in a private placement. Interest is payable on April 15 and October 15 of each year. The 2026 Notes mature on April 15, 2026. On February 2, 2024, we deposited $331.9 million with the trustee for the redemption of the 2026 Notes, which included the payment of accrued and unpaid interest of $12.0 million. As we met the requirements of discharge under the 2026 indenture dated February 4, 2021, we no longer have this liability as of March 31, 2024 (see “Redemptions” below).

Senior Unsecured Notes Repurchases

The following table summarizes repurchases of Senior Unsecured Notes for the periods indicated:

Year Ended March 31,
2024 2023
(in thousands)
2023 Notes
Notes repurchased $ —  $ 272,316 
Cash paid (excluding payments of accrued interest) $ —  $ 265,127 
Gain on early extinguishment of debt (1) $ —  $ 6,555 
2025 Notes
Notes repurchased $ 99,275  $ — 
Cash paid (excluding payments of accrued interest) $ 91,982  $ — 
Gain on early extinguishment of debt (2) $ 6,906  $ — 
2026 Notes
Notes repurchased $ —  $ 12,500 
Cash paid (excluding payments of accrued interest) $ —  $ 10,789 
Gain on early extinguishment of debt (3) $ —  $ 1,611 
(1)    Gain on early extinguishment of debt for the 2023 Notes during the year ended March 31, 2023 is inclusive of the write off of debt issuance costs of $0.6 million. The gain is reported within (loss) gain on early extinguishment of liabilities, net within our consolidated statement of operations.
(2)    Gain on early extinguishment of debt for the 2025 Notes during the year ended March 31, 2024 is inclusive of the write off of debt issuance costs of $0.4 million. The gain is reported within (loss) gain on early extinguishment of liabilities, net within our consolidated statement of operations.
(3)    Gain on early extinguishment of debt for the 2026 Notes during the year ended March 31, 2023 is inclusive of the write off of debt issuance costs of $0.1 million. The gain is reported within (loss) gain on early extinguishment of liabilities, net within our consolidated statement of operations.

F-29
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Senior Unsecured Notes Redemptions

The following table summarizes redemptions of Senior Unsecured Notes for the periods indicated:
Year Ended March 31,
2024 2023
(in thousands)
2023 Notes (1)
Notes redeemed $ —  $ 203,386 
Cash paid (excluding payments of accrued interest) $ —  $ 203,386 
Loss on early extinguishment of debt $ —  $ 367 
2025 Notes (2)
Notes redeemed $ 280,745  $ — 
Cash paid (excluding payments of accrued interest) $ 280,745  $ — 
Loss on early extinguishment of debt $ 978  $ — 
2026 Notes (3)
Notes redeemed $ 319,902  $ — 
Cash paid (excluding payments of accrued interest) $ 319,902  $ — 
Loss on early extinguishment of debt $ 2,159  $ — 
(1)    On March 31, 2023, we redeemed all of the remaining outstanding 2023 Notes. Loss on the early extinguishment of debt for the 2023 Notes during the year ended March 31, 2023 is inclusive of the write off of debt issuance costs of $0.4 million. The loss is reported within (loss) gain on early extinguishment of liabilities, net within our consolidated statement of operations.
(2)    On February 20, 2024, we redeemed all of the remaining outstanding 2025 Notes. Loss on the early extinguishment of debt for the 2025 Notes during the year ended March 31, 2024 includes the write off of debt issuance costs and other expenses of $1.0 million. The loss is reported within (loss) gain on early extinguishment of liabilities, net within our consolidated statement of operations.
(3)    On February 2, 2024, we deposited $331.9 million with the trustee for the redemption of the 2026 Notes, which included the repayment of accrued and unpaid interest of $12.0 million. As we met the requirements of discharge under the 2026 indenture dated February 4, 2021, we no longer had this liability as of March 31, 2024. Loss on the early extinguishment of debt for the 2026 Notes during the year ended March 31, 2024 includes the write off of debt issuance costs and other expenses of $2.2 million. The loss is reported within (loss) gain on early extinguishment of liabilities, net within our consolidated statement of operations.

Other Long-Term Debt

On June 24, 2024, we entered into an equipment loan for $6.4 million with American Bank and Trust Company which bears interest at a rate of 8.50% and is secured by an airplane (see Note 17). On September 24, 2024, we refinanced the loan and lowered the interest rate to 8.00%. We have an aggregate principal balance of $5.7 million at March 31, 2025. This loan matures on June 24, 2030.

On October 1, 2024, we entered into a second equipment loan for $6.4 million with American Bank and Trust Company which bears interest at a rate of 8.00% and is secured by an airplane (see Note 17). We have an aggregate principal balance of $5.9 million at March 31, 2025. This loan matures on September 24, 2030.

F-30
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Debt Maturity Schedule

The scheduled maturities of our long-term debt are as follows at March 31, 2025:
Year Ending March 31, ABL Facility Term Loan B  Senior Secured
Notes		 Other Long-Term Debt Total
(in thousands)
2026 $ —  $ 7,000  $ —  $ 1,805  $ 8,805 
2027 —  7,000  —  1,957  8,957 
2028 —  7,000  —  2,120  9,120 
2029 109,000  7,000  900,000  2,300  1,018,300 
2030 —  7,000  —  2,494  9,494 
Thereafter —  658,000  1,300,000  976  1,958,976 
Total $ 109,000  $ 693,000  $ 2,200,000  $ 11,652  $ 3,013,652 

Amortization of Debt Issuance Costs

Amortization expense for debt issuance costs related to long-term debt was $7.9 million, $10.2 million and $11.9 million during the years ended March 31, 2025, 2024 and 2023, respectively.

The following table summarizes expected amortization of debt issuance costs at March 31, 2025 (in thousands):

Year Ending March 31,
2026 $ 7,926 
2027 7,843 
2028 7,843 
2029 7,505 
2030 5,203 
Thereafter 6,824 
Total $ 43,144 

Note 8—Commitments and Contingencies

Legal Contingencies

In August 2015, LCT Capital, LLC (“LCT”) filed a lawsuit against the GP and the Partnership seeking payment for investment banking services relating to the purchase of TransMontaigne Inc. and related assets in July 2014. After pre-trial rulings, LCT was limited to pursuing claims of (i) quantum meruit (the value of the services rendered by LCT) and (ii) fraudulent misrepresentation against the defendants. Following a jury trial conducted in Delaware state court from July 23, 2018 through August 1, 2018, the jury returned a verdict consisting of an award of $4.0 million for quantum meruit and $29.0 million for fraudulent misrepresentation, subject to statutory interest. On December 5, 2019, in response to our 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. Ultimately, the Supreme Court of Delaware issued a ruling that (a) LCT was not entitled to “benefit-of-the-bargain” damages on its fraud claim; (b) LCT was not entitled to receive fraudulent misrepresentation damages separate from its quantum meruit damages; (c) the trial court abused its discretion when it ordered a new trial on damages relating to LCT’s claim of fraudulent misrepresentation; and (d) the trial court properly ordered a new trial on LCT’s claim of quantum meruit damages. The re-trial of the quantum meruit claim was conducted in Delaware state court from February 6, 2023 through February 15, 2023 and resulted in the jury returning a verdict consisting of an award of $36.0 million, subject to statutory interest and costs, as applicable. The GP and the Partnership contended that the jury verdict was not supportable by controlling law or the evidentiary record, and on July 28, 2023, filed our notice of appeal to the Supreme Court of Delaware. On February 7, 2024, the Supreme Court of Delaware held before the Court en Banc oral arguments for the appeal matters. On May 28, 2024, the Supreme Court of Delaware affirmed the jury verdict and remanded the case back to the trial court to re-calculate the amount of the pre- and post-judgment interest accrual. As of March 31, 2024, we accrued $62.1 million related to this matter, of which approximately $26.1 million represents interest accrued through March 31, 2024 and $0.1 million of costs awarded to the plaintiff. Interest accrued until the amount of the judgment was paid. On June 13, 2024 we paid LCT $63.3 million related to the legal judgment against us, of which $27.2 million represented interest and $0.1 million of costs awarded to LCT.

F-31
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

The Partnership is a party defendant to a purported class action complaint filed in the federal court in the Northern District of Oklahoma styled Gary R. Underwood, Successor Trustee for the James L. Price Revocable Living Trust, on behalf of the Trust and all others similarly situated v. NGL Energy Partners LP, Case No. 4:21-cv-00135-CVE-SH. This case seeks class certification on behalf of owners who allege the Partnership’s Crude Oil Logistics group violated Oklahoma’s Production Revenue Standards Act when it failed to include statutory interest on proceeds payments it made to certain mineral owners and to state unclaimed property divisions for oil purchased from certain Oklahoma wells. A substantial portion of the statutory interest claimed to be owed in the lawsuit related to suspended proceeds we inherited from our predecessors and remitted to various state unclaimed property divisions in 2016. With no admission of liability or wrongdoing, but only to avoid the expense and uncertainty of future litigation, the Partnership entered into a settlement agreement in this case to resolve all claims made against it by the plaintiff and the proposed class and paid approximately $8.4 million to the plaintiff and the proposed class. During the final fairness hearing on June 15, 2023, the settlement agreement was approved by the court and an order granting final approval of the class action settlement was entered into record.

We are party to various other claims, legal actions, and complaints arising in the ordinary course of business. In the opinion of our management, the ultimate resolution of these claims, legal actions, and complaints, after consideration of amounts accrued, insurance coverage, and other arrangements, is not expected to have a material adverse effect on our consolidated financial position, results of operations or cash flows. However, the outcome of such matters is inherently uncertain, and estimates of our liabilities may change materially as circumstances develop.

Environmental Matters

At March 31, 2025, we have an environmental liability, measured on an undiscounted basis, of $1.2 million, which is recorded within accrued expenses and other payables in our consolidated balance sheet. Our operations are subject to extensive federal, state, and local environmental laws and regulations. Although we believe our operations are in substantial compliance with applicable environmental laws and regulations, risks of additional costs and liabilities are inherent in our business, and there can be no assurance that we will not incur significant costs. Moreover, it is possible that other developments, such as increasingly stringent environmental laws, regulations and enforcement policies thereunder, and claims for damages to property or persons resulting from the operations, could result in substantial costs. Accordingly, we have adopted policies, practices, and procedures in the areas of pollution control, product safety, occupational health, and the handling, storage, use, and disposal of hazardous materials designed to prevent material environmental or other damage, and to limit the financial liability that could result from such events. However, some risk of environmental or other damage is inherent in our business.

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.

F-32
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

The following table summarizes changes in our asset retirement obligations, which is reported within other noncurrent liabilities in our consolidated balance sheets (in thousands):
Asset retirement obligations at March 31, 2023 $ 35,163 
Liabilities incurred 23,088 
Liabilities associated with disposed assets (1) (3,718)
Liabilities settled (222)
Liabilities held for sale (2) (356)
Accretion expense 2,619 
Asset retirement obligations at March 31, 2024 56,574 
Liabilities incurred 12,161 
Liabilities associated with disposed assets (3) (274)
Liabilities settled (1,940)
Liabilities held for sale (4) (1,149)
Accretion expense 4,200 
Asset retirement obligations at March 31, 2025 $ 69,572 
(1)    Relates to the sale of certain saltwater disposal wells and other long-lived assets within our Water Solutions segment and the sale of a natural gas liquids terminal in our Liquids Logistics segment (see Note 17).
(2)    Relates to asset retirement obligations classified as held for sale for the sale of certain saltwater disposal assets within our Water Solutions segment (see Note 18).
(3)    Relates to the sale of certain saltwater disposal wells within our Water Solutions segment (see Note 17).
(4)    Relates to asset retirement obligations classified as held for sale for the sale of a portion of our Liquids Logistics segment and certain assets within our Water Solutions segment (see Note 18).

In addition to the obligations described above, we may be obligated to remove facilities or perform other remediation upon retirement of certain other assets. However, the fair value of the asset retirement obligation cannot currently be reasonably estimated because the settlement dates are indeterminable. We will record an asset retirement obligation for these assets in the periods in which settlement dates are reasonably determinable.

Pipeline Capacity Agreement

We have a noncancelable agreement with a crude oil pipeline operator, which guarantees us minimum monthly shipping capacity on the pipeline. As a result, we are required to pay the minimum shipping fees if actual shipments are less than our allotted capacity. Under this agreement, 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, and this agreement allows 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.

All future minimum throughput payments under this agreement were recognized during the year ended March 31, 2025.

F-33
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Sales and Purchase Contracts

We have entered into product sales and purchase contracts for which we expect the parties to physically settle and deliver the inventory in future periods.

At March 31, 2025, we had the following commodity purchase commitments:
Crude Oil (1) Natural Gas Liquids
Value Volume
(in barrels)		 Value Volume
(in gallons)
(in thousands)
Fixed-Price Commodity Purchase Commitments:
Year Ending March 31,
2026 $ 24,060  452  $ 14,952  18,897 
2027 —  —  4,075  5,796 
2028 —  —  343  504 
Total $ 24,060  452  $ 19,370  25,197 
Index-Price Commodity Purchase Commitments:
Year Ending March 31,
2026 $ 1,862,939  28,898  $ 585,742  594,956 
2027 34,721  568  25,029  26,400 
2028 33,100  549  20,981  26,400 
2029 32,791  547  —  — 
2030 32,659  547  —  — 
Thereafter 148,294  2,558  —  — 
Total $ 2,144,504  33,667  $ 631,752  647,756 
(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.

At March 31, 2025, we had the following commodity sale commitments:
Crude Oil Natural Gas Liquids
Value Volume
(in barrels)		 Value Volume
(in gallons)
(in thousands)
Fixed-Price Commodity Sale Commitments:
Year Ending March 31,
2026 $ 24,369  452  $ 23,598  21,789 
2027 —  —  3,519  4,666 
2028 —  —  298  400 
Total $ 24,369  452  $ 27,415  26,855 
Index-Price Commodity Sale Commitments:
Year Ending March 31,
2026 $ 1,304,924  18,738  $ 418,968  348,392 
2027 —  —  57,078  52,955 
Total $ 1,304,924  18,738  $ 476,046  401,347 

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 10) or inventory positions (described in Note 2).

Certain other forward purchase and sale contracts do not qualify for the normal purchase and normal sale election. These contracts are recorded at fair value in our consolidated balance sheet and are not included in the tables above. These contracts are classified as either held for sale or discontinued operations within our March 31, 2025 and 2024 consolidated balance sheets (see Note 18).
F-34
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)


Other Commitments

We have noncancelable agreements for product storage, railcar spurs, capital projects and real estate. The following table summarizes future minimum payments under these agreements at March 31, 2025 (in thousands):
Year Ending March 31,
2026 $ 9,709 
2027 8,590 
2028 4,194 
2029 2,842 
2030 1,710 
Thereafter 2,964 
Total $ 30,009 

Note 9—Equity

Partnership Equity

The Partnership’s equity consists of a 0.1% GP interest and a 99.9% limited partner interest, which consists of common units. Our GP has the right, but not the obligation, to contribute a proportionate amount of capital to the Partnership to maintain its 0.1% GP interest. Our GP is not required to guarantee or pay any of our debts or obligations. At March 31, 2025, we owned 8.69% of our GP.

General Partner Equity

In connection with the issuance of common units for the vesting of restricted units during the years ended March 31, 2024 and 2023, we issued 586 and 1,232, respectively, notional units to our GP for less than $0.1 million in each of the years, in order to maintain its 0.1% interest in the Partnership.

In connection with the repurchase of common units (see below for further discussion), we repurchased 500 notional units from our GP for less than $0.1 million.

Common Unit Repurchase Program

On June 5, 2024, the board of directors of our GP authorized a common unit repurchase program, under which we may repurchase up to $50.0 million of our outstanding common units from time to time in the open market or in other privately negotiated transactions. This program does not have a fixed expiration date. The common unit repurchase program authorization does not obligate us to repurchase any dollar amount or number of common units. During the year ended March 31, 2025, we repurchased 500,000 units for an aggregate price of $2.1 million, including commissions.

Common Unit and Preferred Unit Distributions

The board of directors of our GP temporarily suspended all distributions (common unit distributions which began with the quarter ended December 31, 2020 and preferred unit distributions which began with the quarter ended March 31, 2021) in order to deleverage our balance sheet and meet certain financial performance ratios.

On February 6, 2024, the board of directors of our GP declared a cash distribution of 50% of the outstanding distribution arrearages through December 31, 2023 to preferred unitholders. The distributions were paid on February 27, 2024 to the holders of record at the close of trading on February 16, 2024. See below for a further discussion.

On April 4, 2024 and April 9, 2024, the board of directors of our GP declared cash distributions of the remaining outstanding distributions through March 31, 2024 to the preferred unitholders. The distributions were paid on April 18, 2024 and April 25, 2024, respectively. See below for further discussion.

As of April 25, 2024, all preferred unit distributions in arrears had been paid.
F-35
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)


Class B Preferred Units

As of March 31, 2025, there were 12,585,642 of our Class B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class B Preferred Units”) outstanding.

Distributions for Prior Years

On February 6, 2024, the board of directors of our GP declared a cash distribution of 50% of the outstanding distribution arrearages through December 31, 2023 to the holders of the Class B Preferred Units. The distribution amount of $55.9 million was paid on February 27, 2024 to the holders of record at the close of trading on February 16, 2024.

On April 4, 2024, the board of directors of our GP declared a cash distribution of $3.0224 which was 55.4% of the outstanding distribution arrearages through the quarter ended March 31, 2024 to the holders of the Class B Preferred Units. The distribution amount of $38.0 million was paid on April 18, 2024 to the holders of record at the close of trading on April 12, 2024.

On April 9, 2024, the board of directors of our GP declared a cash distributions of $2.4750 which fully paid the remaining distribution arrearages and interest through the quarter ended March 31, 2024 to the holder of the Class B Preferred Units. The distribution amount of $31.1 million, which included a distribution of $9.9 million earned during the quarter ended March 31, 2024, was paid on April 25, 2024 to the holders of record at the close of trading on April 19, 2024.

Current Fiscal Year Distributions

The current distribution rate for the Class B Preferred Units is a floating rate of the three-month LIBOR interest rate plus a spread of 7.213%. Effective July 3, 2023, the reference to LIBOR in the formulation for the distribution rate in these securities was replaced with three-month CME Term SOFR, as calculated and published by CME Group Benchmark Administration, Ltd., plus a tenor spread adjustment of 0.26161%, in accordance with the Adjustable Interest Rate (LIBOR) Act (“LIBOR Act”), and the rules implementing the LIBOR Act.

The following table summarizes the distributions declared for our Class B Preferred Units during the last fiscal year:

Three-Month Distribution Amount Paid to Class B
Date Declared Record Date Payment Date SOFR Rate Preferred Unitholders
(in thousands)
June 21, 2024 July 1, 2024 July 15, 2024 5.300  % $ 0.8153  $ 10,261 
September 19, 2024 October 1, 2024 October 15, 2024 5.332  % $ 0.8004  $ 10,073 
December 12, 2024 January 1, 2025 January 15, 2025 4.593  % $ 0.7542  $ 9,493 
March 19, 2025 April 1, 2025 April 15, 2025 4.329  % $ 0.7377  $ 9,284 

The distribution amount paid on April 15, 2025 is included in accrued expenses and other payables in our consolidated balance sheet at March 31, 2025.

Class C Preferred Units

As of March 31, 2025, there were 1,800,000 of our Class C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (“Class C Preferred Units”) outstanding.

Distributions for Prior Years

On February 6, 2024, the board of directors of our GP declared a cash distribution of 50% of the outstanding distribution arrearages through December 31, 2023 to the holders of the Class C Preferred Units. The distribution amount of $7.3 million was paid on February 27, 2024 to the holders of record at the close of trading on February 16, 2024.

On April 4, 2024, the board of directors of our GP declared a cash distribution of $2.6790 which was 55.4% of the outstanding distribution arrearages through the quarter ended March 31, 2024 to the holders of Class C Preferred Units. The distribution amount of $4.8 million was paid on April 18, 2024 to the holders of record at the close of trading on April 12, 2024.

F-36
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

On April 9, 2024, the board of directors of our GP declared a cash distribution of $2.1860 which fully paid the remaining distribution arrearages and interest through the quarter ended March 31, 2024 to the holders of the Class C Preferred Units. The distribution amount of $3.9 million, which included a distribution of $1.1 million earned during the quarter ended March 31, 2024, was paid on April 25, 2024 to the holders of record at the close of trading on April 19, 2024.

Current Fiscal Year Distributions

The current distribution rate for the Class C Preferred Units is a floating rate of the three-month LIBOR interest rate plus a spread of 7.384%. Effective July 3, 2023, the reference to LIBOR in the formulation for the distribution rate in these securities was replaced with three-month CME Term SOFR, as calculated and published by CME Group Benchmark Administration, Ltd.

The following table summarizes the distributions declared for our Class C Preferred Units during the last fiscal year:

Three-Month Distribution Amount Paid to Class C
Date Declared Record Date Payment Date SOFR Rate Preferred Unitholders
(in thousands)
June 21, 2024 July 1, 2024 July 15, 2024 5.300  % $ 0.7926  $ 1,426 
September 19, 2024 October 1, 2024 October 15, 2024 5.332  % $ 0.7947  $ 1,431 
December 12, 2024 January 1, 2025 January 15, 2025 4.593  % $ 0.7486  $ 1,347 
March 19, 2025 April 1, 2025 April 15, 2025 4.329  % $ 0.7320  $ 1,318 

The distribution amount paid on April 15, 2025 is included in accrued expenses and other payables in our consolidated balance sheet at March 31, 2025.

Class D Preferred Units

On November 22, 2024, we purchased 23,375,000 of our outstanding warrants for $6.9 million.

As of March 31, 2025, there were 600,000 preferred units (“Class D Preferred Units”) and warrants exercisable to purchase an aggregate of 2,125,000 common units outstanding.

The following table summarizes the outstanding warrants at March 31, 2025:
Issuance Date and Description Number of Warrants Exercise Price
October 31, 2019
Premium warrants 1,250,000  $ 16.28 
Par warrants 875,000  $ 13.56 

All outstanding warrants are currently exercisable and any unexercised warrants will expire on the tenth anniversary of the date of issuance. The warrants will not participate in cash distributions.

Distributions for Prior Years

On February 6, 2024, the board of directors or our GP declared a cash distribution of 50% of the outstanding distribution arrears through December 31, 2023 to the holder of the Class D Preferred Units. The distribution amount of $115.0 million was paid on February 27, 2024 to the holders of record at the close of trading on February 16, 2024.

On April 4, 2024, the board of directors of our GP declared a cash distribution of 55.4% of the outstanding distribution arrearages through the quarter ended March 31, 2024 to the holders of the Class D Preferred Units. The distribution amount of $77.1 million was paid on April 18, 2024 to the holders of record at the close of trading on April 12, 2024.

On April 9, 2024, the board of directors of our GP declared a cash distribution which fully paid the remaining distribution arrearages and interest through the quarter ended Mach 31, 2024 to the holders of the Class D Preferred Units. quarterly distribution of $63.0 million, which included a distribution of $16.4 million earned during the quarter ended March 31, 2024, was paid on April 25, 2024 to the holders of record at the close of trading on April 19, 2024.

F-37
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Current Fiscal Year Distributions

The holders of our Class D Preferred Units have elected, which they are allowed to do so from time to time, for the distributions to be calculated based on a floating rate equal to the applicable three-month LIBOR interest rate (or alternative rate as determined in accordance with our amended and restated limited partnership agreement (“Partnership Agreement”)) plus a spread of 7.00% (“Class D Variable Rate,” as defined in the Partnership Agreement). Effective July 3, 2023, the reference to LIBOR in the formulation for the distribution rate in these securities was replaced with the three-month CME Term SOFR, as calculated and published by CME Group Benchmark Administration, Ltd. Each variable rate election shall be effective for at least four quarters following such election. This variable rate election will be effective until September 30, 2025. The distribution rate for the Class D Preferred Units is 12.329% for the quarter ended March 31, 2025, and includes a 1.0% rate increase, as we exceeded the adjusted total leverage ratio, as defined within the Partnership Agreement.

The following table summarizes the distributions declared on our Class D Preferred Units during the last fiscal year:

Three-Month Distribution Amount Paid to Class D
Date Declared Record Date Payment Date SOFR Rate Preferred Unitholders
(in thousands)
June 21, 2024 (1) July 1, 2024 July 15, 2024 $ 26.01  $ 15,825 
September 19, 2024 October 1, 2024 October 15, 2024 5.332  % $ 32.08  $ 19,248 
December 12, 2024 January 1, 2025 January 15, 2025 4.593  % $ 30.16  $ 18,095 
March 19, 2025 April 1, 2025 April 15, 2025 4.329  % $ 32.07  $ 19,243 
(1)     The distribution rate was 10.00% (equal to $100.00 per every 1,000 in unit value per year).

The distribution amount paid on April 15, 2025 is included in accrued expenses and other payables in our consolidated balance sheet at March 31, 2025.

At any time after July 2, 2019 (“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 our 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 our Partnership Agreement. Upon a Class D Change of Control (as defined in our 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 our 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.

Equity-Based Incentive Compensation

Our GP adopted a long-term incentive plan (“LTIP”), which allowed for the issuance of equity-based compensation. Our GP granted certain restricted units to employees and directors, which vest in tranches, subject to the continued service of the recipients through the vesting date (“Service Awards”). The Service Awards may also vest upon a change of control, at the discretion of the board of directors of our GP. No distributions accrue to or are paid on the Service Awards during the vesting period. As the LTIP expired on May 10, 2021, we had no common units available for grant during the year ended March 31, 2025, and the last of our outstanding Service Awards vested on November 15, 2023.

During the years ended March 31, 2024 and 2023, we recorded compensation expense related to Service Awards of $1.1 million and $2.7 million, respectively.
F-38
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)


Note 10—Fair Value of Financial Instruments

The carrying values of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and other current assets and liabilities (excluding derivative instruments) approximate fair value because of the short-term nature of these instruments. Therefore, these assets and liabilities are not presented in the following table.

Derivatives

The following table summarizes, by level within the fair value hierarchy, the estimated fair values of our derivative assets and liabilities reported in our consolidated balance sheets at the dates indicated:
March 31, 2025 March 31, 2024
Derivative
Assets		 Derivative
Liabilities		 Derivative
Assets		 Derivative
Liabilities
(in thousands)
Level 1 measurements $ 67  $ (1,644) $ 3,873  $ (7,517)
Level 2 measurements 22  (8,133) 1,867  (2,647)
89  (9,777) 5,740  (10,164)
Netting of counterparty contracts (1) (67) 67  (3,873) 3,873 
Net cash collateral provided (held) 1,527  1,577  (295) 3,643 
Derivatives $ 1,549  $ (8,133) $ 1,572  $ (2,648)
(1)    Relates to commodity derivative assets and liabilities that are expected to be net settled on an exchange or through a master netting arrangement with the counterparty. Our physical contracts that do not qualify as normal purchase normal sale transactions are not subject to such master netting arrangements.

The following table summarizes the accounts that include our derivative assets and liabilities in our consolidated balance sheets at the dates indicated:
March 31,
2025 2024
(in thousands)
Prepaid expenses and other current assets $ 1,549  $ 1,572 
Accrued expenses and other payables (6,427) (1,982)
Other noncurrent liabilities (1,706) (666)
Net derivative liability $ (6,584) $ (1,076)

F-39
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

The following table summarizes our open derivative contract positions at the dates indicated. We do not account for these derivatives as hedges.
Contracts Settlement Period Net Long (Short)
Notional Units
(in barrels)		 Fair Value of
Net Assets
(Liabilities)
(in thousands)
At March 31, 2025:
Crude oil fixed-price (1) April 2025–March 2026 59  $ (6,492)
Butane fixed-price (1) April 2025–March 2026 (1,148) (482)
Variable-to-fixed interest rate swaps (2) April 2025–April 2028 (2,539)
Other April 2025–March 2026 (175)
(9,688)
Net cash collateral provided 3,104 
Net derivative liability $ (6,584)
At March 31, 2024:
Crude oil fixed-price (1) April 2024–March 2025 (174) $ (3,000)
Propane fixed-price (1) April 2024–April 2025 6,980  1,870 
Butane fixed-price (1) April 2024–March 2025 (982) (2,222)
Variable-to-fixed interest rate swap (2) April 2024–April 2026 515 
Other April 2024–March 2025 (1,587)
(4,424)
Net cash collateral provided 3,348 
Net derivative liability $ (1,076)
(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.
(2)    See further discussion of these instruments in “Interest Rate Risk” below.

Amounts in the tables above do not include assets and liabilities classified as either held for sale or discontinued operations within our March 31, 2025 and 2024 consolidated balance sheets (see Note 18).

The following table summarizes the net (losses) gains recorded from our commodity derivatives to revenues and cost of sales in our consolidated statements of operations for the periods indicated (in thousands):
Year Ended March 31,
2025 $ (4,482)
2024 $ (12,836)
2023 $ 19,111 

Amounts in the table above do not include net gains and losses from our commodity derivatives related to our refined products and biodiesel businesses, as these amounts have been classified within discontinued operations within our consolidated statements of operations (see Note 18).

During the years ended March 31, 2025 and 2024, we recorded a net loss of $0.4 million and a net gain of $0.5 million, respectively, from our interest rate swaps to interest expense in our consolidated statements of operations.

Credit Risk

We have credit policies that we believe minimize our overall credit risk, including an evaluation of potential counterparties’ financial condition (including credit ratings), collateral requirements under certain circumstances, and the use of industry standard master netting agreements, which allow for offsetting counterparty receivable and payable balances for certain transactions. At March 31, 2025, our primary counterparties were retailers, resellers, energy marketers, producers, refiners, and dealers. This concentration of counterparties may impact our overall exposure to credit risk, either positively or negatively, as the counterparties may be similarly affected by changes in economic, regulatory or other conditions. If a counterparty does not perform on a contract, we may not realize amounts that have been recorded in our consolidated balance sheets and recognized in our net income.
F-40
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)


Interest Rate Risk

Long-Term Debt

The ABL Facility is variable-rate debt with interest rates that are generally indexed to the prime rate or SOFR plus an applicable margin (see Note 7 for the current rates on the ABL Facility).

The Term Loan B is variable-rate debt with interest rates that are generally indexed to SOFR plus an applicable margin (see Note 7 for the current rates on the Term Loan B).

Interest Rate Swaps

In March and April 2024, we entered into interest rate swaps totaling $400.0 million to reduce the variability of cash outflows associated with our floating-rate, SOFR-based borrowings, including borrowings on the Term Loan B. Under these arrangements, we pay fixed interest rates of 4.32% and 4.79%, respectively, in exchange for SOFR-based variable interest through April 2026. In September 2024, we entered into the following transaction:

•For the $200.0 million interest rate swap entered into in April 2024, we extended the original maturity date of April 20, 2026 to a new maturity date of April 19, 2028; and
•Blended the existing swap rate for this extended swap with the then prevailing interest rate swap rate, which lowered the rate from 4.79% to 3.842%.

Preferred Unit Distributions

The current distribution rate for the Class B, Class C and Class D Preferred Units is a floating rate of the three-month CME Term SOFR plus a fixed spread (see Note 9 for the current distribution rates).

Fair Value of Fixed-Rate Notes

The following table provides fair values estimates of our fixed-rate notes at March 31, 2025 (in thousands):
2029 Senior Secured Notes $ 902,250 
2032 Senior Secured Notes $ 1,299,458 

For the 2029 Senior Secured Notes and 2032 Senior Secured Notes, the fair value estimates were developed based on publicly traded quotes and would be classified as Level 2 in the fair value hierarchy.

Note 11—Segments

Our operations are organized into three reportable segments: (i) Water Solutions, (ii) Crude Oil Logistics and (iii) Liquids Logistics. These segments have been identified based on the differing products and services, regulatory environment and the expertise required for these operations. Our Liquids Logistics reportable segment includes operating segments that have been aggregated based on the nature of the products and services provided. Our chief operating decision maker (“CODM”) is our chief executive officer. Adjusted EBITDA is reviewed by the CODM to evaluate performance and make business decisions. We define Adjusted EBITDA for Water Solutions as revenue minus operating and general and administrative expense, which excludes, accretion expense for asset retirement obligations (“Accretion Expense”) and legal and advisory costs associated with acquisitions and dispositions (“Acquisition Expense”), and plus or minus other reconciling items. We define Adjusted EBITDA for Crude Oil Logistics and Liquid Logistics as revenue minus cost of sales, which excludes unrealized gains and losses on derivatives, lower of cost or realizable value adjustments and amortization expense for certain intangible assets, and plus or minus other reconciling segment items. The calculation of Adjusted EBITDA for our three reportable segments is presented in the Reportable Segment Information tables below.

See Note 1 for a discussion of the products and services of our reportable segments. The remainder of our business operations is presented as “Corporate and Other” and consists of certain corporate expenses that are not allocated to the reportable segments and the amounts to eliminate intercompany or intersegment transactions. Intercompany or intersegment transactions are recorded based on prices negotiated between the segments.
F-41
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Intrasegment transactions eliminations are recorded within each reportable segment. All of the tables below do not include amounts related to our refined products and biodiesel businesses, as these amounts have been classified as discontinued operations within our consolidated statements of operations for all periods presented (see Note 1).

Disaggregation of Revenue

The following table summarizes revenues related to our segments for the periods indicated:
Year Ended March 31,
2025 2024 2023
(in thousands)
Revenues:
Water Solutions:
Topic 606 revenues
Disposal service fees $ 637,098  $ 598,046  $ 547,716 
Sale of recovered crude oil 109,008  107,367  120,705 
Sale of water 7,625  11,594  17,509 
Other service revenues 1,896  13,030  11,108 
Non-Topic 606 revenues 60  781  — 
Total Water Solutions revenues 755,687  730,818  697,038 
Crude Oil Logistics:
Topic 606 revenues
Crude oil sales 806,653  1,597,238  2,376,434 
Crude oil transportation and other sales 66,263  50,151  89,502 
Non-Topic 606 revenues 6,986  9,222  7,476 
Total Crude Oil Logistics revenues 879,902  1,656,611  2,473,412 
Liquids Logistics:
Topic 606 revenues
Propane sales 751,376  735,698  1,156,821 
Butane sales 648,303  627,400  772,085 
Other products sales 411,687  377,744  565,706 
Service revenues 8,414  8,209  7,944 
Non-Topic 606 revenues 13,832  17,374  14,604 
Total Liquids Logistics revenues (1) 1,833,612  1,766,425  2,517,160 
Corporate and Other:
Topic 606 revenues
Service revenues 401  —  — 
Elimination of intersegment sales (2) (416) (547) (8,590)
Total Corporate and Other revenues (15) (547) (8,590)
Total revenues $ 3,469,186  $ 4,153,307  $ 5,679,020 
(1)    During the years ended March 31, 2025, 2024 and 2023, our Liquids Logistics revenues included $128.2 million, $132.1 million and $211.0 million of non-US revenues, respectively.
(2)    For the years ended March 31, 2024 and 2023, the elimination of intersegment sales, which was included in the Crude Oil Logistics segment in our March 31, 2024 Annual Report, is now included in “Corporate and Other.”

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NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Reportable Segment Information

The following tables set forth certain selected financial information for our segments for the periods indicated:
Year Ended March 31, 2025
Water Solutions Crude Oil Logistics Liquids Logistics Total Segments Corporate and Other Consolidated
(in thousands)
Revenues $ 755,687  $ 879,902  $ 1,833,612  $ 3,469,201  $ (15) $ 3,469,186 
Cost of sales (1) (2,106) 772,665  1,730,396  2,500,955  (416) 2,500,539 
Operating, general and administrative expenses (2) 217,223  40,866  51,314  309,403  39,244  348,647 
Other (3) 1,426  2  1,467  2,895  (3) 2,892 
Adjusted EBITDA $ 541,996  $ 66,373  $ 53,369  $ 661,738  $ (38,846) $ 622,892 
Depreciation and amortization 254,732 
Amortization in cost of sales 257 
Interest expense 280,078 
Loss on disposal or impairment of assets, net 31,448 
Net unrealized losses on derivatives 3,366 
Lower of cost or net realizable value adjustments 2,916 
Revaluation of liabilities (6,705)
Asset retirement obligation accretion 4,200 
Adjustments related to unconsolidated entities (4) 427 
Other (5) (7,931)
Income from continuing operations before income taxes $ 60,104 
Capital expenditures (6) $ 208,168  $ 6,915  $ 12,200  $ 227,283  $ 17,967  $ 245,250 
Total assets (7) $ 2,794,777  $ 1,198,501  $ 548,901  $ 4,542,179  $ 67,261  $ 4,609,440 
(1)    Amount excludes net unrealized gains and losses on derivatives, lower of cost or net realizable value adjustments and amortization expense for certain intangible assets.
(2)    Amount excludes Accretion Expense and Acquisition Expense.
(3)    Amount includes Adjusted EBITDA related to our unconsolidated entities, interest income and certain other non-operating income and expense items less Adjusted EBITDA related to our noncontrolling interests.
(4)    Amount represents the sum of the amount excluded from our equity in earnings of unconsolidated entities, including, depreciation and amortization, interest expense and gains and losses on the disposal or impairment of assets.
(5)    Amount includes the net of Adjusted EBITDA related to our noncontrolling interests, unrealized gains and losses on investments and marketable securities and certain other non-operating income and expense items.
(6)    Amount includes additions to property, plant and equipment and intangible assets, including the acquisition of assets.
(7)    Total assets includes $13.7 million of non-US total assets.

F-43
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Year Ended March 31, 2024
Water Solutions Crude Oil Logistics Liquids Logistics Total Segments Corporate and Other Consolidated
(in thousands)
Revenues $ 730,818  $ 1,656,611  $ 1,766,425  $ 4,153,854  $ (547) $ 4,153,307 
Cost of sales (1) 10,909  1,527,236  1,657,523  3,195,668  (305) 3,195,363 
Operating, general and administrative expenses (2) 215,300  42,589  55,600  313,489  55,922  369,411 
Other (3) 3,699  101  (15) 3,785  1,096  4,881 
Adjusted EBITDA $ 508,308  $ 86,887  $ 53,287  $ 648,482  $ (55,068) $ 593,414 
Depreciation and amortization 266,114 
Interest expense 269,804 
Loss on disposal or impairment of assets, net 115,936 
Net unrealized losses on derivatives 63,762 
CMA Differential Roll net gains (4) (71,285)
Lower of cost or net realizable value adjustments (2,408)
Loss on early extinguishment of liabilities, net 55,281 
Revaluation of liabilities 2,680 
Asset retirement obligation accretion 2,619 
Equity-based compensation 1,098 
Acquisition expense (5) 48,116 
Adjustments related to unconsolidated entities (6) 384 
Other (7) (2,417)
Loss from continuing operations before income taxes $ (156,270)
Capital expenditures (8) $ 145,048  $ 6,905  $ 15,791  $ 167,744  $ 2,323  $ 170,067 
Total assets (9) $ 2,885,041  $ 1,368,461  $ 686,885  $ 4,940,387  $ 79,707  $ 5,020,094 
(1)    Amount excludes net unrealized gains and losses on derivatives and lower of cost or net realizable value adjustments.
(2)    Amount excludes Accretion Expense and equity-based compensation expense.
(3)    Amount includes Adjusted EBITDA related to our unconsolidated entities, interest income and certain other non-operating income and expense items less Adjusted EBITDA related to our noncontrolling interests.
(4)    In our Crude Oil Logistics segment, we purchase certain crude oil barrels using the West Texas Intermediate (“WTI”) calendar month average (“CMA”) price and sell the crude oil barrels using the WTI CMA price plus the Argus CMA Differential Roll Component (“CMA Differential Roll”) per our contracts. To eliminate the volatility of the CMA Differential Roll, we entered into derivative instrument positions in January 2021 to secure a margin per month from May 2021 through December 2023. Due to the nature of these positions, the cash flow and earnings recognized on a GAAP basis differed from period to period depending on the current crude oil price and future estimated crude oil price which were valued utilizing third-party market quoted prices. We recognized in Adjusted EBITDA the gains and losses from the derivative instrument positions entered into in January 2021 to properly align with the physical margin we hedged each month through the term of this transaction.
(5)    Amount includes the accrued judgment related to the LCT legal matter, excluding interest (see Note 8) and the write-off of the legal costs related to the LCT legal matter that were originally allocated to the GP.
(6)    Amount represents the sum of the amount excluded from our equity in earnings of unconsolidated entities, including, depreciation and amortization, interest expense and gains and losses on the disposal or impairment of assets.
(7)    Amount includes the net of Adjusted EBITDA related to our noncontrolling interests, unrealized gains and losses on investments and marketable securities and certain other non-operating income and expense items.
(8)    Amount includes additions to property, plant and equipment and intangible assets, including the acquisition of assets.
(9)    Total assets includes $22.1 million of non-US total assets.

F-44
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Year Ended March 31, 2023
  Water Solutions Crude Oil Logistics Liquids Logistics Total Segments Corporate and Other Consolidated
(in thousands)
Revenues $ 697,038  $ 2,473,412  $ 2,517,160  $ 5,687,610  $ (8,590) $ 5,679,020 
Cost of sales (1) 18,564  2,308,327  2,430,311  4,757,202  (8,587) 4,748,615 
Operating, general and administrative expenses (2) 218,020  54,537  49,294  321,851  48,173  370,024 
Other (3) 2,637  368  25  3,030  30,198  33,228 
Adjusted EBITDA $ 463,091  $ 110,916  $ 37,580  $ 611,587  $ (17,978) $ 593,609 
Depreciation and amortization 273,108 
Amortization in cost of sales 14 
Interest expense 275,438 
Loss on disposal or impairment of assets, net 86,776 
Net unrealized gains on derivatives (50,438)
CMA Differential Roll net losses (4) 3,547 
Lower of cost or net realizable value adjustments (12,324)
Gain on early extinguishment of liabilities, net (6,177)
Revaluation of liabilities 9,665 
Asset retirement obligation accretion 3,226 
Equity-based compensation 2,718 
Adjustments related to unconsolidated entities (5) 843 
Other (6) (2,041)
Income from continuing operations before income taxes           $ 9,254 
Capital expenditures (7) $ 123,180  $ 9,649  $ 5,704  $ 138,533  $ 2,207  $ 140,740 
Total assets (8) $ 3,009,869  $ 1,616,953  $ 774,221  $ 5,401,043  $ 55,101  $ 5,456,144 
(1)    Amount excludes net unrealized gains and losses on derivatives, lower of cost or net realizable value adjustments and amortization expense for certain intangible assets.
(2)    Amount excludes Accretion Expense, equity-based compensation expense and Acquisition Expense.
(3)    Amount includes Adjusted EBITDA related to our unconsolidated entities, interest income, unrealized gains and losses on investments and marketable securities and certain other non-operating income and expense items less Adjusted EBITDA related to our noncontrolling interests. Within Corporate and Other is other income related to the settlement of a dispute associated with commercial activities not occurring in the current reporting periods, as described further in Note 17.
(4)    In our Crude Oil Logistics segment, we purchase certain crude oil barrels using the WTI CMA price and sell the crude oil barrels using the WTI CMA price plus the Argus CMA Differential Roll per our contracts. To eliminate the volatility of the CMA Differential Roll, we entered into derivative instrument positions in January 2021 to secure a margin per month from May 2021 through December 2023. Due to the nature of these positions, the cash flow and earnings recognized on a GAAP basis differed from period to period depending on the current crude oil price and future estimated crude oil price which were valued utilizing third-party market quoted prices. We recognized in Adjusted EBITDA the gains and losses from the derivative instrument positions entered into in January 2021 to properly align with the physical margin we hedged each month through the term of this transaction.
(5)    Amount represents the sum of the amount excluded from our equity in earnings of unconsolidated entities, including, depreciation and amortization, interest expense and gains and losses on the disposal or impairment of assets.
(6)    Amount includes the net of Adjusted EBITDA related to our noncontrolling interests, unrealized gains and losses on investments and marketable securities and certain other non-operating income and expense items.
(7)    Amount includes additions to property, plant and equipment and intangible assets, including the acquisition of assets.
(8)    Total assets includes $32.3 million of non-US total assets.


F-45
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Note 12—Transactions with Affiliates

The following table summarizes our related party transactions for the periods indicated:
Year Ended March 31,
2025 2024 2023
(in thousands)
Sales to entities affiliated with management $ 401  $ —  $ — 
Purchases from equity method investees $ 421  $ 1,281  $ 1,872 
Purchases from entities affiliated with management $ —  $ 100  $ — 

Affiliate balances consist of the following at the dates indicated:
March 31,
2025 2024
(in thousands)
Accounts receivable-affiliates
Equity method investees $ 595  $ 1,501 
Entities affiliated with management 135  — 
Total $ 730  $ 1,501 
Accounts payable-affiliates
Equity method investees $ 101  $ 36 
Entities affiliated with management 1  1 
Total $ 102  $ 37 

Other Related Party Transactions

During the year ended March 31, 2025, we created two new aviation entities whereby we own a 90% interest and members of management own a 10% interest (see Note 17 for a further discussion of these transactions).

On November 22, 2024, we purchased 16,734,375 of our outstanding warrants for $5.0 million from a greater than 10% beneficial owner of our common units (see Note 9 for a further discussion).

Note 13—Employee Benefit Plan

We have established a defined contribution 401(k) plan to assist our eligible employees in saving for retirement on a tax-deferred basis. The 401(k) plan permits all eligible employees to make voluntary pre-tax contributions to the plan, subject to applicable tax limitations. For every dollar that employees contribute up to 4% of their eligible compensation (as defined in the plan), we contribute one dollar, plus 50 cents for every dollar employees contribute between 4 and 6% of their eligible compensation (as defined in the plan). Our matching contributions vest over an employee’s first two years of employment, subject to a participant’s continued service. Expenses under the plan for the years ended March 31, 2025, 2024 and 2023 were $2.7 million, $2.7 million and $2.7 million, respectively. Expenses for matching contributions related to our refined products and biodiesel businesses have been classified within discontinued operations within our consolidated statements of operations (see Note 18).

Note 14—Revenue from Contracts with Customers

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 have any material contracts with multiple performance obligations or under which we receive material amounts of non-cash consideration.
F-46
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Our costs to obtain or fulfill our revenue contracts were not material as of March 31, 2025.

The majority of our revenue agreements are in scope under ASC 606 and the remainder of our revenue comes from contracts that contain nonmonetary exchanges or leases in the scope of ASC 845 and ASC 842, respectively. See Note 11 for a detail of disaggregated revenue.

Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component. The primary purpose of our invoicing terms is to allow customers to secure the right to reserve the product or storage capacity to be received or used at a later date, not to receive financing from our customers or to provide customers with financing.

We report taxes collected from customers and remitted to taxing authorities, such as sales and use taxes, on a net basis. We include amounts billed to customers for shipping and handling costs in revenues in our consolidated statements of operations.

Water Solutions Performance Obligations

Within the Water Solutions segment, revenue is disaggregated into two primary revenue streams that include service revenue and commodity sales revenue. For contracts involving disposal services, we accept produced water and solids for disposal at our facilities. The determination of transaction price, which is generally considered to be variable, under these contracts involves significant judgment as it is dependent upon the amount of volume of produced water or solids that are delivered to us by the customer over the term of the contract and the fees charged per barrel, which can either be a fixed amount per barrel or variable due to changes in inflation or other factors. Under certain contracts, the customer has committed to delivering to us a minimum volume of produced water over a specified time period. If the customer does not deliver the committed volumes, we receive a shortfall fee if the customer does not deliver their commitment. At each reporting period, we make a determination as to the likelihood of earning this fee. We recognize revenue from these contracts when (i) actual volumes are received; and (ii) when the likelihood of a customer exercising its remaining rights to make up the deficient volumes under minimum volume commitments becomes remote (also known as the breakage model).

For all of our disposal contracts within the Water Solutions segment, revenue will be recognized over time utilizing the output method based on the volume of produced water or solids we accept from the customer. For contracts that involve the sale of recovered crude oil and reuse, recycled and brackish non-potable water, we will recognize revenue at a point in time, based on when control of the product is transferred to the customer.

Crude Oil Logistics Performance Obligations

Within the Crude Oil Logistics segment, revenue is disaggregated into two primary revenue streams that include revenue from the sale of commodities and service revenue. For sales of commodities, we are obligated to deliver a predetermined amount of crude oil, primarily on a month-to-month basis, to our customers. For these types of agreements, revenue is recognized at a point in time based on when the crude oil is delivered and control is transferred to the customer.

For revenue received from services rendered, we are obligated to provide throughput services to move crude oil via pipeline or railcar or to provide terminal maintenance services. In either case, the obligation is satisfied over time utilizing the output method based on each volume of crude oil that is moved from the origination point to the final destination or based on the passage of time.

Liquids Logistics Performance Obligations

Within the Liquids Logistics segment, revenue is disaggregated into two primary revenue streams that include revenue from the sale of commodities and service revenue. For sales of commodities, we are obligated to deliver a specified amount of product over a specified period of time. For these types of agreements, revenue is recognized at a point in time based on when the product is delivered and control is transferred to the customer.

For revenue received from services rendered, we offer a variety of services which include: (i) railcar transportation services; (ii) transloading services; and (iii) logistics services. We are obligated to provide these services over a predetermined period of time. All revenue from services is recognized over time utilizing the output method based on volumes stored or moved.
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NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)


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 utilized 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 contracts. The following table summarizes the amount and timing of revenue recognition for such contracts at March 31, 2025 (in thousands):
Year Ending March 31,
2026 $ 81,881 
2027 69,896 
2028 59,402 
2029 62,433 
2030 53,717 
Thereafter 57,989 
Total $ 385,318 

Many agreements are short-term in nature with a contract term of one year or less. For those contracts, we utilized the practical expedient in ASC 606-10-50 that exempts us from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less. Additionally, for our product sales contracts, we have elected the practical expedient set out in ASC 606-10-50-14A, which states that we are not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Under these agreements, each unit of product represents a separate performance obligation and therefore future volumes are wholly unsatisfied and disclosure of transaction price allocated to remaining performance obligations is not required. Under product sales contracts, the variability arises as both volume and pricing (typically index-based) are not known until the product is delivered.

Contract Assets and Liabilities

Amounts owed from our customers under our revenue contracts are typically billed as the service is being provided on a monthly basis and are due within 1-30 days of billing, and are classified as accounts receivable on our consolidated balance sheets. Under certain of our contracts, we recognize revenues in excess of billings, referred to as contract assets, within prepaid expenses and other current assets in our consolidated balance sheets. Accounts receivable from contracts with customers are presented within accounts receivable and accounts receivable-affiliates in our consolidated balance sheets.

Under certain of our contracts, we may be entitled to receive payments in advance of satisfying our performance obligations under the contract. We recognize a liability for these payments in excess of revenue recognized, referred to as deferred revenue or contract liabilities, within advance payments received from customers in our consolidated balance sheets. Our deferred revenue primarily relates to:

•Prepayments. Some revenue contracts contain prepayment provisions within our Liquids Logistics segment. In some cases, we also receive prepayments from customers purchasing commodities, which allows the customer to secure the right to receive their requested volumes in a future period. Revenue from these contracts is initially deferred, thus creating a contract liability.
•Contracts with variable volumes and pricing. As described above in our Water Solutions segment, we revise the estimate of variable consideration at each reporting period. As the actual amount billed and received from the customer may differ from the amount of revenue recognized, a contract asset or liability is recorded.
•Capital reimbursements. Certain contracts in our Water Solutions segment require that our customers reimburse us for capital expenditures related to the construction of long-lived assets, such as water gathering pipelines, booster stations and custody transfer points, utilized to provide services to them under the revenue contracts. Because we consider these amounts as consideration from customers associated with ongoing services to be provided to customers, we defer these upfront payments in deferred revenue and recognize the amounts in revenue over the life of the associated revenue contract as the performance obligations are satisfied under the contract.

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NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

The following tables summarize the balances of our contract assets and liabilities at the dates indicated:
March 31,
2025 2024 2023
(in thousands)
Accounts receivable from contracts with customers (1) $ 294,378  $ 336,948  $ 342,478 
Contract assets (current) $ 512  $ —  $ 10,050 

Contract liabilities at March 31, 2023 $ 12,004 
Payment received and deferred 59,401 
Payment recognized in revenue (54,308)
Liabilities held for sale (2) (164)
Contract liabilities at March 31, 2024 16,933 
Payment received and deferred 49,787 
Payment recognized in revenue (57,293)
Liabilities held for sale (3) (259)
Contract liabilities at March 31, 2025 $ 9,168 
(1)    Amounts in do not include assets classified as either held for sale or discontinued operations within our March 31, 2025 and 2024 consolidated balance sheets (see Note 18).
(2)    Relates to contract liabilities classified as held for sale for the sale of certain freshwater water solutions facilities within our Water Solutions segment (see Note 18).
(3)    Relates to contract liabilities classified as held for sale for the sale of a portion of our Liquids Logistics segment (see Note 18).

Note 15—Leases

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. Our leases are classified as operating and finance 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 directing 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 the interest rate implicit in our leases is not readily determinable, 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 consolidated balance sheet. Operating lease expense for short-term leases is recognized on a straight-line basis over the lease term and is disclosed below.

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NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

We have lease agreements with lease and non-lease components, which are generally accounted for separately. For certain leases of buildings and land, we account for the lease and non-lease components as a single lease component based on the election of the practical expedient to not separate lease components from non-lease components.

At March 31, 2025, we had operating lease right-of-use assets of $109.9 million and current and noncurrent operating lease obligations of $27.9 million and $85.2 million, respectively, on our consolidated balance sheet. At March 31, 2024, we had operating lease right-of-use assets of $95.4 million and current and noncurrent operating lease obligations of $29.4 million and $70.6 million, respectively, on our consolidated balance sheet. These amounts do not include assets and liabilities classified as either held for sale or discontinued operations within our March 31, 2025 and 2024 consolidated balance sheets (see Note 18). During the year ended March 31, 2024, we recorded an impairment of $2.4 million for certain leases in our Water Solutions segment due to underutilization of certain freshwater wells. During the year ended March 31, 2023, an impairment of the operating lease right-of-use asset of $1.5 million was recorded for underperforming terminals in our Crude Oil Logistics segment and an impairment of $0.1 million was recorded for underperforming terminals in our Liquids Logistics segment. Also, during the year ended March 31, 2023, we recorded an impairment of the operating lease right-of-use asset of $0.1 million related to an office lease in our Crude Oil Logistics segment and a $0.3 million loss related to the termination of leases in our Crude Oil Logistics segment.

At March 31, 2025, the weighted-average remaining lease term and weighted-average discount rate for all our operating leases was 5.54 years and 8.62%, respectively. At March 31, 2024, the weighted-average remaining lease term and weighted-average discount rate for all our operating leases was 5.70 years and 9.39%, respectively.

The following table summarizes the components of our lease cost for the periods indicated:
Year Ended March 31,
2025 2024 2023
(in thousands)
Operating lease cost (1) $ 41,014  $ 44,683  $ 48,720 
Variable lease cost (1) 37,123  31,118  29,742 
Short-term lease cost (1) 1,029  931  341 
Finance lease cost
Amortization of right-of-use asset (2) 5  5  3 
Interest on lease obligation (3) 9  12  9 
Total lease cost $ 79,180  $ 76,749  $ 78,815 
(1)    Included in operating expenses in our consolidated statements of operations.
(2)    Included in depreciation and amortization expense in our consolidated statements of operations.
(3)    Included in interest expense in our consolidated statement of operations.

Amounts in the table above do not include lease costs related to our refined products and biodiesel businesses, as these amounts have been classified within discontinued operations within our consolidated statements of operations (see Note 18).

The following table summarizes maturities of our lease obligations at March 31, 2025 (in thousands):
Operating Finance
Year Ending March 31, Leases Lease (1)
2026 $ 35,706  $ 28 
2027 30,296  28 
2028 27,241  9 
2029 18,400  — 
2030 9,416  — 
Thereafter 21,707  — 
Total lease payments 142,766  65 
Less imputed interest (29,615) (9)
Total lease obligations $ 113,151  $ 56 
(1)    At March 31, 2025, the short-term finance lease obligation of less than $0.1 million is included in accrued expenses and other payables and the long-term finance lease obligation of $0.1 million is included in other noncurrent liabilities in our consolidated balance sheet.

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NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Amounts in the table above do not include maturities of lease obligations related to liabilities classified as either held for sale or discontinued operations within our March 31, 2025 and 2024 consolidated balance sheets (see Note 18).

The following table summarizes supplemental cash flow information related to our leases for the periods indicated:
Year Ended March 31,
2025 2024 2023
(in thousands)
Supplemental Cash Flow Information
Cash paid for amounts included in the measurement of lease obligations
Operating cash outflows from operating leases $ 41,541  $ 44,781  $ 48,346 
Operating cash outflows from finance lease $ 9  $ 12  $ 9 
Financing cash outflows from finance lease $ 19  $ 16  $ 10 
Right-of-use assets obtained in exchange for lease obligations
Operating leases $ 51,060  $ 53,338  $ 32,984 
Finance lease $ —  $ —  $ 102 

Amounts in the table above do not include operating cash outflows from operating leases or right-of-use assets for operating leases, related to our refined products and biodiesel businesses, as these amounts have been classified within discontinued operations within our consolidated statements of operations (see Note 18).

Lessor Accounting and Subleases

Our lessor arrangements include storage and railcar contracts, of which certain agreements contain renewal options for periods of between one year and five years. We determine if an agreement contains a lease at the inception of the arrangement. If an arrangement is determined to contain a lease, we classify the lease as operating, sales-type or direct financing. Lessor accounting under ASC 842 is substantially unchanged and all of our leases will continue to be classified as operating leases. We also, from time to time, sublease certain of our storage capacity and railcars to third-parties. Fixed rental revenue is recognized on a straight-line basis over the lease term. During the years ended March 31, 2025, 2024 and 2023, fixed rental revenue was $15.0 million, $17.8 million and $13.9 million, which includes $3.4 million, $6.2 million and $3.8 million of sublease revenue, respectively.

The following table summarizes future minimum lease payments to be received under various noncancelable operating lease agreements at March 31, 2025 (in thousands):
Year Ending March 31,
2026 $ 10,747 
2027 9,147 
2028 6,073 
2029 1,337 
2030 1,062 
Thereafter 1,805 
Total $ 30,171 

Note 16—Allowance for Current Expected Credit Losses

ASU 2016-13 requires that an allowance for expected credit losses be recognized for certain financial assets that reflects the current expected credit loss over the financial asset’s contractual life. The valuation allowance considers the risk of loss, even if remote, and considers past events, current conditions and reasonable and supportable forecasts.

We are exposed to credit losses primarily through the sale of products and services and notes receivable from third-parties. A counterparty’s ability to pay is assessed through a credit process that considers the payment terms, the counterparty’s established credit rating or our assessment of the counterparty’s credit worthiness and other risks. We can require prepayment or collateral to mitigate credit risks.

We group our financial assets into pools of counterparties with similar risk characteristics for the purpose of determining the allowance for expected credit losses. Each reporting period, we assess whether a significant change in the risk of expected credit loss has occurred.
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NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Among the quantitative and qualitative factors considered in calculating our allowance for expected credit losses are historical financial data, including write-offs and allowances, current conditions, industry risk and current credit ratings. Financial assets will be written off in whole, or in part, when practical recovery efforts have been exhausted and no reasonable expectation of recovery exists. Subsequent recoveries of amounts previously written off are recorded as an increase to the allowance for expected credit losses. We manage receivable pools using past due balances as a key credit quality indicator.

The following table summarizes changes in our allowance for expected credit losses for the periods indicated:
Accounts Receivable Notes Receivable and Other
  (in thousands)
Allowance for expected credit losses at March 31, 2022 $ 2,372  $ 458 
Change in provision for expected credit losses (213) (410)
Write-offs charged against the provision (687) — 
Allowance for expected credit losses at March 31, 2023 1,472  48 
Change in provision for expected credit losses 463  3 
Write-offs charged against the provision (489) — 
Allowance for expected credit losses at March 31, 2024 1,446  51 
Change in provision for expected credit losses 2,514  (18)
Dispositions (see Note 17) (146) — 
Assets held for sale (see Note 18) (44) — 
Write-offs charged against the provision (81) — 
Allowance for expected credit losses at March 31, 2025 $ 3,689  $ 33 

Amounts in the table above do not include allowance for expected credit losses related to assets classified as either held for sale or discontinued operations within our March 31, 2025 and 2024 consolidated balance sheets (see Note 18).

Note 17—Other Matters

Dispute Settlement

During the three months ended December 31, 2022, we recorded other income of $29.5 million to settle a dispute associated with commercial activities not occurring in the current reporting periods. We received payment on December 29, 2022. This amount is recorded within other income, net in our consolidated statement of operations for the year ended March 31, 2023.

Third-party Loan Receivable

As previously disclosed, we had an outstanding loan receivable, including accrued interest, associated with our interest in a facility that was utilized by a third-party. Due to the bankruptcy of the third-party, we wrote down the remaining outstanding balance to what we expected to collect as an unsecured claim. At March 31, 2022, the outstanding balance of our unsecured claim was $0.6 million, net of an allowance for an expected credit loss, which was recorded within prepaid expenses and other current assets in our consolidated balance sheet. During the three months ended June 30, 2022, we received $1.0 million to settle our unsecured claim and we reversed the allowance for the expected credit loss.

Acquisition and Disposition of Certain Saltwater Disposal Assets

On June 21, 2023, we sold certain saltwater disposal assets in the Eagle Ford Basin to a third-party for total consideration of $3.0 million, of which $0.05 million was in cash and $2.95 million was a loan receivable. The buyer also assumed certain asset retirement obligations associated with the saltwater disposal assets. Interest on the loan receivable is based on the prime rate and is due monthly beginning on August 1, 2023. The loan receivable matures on December 31, 2025. We recorded a loss of $5.4 million within loss on disposal or impairment of assets, net in our consolidated statement of operations for the year ended March 31, 2024.

On March 6, 2024, we acquired a 51% voting interest in these previously sold saltwater disposal assets, which we are accounting for as an acquisition of assets. Total consideration for this acquisition was $3.0 million, which included the termination of a loan receivable (discussed above), and was allocated to property, plant and equipment, asset retirement obligation and noncontrolling interest.
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NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)


Acquisition of Airplanes

As discussed in Note 12, during the year ended March 31, 2025, we created a new aviation entity whereby we own a 90% interest and a member of our management owns a 10% interest. The aviation entity is considered a VIE (see Note 2). During the three months ended June 30, 2024, the aviation entity purchased an airplane for total consideration of $8.1 million, of which $1.7 million was paid in cash and $6.4 million was a note payable (see Note 7). We also executed a guarantee for the benefit of the lender for the outstanding loan.

As discussed in Note 12, during the year ended March 31, 2025, we created a new aviation entity whereby we own a 90% interest and a member of our management owns a 10% interest. The aviation entity is considered a VIE (see Note 2). During the three months ended December 31, 2024, the aviation entity purchased an airplane for total consideration of $8.1 million, of which $1.7 million was paid in cash and $6.4 million was a note payable (see Note 7). We also executed a guarantee for the benefit of the lender for the outstanding loan.

As part of these transactions, the noncontrolling interest holders have an option to require that we purchase their interest in the aviation entities. Due to these put options, activity for the noncontrolling interest holders has been recorded as redeemable noncontrolling interest in our March 31, 2025 consolidated balance sheet (see Note 2).

Purchase and Sale of Marketable Equity Securities

On March 26, 2025, we purchased 2,200,000 shares of Prairie Operating Co. (“Prairie”) for $9.9 million. From March 27, 2025 to March 31, 2025, we sold 731,663 of these shares for $4.1 million and recognized a gain of $0.8 million within other income, net in our consolidated statement of operations. At March 31, 2025, we own 1,468,337 shares of Prairie with a fair value of $7.9 million which is recorded within prepaid expenses and other current assets in our consolidated balance sheet. During the year ended March 31, 2025, we recorded unrealized gains on marketable equity securities of $1.2 million within other income, net in our consolidated statement of operations. From April 1, 2025 to May 29, 2025, we sold 738,437 of these shares for $3.3 million and recognized a loss of $0.1 million.

The fair value estimate was developed based on publicly traded quotes and would be classified as Level 1 in the fair value hierarchy.

Dispositions

Water Solutions

Sale of Certain Saltwater Disposal Assets

On March 31, 2023, we sold certain saltwater disposal assets in the Midland Basin to two third-parties for total consideration of $13.6 million, of which $5.0 million was in cash and $8.6 million was a loan receivable. The buyer also assumed certain asset retirement obligations and contingent consideration liabilities associated with the saltwater disposal assets. Interest on the loan receivable is based on the prime rate and is due monthly beginning on September 1, 2023. The loan receivable matures on April 1, 2026. We recorded a loss of $18.8 million within loss on disposal or impairment of assets, net in our consolidated statement of operations for the year ended March 31, 2023.

On July 25, 2023, we entered into an agreement in which we terminated a minimum volume water disposal contract and sold certain saltwater disposal assets and intangible assets in the Pinedale Anticline Basin to a third-party for total consideration of $8.7 million in cash. The buyer also assumed certain asset retirement obligations associated with the saltwater disposal assets. For this transaction, the consideration was allocated between the termination of the water disposal contract and the sale of assets based on their relative fair values. The terminated contract included a minimum volume commitment through December 31, 2025. Approximately $7.8 million of the total consideration was allocated to the termination of the water disposal contract and was recognized as revenue, and the remaining $0.9 million was allocated to the sale of assets. We recorded a loss of $21.2 million on the sale within loss on disposal or impairment of assets, net in our consolidated statement of operations for the year ended March 31, 2024.

On December 8, 2023, we sold certain saltwater disposal assets and intangible assets in the Delaware Basin to a third-party for total consideration of $12.0 million in cash. The buyer also assumed certain asset retirement obligations associated with the saltwater disposal assets.
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NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

We recorded a loss of $1.3 million on the sale within loss on disposal or impairment of assets, net in our consolidated statement of operation for the year ended March 31, 2024.

On April 15, 2024, we sold certain saltwater disposal assets and intangible assets in the Delaware Basin to a third-party for total consideration of $4.2 million in cash. The buyer also assumed certain asset retirement obligations associated with the saltwater disposal assets. See Note 18 for a summary of assets and liabilities held for sale at March 31, 2024. As discussed below, we recorded a loss of $1.6 million to write down these assets to fair value less cost to sell within loss on disposal or impairment of assets, net in our consolidated statement of operations for the year ended March 31, 2024. We also recorded a gain of $0.1 million on the sale within loss on disposal or impairment of assets, net in our consolidated statement of operations for the year ended March 31, 2025.

On August 1, 2024, we retained a 51% voting interest and sold a minority interest in certain saltwater disposal assets in the Eagle Ford Basin to a third-party for total consideration of $1.5 million, of which $0.025 million was in cash and $1.475 million was a loan receivable. The loan receivable matures on September 30, 2025 with quarterly principal payments starting on December 31, 2024. The disposition of this interest was accounted for as an equity transaction, no gain or loss was recorded and the carrying value of the noncontrolling interest was adjusted to reflect the change in ownership interest of the subsidiary.

Sale of Certain Freshwater Water Solutions Facilities

On April 5, 2024, we sold approximately 122,250 acres of real estate on two ranches located in Eddy and Lea Counties, New Mexico and certain intangible assets to a third-party for total consideration of $68.5 million in cash, including working capital. Our two ranches include fee, state and federal agricultural leased property, certain water rights, freshwater wells, and related freshwater infrastructure. See Note 18 for a summary of assets and liabilities held for sale at March 31, 2024. We recorded a gain of $2.6 million on the sale within loss on disposal or impairment of assets, net in our consolidated statement of operations for the year ended March 31, 2025.

Sale of Certain Real Estate

On May 14, 2024, we sold approximately 1,400 acres of real estate located in Lea County, New Mexico to a third-party for total consideration of $8.0 million in cash. See Note 18 for a summary of assets and liabilities held for sale at March 31, 2024. We recorded a gain of $7.3 million on the sale within loss on disposal or impairment of assets, net in our consolidated statement of operations for the year ended March 31, 2025.

As these sale transactions did not represent a strategic shift that will have a major effect on our operations or financial results, operations related to these portions of our Water Solutions segment have not been classified as discontinued operations.

Liquids Logistics

Fiscal Year 2024 Transactions

On July 24, 2023, we sold two natural gas liquids terminals in the Pacific Northwest to a third-party for total consideration of $16.0 million in cash. Also, as part of this transaction, we wrote off goodwill allocated to this transaction and terminated an existing lease. We recorded a gain of $6.8 million within loss on disposal or impairment of assets, net in our consolidated statement of operations for the year ended March 31, 2024.

On November 15, 2023, we sold a certain other natural gas liquids terminal to a third-party for total consideration of $2.3 million in cash. The buyer also assumed certain asset retirement obligations associated with the natural gas liquids terminal. As part of this transaction, we also terminated an existing lease. We recorded a gain of $1.6 million on the sale within loss on disposal or impairment of assets, net in our consolidated statement of operations for the year ended March 31, 2024.

Fiscal Year 2025 Transactions

On March 31, 2025, we sold our natural gas liquids terminal in Green Bay, Wisconsin to a third-party for total consideration of $3.8 million. We recorded a gain of $2.0 million on the sale within loss on disposal or impairment of assets, net in our consolidated statement of operations for the year ended March 31, 2025. In addition, the buyer purchased inventory for $0.2 million.

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NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Exiting a Business

During the three months ended December 31, 2024, we started the process of winding down our biodiesel business by allowing our storage lease and certain railcar leases to expire and closing out the open purchase and sale contracts. Other than the railcar and storage leases, this business did not have any other long-lived assets. We liquidated all of our inventory and renewable identification numbers by March 31, 2025.

Crude Oil Logistics

Sale of Certain Railcars

During the three months ended March 31, 2025, we sold 193 railcars for total consideration of $14.4 million. We recognized a gain of $5.5 million within loss on disposal or impairment of assets, net in our consolidated statement of operations for the year ended March 31, 2025. As of March 31, 2025, we entered into definitive agreements with third-parties to sell an additional 135 railcars, which have been classified as held for sale. See Note 18 for a summary of assets held for sale at March 31, 2025.

From April 1, 2025 to May 29, 2025, we sold 77 railcars of the 135 railcars discussed above for total consideration of $3.4 million in cash and we expect to record a gain of $1.4 million.

Sale of Marine Assets

On March 30, 2023, we sold our marine assets to two third-parties for total consideration of $111.7 million in cash less estimated expenses of approximately $7.5 million. We recorded a loss of $8.0 million within loss on disposal or impairment of assets, net in our consolidated statement of operations for the year ended March 31, 2023.

As these sale transactions did not represent a strategic shift that will have a major effect on our operations or financial results, operations related to these portions of our Crude Oil Logistics segment have not been classified as discontinued operations.

Note 18—Assets and Liabilities Held for Sale and Discontinued Operations

As discussed in Note 1, at March 31, 2025, we met the criteria for classifying the assets and liabilities of our refined products business and biodiesel business as either held for sale or discontinued operations and the operations of these businesses as discontinued. Also, as discussed in Note 1, Note 17 and Note 20, at March 31, 2025, we met the criteria for classifying a portion of our Liquids Logistics segment, certain railcars and certain investments in unconsolidated entities and related assets as held for sale. Upon classification as held for sale, we recorded a loss of $8.0 million to write down certain investments in unconsolidated entities and related assets to fair value less cost to sell within loss on disposal or impairment of assets, net in our consolidated statement of operations for the year ended March 31, 2025, and a valuation allowance included in assets held for sale in our March 31, 2025 consolidated balance sheet.

As discussed in Note 17, at March 31, 2024, we met the criteria for classifying the assets and liabilities of certain freshwater water solutions facilities, certain saltwater disposal assets and certain real estate as held for sale. Upon classification as held for sale, we recorded a loss of $1.6 million to write down certain saltwater disposal assets to fair value less cost to sell within loss on disposal or impairment of assets, net in our consolidated statement of operations for the year ended March 31, 2024, and a valuation allowance included in assets held for sale in our March 31, 2024 consolidated balance sheet.

F-55
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

The following tables summarize the major classes of assets and liabilities classified as held for sale by segment at the dates indicated:
March 31, 2025
Water Solutions Crude Oil Logistics Liquids Logistics Total
(in thousands)
Assets Held for Sale
Cash and cash equivalents $ —  $ —  $ 114  $ 114 
Accounts receivable, net —  —  21,204  21,204 
Inventories —  —  20,715  20,715 
Prepaid expenses and other current assets —  —  5,098  5,098 
Property, plant and equipment, net 412  1,350  51,349  53,111 
Goodwill —  —  17,051  17,051 
Intangible assets, net 29,557  —  9,718  39,275 
Investments in unconsolidated entities 18,221  —  51  18,272 
Operating lease right-of-use assets —  —  3,962  3,962 
Other noncurrent assets —  1,237  3,142  4,379 
Valuation allowance on assets held for sale (7,974) —  —  (7,974)
Total assets held for sale $ 40,216  $ 2,587  $ 132,404  $ 175,207 
Liabilities Held for Sale
Accounts payable $ —  $ —  $ 32,072  $ 32,072 
Accrued expenses and other payables —  —  4,650  4,650 
Advance payments received from customers —  —  259  259 
Operating lease obligations-current —  —  1,705  1,705 
Operating lease obligations-noncurrent —  —  2,233  2,233 
Other noncurrent liabilities 94  —  1,090  1,184 
Total liabilities held for sale $ 94  $ —  $ 42,009  $ 42,103 

March 31, 2024
Water Solutions Liquids Logistics Total
(in thousands)
Assets Held for Sale
Accounts receivable, net $ 565  $ —  $ 565 
Inventories —  5,436  5,436 
Prepaid expenses and other current assets 13  437  450 
Property, plant and equipment, net (1) 14,354  1,261  15,615 
Goodwill (1) 4,108  17,051  21,159 
Intangible assets, net (1) 49,179  7,264  56,443 
Other noncurrent assets (1) —  610  610 
Valuation allowance on assets held for sale (1,622) —  (1,622)
Total assets held for sale $ 66,597  $ 32,059  $ 98,656 
Liabilities Held for Sale
Accounts payable $ 63  $ —  $ 63 
Accrued expenses and other payables 31  1,450  1,481 
Advance payments received from customers 164  —  164 
Other noncurrent liabilities 356  —  356 
Total liabilities held for sale $ 614  $ 1,450  $ 2,064 
F-56
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

(1)    Amounts for the Liquids Logistics segment are included in noncurrent assets held for sale in our March 31, 2024 consolidated balance sheet.

The following table summarizes the major classes of assets and liabilities classified as discontinued operations in our Liquids Logistics segment at the dates indicated:
March 31,
2025 2024
(in thousands)
Assets of Discontinued Operations
Accounts receivable, net $ 67,350  $ 97,065 
Inventories —  18,873 
Prepaid expenses and other current assets 82  55,181 
Operating lease right-of-use assets —  1,719 
Total assets of discontinued operations $ 67,432  $ 172,838 
Liabilities of Discontinued Operations
Accounts payable $ 48,454  $ 68,773 
Accrued expenses and other payables 4,295  39,705 
Operating lease obligations-current —  1,703 
Total liabilities of discontinued operations $ 52,749  $ 110,181 

The following table summarizes the results of operations from discontinued operations related to our refined products and biodiesel businesses for the periods indicated:
Year Ended March 31,
2025 2024 2023
(in thousands)
Revenues $ 2,253,294  $ 2,803,264  $ 3,015,884 
Cost of sales 2,267,498  2,781,360  2,960,610 
Operating expenses 4,865  5,580  9,136 
General and administrative expenses 197  256  335 
Depreciation and amortization 223  409  513 
Loss on disposal or impairment of assets, net 1,995  —  112 
Operating (loss) income from discontinued operations (21,484) 15,659  45,178 
Interest expense (225) (119) (7)
Other (expense) income, net (7) 11  (1,662)
(Loss) income from discontinued operations before taxes (21,716) 15,551  43,509 
Income tax expense (110) (947) (52)
(Loss) income from discontinued operations, net of tax $ (21,826) $ 14,604  $ 43,457 

Note 19—Quarterly Financial Data (Unaudited)

The following tables summarize our unaudited quarterly financial data. The computation of net income (loss) per common unit is done separately by quarter and year. The total of net income (loss) per common unit of the individual quarters may not equal net income (loss) per common unit for the year, due primarily to the income allocation between the general partner and limited partners and variations in the weighted average units outstanding used in computing such amounts.

Our Liquids segment is subject to seasonal fluctuations, as demand for propane and butane is typically higher during the winter months. Our operating revenues from our other segments are less weather sensitive.
F-57
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Quarter Ended Year Ended
June 30,
2024		 September 30,
2024		 December 31,
2024		 March 31,
2025		 March 31,
2025
(in thousands, except unit and per unit amounts)
Total revenues $ 759,234  $ 756,472  $ 982,414  $ 971,066  $ 3,469,186 
Total cost of sales $ 539,305  $ 522,915  $ 735,421  $ 709,436  $ 2,507,077 
Income from continuing operations $ 17,603  $ 7,493  $ 23,740  $ 16,153  $ 64,989 
Net income $ 10,475  $ 3,391  $ 14,575  $ 14,722  $ 43,163 
Net income attributable to NGL Energy Partners LP $ 9,683  $ 2,454  $ 13,507  $ 13,724  $ 39,368 
Basic and diluted loss per common unit
Loss from continuing operations $ (0.09) $ (0.18) $ (0.05) $ (0.11) $ (0.43)
Net loss $ (0.14) $ (0.21) $ (0.12) $ (0.12) $ (0.60)
Basic weighted average common units outstanding 132,512,766  132,274,669  132,012,766  132,012,766  132,204,283 
Diluted weighted average common units outstanding 132,512,766  132,274,669  132,012,766  132,012,766  132,204,283 
Quarter Ended Year Ended
June 30,
2023		 September 30,
2023		 December 31,
2023		 March 31,
2024		 March 31,
2024
(in thousands, except unit and per unit amounts)
Total revenues $ 911,415  $ 1,007,546  $ 1,195,184  $ 1,039,162  $ 4,153,307 
Total cost of sales $ 688,253  $ 751,990  $ 933,051  $ 812,140  $ 3,185,434 
Income (loss) from continuing operations $ 8,243  $ 22,876  $ 45,413  $ (234,260) $ (157,728)
Net income (loss) $ 19,563  $ 28,285  $ 45,767  $ (236,739) $ (143,124)
Net income (loss) attributable to NGL Energy Partners LP $ 19,301  $ 28,028  $ 45,682  $ (236,766) $ (143,755)
Basic and diluted (loss) income per common unit
(Loss) income from continuing operations $ (0.20) $ (0.09) $ 0.07  $ (2.04) $ (2.25)
Net (loss) income $ (0.11) $ (0.05) $ 0.08  $ (2.05) $ (2.14)
Basic weighted average common units outstanding 131,927,343  131,927,343  132,220,055  132,512,766  132,146,477 
Diluted weighted average common units outstanding 131,927,343  131,927,343  132,498,734  132,512,766  132,146,477 

Year Ended March 31, 2025

•During the fourth quarter of fiscal year 2025, we recorded a goodwill impairment charge related to the Liquids Logistics segment (see Note 5); and
•During the year ended March 31, 2025, we sold certain assets and businesses (see Note 1 and Note 17).

Year Ended March 31, 2024

•During the fourth quarter of fiscal year 2024, we recorded a goodwill impairment charge related to the Liquids Logistics segment (see Note 5);
•During the fourth quarter of fiscal year 2024, we closed a debt refinancing transaction consisting of a private offering of the 2029 Senior Secured Notes and 2032 Senior Secured Notes and also entered into the Term Loan B (see Note 7);
•As of March 31, 2024, we accrued amounts owned in the LCT matter (see Note 8);
•During the year ended March 31, 2024, we sold certain assets and businesses (see Note 17); and
•During the year ended March 31, 2024, we repurchased a portion of our 2025 Notes and redeemed the remaining outstanding 2025 Notes, 2026 Notes and 2026 Senior Secured Notes and recorded a net loss on the early extinguishment of these notes (see Note 7).

F-58
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)

Note 20—Subsequent Events

Sale of Certain Investments in Unconsolidated Entities and Related Assets

On April 14, 2025, we sold certain investments in unconsolidated entities, property, plant and equipment and intangible assets to a third-party for total consideration of $40.0 million in cash, plus working capital. We have classified the assets and liabilities as held for sale as of March 31, 2025 (see Note 18 for a summary of assets and liabilities held for sale).

Sale of Refined Products Business, Certain Natural Gas Liquids Terminals and Most of Our Wholesale Propane Business

On April 30, 2025, we completed the sales of our refined products business, most of our wholesale propane business and 17 natural gas liquids terminals for total consideration of approximately $154.9 million in cash, subject to changes from finalizing the working capital balances, and we recorded a gain on each transaction totaling a combined $57.4 million.

Sale of Certain Railcars

On May 16, 2025, we sold 68 railcars to a third-party for total consideration of $2.1 million and we expect to record a gain of $1.4 million.

Repurchase of Class D Preferred Units

On May 19, 2025, we repurchased 20,000 Class D Preferred Units on the open market for $28.2 million.
F-59
EX-4.15 2 ex41503312510-k.htm EX-4.15 Document

Exhibit 4.15

SUPPLEMENTAL INDENTURE
8.125% Senior Secured Notes due 2029
8.375% Senior Secured Notes due 2032

SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of April 29, 2024, among NGL Energy Operating LLC, a Delaware limited liability company (the "Operating LLC"), NGL Energy Finance Corp., a Delaware corporation (together with Operating LLC, the “Issuers”), the Guarantors (as defined in the Indenture referred to below) signatory hereto and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). Capitalized terms used but not defined herein have the respective meanings set forth in the Indenture.
W I T N E S S E T H
WHEREAS, the Issuers previously issued 8.125% Senior Secured Notes due 2029 and 8.375% Senior Secured Notes due 2032 (together, the “Notes”) pursuant to the Indenture, dated as of February 2, 2024 (the “Indenture”), among the Issuers, the Guarantors party thereto and the Trustee;

WHEREAS, Section 9.01 of the Indenture provides in part that the Indenture may be amended or supplemented without the consent of any Holder of Notes, including, without limitation, to (a) conform the text of the Indenture to any provision of the “Description of the notes” section of the Offering Memorandum, dated January 25, 2024, to the extent that such provision in that “Description of the notes” was intended to be a verbatim recitation of a provision of the Indenture (as evidenced by an Officers’ Certificate), or (b) cure any ambiguity, defect, mistake or inconsistency;

WHEREAS, pursuant to Section 9.01 of the Indenture the Issuers have requested the Trustee to join the Issuers and the Guarantors in the execution and delivery of this Supplemental Indenture in order to amend the Indenture as permitted by Section 9.01 of the Indenture; and

WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Issuers, the Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of Notes of each series as follows:

I.AGREEMENT TO THE INDENTURE. Effective and operative on and after the date hereof, the Indenture is hereby amended as set forth in Exhibit A attached hereto.

II.NEW YORK LAW TO GOVERN. THE LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE

III.COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of signed copies of this Supplemental Indenture by facsimile transmission or emailed portable document format (pdf) shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and such copies may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or portable document format (pdf) shall be deemed to be their original signatures for all purposes.

IV.EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof.

V.THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Issuers and the Guarantors.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written.

Dated: April 29, 2024

NGL ENERGY OPERATING LLC


By:    /s/ Brad Cooper
Name:    Brad Cooper
Title:    Executive Vice President and Chief Financial Officer


NGL ENERGY FINANCE CORP.


By:    /s/ Brad Cooper
Name:    Brad Cooper
Title:    Executive Vice President and Chief Financial Officer
[Signature Page to Supplemental Indenture]

GUARANTORS:

ANTICLINE DISPOSAL, LLC
AWR DISPOSAL, LLC
CENTENNIAL ENERGY, LLC
CENTENNIAL GAS LIQUIDS ULC
CHOYA OPERATING, LLC
DISPOSALS OPERATING, LLC
GGCOF HEP BLOCKER, LLC
GGCOF HEP BLOCKER II, LLC
GRAND MESA PIPELINE, LLC
GSR NORTHEAST TERMINALS LLC
HILLSTONE ENVIRONMENTAL PARTNERS, LLC
NGL CRUDE CUSHING, LLC
NGL CRUDE LOGISTICS, LLC
NGL CRUDE TERMINALS, LLC
NGL CRUDE TRANSPORTATION, LLC
NGL DELAWARE BASIN HOLDINGS, LLC
NGL ENERGY GP LLC
NGL LIQUIDS, LLC
NGL MARINE, LLC
NGL RECYCLING SERVICES, LLC
NGL SHARED SERVICES HOLDINGS, INC.
NGL SHARED SERVICES, LLC
NGL SUPPLY TERMINAL COMPANY, LLC
NGL SUPPLY WHOLESALE, LLC
NGL WATER PIPELINES, LLC
NGL WATER SOLUTIONS, LLC
NGL WATER SOLUTIONS DJ, LLC
NGL WATER SOLUTIONS EAGLE FORD, LLC
NGL WATER SOLUTIONS - ORLA SWD, LLC
NGL WATER SOLUTIONS PERMIAN, LLC
NGL WATER SOLUTIONS PRODUCT SERVICES, LLC


By:    /s/ Brad Cooper
Name:    Brad Cooper
Title:    Executive Vice President and Chief Financial Officer



NGL SHARED SERVICES HOLDINGS. INC.


By:    /s/ Brad Cooper
Name:    Brad Cooper
Title:    Executive Vice President and Chief Financial Officer
[Signature Page to Supplemental Indenture]



U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee Please see attached.


By:    /s/ Michael K. Herberger
Name:    Michael K. Herberger
Title:    Vice President

[Signature Page to Supplemental Indenture]

EXHIBIT A

AMENDED INDENTURE

[Signature Page to Supplemental Indenture]






NGL ENERGY OPERATING LLC,

NGL ENERGY FINANCE CORP.

AND EACH OF THE GUARANTORS PARTY HERETO

8.125% SENIOR SECURED NOTES DUE 2029

8.375% SENIOR SECURED NOTES DUE 2032



INDENTURE

Dated as of February 2, 2024


U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION

as Trustee and Collateral Agent
            





TABLE OF CONTENTS

Page
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01 Definitions 1
Section 1.02 Other Definitions 37
Section 1.03 Rules of Construction 37
ARTICLE II
THE NOTES
Section 2.01
Form and Dating
 38
Section 2.02
Execution and Authentication
 39
Section 2.03
Registrar and Paying Agent
 39
Section 2.04
Paying Agent to Hold Money in Trust
 40
Section 2.05
Holder Lists
 40
Section 2.06
Transfer and Exchange
 40
Section 2.07 Replacement Notes 49
Section 2.08
Outstanding Notes
 50
Section 2.09
Treasury Notes
 50
Section 2.10
Temporary Notes
 50
Section 2.11
Cancellation
 50
Section 2.12
Defaulted Interest
 50
Section 2.13
CUSIP and ISIN Numbers
 51
ARTICLE III
REDEMPTION
Section 3.01
Notices to Trustee
 51
Section 3.02
Selection of Notes to be Redeemed
 51
Section 3.03
Notice of Redemption
 52
Section 3.04
Effect of Notice of Redemption
 53
Section 3.05
Deposit of Redemption Price
 53
Section 3.06 Notes Redeemed in Par 53
Section 3.07
Optional Redemption of 2029 Notes
 53
Section 3.08
Optional Redemption of 2032 Notes
 54
ARTICLE IV
COVENANTS
Section 4.01
Payment of Notes
 55
Section 4.02
Maintenance of Office or Agency
 55
Section 4.03
Reports
 56
Section 4.04
Compliance Certificate
 57
Section 4.05
Taxes
 57
Section 4.06
Stay, Execution and Usury Laws
 58
Section 4.07
Restricted Payments
 58
Section 4.08
Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries
 61
Section 4.09
Incurrence of Indebtedness and Issuance of Preferred Stock
 63
Section 4.10
Asset Sales
 66
Section 4.11
Transactions with Affiliates
 72
Section 4.12
Liens
 74
i

Section 4.13
Business Activities of Finance Corp
 74
Section 4.14
Offer to Repurchase Upon Change of Control
 74
Section 4.15
Additional Note Guarantees
 76
Section 4.16
Designation of Restricted and Unrestricted Subsidiaries
 77
Section 4.17
Covenant Suspension
 77
Section 4.18
Layering
 78
Section 4.19
Limitation on activities of the Company
 79
Section 4.20
Limited Condition Transactions
 79
ARTICLE V
SUCCESSORS
Section 5.01
Merger, Consolidation, or Sale of Assets
 80
Section 5.02
Successor Entity Substituted
 83
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01
Events of Default
 83
Section 6.02
Acceleration
 85
Section 6.03
Other Remedies
 86
Section 6.04
Waiver of Past Defaults
 86
Section 6.05
Control by Majority
 86
Section 6.06
Limitation on Suits
 86
Section 6.07
Rights of Holders of Notes to Receive Payment
 87
Section 6.08
Collection Suit by Trustee
 87
Section 6.09
Trustee May File Proofs of Claim
 87
Section 6.10
Priorities
 87
Section 6.11
Undertaking for Costs
 88
ARTICLE VII
TRUSTEE
Section 7.01
Duties of Trustee
 88
Section 7.02
Rights of Trustee
 89
Section 7.03
Individual Rights of Trustee
 90
Section 7.04
Trustee's Disclaimer
 90
Section 7.05
Notice of Defaults
 90
Section 7.06
[Reserved]
 90
Section 7.07
Compensation and Indemnity
 90
Section 7.08
Replacement of Trustee
 91
Section 7.09
Successor Trustee by Merger, etc.
 92
Section 7.10
Eligibility; Disqualification
 92
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01
Option to Effect Legal Defeasance or Covenant Defeasance
 92
Section 8.02
Legal Defeasance and Discharge
 92
Section 8.03
Covenant Defeasance
 93
Section 8.04
Conditions to Legal or Covenant Defeasance
 93
Section 8.05
Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions
 94
Section 8.06
Repayment to Company
 95
Section 8.07
Reinstatement
 95
ii

ARTICLE IX
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01
Without Consent of Holders of Notes
 95
Section 9.02
With Consent of Holders of Notes
 97
Section 9.03
[Reserved]
 99
Section 9.04
Revocation and Effect of Consents
 99
Section 9.05
Notation on or Exchange of Notes
 99
Section 9.06
Designation of Unrestricted Subsidiaries
 99
ARTICLE X
NOTE GUARANTEES
Section 10.01
Guarantee
 99
Section 10.02
Limitation on Guarantor Liability
 100
Section 10.03
Execution and Delivery of Note Guarantee
 101
Section 10.04
Guarantors May Consolidate, etc., on Certain Terms
 101
Section 10.05
Releases
 102
ARTICLE XI
SATISFACTION AND DISCHARGE
Section 11.01
Satisfaction and Discharge
 102
Section 11.02
Application of Trust Money
 103
ARTICLE XII
MISCELLANEOUS
Section 12.01 Concerning the Trust Indenture Act 104
Section 12.02 Notices 104
Section 12.03 [Reserved] 105
Section 12.04 Certificate and Opinion as to Conditions Precedent 105
Section 12.05 Statements Required in Certificate or Opinion 105
Section 12.06
Rules by Trustee and Agents
 106
Section 12.07 No Personal Liability of Directors, Officers, Employees and Unitholders 106
Section 12.08
Governing Law
 106
Section 12.09
No Adverse Interpretation of Other Agreements
 106
Section 12.10
Successors
 106
Section 12.11
Severability
 106
Section 12.12
Counterpart Originals
 106
Section 12.13
Table of Contents, Headings, etc.
 107
ARTICLE XIII
COLLATERAL
Section 13.01
The Collateral
 107
Section 13.02
Maintenance of Collateral; Further Assurances
 108
Section 13.03
After-Acquired Property
 108
Section 13.04
Amendment of Security Interest
 109
Section 13.05
Real Estate Mortgages and Filings
 109
Section 13.06
Release of Liens on the Collateral
 112
Section 13.07
Authorization of Actions to be Taken by the Trustee or the Collateral Agent Under the Security Documents
 113
Section 13.08
Information Regarding Collateral
 114
Section 13.09
Negative Pledge
 114
iii

Section 13.10
Regarding the Collateral Agent
 115
Section 13.11
Conflicts
 117
EXHIBITS
Exhibit A-1
FORM OF 2029 NOTE
Exhibit A-2
FORM OF 2032 NOTE
Exhibit B
FORM OF CERTIFICATE OF TRANSFER
Exhibit C
FORM OF CERTIFICATE OF EXCHANGE
Exhibit D
FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Exhibit E FORM OF SUPPLEMENTAL INDENTURE
iv


INDENTURE dated as of February 2, 2024 among NGL Energy Operating LLC, a Delaware limited liability company (the “Operating LLC”), NGL Energy Finance Corp., a Delaware corporation (“Finance Corp.” and, together with Operating LLC, the “Issuers”), each a wholly owned subsidiary of NGL Energy Partners LP, a Delaware limited partnership (the “Company”), the Guarantors (as defined herein) and U.S. Bank Trust Company, National Association, as trustee with respect to the 2029 Notes and with respect to the 2032 Notes (in such capacity, the “Trustee”) and as collateral agent with respect to the 2029 Notes and with respect to the 2032 Notes (in such capacity, the “Collateral Agent”).

The Issuers, the Guarantors and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders (as defined herein) of each series of Notes (as defined herein), respectively:

ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01    Definitions.
.
“144A Global Note” means a Global Note substantially in the form of Exhibit A-1, in the case of 2029 Notes, or Exhibit A-2, in the case of 2032 Notes, hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the 2029 Notes or 2032 Notes, as applicable, sold in reliance on Rule 144A.

“2029 Additional Notes” means additional 2029 Notes (other than the 2029 Initial Notes) issued under this Indenture in accordance with Section 2.02 and Section 4.09 hereof, as part of the same series as the 2029 Initial Notes.

“2032 Additional Notes” means additional 2032 Notes (other than the 2032 Initial Notes) issued under this Indenture in accordance with Section 2.02 and Section 4.09 hereof, as part of the same series as the 2032 Initial Notes.

“2029 Initial Notes” means the 2029 Notes issued under this Indenture on the Issue Date.

“2032 Initial Notes” means the 2032 Notes issued under this Indenture on the Issue Date.

“2026 Senior Secured Notes” means the Issuers’ 7.500 senior secured notes due 2026.

“2029 Notes” means the Issuers’ 8.125% Senior Secured Notes due 2029 and includes 2029 Additional Notes, together as a single class.

“2029 Notes Make-Whole Price” with respect to any 2029 Notes to be redeemed, means an amount equal to the greater of:

(1) 100% of the principal amount of such 2029 Notes; and

(2) (a) the redemption price of such Notes at the 2029 Notes Step-Down Date (as defined herein) plus (b) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date (assuming the 2029 Notes matured on the 2029 Notes Step-Down Date) on a quarterly basis (assuming a 360-day year consisting of twelve 30-day months) at the 2029 Notes Treasury Rate plus 50 basis points less (c) interest accrued to, but excluding, the date of redemption;

plus, in the case of both (1) and (2), accrued and unpaid interest on such 2029 Notes to be redeemed, if any, to, but excluding, the redemption date.

“2029 Notes Obligations” means all Obligations under this indenture, the notes and the Note Guarantees with respect to the 2029 Notes.


“2029 Notes Treasury Rate” means, with respect to any redemption date, the yield determined by the Issuers in accordance with the following two paragraphs:

The 2029 Notes Treasury Rate shall be determined by the Issuers after 4:15 p.m., New York City time (or after such time as yields on U.S. government securities are posted daily by the Board of Governors of the Federal Reserve System), on the third business day preceding the redemption date based upon the yield or yields for the most recent day that appear after such time on such day in the most recent statistical release published by the Board of Governors of the Federal Reserve System designated as “Selected Interest Rates (Daily) – H.15” (or any successor designation or publication) (“H.15”) under the caption “U.S. government securities–Treasury constant maturities–Nominal” (or any successor caption or heading) (“H.15 TCM”). In determining the 2029 Notes Treasury Rate, the Issuers shall select, as applicable: (1) the yield for the Treasury constant maturity on H.15 exactly equal to the period from the redemption date to the 2029 Notes Step-Down Date (the “Remaining Life”); or (2) if there is no such Treasury constant maturity on H.15 exactly equal to the Remaining Life, the two yields – one yield corresponding to the Treasury constant maturity on H.15 immediately shorter than and one yield corresponding to the Treasury constant maturity on H.15 immediately longer than the Remaining Life – and shall interpolate to the 2029 Notes Step-Down Date on a straight-line basis (using the actual number of days) using such yields and rounding the result to three decimal places; or (3) if there is no such Treasury constant maturity on H.15 shorter than or longer than the Remaining Life, the yield for the single Treasury constant maturity on H.15 closest to the Remaining Life. For purposes of this paragraph, the applicable Treasury constant maturity or maturities on H.15 shall be deemed to have a maturity date equal to the relevant number of months or years, as applicable, of such Treasury constant maturity from the redemption date.

If on the third business day preceding the redemption date H.15 TCM is no longer published, the Issuers shall calculate the 2029 Notes Treasury Rate based on the rate per annum equal to the quarterly equivalent yield to maturity at 11:00 a.m., New York City time, on the second business day preceding such redemption date of the United States Treasury security maturing on, or with a maturity that is closest to, the 2029 Notes Step-Down Date, as applicable. If there is no United States Treasury security maturing on the 2029 Notes Step-Down Date but there are two or more United States Treasury securities with a maturity date equally distant from the 2029 Notes Step-Down Date, one with a maturity date preceding the 2029 Notes Step-Down Date and one with a maturity date following the 2029 Notes Step-Down Date, the Issuers shall select the United States Treasury security with a maturity date preceding the 2029 Notes Step-Down Date. If there are two or more United States Treasury securities maturing on the 2029 Notes Step-Down Date or two or more United States Treasury securities meeting the criteria of the preceding sentence, the Issuers shall select from among these two or more United States Treasury securities the United States Treasury security that is trading closest to par based upon the average of the bid and asked prices for such United States Treasury securities at 11:00 a.m., New York City time. In determining the 2029 Notes Treasury Rate in accordance with the terms of this paragraph, the quarterly yield to maturity of the applicable United States Treasury security shall be based upon the average of the bid and asked prices (expressed as a percentage of principal amount) at 11:00 a.m., New York City time, of such United States Treasury security, and rounded to three decimal places.

“2032 Notes” means the Issuers’ 8.375% Senior Secured Notes due 2032 and includes 2032 Additional Notes, together as a single class.

“2032 Notes Make-Whole Price” with respect to any 2032 Notes to be redeemed, means an amount equal to the greater of:

(1) 100% of the principal amount of such 2032 Notes; and

(2) (a) the redemption price of such Notes at the 2032 Notes Step-Down Date (as defined herein) plus (b) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date (assuming the 2032 Notes matured on the 2032 Notes Step-Down Date) on a quarterly basis (assuming a 360-day year consisting of twelve 30-day months) at the 2032 Notes Treasury Rate plus 50 basis points less (c) interest accrued to, but excluding, the date of redemption;

plus, in the case of both (1) and (2), accrued and unpaid interest on such 2032 Notes to be redeemed, if any, to, but excluding, the redemption date.
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“2032 Notes Obligations” means all Obligations under this indenture, the notes and the Note Guarantees with respect to the 2032 Notes.

“2032 Notes Treasury Rate” means, with respect to any redemption date, the yield determined by the Issuers in accordance with the following two paragraphs:

The 2032 Notes Treasury Rate shall be determined by the Issuers after 4:15 p.m., New York City time (or after such time as yields on U.S. government securities are posted daily by the Board of Governors of the Federal Reserve System), on the third business day preceding the redemption date based upon the yield or yields for the most recent day that appear after such time on such day in the most recent statistical release published by the Board of Governors of the Federal Reserve System designated as “Selected Interest Rates (Daily) – H.15” (or any successor designation or publication) (“H.15”) under the caption “U.S. government securities–Treasury constant maturities–Nominal” (or any successor caption or heading) (“H.15 TCM”). In determining the 2032 Notes Treasury Rate, the Issuers shall select, as applicable: (1) the yield for the Treasury constant maturity on H.15 exactly equal to the period from the redemption date to the 2032 Notes Step-Down Date (the “Remaining Life”); or (2) if there is no such Treasury constant maturity on H.15 exactly equal to the Remaining Life, the two yields – one yield corresponding to the Treasury constant maturity on H.15 immediately shorter than and one yield corresponding to the Treasury constant maturity on H.15 immediately longer than the Remaining Life – and shall interpolate to the 2032 Notes Step-Down Date on a straight-line basis (using the actual number of days) using such yields and rounding the result to three decimal places; or (3) if there is no such Treasury constant maturity on H.15 shorter than or longer than the Remaining Life, the yield for the single Treasury constant maturity on H.15 closest to the Remaining Life. For purposes of this paragraph, the applicable Treasury constant maturity or maturities on H.15 shall be deemed to have a maturity date equal to the relevant number of months or years, as applicable, of such Treasury constant maturity from the redemption date
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If on the third business day preceding the redemption date H.15 TCM is no longer published, the Issuers shall calculate the 2032 Notes Treasury Rate based on the rate per annum equal to the quarterly equivalent yield to maturity at 11:00 a.m., New York City time, on the second business day preceding such redemption date of the United States Treasury security maturing on, or with a maturity that is closest to, the 2032 Notes Step-Down Date, as applicable. If there is no United States Treasury security maturing on the 2032 Notes Step-Down Date but there are two or more United States Treasury securities with a maturity date equally distant from the 2032 Notes Step-Down Date, one with a maturity date preceding the 2032 Notes Step-Down Date and one with a maturity date following the 2032 Notes Step-Down Date, the Issuers shall select the United States Treasury security with a maturity date preceding the 2032 Notes Step-Down Date. If there are two or more United States Treasury securities maturing on the 2032 Notes Step-Down Date or two or more United States Treasury securities meeting the criteria of the preceding sentence, the Issuers shall select from among these two or more United States Treasury securities the United States Treasury security that is trading closest to par based upon the average of the bid and asked prices for such United States Treasury securities at 11:00 a.m., New York City time. In determining the 2032 Notes Treasury Rate in accordance with the terms of this paragraph, the quarterly yield to maturity of the applicable United States Treasury security shall be based upon the average of the bid and asked prices (expressed as a percentage of principal amount) at 11:00 a.m., New York City time, of such United States Treasury security, and rounded to three decimal places.

“ABL Administrative Agent” means JPMorgan Chase Bank, N.A. in its capacity as the administrative agent under the ABL Credit Agreement, or any successor representative acting in such capacity.

“ABL Collateral Agent” means JPMorgan Chase Bank, N.A. in its capacity as the collateral agent under the ABL Credit Agreement, or any successor representative acting in such capacity.

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“ABL Credit Agreement” means that certain Credit Agreement, dated as of February 4, 2021, by and among Operating LLC, as borrower, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and the several lenders and other agents party thereto, including any notes, guarantees, collateral and security documents, instruments and agreements executed in connection therewith, as amended by that certain First Amendment to Credit Agreement, dated as of November 8, 2021, that certain Second Amendment to Credit Agreement, dated as of April 13, 2022, that certain Third Amendment to Credit Agreement, dated as of February 16, 2023, that certain Fourth Amendment to Credit Agreement, dated as of July 13, 2023, that certain Fifth Amendment to Credit Agreement, dated as of the Issue Date, and as may have been further amended, restated, amended and restated, supplemented or otherwise modified to date, including any agreement exchanging, extending the maturity of, refinancing, renewing, replacing, substituting or otherwise restructuring (including increasing the amount of available borrowings thereunder, changing the maturity or adding or removing Subsidiaries as borrowers or guarantors thereunder and whether or not with the same agents, lenders, investors or holders) all or any portion of the Indebtedness under such agreement or facility or any successor or replacement agreement or facility; provided that, after giving effect to any such amendment, supplement or modification, the so amended, supplemented or modified ABL Credit Agreement shall constitute an asset based revolving facility in which the majority of the commitments thereunder are held by commercial banks and other financial institutions that are regulated by, or under the supervision of, the Office of the Comptroller of the Currency.

“ABL Documents” means the ABL Credit Agreement, any additional credit agreement, note purchase agreement, indenture or other agreement related thereto and all other loan, letter of credit or note documents, collateral or security documents, notes, guarantees, mortgages, deeds of trust, pledge agreements, instruments and agreements governing or evidencing, or executed or delivered in connection with, the ABL Credit Agreement or any Pari Passu ABL Obligations, as such agreements or instruments may be amended, supplemented, modified, restated, replaced, renewed, refunded, restructured, increased or refinanced from time to time.

“ABL Facility” means the asset-based revolving credit facility established under the ABL Credit Agreement.

“ABL Indebtedness” means all Indebtedness, liabilities and obligations (of every kind or nature) incurred or arising under or relating to the ABL Documents that is secured by a Permitted Lien described under clause (1) of the definition thereof (including any Hedging Obligations and Obligations in respect of Treasury Management Arrangements secured pursuant to the ABL Documents), and all other obligations of the Issuers or any Guarantor in respect thereof.

“ABL Intercreditor Agreement” means the intercreditor agreement dated as of the Issue Date among the Issuers, the Guarantors, the Collateral Agent, the Term Loan Collateral Agent, the Real Property Collateral Agent and the ABL Collateral Agent, as amended or supplemented from time to time.

“ABL Obligations” means ABL Indebtedness and all other Obligations in respect thereof.

“ABL Priority Collateral” has the meaning given to it in the ABL Intercreditor Agreement.

“Acquired Debt” means, with respect to any specified Person:

(1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person, regardless of whether such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person, but excluding Indebtedness which is extinguished, retired or repaid in connection with such Person merging with or into or becoming a Restricted Subsidiary of such specified Person; and

(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

“Additional Assets” means:

(1) any property or assets (other than Indebtedness and Capital Stock) to be used by the Company or a Restricted Subsidiary in a Permitted Business;

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(2) the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Restricted Subsidiary; or (3) outstanding Capital Stock of any Restricted Subsidiary held by Persons other than Affiliates; provided that all the Capital Stock of such Restricted Subsidiary held by the Company or any other Restricted Subsidiaries shall entitle the Company or such other Restricted Subsidiary to not less than a pro rata portion of all dividends or other distributions made by such Restricted Subsidiary upon any of such Capital Stock;

provided, however, that, in the case of clauses (2) and (3), such Restricted Subsidiary is primarily engaged in a Permitted Business.

“Additional Notes” means 2029 Additional Notes and 2032 Additional Notes.

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control,” as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” have correlative meanings.

“Agent” means any Registrar, co-registrar, Paying Agent or additional paying agent.

“Applicable Procedures” means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Clearstream that apply to such transfer or exchange.

“Asset Sale” means:

(1) the sale, lease, conveyance or other disposition of any assets or rights by the Company or any of the Company’s Restricted Subsidiaries; provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole or of all of the Equity Interests of the Issuers will be governed by Section 4.14 and/or Section 5.01 hereof and not by Section 4.10 hereof; and

(2) the issuance of Equity Interests by any of the Company’s Restricted Subsidiaries or the sale by the Company or any of the Company’s Restricted Subsidiaries of Equity Interests in any of the Company’s Restricted Subsidiaries (other than, in each case, directors’ qualifying shares or Equity Interests required by applicable law to be held by a Person other than the Company or any of the Company’s Restricted Subsidiaries).

Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale:

(1) any single transaction or series of related transactions that involves assets having a Fair Market Value of less than $50.0 million;

(2) a transfer of assets between or among the Company and its Restricted Subsidiaries;

(3) an issuance or sale of Equity Interests by a Restricted Subsidiary to the Company or to a Restricted Subsidiary;

(4) the sale, lease or other disposition of equipment, inventory, products, services, accounts receivable, working capital assets or other assets in the ordinary course of business (including in connection with any compromise, settlement or collection of accounts receivable), and any sale or other disposition of damaged, worn-out or obsolete assets or assets that are no longer useful in the conduct of the business of the Company and its Restricted Subsidiaries (including the abandonment or other disposition of Intellectual Property that is, in the reasonable judgment of the Company, no longer economically practicable to maintain or useful in the conduct of the business of the Company and its Restricted Subsidiaries taken as whole);
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(5) licenses and sublicenses by the Company or any of its Restricted Subsidiaries of software or Intellectual Property in the ordinary course of business;

(6) any surrender or waiver of contract rights or settlement, release, recovery on or surrender of contract, tort or other claims of any kind;

(7) the creation or perfection of a Lien not prohibited by Section 4.12 hereof, including a Permitted Lien and the exercise by any Person in whose favor a Permitted Lien is granted of any of its rights in respect of that Permitted Lien;

(8) the sale or other disposition of cash or Cash Equivalents;

(9) the sale or other disposition of Hedging Obligations or other financial instruments in the ordinary course of business;

(10) (a) a Restricted Payment that does not violate Section 4.07 hereof, including, without limitation, the issuance or sale of Equity Interests or the sale, lease or other disposition of products, services, equipment, inventory, accounts receivable or other assets pursuant to any such Restricted Payment, or (b) the consummation of a Permitted Investment, including, without limitation, unwinding any Hedging Obligations, and including the issuance or sale of Equity Interests or the sale, lease or other disposition of products, services, equipment, inventory, accounts receivable or other assets pursuant to any such Permitted Investment;

(11) the issuance, sale or other disposition of Equity Interests of an Unrestricted Subsidiary; and

(12) any trade or exchange by the Company or any of its Restricted Subsidiaries of assets for properties or assets owned or held by another Person used or useful in a Permitted Business (including Capital Stock of a Person engaged primarily in a Permitted Business that is or becomes a Restricted Subsidiary); provided that (a) the assets or properties exchanged or received by the Company or any of its Restricted Subsidiaries may not include cash or Cash Equivalents except for relatively minor amounts necessary in order to achieve an exchange of equivalent value and (b) the Fair Market Value of the assets traded or exchanged by the Company or such Restricted Subsidiary (together with any cash or Cash Equivalents to be delivered by the Company or such Restricted Subsidiary) is reasonably equivalent to the Fair Market Value of the assets (together with any cash or Cash Equivalents) to be received by the Company or such Restricted Subsidiary; and provided, further, that any cash received must be applied in accordance with the provisions of Section 4.10 hereof. “Bankruptcy Law” means Title 11, U.S. Code or any similar federal or state law for the relief of debtors, the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada) or any other Canadian federal or provincial law (including the debtor relief provisions of corporate statutes) or the law of any other jurisdiction relating to bankruptcy, insolvency, winding up, liquidation, arrangement, reorganization or relief of debtors.

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The terms “Beneficially Owns” and “Beneficially Owned” have corresponding meanings. For purposes of this definition, a Person shall be deemed not to Beneficially Own securities that are the subject of a stock purchase agreement, merger agreement, amalgamation agreement, arrangement agreement or similar agreement until consummation of the transactions or, as applicable, series of related transactions contemplated thereby.
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“Board of Directors” means:

(1) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board;

(2) with respect to a partnership, the board of directors of the general partner of the partnership;

(3) with respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof; and

(4) with respect to any other Person, the board or committee of such Person serving a similar function.

So long as the Company is organized as a limited partnership, references to its Board of Directors are to the Board of Directors of the General Partner.

“Borrowing Base” means the “borrowing base” under (i) the ABL Facility as in effect from time to time or (ii) any replacement thereof in the form of an asset based revolving facility; provided that a majority of the commitments thereunder shall be held by commercial banks and other financial institutions that are regulated by, or under the supervision of, the Office of the Comptroller of the Currency, and such term shall be defined in accordance with customary practices and standards for U.S. asset based revolving facilities.

“Business Day” means each day that is not a Saturday, Sunday or other day on which banking institutions in New York, New York or another place of payment are authorized or required by law to remain closed.

“Capital Lease Obligation” means, at the time any determination is to be made, the amount of the liability in respect of a capital lease or finance lease that would at that time be required to be capitalized on a balance sheet prepared in accordance with GAAP, and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty. Notwithstanding the foregoing, all obligations of the Company and its Restricted Subsidiaries that are or would be characterized as an operating lease as determined in accordance with GAAP prior to January 1, 2019 (whether or not such operating lease was in effect on such date) shall continue to be accounted for as an operating lease (and not as a Capital Lease Obligation) for purposes of this Indenture regardless of any change in GAAP on or after January 1, 2019 (or any change in the implementation in GAAP for future periods that are contemplated as of such date) that would otherwise require such obligation to be recharacterized as a Capital Lease Obligation.

“Capital Stock” means:

(1) in the case of a corporation, corporate stock;

(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3) in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and

(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, regardless of whether such debt securities include any right of participation with Capital Stock.

References herein to “stock,” in the case of a non-corporation, shall be deemed to include the equivalent “Capital Stock” instrument for such non-corporation.
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“Cash Equivalents” means:

(1) United States dollars;

(2) Government Securities having maturities of not more than one year from the date of acquisition;

(3) certificates of deposit, demand deposit accounts and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case, with any lender party to the ABL Credit Agreement or with any commercial bank with commercial paper rated, on the day of such purchase, at least A-1 or the equivalent thereof by S&P or P-1 or the equivalent thereof by Moody’s;

(4) marketable general obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition thereof, having a credit rating of “A” or better from either S&P or Moody’s;

(5) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clauses (2), (3) or (4) above entered into with any financial institution meeting the qualifications specified in clause (3) above;

(6) commercial paper issued by any lender party to the ABL Credit Agreement, the parent corporation of any lender party to the ABL Credit Agreement or any Subsidiary of such lender’s parent corporation, and commercial paper rated at least A-2 or the equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody’s and in each case maturing within one year after the date of acquisition thereof;

(7) money market funds that (A) comply with the criteria set forth in Rule 2a-7 promulgated under the Investment Company Act of 1940, as amended, (B) are rated AA by S&P and Aa by Moody’s and (C) have portfolio assets of at least $5,000,000,000; and

(8) deposits in any currency available for withdrawal on demand with any commercial bank that is organized under the laws of any country in which the Company or any Restricted Subsidiary maintains its chief executive office or is engaged in a Permitted Business; provided that all such deposits are made in such accounts in the ordinary course of business.

“Change of Control” means the occurrence of any of the following:

(1) the sale, lease, transfer, conveyance or other disposition (other than by way of merger, amalgamation or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole to any “person” (as such term is used in Sections 13(d) of the Exchange Act), other than a Permitted Holder, which occurrence is followed within 60 days thereafter by a Rating Decline;

(2) the adoption of a plan for the liquidation or dissolution of the Company;

(3) the consummation of any transaction (including, without limitation, any merger, amalgamation or consolidation) the result of which is that any “person” or “group” (as those terms are used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), other than a Permitted Holder, becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of the General Partner (or, following a conversion of the Company from a limited partnership to a corporation (and so long as the Company is not subsequently converted to a limited partnership), the Company), measured by voting power rather than number of shares, units or the like, which occurrence is followed within 60 days thereafter by a Rating Decline;
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(4) the removal of the General Partner by the limited partners of the Company in accordance with the terms of the Partnership Agreement; or

(5) the Company ceases to own, directly or indirectly, all of the Equity Interests of each of the Issuers.

Notwithstanding the preceding, a conversion of the Company or any of its Restricted Subsidiaries from a limited partnership, corporation, limited liability company or other form of entity to a limited liability company, corporation, limited partnership or other form of entity or an exchange of all of the outstanding Equity Interests in one form of entity for Equity Interests in another form of entity or the addition of one or more holding companies or entities shall not constitute a Change of Control, so long as following such conversion or exchange the “persons” (as that term is used in Section 13(d)(3) of the Exchange Act) who Beneficially Owned the Capital Stock of the Company immediately prior to such transactions continue to Beneficially Own in the aggregate more than 50% of the Voting Stock of such entity, or continue to Beneficially Own sufficient Equity Interests in such entity or its general partner, as applicable, to elect a majority of its directors, managers, trustees or other persons serving in a similar capacity for such entity or its general partner, as applicable, and, in either case, no “person,” other than a Permitted Holder, Beneficially Owns more than 50% of the Voting Stock of such entity or its general partner, as applicable.

“Class B Preferred Unit,” “Class C Preferred Unit” and “Class D Preferred Unit” each have the respective meanings assigned to such term in the Partnership Agreement, as in effect on the Issue Date.

“Clearstream” means Clearstream Banking, S.A.

“Collateral” means the ABL Priority Collateral and the Notes-TLB Priority Collateral.

“Collateral Agent” has the meaning assigned to such term in the preamble of this Indenture.

“Company” has the meaning assigned to such term in the preamble of this Indenture.

“Consolidated Cash Flow” means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period plus, without duplication:

(1) an amount equal to any extraordinary loss plus any net loss realized by such Person or any of its Restricted Subsidiaries in connection with an Asset Sale (together with any related provision for taxes and any related non-recurring charges relating to any premium or penalty paid, write-off of deferred financing costs or other financial recapitalization charges in connection with redeeming or retiring any Indebtedness prior to its Stated Maturity), to the extent that such losses were deducted in computing such Consolidated Net Income; plus

(2) provision for taxes based on income or profits (including state franchise taxes accounted for as income taxes in accordance with GAAP) of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus

(3) the Fixed Charges of such Person and its Restricted Subsidiaries for such period, to the extent that such Fixed Charges were deducted in computing such Consolidated Net Income; plus

(4) depreciation, depletion, amortization, (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period), abandonment, impairment and other non-cash charges and expenses (excluding any such non-cash charge or expense to the extent that it represents an accrual of or reserve for cash charges or expenses in any future period or amortization of a prepaid cash charge or expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, depletion, amortization, impairment and other non-cash charges or expenses were deducted in computing such Consolidated Net Income; plus
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(5) all extraordinary, unusual or non-recurring expenses, including expenses related to the Fair Market Value of contingent consideration, to the extent that such extraordinary, unusual or non-recurring expenses were deducted in computing such Consolidated Net Income; plus

(6) forecasted income that is derived from MVC Contracts, less appropriate direct and indirect costs to realize such income, projected by the Company to be realized within 12 months from the date of determination (which income shall be subject to certification by management of the Company and shall be calculated on a pro forma basis as though such income had been realized on the first day of such period), net of the amount of actual benefits realized during such period; provided that such income is reasonably identifiable and factually supportable and projected by the Company in good faith; minus

(7) non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue in the ordinary course of business,

in each case, on a consolidated basis and determined in accordance with GAAP.

“Consolidated Net Income” means, with respect to any specified Person for any period, the aggregate of the net income (loss) of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP and without any reduction in respect of preferred stock dividends or distributions; provided that:

(1) any gain (loss) realized upon the sale or other disposition of any property, plant or equipment of such Person or its consolidated Restricted Subsidiaries (including pursuant to any sale or leaseback transaction) which is not sold or otherwise disposed of in the ordinary course of business and any gain (loss) realized upon the sale or other disposition of any Capital Stock of any Person will be excluded;

(2) the net income (but not loss) of any Person that is not a Restricted Subsidiary of such specified Person or that is accounted for by the equity method of accounting will be included only to the extent of the amount of dividends or similar distributions paid in cash to the specified Person or a Restricted Subsidiary of such specified Person;

(3) the net income (but not loss) of any Restricted Subsidiary of such specified Person that is not a Guarantor will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that net income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, partners or members; provided, however, that the operation of this clause (3) shall be suspended with respect to any Restricted Subsidiary that is acquired by the Company or any of its Restricted Subsidiaries (regardless of whether such acquisition is effected pursuant to a merger or otherwise), but such suspension shall cease immediately after the first six months following such acquisition;

(4) the cumulative effect of a change in accounting principles will be excluded;

(5) any unrealized losses and gains for such period under derivative instruments included in the determination of Consolidated Net Income, including, without limitation, those resulting from the application of FASB ASC 815, will be excluded; (6) all non-cash equity-based compensation expense, including all non-cash charges related to restricted Equity Interests and redeemable Equity Interests granted to officers, directors and employees, will be excluded;
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(7) any charges associated with any write-down, amortization or impairment of goodwill or other tangible or intangible assets will be excluded; and

(8) any non-cash or other charges relating to any premium or penalty paid, write-off of deferred financing costs or other financial recapitalization charges in connection with redeeming or retiring any Indebtedness prior to its Stated Maturity (including, without limitation, premiums or penalties paid to counterparties in connection with the breakage, termination or unwinding of Hedging Obligations) will be excluded.

“continuing” means, with respect to any Default or Event of Default, that such Default or Event of Default has not been cured or waived.

“Controlling Collateral Agent” has the meaning set forth in the Notes-TLB Intercreditor Agreement.

“Corporate Trust Office of the Trustee” means the office of the Trustee at its address specified in Section 12.02 hereof or such other address as to which the Trustee may give notice to the Company.

“Credit Facilities” means one or more debt facilities (including, without limitation, the ABL Facility and the Term Loan Facility), commercial paper facilities or secured or unsecured capital markets financings, in each case, with banks or other institutional lenders or institutional investors providing for revolving credit loans, term loans, capital market financings, private placements, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case (subject to the proviso in the definition of ABL Credit Agreement), as amended, restated, modified, renewed, refunded, replaced in any manner (whether upon or after termination or otherwise) or refinanced (including refinancing with any capital markets transaction or otherwise by means of sales of debt securities to institutional investors) in whole or in part from time to time.

“Custodian” means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto.

“Customary Recourse Exceptions” means, with respect to any Non-Recourse Debt of an Unrestricted Subsidiary or Joint Venture, (i) Liens on and pledges of the Equity Interests of any Unrestricted Subsidiary or any Joint Venture owned by the Company or any Restricted Subsidiary to the extent securing otherwise Non-Recourse Debt of such Unrestricted Subsidiary or Joint Venture and (ii) exclusions from the exculpation provisions with respect to such Non-Recourse Debt for the voluntary bankruptcy of such Unrestricted Subsidiary or Joint Venture, fraud, misapplication of cash, environmental claims, waste, willful destruction and other circumstances customarily excluded by lenders from exculpation provisions or included in separate indemnification agreements in non-recourse financings.

“Default” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

“Definitive Note” means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, substantially in the form of Exhibit A-1 or Exhibit A-2 hereto, as applicable, except that such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the Global Note” attached thereto.

“Delaware Assets” shall mean the fee-owned Material Real Property Assets that are part of the Delaware Pipeline.
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“Delaware Pipeline” shall mean pipeline systems of the Issuers and Guarantors located in Lea County, New Mexico; Eddy County, New Mexico; Loving County, Texas and Reeves County, Texas.

“Depositary” means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture.

“Designated Value” means, with respect to any Real Property Asset, the book value of such Real Property Asset, together with the book value of all fixtures appurtenant thereto and all improvements thereon.

“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Company to repurchase or redeem such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 4.07 hereof. The amount of Disqualified Stock deemed to be outstanding at any time for purposes of this Indenture will be the maximum amount that the Company and its Restricted Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock, exclusive of accrued dividends or distributions.

“Domestic Subsidiary” means any Restricted Subsidiary that was formed under the laws of the United States or any state of the United States or the District of Columbia or that guarantees or otherwise provides direct credit support for any Indebtedness of the Company or any Restricted Subsidiary (other than a Foreign Subsidiary).

“Equity Interests” of any Person means Capital Stock and all warrants, options or other rights to acquire Capital Stock of such Person (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

“Equity Offering” means a sale of Equity Interests of the Company (other than Disqualified Stock and other than to a Subsidiary of the Company) made for cash on a primary basis by the Company after the Issue Date.

“Euroclear” means Euroclear Bank, S.A./N.V., as operator of the Euroclear system.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Excluded Deposit Account” means accounts that are (a) solely used for the purposes of making payments in respect of payroll, taxes and employees’ wages and benefits, (b) disbursement accounts where solely proceeds of indebtedness, including the proceeds of the loans under the ABL Credit Agreement, are deposited, (c) zero balance accounts from which balances are swept daily to a Controlled Account (as defined in the ABL Credit Agreement), (d) third-party trust accounts and (e) other accounts with funds on deposit with a daily average balance of less than $2.0 million individually and $10.0 million in the aggregate.

“Existing Indebtedness” means all Indebtedness of the Company and its Subsidiaries (other than Indebtedness under the Term Loan Credit Agreement, ABL Credit Agreement, the Notes or the Note Guarantees) in existence on the Issue Date, until such amounts are repaid.

“Existing Preferred Units” means the Class B Preferred Units, the Class C Preferred Units, and the Class D Preferred Units existing on the Issue Date.
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“Fair Market Value” means the value that would be paid by a willing buyer to an unaffiliated willing seller in a transaction not involving distress or necessity of either party, determined in good faith by the Board of Directors of the Company in the case of amounts of $40.0 million or more and otherwise by an officer of the General Partner (unless otherwise provided herein); provided, that, for purposes of Section 4.10(a)(2)(C) and clause (12) of the second paragraph of the definition of “Asset Sale” if the value of such Additional Assets or assets contemplated to be traded or exchanged exceeds $150.0 million, the Company shall deliver to the Trustee a copy of a written opinion as to the fairness from a financial point of view of such trade or exchange issued by a nationally recognized investment bank, appraisal firm or firm of independent public accountants.

“FASB ASC 815” means Financial Accounting Standards Board Accounting Standards Codification 815.

“FERC Subsidiary” means a Restricted Subsidiary that is subject to the regulatory jurisdiction of the Federal Energy Regulatory Commission (or any successor thereof).

“Finance Corp.” has the meaning assigned to such term in the preamble of this Indenture.

“First Lien Leverage Ratio” means, at any time of determination, the ratio of (i) the outstanding principal amount of Secured Indebtedness (other than Junior Lien Obligations) with respect to the Collateral (net of up to (i) for so long as Class D Preferred Units remain outstanding, $25.0 million cash and/or Cash Equivalents of the Company and the Restricted Subsidiaries and (ii) thereafter, $100.0 million cash and/or Cash Equivalents of the Company and the Restricted Subsidiaries) as of the end of the Trailing Four Quarters, to (ii) the Consolidated Cash Flow of the Company and its Restricted Subsidiaries for such Trailing Four Quarters; provided that such First Lien Leverage Ratio shall be determined on a pro forma basis in a manner consistent with the definition of Fixed Charge Coverage Ratio.

“Fitch” means Fitch Ratings, Inc. or any successor to the ratings business thereof.

“Fixed Charge Coverage Ratio” means with respect to any specified Person for any Trailing Four Quarter Period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees, repays, repurchases, redeems, defeases or otherwise discharges any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect to such incurrence, assumption, Guarantee, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness, or such issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom, as if the same had occurred at the beginning of the Trailing Four Quarter Period. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness will be calculated as if the average rate in effect from the beginning of such period to the Calculation Date had been the applicable rate for the entire period (taking into account any interest Hedging Obligation applicable to such Indebtedness, but if the remaining term of such interest Hedging Obligation is less than twelve months, then such interest Hedging Obligation shall only be taken into account for that portion of the period equal to the remaining term thereof). If any Indebtedness that is being given pro forma effect bears an interest rate at the option of such Person, the interest rate shall be calculated by applying such option rate chosen by such Person. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a Eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or if none, then based upon such optional rate chosen as such Person may designate.

Notwithstanding anything to the contrary herein with respect to any amounts incurred or transactions entered into (or consummated) in reliance on a provision of this Indenture under a restrictive covenant that does not require compliance with a financial ratio or test (including, without limitation, any First Lien Leverage Ratio test, Secured Leverage Ratio test, any Fixed Charge Coverage Ratio test and any Total Leverage Ratio test) (any such amounts, the “Fixed Amounts”) substantially concurrently with any amounts incurred or transactions entered into (or consummated) in reliance on a provision of this Indenture that requires compliance with any such financial ratio or test (any such amounts, the “Incurrence Based Amounts”), it is understood and agreed that the Fixed Amounts (and any cash proceeds thereof) shall be disregarded in the calculation of the financial ratio or test applicable to the Incurrence Based Amounts in connection with such substantially concurrent incurrence.
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Each amount incurred or transaction entered into (or consummated) will be deemed to have been incurred or entered into (or consummated) first, to the extent available, as an Incurrence Based Amount pursuant to the applicable financial ratio or test.

In addition, for purposes of calculating the Fixed Charge Coverage Ratio:

(1) acquisitions that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers, amalgamations, consolidations or otherwise (including acquisitions of assets used or useful in a Permitted Business), or any Person or any of its Restricted Subsidiaries acquired by the specified Person or any of its Restricted Subsidiaries, and including all related financing transactions and including increases in ownership of Restricted Subsidiaries, during the Trailing Four Quarter Period or subsequent to such reference period and on or prior to the Calculation Date, will be given pro forma effect as if they had occurred on the first day of the Trailing Four Quarter Period;

(2) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded;

(3) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date;

(4) any Person that is a Restricted Subsidiary of the specified Person on the Calculation Date will be deemed to have been a Restricted Subsidiary at all times during such Trailing Four Quarter Period;

(5) any Person that is not a Restricted Subsidiary of the specified Person on the Calculation Date will be deemed not to have been a Restricted Subsidiary at any time during such Trailing Four Quarter Period; and

(6) interest income reasonably anticipated by such Person to be received during the Trailing Four Quarter Period from cash or Cash Equivalents held by such Person or any Restricted Subsidiary of such Person, which cash or Cash Equivalents exist on the Calculation Date or will exist as a result of the transaction giving rise to the need to calculate the Fixed Charge Coverage Ratio, will be included.

For purposes of this definition, whenever pro forma effect is to be given to any calculation under this definition, the pro forma calculations will be determined in good faith by a responsible financial or accounting officer of such Person, which determination shall be conclusive for all purposes under this Indenture; provided that such officer may in such officer’s discretion include any reasonably identifiable and factually supportable pro forma changes to Consolidated Cash Flow or Fixed Charges, including any pro forma expense and cost reductions or synergies that have occurred or are reasonably expected to occur within the 12 months immediately following the Calculation Date and are either (i) prepared and calculated in accordance with Regulation S-X under the Securities Act or (ii) set forth in an Officers’ Certificate signed by the chief financial officer of such Person that states (a) the amount of each such adjustment and (b) that such adjustments are based on the reasonable good faith belief of the chief financial officer executing such Officers’ Certificate at the time of such execution and the factual basis on which such good faith belief is based.

“Fixed Charges” means, with respect to any specified Person for any period, the sum, without duplication, of:

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(1) the consolidated interest expense (less interest income) of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (excluding write-off of deferred financing costs and accretion of interest charges on future retirement benefits and other obligations that do not constitute Indebtedness, but including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings), and net of the effect of all payments made or received pursuant to Hedging Obligations in respect of interest rates; plus

(2) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period; plus

(3) any interest on Indebtedness of another Person that is guaranteed by the specified Person or one or more of its Restricted Subsidiaries or secured by a Lien on assets of such specified Person or one or more of its Restricted Subsidiaries, regardless of whether such Guarantee or Lien is called upon; plus

(4) all dividends (in the case of a partnership or limited liability company, quarterly or other periodic distributions equivalent to a dividend) paid in cash in the applicable Trailing Four Quarter Period on any series of preferred stock of such Person or any of its Restricted Subsidiaries which dividends or distributions had accrued during such Trailing Four Quarter Period, other than dividends or distributions on Equity Interests paid or payable or determined by the Board to be paid in Equity Interests of such Person (other than Disqualified Stock) or to such Person or a Restricted Subsidiary of such Person, in each case, determined on a consolidated basis in accordance with GAAP.

“Foreign Subsidiary” means any Restricted Subsidiary that is not a Domestic Subsidiary.

“GAAP” means generally accepted accounting principles in the United States, that are in effect from time to time. All ratios and computations based on GAAP contained in this Indenture will be computed in conformity with GAAP. At any time after the Issue Date, the Company may elect to apply International Financial Reporting Standards (“IFRS”) accounting principles in lieu of GAAP and, upon any such election, references herein to GAAP shall thereafter be construed to mean IFRS (except as otherwise provided in this Indenture); provided that any such election, once made, shall be irrevocable; provided, further, that any calculation or determination in this Indenture that requires the application of GAAP for periods that include fiscal quarters ended prior to the Company’s election to apply IFRS shall remain as previously calculated or determined in accordance with GAAP. The Company shall give notice of any such election made in accordance with this definition to the Trustee and the Holders of Notes.

“General Partner” means NGL Energy Holdings LLC, a Delaware limited liability company, and its successors and permitted assigns as the general partner of the Company; provided that, following a conversion of the Company from a limited partnership to a corporation (and so long as the Company is not subsequently converted to a limited partnership), all references to “General Partner” herein shall be to the Company.

“Global Note Legend” means the legend set forth in Section 2.06(f)(2) hereof, which is required to be placed on all Global Notes issued under this Indenture.

“Global Notes” means, individually and collectively, each of the Notes deposited with or on behalf of and registered in the name of the Depositary or its nominee, substantially in the form of Exhibit A-1 or Exhibit A-2, as applicable, hereto and that bears the Global Note Legend and that has the “Schedule of Exchanges of Interests in the Global Note” attached thereto, issued in accordance with Section 2.01, Section 2.06(b)(3), Section 2.06(b)(4), Section 2.06(d)(2), Section 2.06(d)(3) or Section 2.06(f) hereof.

“Government Securities” means direct obligations of, or obligations Guaranteed by, the United States of America, or any agency or instrumentality thereof, in each case for which the full faith and credit of the United States is pledged or the timely payment of which is unconditionally guaranteed as a full faith and credit obligation of the United States.

“Grand Mesa Assets” shall mean the fee-owned Material Real Property Assets that are part of the Grand Mesa Pipeline.
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“Grand Mesa Pipeline” shall mean the 550-mile pipeline that transports crude oil from its origin in Weld County, Colorado to the terminal of the Issuers and Guarantors in Cushing, Oklahoma.


“Grantors” means, collectively, the Issuers and the Guarantors.
“Guarantee” means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement conditions or otherwise). When used as a verb, “Guarantee” has a correlative meaning.

“Guarantors” means any of: (1) the Company, (2) the Restricted Subsidiaries of the Company executing this Indenture as initial Subsidiary Guarantors; and (3) the Restricted Subsidiaries of the Company that become Subsidiary Guarantors in accordance with the provisions of this Indenture, and their respective successors and assigns, in each case, until the Note Guarantee of such Person (other than the Company) has been released in accordance with the provisions of this Indenture.

“Hedging Obligations” means, with respect to any specified Person, the obligations of such Person under:

(1) interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements, interest rate collar agreements or other agreements or arrangements designed to manage interest rates or interest rate risk;

(2) any commodity futures contract, commodity option or other similar agreement or arrangement designed to protect such Person against fluctuations in the price of Hydrocarbons used, produced, processed or sold; and

(3) foreign exchange contracts, currency protection agreements or other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates.

“Holder” means a Person in whose name a Note is registered and shall, if the Holder is DTC or its nominee, mean and include the beneficial owner of the Notes where appropriate in context.

“Hydrocarbons” means oil, natural gas, casing head gas, drip gasoline, natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all constituents, elements or compounds thereof and products refined or processed therefrom.

“IAI Global Note” means a Global Note substantially in the form of Exhibit A-1 or Exhibit A-2, as applicable, hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold to Institutional Accredited Investors.

“Indebtedness” means, with respect to any specified Person, without duplication, any indebtedness of such Person, regardless of whether contingent:

(1) in respect of borrowed money;

(2) evidenced by or issued in exchange for bonds, notes, credit agreements, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) (but excluding obligations with respect to letters of credit securing obligations (other than obligations with respect to borrowed money) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than 30 days following receipt by such Person of a demand for reimbursement following payment on the letter of credit); (3) in respect of bankers’ acceptances;
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(4) representing Capital Lease Obligations;

(5) representing the balance deferred and unpaid of the purchase price of any property or services due more than six months after such property is acquired or such services are completed; or

(6) representing any Hedging Obligations,

if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term “Indebtedness” includes (a) all Indebtedness of others secured by a Lien on any asset of the specified Person (regardless of whether such Indebtedness is assumed by the specified Person); provided, that the amount of such Indebtedness will be the lesser of (i) the Fair Market Value of such asset at such date of determination and (ii) the amount of such Indebtedness of such other Person, and (b) to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. Indebtedness shall be calculated without giving effect to the effects of FASB ASC 815 and related interpretations to the extent such effects would otherwise increase or decrease an amount of Indebtedness for any purpose under this Indenture as a result of accounting for any embedded derivatives created by the terms of such Indebtedness.

The amount of any Indebtedness outstanding as of any date will be:

(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;

(2) in the case of any Hedging Obligation, the termination value of the agreement or arrangement giving rise to such Hedging Obligation that would be payable by such Person at such date;

(3) in the case of any letter of credit, the face amount thereof;

(4) the principal amount of the Indebtedness, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness; and

(5) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:

(A) the Fair Market Value of such assets at the date of determination; and

(B) the amount of the Indebtedness of the other Person.

Notwithstanding the foregoing, the following shall not constitute “Indebtedness:”

(i) accrued expenses and trade accounts payable arising in the ordinary course of business;

(ii) any indebtedness that has been defeased in accordance with GAAP or defeased or discharged pursuant to the deposit of cash or Government Securities (in an amount sufficient to satisfy all such indebtedness obligations at maturity or redemption, as applicable, and all payments of interest and premium, if any) in a trust or account created or pledged for the sole benefit of the holders of such indebtedness, and subject to no other Liens, and the other applicable terms of the instrument governing such indebtedness;

(iii) Hydrocarbon balancing liabilities incurred in the ordinary course of business; (iv) any unrealized losses or charges in respect of Hedging Obligations (including those resulting from the application of the FASB ASC 815);
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(v) any obligations in respect of (a) bid, performance, completion, surety, appeal and similar bonds, (b) bankers’ acceptances, (c) workers’ compensation claims, health or other types of social security benefits, unemployment or other insurance or self-insurance obligations, reclamation and statutory obligations and (d) any Guarantees or standby letters of credit functioning as or supporting any of the foregoing bonds or obligations, to the extent not drawn; provided, however, that such bonds or obligations mentioned in subclause (a), (b), (c) or (d) of this clause (v) are incurred in the ordinary course of the business of the Company and its Restricted Subsidiaries and do not relate to obligations for borrowed money;

(vi) any obligation arising from any agreement providing for indemnities, guarantees, purchase price adjustments, holdbacks, earnouts, contingency payment obligations based on the performance of the acquired or disposed assets or similar obligations (other than Guarantees of Indebtedness) incurred by any Person in connection with the acquisition or disposition of any business, assets or Capital Stock;

(vii) any obligation arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided that such obligation is extinguished within five Business Days of its incurrence;

(viii) any Treasury Management Arrangement;

(ix) any obligation arising out of advances on trade receivables, factoring of receivables, customer prepayments and similar transactions in the ordinary course of business and consistent with past practice; and

(x) all contracts and other obligations, agreements, instruments or arrangements described in clauses (16), (26), and (27) of the definition of “Permitted Liens.”

“Indenture” means this Indenture, as amended or supplemented from time to time.

“Indirect Participant” means a Person who holds a beneficial interest in a Global Note through a Participant.

“Initial Notes” means the 2029 Initial Notes and the 2032 Initial Notes.

“Insolvency or Liquidation Proceeding” means:

(1) any voluntary or involuntary case or proceeding under any Bankruptcy Law with respect to any Issuer or any Guarantor;

(2) any other voluntary or involuntary insolvency, reorganization or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding with respect to any Issuer or any Guarantor or with respect to a material portion of their respective assets;

(3) any liquidation, dissolution, reorganization or winding up of any Issuer or any Guarantor whether voluntary or involuntary and whether or not involving insolvency or bankruptcy; or

(4) any assignment for the benefit of creditors or any other marshalling of assets and liabilities of any Issuer or any Guarantor.
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“Institutional Accredited Investor” means an institution that is an “accredited investor” as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, who are not also QIBs.

“Intellectual Property” means all U.S. and foreign (a) patents, patent applications, patent disclosures, and all related continuations, continuations-in-part, divisionals, reissues, re-examinations, substitutions, and extensions thereof (“Patents”), (b) trademarks, service marks, trade names, domain names, logos, slogans, trade dress, and other similar designations of source or origin, together with the goodwill symbolized by any of the foregoing (“Trademarks”), (c) copyrights and copyrightable subject matter (“Copyrights”), (d) rights of publicity, (e) moral rights and rights of attribution and integrity, (f) computer programs (whether in source code, object code, or other form), databases, compilations and data, technology supporting the foregoing, and all documentation, including user manuals and training materials, related to any of the foregoing,(g) trade secrets and all confidential information, know-how, inventions, proprietary processes, formulae, models, and methodologies, (h) all rights in the foregoing and in other similar intangible assets, (i) all applications and registrations for the foregoing, and (j) all rights and remedies against infringement, misappropriation, or other violation thereof.

“Intercreditor Agreements” means, collectively, the ABL Intercreditor Agreement and the Notes-TLB Intercreditor Agreement.

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended, and any successor statute.

“Investment Grade Rating” means a rating equal to or higher than:

(1) Baa3 (or the equivalent) by Moody’s;

(2) BBB- (or the equivalent) by S&P; or

(3) BBB- (or the equivalent) by Fitch,

or, if any such Rating Agency ceases to rate the Notes of the applicable series for reasons outside of the control of the Company, the equivalent investment grade credit rating from any other Rating Agency.

“Investment Grade Rating Event” means, with respect to a series of Notes, the first day on which (a) the Notes of such series have an Investment Grade Rating from at least two Rating Agencies, (b) no Default or Event of Default with respect to the Notes of such series has occurred and is then continuing under this Indenture and (c) the Company has delivered to the Trustee an Officers’ Certificate certifying as to the satisfaction of the conditions set forth in clauses (a) and (b) of this definition.

“Investments” means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other obligations), advances or capital contributions (excluding (1) endorsements of negotiable instruments and documents in the ordinary course of business, and commission, travel and similar advances to officers, employees and consultants made in the ordinary course of business and (2) advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of the Person making the advance), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities (excluding any interest in an oil or natural gas leasehold to the extent constituting a security under applicable law), together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company or any Restricted Subsidiary sells or otherwise disposes of any Equity Interests of any Restricted Subsidiary such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Company, the Company will be deemed to have made an Investment on the date of any such sale or disposition in an amount equal to the Fair Market Value of the Company’s Investments in such Subsidiary that were not sold or disposed of in an amount determined as provided in Section 4.07(c) hereof. The acquisition by the Company or any Restricted Subsidiary of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Company or such Restricted Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investments held by the acquired Person in such third Person in an amount determined as provided in Section 4.07(c) hereof.
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Except as otherwise provided in this Indenture, the amount of an Investment will be determined at the time the Investment is made and without giving effect to subsequent changes in value or write-ups, write-downs or write-offs with respect to such Investment.

“Issue Date” means February 2, 2024.

“Issuers” has the meaning assigned to such term in the preamble of this Indenture, together with their successors and assigns.

“Joint Venture” means any Person that is not a direct or indirect Subsidiary of the Company in which the Company or any of its Restricted Subsidiaries makes any Investment.

“Junior Lien” means a Lien, junior to the Liens on the Collateral securing both any ABL Obligations and Notes-TLB Obligations pursuant to the Junior Lien Intercreditor Agreement, granted by the Issuer or any Guarantor to secure Junior Lien Obligations.

“Junior Lien Documents” means, collectively, any indenture, note, security document and each of the other agreements, documents and instruments providing for or evidencing any Junior Lien Obligations, and any other document or instrument executed or delivered at any time in connection with any Junior Lien Obligations, to the extent such are effective at the relevant time, in each case as each may be amended, restated, supplemented, modified, renewed, extended or refinanced in whole or in part from time to time, and any other credit agreement, indenture or other agreement, document or instrument evidencing, governing, relating to or securing any Junior Lien Obligations.

“Junior Lien Indebtedness” means any Indebtedness (other than intercompany Indebtedness owing to an Issuer or its Affiliates) of any Issuer or any Guarantor (including any Permitted Refinancing Indebtedness in respect thereof) that is secured by a Junior Lien pursuant to a Permitted Lien described under clause (1) of the definition thereof; provided that, in the case of any Indebtedness referred to in this definition:

(1) such Indebtedness does not mature and does not have any mandatory or scheduled payments or sinking fund obligations prior to the maturity date of the Notes (except as a result of a customary change of control or asset sale repurchase offer provisions);

(2) on or before the date on which the first such Indebtedness is incurred by any Issuer or any Guarantor, the Company shall deliver to each Secured Representative complete copies of each applicable Junior Lien Document (which shall provide that each secured party with respect to such Indebtedness shall be subject to and bound by the Junior Lien Intercreditor Agreement), along with an Officers’ Certificate certifying as to such Junior Lien Documents and identifying the obligations constituting Junior Lien Obligations;

(3) on or before the date on which any such Indebtedness is incurred by any Issuer or any Guarantor, such Indebtedness is designated by the Company, in an Officers’ Certificate delivered to the Junior Lien Representative and each Secured Representative, as “Junior Lien Obligations” hereunder;

(4) a Junior Lien Representative is designated with respect to such Indebtedness and executes and delivers the Junior Lien Intercreditor Agreement (including, as applicable, a joinder thereto) on behalf of itself and all holders of such Indebtedness; and

(5) all other requirements set forth in the Junior Lien Intercreditor Agreement as to the confirmation, grant or perfection of the Liens of the holders of Junior Lien Obligations to secure such Indebtedness or Obligations in respect thereof are satisfied.

“Junior Lien Intercreditor Agreement” means an intercreditor agreement which subordinates the Lien on the Collateral of the holders of the Junior Lien Obligations to the Lien on the Collateral of each of the holders of ABL Obligations and Pari Passu ABL Obligations and the holders of the Notes-TLB Obligations and the terms of which are consistent with market terms (in the view of the ABL Collateral Agent or, if the ABL Collateral Agent has been replaced, any other agent for the holders of ABL Obligations) governing security arrangements for the subordination and sharing of Liens or arrangements relating to the distribution of payments, as applicable, at the time the intercreditor agreement is proposed to be established in light of the type of Indebtedness subject thereto.
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“Junior Lien Obligations” means Junior Lien Indebtedness and all other Obligations in respect thereof.

“Junior Lien Representative” means in the case of any series of Junior Lien Obligations, the trustee, agent or representative of the holders of such series of Junior Lien Obligations who is appointed as a representative of the Junior Lien Obligations (for purposes related to the administration of security interests) pursuant to the applicable Junior Lien Document governing such series of Junior Lien Obligations, together with its successors and assigns in such capacity.

“Leasehold Property” means any leasehold interest of any Issuer or any Guarantor as lessee under any lease of a Real Property Asset.

“Lien” means, with respect to any asset, any mortgage, lien, pledge, hypothecation, charge, security interest or encumbrance of any kind in respect of such asset, regardless of whether filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the UCC or PPSA (or equivalent statutes) of any jurisdiction other than a precautionary financing statement respecting a lease not intended as a security agreement.

“Limited Condition Transaction” means any (i) Investment, acquisition (whether by merger, consolidation, amalgamation or otherwise), sale or disposition whose consummation is not conditioned on the availability or, or on obtaining, third-party financing and (ii) any redemption, repurchase, defeasance, satisfaction and discharge or repayment of Indebtedness, Disqualified Stock or preferred stock requiring irrevocable notice in advance of such redemption, repurchase, defeasance, satisfaction and discharge or repayment.

“Material Real Property Asset” means (a) any (x) Grand Mesa Asset and (y) Delaware Asset, in each case, with a Designated Value in excess of $1.0 million and (b) any other Real Property Asset of any Issuer or any Guarantor that is located in the United States and has a Designated Value equal to or greater than $10.0 million as of the Issue Date or as of the date of acquisition thereof, excluding in the case of this subsection (b):

(1) any Leasehold Property, easement or right of way if under the terms of the lease with respect to such Leasehold Property or conveyance document with respect to such easement or right-of-way, or applicable law, the grant of a Lien therein is prohibited or requires the consent of the applicable third party and such prohibition has not been waived or any necessary third party consents have not been obtained after the use of commercially reasonable efforts to do so (which, for the avoidance of doubt shall not require cash payments or other consideration aside from payment or reimbursement of reasonable fees and expenses in connection with the preparation and recording of the documentations related to such consents and mortgages); and

(2) any other Real Property Asset or Real Property Assets identified by Issuer or Guarantor, if the aggregate Designated Value of such Real Property Asset(s), together with the Designated Value of any Real Property Asset(s) the subject of subsection (1) above, does not exceed the greater of $250.0 million and 2.5% of the Total Assets of the Company.

“Moody’s” means Moody’s Investors Service, Inc. or any successor to the ratings business thereof.

“MVC Contract” means any minimum volume contract or other revenue contract of Operating LLC or any of its Subsidiaries, the duration of which is at least 12 months, that features a fixed fee that automatically steps up on a date certain notwithstanding any change in volumes or other conditions.
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“Net Proceeds” means the aggregate amount of cash proceeds and Cash Equivalents received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash or Cash Equivalents received upon the sale or other disposition of any non-cash consideration received in any Asset Sale, but excluding any non-cash consideration deemed to be cash for purposes of Section 4.10 hereof), net of:

(1) the direct costs relating to such Asset Sale, including, without limitation, all legal, accounting, investment banking, title and recording tax expenses, commissions and other fees and expense incurred, and all federal, state, provincial, foreign and local taxes required to be paid or accrued as a liability under GAAP (after taking into account any available tax credits or deductions and any tax sharing agreements), as a consequence of such Asset Sale;

(2) all payments made on any Indebtedness that is secured by any assets subject to such Asset Sale, in accordance with the terms of such Indebtedness, or that must by its terms, or in order to obtain a necessary consent to such Asset Sale, or by applicable law be repaid out of the proceeds from such Asset Sale;

(3) all distributions and other payments required to be made to holders of minority interests in Subsidiaries or Joint Ventures as a result of such Asset Sale; and

(4) the deduction of appropriate amounts to be provided by the seller as a reserve, in accordance with GAAP, or held in escrow, in either case for as long as required to be held as reserve or in escrow for adjustment in respect of the sale price or for indemnification or any liabilities associated with the assets disposed of in such Asset Sale and retained by the Company or any Restricted Subsidiary after such Asset Sale.

“Non-Recourse Debt” means Indebtedness:

(1) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, Guarantee, indemnity, agreement or instrument that would constitute Indebtedness) or (b) is directly or indirectly liable as a guarantor or otherwise, in each case of clause (a) and (b) above, except for Customary Recourse Exceptions; and

(2) as to which the lenders have been notified in writing that they will not have any recourse to the Capital Stock or assets of the Company or any of its Restricted Subsidiaries (other than the Equity Interests of any Unrestricted Subsidiary or Joint Venture), except for Customary Recourse Exceptions.

“Non-U.S. Person” means a Person who is not a U.S. Person.

“Note Guarantees” means, with respect to a series of Notes, any Guarantee of the Issuers’ obligations under this Indenture and the Notes of such series by any Guarantor in accordance with the provisions of this Indenture.

“Notes Obligations” means the 2029 Notes Obligations and the 2032 Notes Obligations.

“Notes” means the 2029 Notes and the 2032 Notes.

“Notes Documents” means this Indenture, the Notes, the Note Guarantees, the Security Documents and any other document related to the issuance of the Notes, as may be amended or supplemented from time to time.

“Notes-TLB Intercreditor Agreement” means the intercreditor agreement dated as of the Issue Date among the Term Loan Collateral Agent, the Collateral Agent, the Real Property Collateral Agent, the Issuers and the Guarantors in respect of the Notes-TLB Obligations and any future Pari Passu Notes-TLB Obligations, as amended or supplemented from time to time.

“Notes-TLB Priority Collateral” has the meaning given to it in the ABL Intercreditor Agreement.
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“Notes-TLB Obligations” means, subject to the terms and conditions in the Intercreditor Agreements, (i) all Notes Obligations, (ii) all Term Loan Obligations and (iii) all Pari Passu Notes-TLB Obligations.

“Obligations” means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.

“Offering Memorandum” means the offering memorandum dated January 25, 2024, related to the Notes.

“Officer” means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Chief Accounting Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person (or, with respect to the Company, so long as it remains a partnership, the General Partner).

“Officers’ Certificate” means a certificate signed on behalf of the Company by two Officers of the Company or two Officers of the General Partner, one of whom must be the principal executive officer, the principal financial officer or the principal accounting officer of such Person, that meets the requirements of this Indenture pertaining to such certificates.

“Operating Surplus” has the meaning assigned to such term in the Partnership Agreement, as in effect on the Issue Date; provided that, for the avoidance of doubt, for purposes of any calculation pursuant to this Indenture, Operating Surplus shall be zero as of the day immediately prior to the first day of the first quarter in which the Issue Date occurs and exclude any amounts attributable to Operating Surplus prior to the first day of the first quarter in which the Issue Date occurs. For the avoidance of doubt, when used with reference to a fiscal quarter or other period, such reference shall mean the Operating Surplus calculated through and including the last day of such period.

“Opinion of Counsel” means an opinion from legal counsel who is reasonably acceptable to the Trustee, that meets the requirements of Section 12.05 hereof. The counsel may be an employee of or counsel to the Company, any Subsidiary of the Company or the Trustee.

“Pari Passu ABL Lien Indebtedness” means any Indebtedness that is permitted to have Pari Passu Lien Priority relative to the ABL Obligations with respect to the Collateral and is not secured by any other assets; provided that, in each case, an authorized representative of the holders of such Indebtedness shall have executed a joinder to the ABL Intercreditor Agreement in the form provided therein.

“Pari Passu ABL Obligations” means Pari Passu ABL Lien Indebtedness and all other Obligations in respect thereof.

“Pari Passu Indebtedness” means any Indebtedness of the Issuer or any Guarantor that is not Subordinated Debt.

“Pari Passu Lien Priority” means relative to specified Indebtedness and other obligations having equal Lien priority to (i) the Notes-TLB Obligations on the Collateral or (ii) the ABL Obligations on the Collateral.

“Pari Passu Notes-TLB Indebtedness” means any Additional Notes, additional Term Loan Obligations and any other Indebtedness that has a Stated Maturity date that is equal to or longer than the Stated Maturity date of any Notes-TLB Obligations that is permitted to have Pari Passu Lien Priority relative to the Notes-TLB Obligations with respect to the Collateral and is not secured by any other assets; provided that, in each case, an authorized representative of the holders of such Indebtedness (other than any Additional Notes) shall have executed a joinder to the Intercreditor Agreements in the form provided therein.

“Pari Passu Notes-TLB Obligations” means Pari Passu Notes-TLB Indebtedness and all other Obligations in respect thereof.
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“Pari Passu Second Lien” means a Lien having equal priority to (i) the Lien securing the Notes-TLB Obligations on the ABL Priority Collateral and (ii) the Lien securing the ABL Obligations on the Notes-TLB Priority Collateral pursuant to the Pari Passu Second Lien Intercreditor Agreement, granted by the Issuers or any Guarantor to secure Pari Passu Second Lien Obligations.

“Pari Passu Second Lien Documents” means, collectively, any indenture, note, security document and each of the other agreements, documents and instruments providing for or evidencing any Pari Passu Second Lien Obligations, and any other document or instrument executed or delivered at any time in connection with any Pari Passu Second Lien Obligations, to the extent such are effective at the relevant time, in each case as each may be amended, restated, supplemented, modified, renewed, extended or refinanced in whole or in part from time to time, and any other credit agreement, indenture or other agreement, document or instrument evidencing, governing, relating to or securing any Pari Passu Second Lien Obligations.

“Pari Passu Second Lien Indebtedness” means any Indebtedness (other than intercompany Indebtedness owing to an Issuer or its affiliates) of any Issuer or any Guarantor (including any Permitted Refinancing Indebtedness in respect thereof) that is secured by a Pari Passu Second Lien pursuant to a Permitted Lien described under clause (1) of the definition thereof; provided that, in the case of any Indebtedness referred to in this definition:

(1) such Indebtedness does not mature and does not have any mandatory or scheduled payments or sinking fund obligations prior to the maturity date of the Notes (except as a result of a customary change of control or asset sale repurchase offer provisions);

(2) on or before the date on which the first such Indebtedness is incurred by any Issuer or any Guarantor, the Company shall deliver to each Secured Representative complete copies of each applicable Pari Passu Second Lien Document (which shall provide that each secured party with respect to such Indebtedness shall be subject to and bound by the Pari Passu Second Lien Intercreditor Agreement), along with an Officers’ Certificate certifying as to such Pari Passu Second Lien Documents and identifying the obligations constituting Pari Passu Second Lien Obligations;

(3) on or before the date on which any such Indebtedness is incurred by any Issuer or any Guarantor, such Indebtedness is designated by the Company, in an Officers’ Certificate delivered to the Pari Passu Second Lien Representative and each Secured Representative, as “Pari Passu Second Lien” hereunder;

(4) a Pari Passu Second Lien Representative is designated with respect to such Indebtedness and executes and delivers the Pari Passu Second Lien Intercreditor Agreement (including, as applicable, a joinder thereto) on behalf of itself and all holders of such Indebtedness; and

(5) all other requirements set forth in the Pari Passu Second Lien Intercreditor Agreement as to the confirmation, grant or perfection of the Liens of the holders of Pari Passu Second Lien Obligations to secure such Indebtedness or Obligations in respect thereof are satisfied.

“Pari Passu Second Lien Intercreditor Agreement” means an intercreditor agreement which subordinates the Lien on the Collateral of the holders of the Pari Passu Second Lien Obligations to (i) the Lien on the ABL Priority Collateral of each of the holders of ABL Obligations and Pari Passu ABL Obligations and (ii) the Lien on the Notes-TLB Priority Collateral of the holders of the Notes-TLB Obligations and the terms of which are consistent with market terms (in the view of the ABL Collateral Agent or, if the ABL Collateral Agent has been replaced, any other agent for the holders of ABL Obligations) governing security arrangements for the subordination and sharing of Liens or arrangements relating to the distribution of payments, as applicable, at the time the intercreditor agreement is proposed to be established in light of the type of Indebtedness subject thereto.

“Pari Passu Second Lien Obligations” means Pari Passu Second Lien Indebtedness and all other Obligations in respect thereof.
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“Pari Passu Second Lien Representative” means in the case of any series of Pari Passu Second Lien Obligations, the trustee, agent or representative of the holders of such series of Pari Passu Second Lien Obligations who is appointed as a representative of the Pari Passu Second Lien Obligations (for purposes related to the administration of security interests) pursuant to the applicable Pari Passu Second Lien Document governing such series of Pari Passu Second Lien Obligations, together with its successors and assigns in such capacity.

“Participant” means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and, with respect to DTC, shall include Euroclear and Clearstream).

“Partnership Agreement” means the Seventh Amended and Restated Agreement of Limited Partnership of the Company dated as of October 31, 2019, as amended by the First Amendment to Seventh Amended and Restated Agreement of Limited Partnership of NGL Energy Partners LP dated as of February 4, 2021, as such may be further amended, modified or supplemented from time to time.

“Permitted Acquisition Indebtedness” means Indebtedness or Disqualified Stock of the Company or any of its Restricted Subsidiaries to the extent such Indebtedness or Disqualified Stock was Indebtedness or Disqualified Stock of:

(1) a Subsidiary prior to the date on which such Subsidiary became a Restricted Subsidiary; or

(2) a Person that was merged, amalgamated or consolidated into the Company or a Restricted Subsidiary;

provided that on the date such Subsidiary became a Restricted Subsidiary or the date such Person was merged, amalgamated and consolidated into the Company or a Restricted Subsidiary, as applicable, after giving pro forma effect thereto and to any related financing transaction as if the same had occurred at the beginning of the Trailing Four Quarter Period:

(A) the Restricted Subsidiary or the Company, as applicable, would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09 hereof; or

(B) the Fixed Charge Coverage Ratio for the Restricted Subsidiary or the Company, as applicable, would be equal to or greater than the Fixed Charge Coverage Ratio for such Restricted Subsidiary or the Company immediately prior to such transaction.

“Permitted Business” means either (a) gathering, transporting, compressing, treating, processing, marketing, distributing, storing or otherwise handling Hydrocarbons, or activities or services reasonably related or ancillary thereto, including water treatment, disposal and transportation, and entering into Hedging Obligations relating to any of the foregoing activities, or (b) any other business that generates gross income at least 90% of which constitutes “qualifying income” under Section 7704(d) of the Internal Revenue Code.

“Permitted Business Investments” means Investments by the Company or any of its Restricted Subsidiaries in any Unrestricted Subsidiary or in any Joint Venture; provided that:

(1) if such Unrestricted Subsidiary or Joint Venture has outstanding Indebtedness at the time of such Investment, either (a) all such Indebtedness is Non-Recourse Debt or (b) any such Indebtedness of such Unrestricted Subsidiary or Joint Venture that is recourse to the Company or any of its Restricted Subsidiaries (which shall include, without limitation, all Indebtedness of such Unrestricted Subsidiary or Joint Venture for which the Company or any of its Restricted Subsidiaries may be directly or indirectly, contingently or otherwise, obligated to pay, whether pursuant to the terms of such Indebtedness, by law or pursuant to any guarantee, including, without limitation, any “claw-back,” “make-well” or “keep-well”
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arrangement) could, at the time such Investment is made, be incurred at that time by the Company and its Restricted Subsidiaries under the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) hereof; and

(2) such Unrestricted Subsidiary’s or Joint Venture’s activities are not outside the scope of the Permitted Business.

“Permitted Holder” means: (i) any of Coady Enterprises, LLC, Shawn W. Coady, Thorndike, LLC, Todd M. Coady, KrimGP2010, LLC, H. Michael Krimbill, NGL Energy GP LLC and EMG II NGL GP Holdings, LLC; (ii) any spouse, lineal descendant, legal guardian or other legal representative or estate of any of the Persons described in the preceding clause (i); (iii) any trust of which at least one of the trustees is any of the Persons described in the preceding clauses (i) or (ii); and (iv) any other Person that is controlled directly or indirectly by any one or more of the Persons described in the preceding clauses (i) through (iii).

“Permitted Investments” means:

(1) any Investment in the Company or in a Restricted Subsidiary;

(2) any Investment in Cash Equivalents;

(3) any Investment by the Company or any Restricted Subsidiary in a Person, if as a result of such Investment:

(A) such Person becomes a Restricted Subsidiary; or

(B) such Person is merged, consolidated or amalgamated with or into, or is otherwise acquired by, or transfers or conveys substantially all of its assets to, or is liquidated or wound-up into, the Company or a Restricted Subsidiary;

(4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 4.10 hereof;

(5) any Investment in a Person to the extent in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company;

(6) any Investment received in compromise or resolution of (a) obligations of trade creditors or customers that were incurred in the ordinary course of business of the Company or any of its Restricted Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer, or as a result of a foreclosure by, or other transfer of title to, the Company or any of its Restricted Subsidiaries with respect to any secured investment in default; or (b) litigation, arbitration or other disputes;

(7) Investments represented by Hedging Obligations;

(8) Investments in any Person to the extent such Investments consist of prepaid expenses, negotiable instruments held for collection and lease, utility and workers’ compensation, performance and other deposits made in the ordinary course of business by the Company or any of its Restricted Subsidiaries;

(9) advances to or reimbursements of employees for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business;

(10) loans or advances to officers, directors or employees made in the ordinary course of business of the General Partner, the Company or any Restricted Subsidiary in an aggregate principal amount not to exceed $5.0 million at any one time outstanding; (11) repurchases of the Notes of any series and the Note Guarantees;
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(12) advances and prepayments for asset purchases in the ordinary course of business in a Permitted Business of the Company or any of its Restricted Subsidiaries;

(13) receivables owing to the Company or any Restricted Subsidiary created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Company or any such Restricted Subsidiary deems reasonable under the circumstances;

(14) any Guarantee of Indebtedness permitted to be incurred by Section 4.09 hereof other than a guarantee of Indebtedness of an Affiliate of the Company that is not a Restricted Subsidiary;

(15) any Investment existing on, or made pursuant to binding commitments existing on, the Issue Date and any Investment consisting of an extension, modification or renewal of any Investment existing on, or made pursuant to a binding commitment existing on, the Issue Date; provided that the amount of any such Investment may be increased (a) as required by the terms of such Investment as in existence on the Issue Date or (b) as otherwise permitted under this Indenture;

(16) surety and performance bonds and workers’ compensation, utility, lease, tax, performance and similar deposits and prepaid expenses in the ordinary course of business;

(17) guarantees by the Company or any of its Restricted Subsidiaries of operating leases (other than Capital Lease Obligations) or of other obligations that do not constitute Indebtedness, in each case entered into by the Company or any such Restricted Subsidiary in the ordinary course of business;

(18) Permitted Business Investments having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (18) that are at the time outstanding, that do not exceed the greater of (a) $200.0 million and (b) 3.75% of the Total Assets of the Company;

(19) Investments received as a result of a foreclosure by the Company or any of its Restricted Subsidiaries with respect to any secured Investment in default;

(20) Investments acquired after the Issue Date as a result of the acquisition by the Company or any Restricted Subsidiary of another Person, including by way of a merger, amalgamation or consolidation with or into the Company or any of its Restricted Subsidiaries, or all or substantially all of the assets of another Person, in each case, in a transaction that is not prohibited by Section 5.01(a) hereof after the Issue Date to the extent that such Investments were not made in contemplation of such acquisition, merger, amalgamation or consolidation and were in existence on the date of such acquisition, merger, amalgamation or consolidation; and

(21) other Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (21) that are at the time outstanding, that do not exceed the greater of (a) $200.0 million and (b) 3.75% of the Total Assets of the Company; provided, however, that if any Investment pursuant to this clause (21) is made in any Person that is not a Restricted Subsidiary at the date of the making of such Investment and such Person becomes a Restricted Subsidiary after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (1) above and shall cease to have been made pursuant to this clause (21) for so long as such Person continues to be a Restricted Subsidiary.

“Permitted Liens” means, with respect to any Person:
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(1) Liens securing Indebtedness incurred under Credit Facilities (including the ABL Facility, the Term Loan Facility and the Notes (other than any Additional Notes), the Note Guarantees (other than in respect of any Additional Notes) and other obligations under this Indenture (other than in respect of any Additional Notes)) that is permitted to be incurred pursuant to clause (1) of the definition of Permitted Debt in Section 4.09; provided that such Indebtedness secured by Liens pursuant to clause (1)(II) of such definition may be Pari Passu Notes-TLB Obligations (including Additional Notes), Pari Passu Second Lien Obligations or Junior Lien Obligations;

(2) Liens securing Indebtedness of Foreign Subsidiaries that is permitted to be incurred pursuant to clause (13) of the definition of Permitted Debt in Section 4.09(b) hereof;

(3) Liens to secure Hedging Obligations and/or Obligations with respect to Treasury Management Arrangements incurred in the ordinary course of business;

(4) Liens on property of a Person existing at the time such Person becomes a Restricted Subsidiary or is merged with or into or amalgamated with or consolidated with the Company or any Restricted Subsidiary; provided that such Liens were in existence prior to the contemplation of such Person becoming a Restricted Subsidiary or such merger, amalgamation or consolidation and do not extend to any assets (other than improvements thereon, accessions thereto and proceeds thereof) other than those of the Person that becomes a Restricted Subsidiary or is merged with or into or amalgamated with or consolidated with the Company or any Restricted Subsidiary;

(5) Liens on property (including Capital Stock) existing at the time of acquisition of the property by the Company or any Subsidiary of the Company, including any acquisition by means of a merger, amalgamation or consolidation with or into the Company or a Restricted Subsidiary; provided that such Liens were in existence prior to such acquisition and not incurred in contemplation of, such acquisition;

(6) Liens, pledges or deposits by such Person under workers’ compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits or cash or United States government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import or customs duties or for the payment of rent, in each case incurred in the ordinary course of business;

(7) carriers’, warehousemen’s, mechanics’, landlords’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business in respect of obligations which do not, individually or in the aggregate, materially impair the use of any of the assets or properties of the Company or any Restricted Subsidiary or which are not overdue by more than 30 days or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Company or such Restricted Subsidiary, as the case may be, in accordance with GAAP;

(8) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (3) of the definition of Permitted Debt in Section 4.09(b) hereof covering only the assets acquired with or financed by such Indebtedness;

(9) Liens to secure Indebtedness of Restricted Subsidiaries that are not Guarantors permitted under Section 4.09 hereof; provided that such Liens may not extend to any property or assets of the Company or any Guarantor other than the Capital Stock of any non-Guarantor Restricted Subsidiaries;

(10) (i) Liens on and pledges of the Equity Interests of any Unrestricted Subsidiary or any Joint Venture owned by the Company or any Restricted Subsidiary to the extent securing Non-Recourse Debt or other Indebtedness of such Unrestricted Subsidiary or Joint Venture and (ii) any restriction or encumbrance (including customary rights of first refusal and tag, drag and similar rights) with respect to the pledge or transfer of Equity Interests of (x) any Unrestricted Subsidiary, (y) any Subsidiary that is not a wholly owned Subsidiary or (z) the Equity Interests in any Person that is not a Subsidiary;
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(11) Liens on any asset or property acquired, constructed or improved by the Company or any of its Restricted Subsidiaries; provided that (a) such Liens are in favor of the seller of such asset or property, in favor of the Person or Persons developing, constructing, repairing or improving such asset or property, or in favor of the Person or Persons that provided the funding for the acquisition, development, construction, repair or improvement cost, as the case may be, of such asset or property, (b) such Liens are created within 360 days after the acquisition, development, construction, repair or improvement, (c) the aggregate principal amount of the Indebtedness secured by such Liens is otherwise permitted to be incurred under this Indenture and does not exceed the greater of (i) the cost of the asset or property so acquired, constructed or improved plus related financing costs and (ii) the Fair Market Value of the asset or property so acquired, constructed or improved, measured at the date of such acquisition, or the date of completion of such construction or improvement, and (d) such Liens are limited to the asset or property so acquired, constructed or improved (including the proceeds thereof, accessions thereto, upgrades thereof and improvements thereto);

(12) Liens existing on the Issue Date (for the avoidance of doubt, excluding Liens securing Indebtedness incurred under the ABL Facility, the Notes and the Note Guarantees and the Term Loan Facility on the Issue Date);

(13) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded; provided that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor;

(14) Liens imposed by law, such as carriers’, warehousemen’s, landlord’s and mechanics’ Liens, in each case, incurred in the ordinary course of business;

(15) survey exceptions, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, leases and subleases of real property, or zoning or other restrictions as to the use of real property that were not incurred in connection with Indebtedness and that do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of the Company and its Restricted Subsidiaries, considered as a single enterprise;

(16) Liens on pipelines or pipeline facilities that arise by operation of law;

(17) Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred under this Indenture and which Refinances Secured Indebtedness; provided, however, that the new Lien is limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to, such property or proceeds or distributions thereof);

(18) Liens on insurance policies and proceeds thereof, or other deposits, to secure insurance premium financings;

(19) filing of UCC or PPSA financing statements as a precautionary measure in connection with operating leases;

(20) bankers’ Liens, rights of setoff, Liens arising out of judgments, attachments or awards not constituting an Event of Default and notices of lis pendens and associated rights related to litigation being contested in good faith by appropriate proceedings and for which adequate reserves have been made; (21) Liens on cash, Cash Equivalents or other property arising in connection with the defeasance, discharge or redemption of Indebtedness;
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(22) Liens on specific items of inventory or other goods (and the proceeds thereof) of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created in the ordinary course of business for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

(23) grants of software and other technology licenses in the ordinary course of business;

(24) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into in the ordinary course of business;

(25) Liens in favor of the Issuers or any of the Guarantors;

(26) Liens arising under operating agreements, joint venture agreements, partnership agreements, construction agreements, oil and gas leases, farmout agreements, division orders, agreements for the purchase, gathering, processing, treatment, sale, transportation or exchange of Hydrocarbons, unitization and pooling designations, declarations, orders and agreements, development agreements, participating agreements, area of mutual interest agreements, gas balancing agreements, injection, repressuring and recycling agreements, salt water or other disposal agreements, and other agreements arising in the ordinary course of the Company’s or any of its Restricted Subsidiaries’ business that are customary in the Permitted Business;

(27) Liens on, or related to, properties or assets to secure all or part of the costs incurred in the ordinary course of a Permitted Business for gathering, transporting, compressing, treating, processing, marketing, distributing, storing or otherwise handling Hydrocarbons, or activities or services reasonably related or ancillary thereto, including entering into Hedging Obligations to support these businesses and the development, manufacture or sale of equipment or technology related to these activities;

(28) Liens arising solely by virtue of any statutory or common law provisions relating to bankers’ Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained or deposited with a depositary institution; provided that:

(A) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Company in excess of those set forth by regulations promulgated by the Federal Reserve Board; and

(B) such deposit account is not intended by the Company or any Restricted Subsidiary to provide collateral to the depository institution;

(29) Liens arising from UCC or PPSA financing statement filings regarding operating leases entered into by the Company and its Restricted Subsidiaries in the ordinary course of business;

(30) Liens arising under this Indenture in favor of the Trustee under this Indenture for its own benefit and similar Liens in favor of other trustees, agents and representatives arising under instruments governing Indebtedness permitted to be incurred under this Indenture; provided that such Liens are solely for the benefit of the trustees, agents or representatives in their capacities as such and not for the benefit of the holders of the Indebtedness;

(31) any leases or non-exclusive licenses of any Intellectual Property or intangible assets or entering into any franchise agreement, in each case, in the ordinary course of business;

(32) ground leases in respect of real property on which facilities owned or leased by the Company or any of its Restricted Subsidiaries are located and other Liens affecting the interest of any landlord (and any underlying landlord) of any real property leased by the Company or any Restricted Subsidiary;
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(33) other Liens with respect to obligations at any one time outstanding not to exceed the greater of (a) $150.0 million and (b) 3.00% of the Total Assets of the Company; and

(34) Liens securing Junior Lien Obligations in an amount equal to the maximum principal amount that could be incurred such that after giving pro forma effect thereto, the Secured Leverage Ratio for the Trailing Four Quarters would be no greater than 4.50 to 1.00.

“Permitted Preferred Payments” means any and all payments to holders of, or otherwise on, Existing Preferred Units, including in respect of distribution amounts (including any penalty or default amounts), liquidation preference, stated value, redemption amounts and accretion amounts (excluding any payments on Class B Preferred Units and Class C Preferred Units that are not required in order to permit the redemption, repurchase or other acquisition or retirement of, or any other payments in respect of, in whole or in part, the Class D Preferred Units).

“Permitted Refinancing Indebtedness” means any Indebtedness of the Company or any of its Restricted Subsidiaries, any Disqualified Stock of the Company or any preferred stock of any Restricted Subsidiary (a) issued in exchange for, or the net proceeds of which are used to extend, renew, refund, refinance, replace, retire, redeem, repay, defease, discharge or otherwise retire for value, in whole or in part, or (b) constituting an amendment, modification or supplement to or a deferral or renewal of (clauses (a) and (b), collectively, a “Refinancing,” and the term “Refinanced” has a correlative meaning) any other Indebtedness of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness), any Disqualified Stock of the Company or any preferred stock of a Restricted Subsidiary in a principal amount or, in the case of Disqualified Stock of the Company or preferred stock of a Restricted Subsidiary, liquidation preference, not to exceed (after deduction of reasonable and customary fees and expenses incurred in connection with the Refinancing) the lesser of:

(1) the principal amount or, in the case of Disqualified Stock or preferred stock, liquidation preference, of the Indebtedness, Disqualified Stock or preferred stock so Refinanced (plus, in the case of Indebtedness, the amount of premium, if any paid in connection therewith); and

(2) if the Indebtedness being Refinanced was issued with any original issue discount, the accreted value of such Indebtedness (as determined in accordance with GAAP) at the time of such Refinancing.

Notwithstanding the preceding, no Indebtedness, Disqualified Stock or preferred stock will be deemed to be Permitted Refinancing Indebtedness, unless:

(A) such Indebtedness, Disqualified Stock or preferred stock has a final maturity date or redemption date, as applicable, no earlier than the final maturity date or redemption date, as applicable, of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness, Disqualified Stock or preferred stock being Refinanced;

(B) if the Indebtedness, Disqualified Stock or preferred stock being Refinanced is contractually subordinated or otherwise junior in right of payment to the Notes, such Indebtedness (and any related Guarantee), Disqualified Stock or preferred stock is contractually subordinated or otherwise junior in right of payment to, the Notes, on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness, Disqualified Stock or preferred stock being Refinanced at the time of the Refinancing; and

(C) such Indebtedness or Disqualified Stock is incurred or issued by the Company or such Indebtedness, Disqualified Stock or preferred stock is incurred or issued by the Restricted Subsidiary who is the obligor on the Indebtedness being Refinanced or the issuer of the Disqualified Stock or preferred stock being Refinanced; provided that a Restricted Subsidiary that is also a Guarantor may guarantee Permitted Refinancing Indebtedness incurred by the Company, regardless of whether such Restricted Subsidiary was an obligor or guarantor of the Indebtedness being Refinanced.
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Notwithstanding the foregoing, any Indebtedness incurred under Credit Facilities shall be subject to the refinancing provision of the definition of Credit Facilities and not pursuant to the requirements set forth in this definition of Permitted Refinancing Indebtedness.

“Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company, unlimited liability company or government or other entity.

“PPSA” means the Personal Property Security Act (Alberta), including the regulations thereto, as amended from time to time, and any other similar legislation of any Canadian province or territory; provided that, if perfection or the effect of perfection or non-perfection or the priority of any security interest or other Lien is governed by the personal property security legislation or other applicable legislation with respect to personal property security in effect in a jurisdiction in Canada other than the Province of Alberta (including the Civil Code of Québec), “PPSA” shall refer instead to such other applicable federal, provincial or territorial legislation pertaining to the granting, perfecting, opposability, priority, ranking or enforcement of Liens on personal or movable property, and any successor statutes, together with any regulations thereunder, in each case as in effect from time to time. provisions hereof relating to such perfection, effect of perfection or non-perfection or priority.

“Private Placement Legend” means the legend set forth in Section 2.06(f)(1) hereof to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture.

“QIB” means a “qualified institutional buyer” as defined in Rule 144A.

“Rating Agency” means each of S&P, Moody’s and Fitch, or if (and only if) any of S&P, Moody’s or Fitch shall not make a rating on the Notes of the applicable series publicly available, a nationally recognized statistical rating agency or agencies, as the case may be, selected by the Company, which shall be substituted for S&P, Moody’s or Fitch, as the case may be.

“Rating Decline” means a decrease in the rating of the Notes of any series by at least two Rating Agencies by one or more gradations (including gradations within rating categories as well as between rating categories) within 60 days after the earliest of (x) a Change of Control, (y) the date of public notice of the occurrence of a Change of Control and (z) public notice of the intention of the Company to effect a Change of Control (which 60-day period shall be extended so long as the rating of the Notes of such series is under publicly announced consideration for possible downgrade by a Rating Agency), which Rating Decline was the result of such Change of Control; provided, however, that a Rating Decline otherwise arising by virtue of a particular reduction in rating will not be deemed to have occurred as a result of a particular Change of Control unless each such Rating Agency making the reduction in rating to which this definition would otherwise apply announces or publicly confirms or informs the trustee in writing at the request of the Issuers or the Trustee that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the applicable Change of Control (whether or not the applicable Change of Control has occurred at the time of the Rating Decline). In determining whether the rating of any series of Notes has decreased by one or more gradations, gradations within rating categories, such as + or - for S&P, and 1, 2, and 3 for Moody’s, will be taken into account; for example, in the case of S&P, a rating decline either from BB+ to BB or BB- to B+ will constitute a decrease of one gradation. For purposes of this definition, “Change of Control” shall also include any transaction described in clauses (1) and (3) of the definition of “Change of Control” that would constitute a Change of Control pursuant to such definition if followed by a Rating Decline within the time period specified therein.

“Real Property Asset” means, at any time of determination, any fee ownership or leasehold interest of any Issuer or any Guarantor in or to any real property, together with any easements or rights-of-way of any Issuer or any Guarantor.
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“Real Property Collateral Agent” means the agent under the Notes-TLB Intercreditor Agreement appointed on behalf of each Holder of Notes-TLB Obligations to act as real property collateral agent under any mortgages, leasehold mortgages, deeds of trust, assignments of leases and rents and other security documents with respect to Material Real Property Assets.

“Regulation S” means Regulation S promulgated under the Securities Act.

“Regulation S Global Note” means a Global Note substantially in the form of Exhibit A-1 or Exhibit A-2, as applicable, hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Regulation S.

“Reporting Default” means a Default described in Section 6.01(5)(b).

“Responsible Officer” when used with respect to the Trustee, means any officer within the Corporate Trust Administration of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.

“Restricted Definitive Note” means a Definitive Note bearing the Private Placement Legend.

“Restricted Global Note” means a Global Note bearing the Private Placement Legend.

“Restricted Investment” means an Investment other than a Permitted Investment.

“Restricted Note” means a Restricted Definitive Note or a Restricted Global Note.

“Restricted Period” means the 40-day distribution compliance period as defined in Regulation S.

“Restricted Subsidiary” means any Subsidiary of the Company, other than an Unrestricted Subsidiary.

“Rule 144” means Rule 144 promulgated under the Securities Act.

“Rule 144A” means Rule 144A promulgated under the Securities Act.

“Rule 903” means Rule 903 promulgated under the Securities Act.

“Rule 904” means Rule 904 promulgated under the Securities Act.

“S&P” means S&P Global Inc., or any successor to the rating business thereof.

“SEC” means the United States Securities and Exchange Commission.

“Secured Indebtedness” means all Indebtedness (other than obligations in respect of Hedging Obligations) that is secured by a Lien.

“Secured Leverage Ratio” means, at any time of determination, the ratio of the outstanding principal amount of Secured Indebtedness (net of up to (i) for so long as Class D Preferred Units remain outstanding, $25.0 million cash and/or Cash Equivalents of the Company and the Restricted Subsidiaries and (ii) thereafter, $100.0 million cash and/or Cash Equivalents of the Company and the Restricted Subsidiaries) as of the end of the Trailing Four Quarters, to (ii) the Consolidated Cash Flow of the Company and its Restricted Subsidiaries for such Trailing Four Quarters; provided that such Secured Leverage Ratio shall be determined on a pro forma basis in a manner consistent with the definition of Fixed Charge Coverage Ratio.
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“Secured Representative” means:

(1) in the case of this Indenture and the Notes, the Trustee; or

(2) in the case of any series of Pari Passu Notes-TLB Obligations, any trustee, agent or representative thereof designated as such in the respective agreement or instrument governing such series of Pari Passu Notes-TLB Obligations.

“Securities Act” means the Securities Act of 1933, as amended.

“Security Documents” means the security agreements, pledge agreements, agency agreements, mortgages, deeds of hypothec, deeds of trust, deeds to secured debt, collateral assignments, collateral agency agreements, debentures and other instruments and documents executed and delivered by either Issuer or any Guarantor pursuant to this Indenture or any of the foregoing (including, without limitation, the financing statements under the UCC or the PPSA of the relevant state, province or territory), as the same may be amended, supplemented or otherwise modified from time to time and pursuant to which Collateral is pledged, assigned or granted to or on behalf of the Collateral Agent for the ratable benefit of the Holders with respect to each series of Notes, the Collateral Agent and the Trustee, perfected and notice of such pledge, assignment or grant is given.

“Significant Subsidiary” means any Restricted Subsidiary that would be a “significant subsidiary” as defined in Article I, Rule 1-02 of Regulation S-X promulgated pursuant to the Securities Act, as such Regulation is in effect on the Issue Date.

“Stated Maturity” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Indebtedness as of the first date it was incurred in compliance with the terms of this Indenture, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof; provided that, in the case of debt securities that are by their terms convertible into Capital Stock (or cash or a combination of cash and Capital Stock based on the value of the Capital Stock) of the Company, any obligation to offer to repurchase such debt securities on a date(s) specified in the original terms of such securities, which obligation is not subject to any condition or contingency, will be treated as a Stated Maturity date of such convertible debt securities.

“Subordinated Debt” means Indebtedness of the Company or a Guarantor that is contractually subordinated in right of payment (by its terms or the terms of any document or instrument relating thereto) to the Notes or the Note Guarantee of such Guarantor, as applicable. References to “subordinate” or “subordinate in right of payment” and similar terms shall have a correlative meaning.

“Subsidiary” means, with respect to any specified Person:

(1) any corporation, association or other business entity (other than a partnership or a limited liability company) of which more than 50% of the total voting power of its Voting Stock is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and

(2) any partnership or limited liability company of which (a) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general and limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, whether in the form of membership, general, special or limited partnership interests or otherwise, and (b) such Person or any Subsidiary of such Person is a controlling general partner or otherwise controls such entity.

“Subsidiary Guarantor” means any Domestic Subsidiary of the Company that is a Guarantor.
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“TIA” means the Trust Indenture Act of 1939 (15 U.S. Code §§ 77aaa-77bbbb), as amended, as in effect on the date hereof.

“Term Loan Administrative Agent” means The Toronto Dominion (Texas) LLC, in its capacity as the collateral agent under the Term Loan Credit Agreement, or any successor representative acting in such capacity.

“Term Loan Collateral Agent” means The Toronto Dominion (Texas) LLC, in its capacity as the collateral agent under the Term Loan Credit Agreement, or any successor representative acting in such capacity.

“Term Loan Credit Agreement” means that certain senior secured term loan credit agreement, dated on or about the Issue Date, by and among Operating LLC, as borrower, The Toronto Dominion (Texas) LLC, as administrative agent and collateral agent, and the several lenders and other agents party thereto, including any notes, guarantees, collateral and security documents, instruments and agreements executed in connection therewith, and in each case as such agreement or facility may be amended (including any amendment or restatement thereof), supplemented or otherwise modified from time to time, including any agreement exchanging, extending the maturity of, refinancing, renewing, replacing, substituting or otherwise restructuring all or any portion of the Indebtedness under such agreement or facility or any successor or replacement agreement or facility.

“Term Loan Documents” means the Term Loan Credit Agreement, any additional credit agreement, note purchase agreement, indenture or other agreement related thereto and all other loan or note documents, collateral or security documents, notes, guarantees, mortgages, deeds of trust, pledge agreements, instruments and agreements governing or evidencing, or executed or delivered in connection with, the Term Loan Credit Agreement, as such agreements or instruments may be amended, supplemented, modified, restated, replaced, renewed, refunded, restructured, increased or refinanced from time to time.

“Term Loan Facility” means the senior secured term loan credit facility established under the Term Loan Credit Agreement.

“Term Loan Indebtedness” means all Indebtedness, liabilities and obligations (of every kind or nature) incurred or arising under or relating to the Term Loan Documents that has a Pari Passu Lien Priority relative to notes and the Note Guarantees, and all other obligations of the Issuers or any Guarantor in respect thereof.

“Term Loan Obligations” means Term Loan Indebtedness and all other Obligations in respect thereof.

“Total Assets” of any Person means, as of any date, the amount that, in accordance with GAAP, would be set forth under the caption “Total Assets” (or any like caption) on a consolidated balance sheet of such Person and its Restricted Subsidiaries, as of the end of the most recently ended fiscal quarter for which internal financial statements are available; provided, however, that such amount shall be adjusted to give pro forma effect to any subsequent Investment, acquisition or disposition of any assets or Person (regardless of whether effected as a merger, purchase or sale of Equity Interests, asset acquisition or disposition or other form of acquisition or disposition) by such Person or any of its Restricted Subsidiaries, including any such Investment, acquisition or disposition that is pending and giving rise to the need to determine the amount of Total Assets, as if such transaction had occurred immediately prior to the end of such most recently ended fiscal quarter.

“Total Leverage Ratio” means, at any time of determination, the ratio of (i) the outstanding principal amount of Indebtedness (other than obligations in respect of Hedging Obligations) of the Company and its Restricted Subsidiaries (net of up to (i) for so long as Class D Preferred Units remain outstanding, $25.0 million cash and/or Cash Equivalents of the Company and the Restricted Subsidiaries and (ii) thereafter, $100.0 million cash and/or Cash Equivalents of the Company and the Restricted Subsidiaries) as of the end of the Trailing Four Quarters, to (ii) the Consolidated Cash Flow of the Company and its Restricted Subsidiaries for such Trailing Four Quarters; provided that such Total Leverage Ratio shall be determined on a pro forma basis in a manner consistent with the definition of Fixed Charge Coverage Ratio.

“Trailing Four Quarters” or “Trailing Four Quarter Period” means the four full fiscal quarters most recently ended prior to such time of determination for which internal financial statements are available.
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“Transactions” means all the transactions (and any transactions related thereto) described in the definition of “Transactions” in the Offering Memorandum, which, for the avoidance of doubt, need not occur on the Issue Date.

“Treasury Management Arrangement” means any agreement or other arrangement governing the provision of treasury or cash management services, including deposit accounts, overdraft, credit or debit card, funds transfer, automated clearinghouse, zero balance accounts, returned check concentration, controlled disbursement, lockbox, account reconciliation and reporting and trade finance services and other cash management services.

“Trustee” means the party named as such in the preamble of this Indenture until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder.

“UCC” means the Uniform Commercial Code as in effect from time to time in any applicable jurisdiction.

“Unrestricted Definitive Note” means a Definitive Note that does not bear and is not required to bear the Private Placement Legend.

“Unrestricted Global Note” means a Global Note that does not bear and is not required to bear the Private Placement Legend.

“Unrestricted Note” means an Unrestricted Definitive Note or an Unrestricted Global Note.

“Unrestricted Subsidiary” means (i) each of the following Persons so long as it constitutes a Subsidiary of the Company, unless and until designated by the Board of Directors of the Company as a Restricted Subsidiary in compliance with Section 4.16 hereof: NGL Water Solutions Holdco, LLC and (ii) any Subsidiary of the Company (excluding any Issuer) that is designated by the Board of Directors of the Company as an Unrestricted Subsidiary pursuant to a resolution of the Board of Directors, but only to the extent that such Subsidiary:

(1) except to the extent permitted by subclause (1)(b) of the definition of “Permitted Business Investments,” has no Indebtedness other than Non-Recourse Debt owing to any Person other than the Company or any of its Restricted Subsidiaries;

(2) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and

(3) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries, except to the extent such Guarantee or credit support would be released upon such designation.

All Subsidiaries of an Unrestricted Subsidiary shall also be Unrestricted Subsidiaries.

“U.S. Person” means a U.S. Person as defined in Rule 902(k) promulgated under the Securities Act.

“Voting Stock” of any specified Person as of any date means the Capital Stock of such Person entitling the holders thereof (whether at all times or only so long as no senior class of Capital Stock has voting power by reason of any contingency) to vote in the election of members of the Board of Directors of such Person; provided that, with respect to a limited partnership or other entity which does not have a Board of Directors, Voting Stock means the Capital Stock of the general partner of such limited partnership or other business entity with the ultimate authority to manage the business and operations of such Person.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:
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(1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by

(2) the then outstanding principal amount of such Indebtedness.

Section 1.02    Other Definitions.

Term Defined in Section
“2029 Notes Step Down” 3.07
“2032 Notes Step Down” 3.08
“Affiliate Transaction” 4.11
“Alternate Offer” 4.14
“Authentication Order” 2.02
“CERCLA” 13.10
“Change of Control Offer” 4.14
“Change of Control Payment” 4.14
“Change of Control Purchase Date” 4.14
“Collateral Disposition Offer” 4.10
“Covenant Defeasance” 8.03
“DTC” 2.03
“Equity Distributions” 4.07
“Event of Default” 6.01
“Excess Collateral Proceeds” 4.10
“Excess Proceeds” 4.10
“Incremental Funds” 4.07
“incur” 4.09
“LCT Election” 4.20
“LCT Test Date” 4.20
“Legal Defeasance” 8.02
“Note Amount” 4.10
“Net Proceeds Offer” 4.10
“Net Proceeds Purchase Date” 4.10
“Offer Amount” 4.10
“Offer Period” 4.10
“Paying Agent” 2.03
“Other Specified Collateral Deliverables” 13.05
“Other Specified Collateral Requirements” 13.05
“Other Specified Property” 13.05
“Pari Passu Offer” 4.10
“Paying Agent” 2.03
“Payment Default” 6.01
“Permitted Debt” 4.09
“Registrar” 2.03
“Reinstatement Date” 4.17
“Restricted Payments” 4.07
“Suspended Covenants” 4.17
“Suspension Date” 4.17
“Suspension Period” 4.17

Section 1.03    Rules of Construction.

(a) Unless the context otherwise requires:

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(1) a term has the meaning assigned to it;

(2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

(3) “or” is not exclusive;

(4) “including” is not limiting;

(5) words in the singular include the plural, and in the plural include the singular;

(6) “will” shall be interpreted to express a command;

(7) provisions apply to successive events and transactions; and

(8) references to sections of or rules under the Securities Act will be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time.

(b) For purposes of any Collateral located in the Province of Québec or charged by any deed of hypothec (or any other Notes Documents governed by the laws of the Province of Québec) and for all other purposes pursuant to which the interpretation or construction of any Notes Documents may be subject to the laws of the Province of Québec or a court or tribunal exercising jurisdiction in the Province of Québec, (a) “personal property” shall be deemed to include “movable property”, (b) “real property” shall be deemed to include “immovable property”, (c) “tangible property” shall be deemed to include “corporeal property”, (d) “intangible property” shall be deemed to include “incorporeal property”, (e) “security interest” and “mortgage” shall be deemed to include a “hypothec”, (f) all references to filing, registering or recording under the UCC or the PPSA shall be deemed to include publication under the Civil Code of Québec, (g) all references to “perfection” of or “perfected” Liens shall be deemed to include a reference to the “opposability” of such Liens to third parties, (h) any “right of offset”, “right of setoff” or similar expression shall be deemed to include a “right of compensation”, (i) “goods” shall be deemed to include “corporeal movable property” other than chattel paper, documents of title, instruments, money and securities, and (j) an “agent” shall be deemed to include a “mandatary”.

ARTICLE II
THE NOTES

Section 2.01    Form and Dating.

(a) General. The Notes of each series and the Trustee’s certificate of authentication will be substantially in the form of Exhibit A-1 or Exhibit A-2 hereto, as applicable. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note will be dated the date of its authentication. The Notes shall be in denominations of $2,000 and integral multiples of $1,000 in excess thereof.

The terms and provisions contained in each series of Notes will constitute, and are hereby expressly made, a part of this Indenture and the Issuers, the Guarantors, the Trustee and the Collateral Agent, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.

(b) Global Notes. Notes issued in global form will be substantially in the form of Exhibit A-1 or Exhibit A-2 hereto, as applicable (including the Global Note Legend thereon and the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Notes issued in definitive form will be substantially in the form of Exhibit A-1 or Exhibit A-2 hereto, as applicable (but without the Global Note Legend thereon and without the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Each Global Note will represent such of the outstanding Notes of such series as will be specified therein and each shall provide that it represents the aggregate principal amount of outstanding Notes of such series from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes of such series represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes of such series represented thereby will be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof.
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(c) Additional Notes. Subject to compliance with the provisions of this Indenture, the Issuers may issue Additional Notes of either series under this Indenture after the Issue Date in an unlimited aggregate principal amount.

Section 2.02    Execution and Authentication.

At least one Officer must sign the Notes for each Issuer by manual or facsimile signature.

If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note will nevertheless be valid.

A Note will not be valid until authenticated by the manual signature of the Trustee. The signature will be conclusive evidence that the Note has been authenticated under this Indenture.

The Trustee will authenticate: (i) for original issue on the Issue Date, 2029 Initial Notes in the aggregate principal amount of $900,000,000 and 2032 Initial Notes in the aggregate principal amount of $1,300,000,000, and (ii) any amount of Additional Notes of such series specified by the Issuers, in each case, upon receipt of a written order of the Issuers signed by two Officers (an “Authentication Order”). Such order shall specify (a) the amount of the Notes of each series to be authenticated and the date of original issue thereof and (b) whether the Notes are Restricted Notes or Unrestricted Notes. The aggregate principal amount of Notes of each series outstanding at any time may not exceed the aggregate principal amount of such Notes authorized for issuance by the Issuers pursuant to one or more Authentication Orders, except as provided in Section 2.07 hereof.

The Trustee may appoint an authenticating agent acceptable to the Issuers to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company.

Each series of Initial Notes and any Additional Notes of such series shall be treated as a single class for all purposes under this Indenture, and unless the context otherwise requires, all references to the Notes of a series shall include the Initial Notes of such series and any Additional Notes of such series. Although the 2029 Notes and the 2032 Notes are referred to as the “Notes,” each are a separate series and will not together have any class voting rights other than as set forth in this Indenture. Accordingly, for purposes of this Indenture, unless the context otherwise requires, references to the “Notes” shall be deemed to refer to each series of Notes separately (including any Additional Notes of such series), and not to the 2029 Notes and the 2032 Notes on a combined basis. Nothing in this paragraph shall be deemed to modify, replace or otherwise affect the restrictions on transfer applicable to Restricted Notes with respect to a series of Notes set forth in Section 2.06 hereof.

Section 2.03    Registrar and Paying Agent.
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The Issuers will maintain an office or agency where Notes may be presented for registration of transfer or for exchange (“Registrar”) and an office or agency in the Borough of Manhattan, The City of New York, where Notes may be presented for payment (“Paying Agent”). Unless otherwise designated by the Issuers by written notice to the Trustee, each such office or agency shall be the Trustee’s office in the Borough of Manhattan, The City of New York.

The Registrar will keep a register of each series of Notes and of their transfer and exchange. The Issuers may appoint one or more co-registrars and one or more additional paying agents. The term “Registrar” includes any co-registrar and the term “Paying Agent” includes any additional paying agent. The Issuers may change any Paying Agent or Registrar without notice to any Holder.
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The Issuers will notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Issuers fail to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. Either Issuer or any of its Subsidiaries may act as Paying Agent or Registrar.

The Issuers initially appoint The Depository Trust Company (“DTC”) to act as Depositary with respect to the Global Notes.

The Issuers initially appoint the Trustee to act as the Registrar and Paying Agent and to act as Custodian with respect to the Global Notes.

Section 2.04    Paying Agent to Hold Money in Trust.

The Issuers will require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal of, or premium, if any, or interest, if any, on, the Notes of a series, and will notify the Trustee of any default by the Issuers in making any such payment. While any such default continues with respect to a series of Notes, the Trustee may require a Paying Agent to pay all money held by it with respect to such series of Notes to the Trustee. The Issuers at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than an Issuer or one of its Subsidiaries) will have no further liability for the money. If an Issuer or a Subsidiary acts as Paying Agent, it will segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Issuers, the Trustee will serve as Paying Agent for the Notes.

Section 2.05    Holder Lists.

The Trustee, for so long as it is acting as Registrar, shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders. If the Trustee is not the Registrar, the Issuers shall furnish to the Trustee at least two Business Days before each interest payment date, and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders. Every Holder, by receiving and holding the same, agrees with the Issuers, the Guarantors, the Trustee and the Collateral Agent that none of the Issuer, the Guarantors, the Trustee or the Collateral Agent or any agent of any of them shall be held accountable by reason of the disclosure of any information as to the names and addresses of the Holders, regardless of the source from which such information was derived.

Section 2.06    Transfer and Exchange.

(a) Transfer and Exchange of Global Notes. A Global Note of a series may not be transferred except as a whole by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Notes of a series will be exchanged by the Issuers for Definitive Notes of such series if:

(1) the Issuers deliver to the Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Issuers within 120 days after the date of such notice from the Depositary;

(2) the Issuers in their sole discretion determine that the Global Notes (in whole but not in part) should be exchanged for Definitive Notes and deliver a written notice to such effect to the Trustee; or

(3) there has occurred and is continuing an Event of Default with respect to the Notes and the Depositary notifies the Trustee of its decision to exchange the Global Notes for Definitive Notes.
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Upon the occurrence of either of the preceding events in (1) or (2) above, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee. Global Notes of a series also may be exchanged or replaced, in whole or in part, as provided in Section 2.07 and Section 2.10 hereof. Every Note of a series authenticated and delivered in exchange for, or in lieu of, a Global Note of such series or any portion thereof, pursuant to this Section 2.06, Section 2.07 or Section 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note of such series. A Global Note of a series may not be exchanged for another Note of such series other than as provided in this Section 2.06(a), however, beneficial interests in a Global Note of a series may be transferred and exchanged as provided in Section 2.06(b), (c) or (e) hereof.

(b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes will be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes will be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also will require compliance with either subparagraph (1) or (2) below, as applicable, as well as one or more of the other following subparagraphs, as applicable:

(1) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend. Beneficial interests in any Unrestricted Global Note of a series may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note of such series. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(1).

(2) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(1) hereof, the transferor of such beneficial interest must deliver to the Registrar either:

(A) both:

(i) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note of such series in an amount equal to the beneficial interest to be transferred or exchanged; and

(ii) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase; or

(B) both:

(i) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note of such series in an amount equal to the beneficial interest to be transferred or exchanged; and

(ii) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (i) above. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(g) hereof.
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(3) Transfer of Beneficial Interests to Another Restricted Global Note. A beneficial interest in any Restricted Global Note of a series may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note of such series if the transfer complies with the requirements of Section 2.06(b)(2) hereof and the Registrar receives the following:

(A) if the transferee will take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;

(B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and

(C) if the transferee will take delivery in the form of a beneficial interest in the IAI Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable.

(4) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note. A beneficial interest in any Restricted Global Note of a series may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note of such series or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note of such series if the exchange or transfer complies with the requirements of Section 2.06(b)(2) hereof and the Registrar receives the following:

(i) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or

(ii) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (4), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

If any such transfer is effected pursuant to this subparagraph (4) at a time when an Unrestricted Global Note has not yet been issued, the Issuers shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes of such series in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to this subparagraph (4).

Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.

(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.

(1) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes. If any holder of a beneficial interest in a Restricted Global Note of a series proposes to exchange such beneficial
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interest for a Restricted Definitive Note of such series or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note of such series, then, upon receipt by the Registrar of the following documentation:

(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof;

(B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;

(C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;

(D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;

(E) if such beneficial interest is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable;

(F) if such beneficial interest is being transferred to one or both Issuers or any of their Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or

(G) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,

the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g) hereof, and the Issuers shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(1) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.

(2) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes. A holder of a beneficial interest in a Restricted Global Note of a series may exchange such beneficial interest for an Unrestricted Definitive Note of such series or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note of such series only if the Registrar receives the following:

(i) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or (ii) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
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and, in each such case set forth in this subparagraph (2), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

(3) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes. If any holder of a beneficial interest in an Unrestricted Global Note of a series proposes to exchange such beneficial interest for a Definitive Note of such series or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note of such series, then, upon satisfaction of the conditions set forth in Section 2.06(b)(2) hereof, the Trustee will cause the aggregate principal amount of the applicable Unrestricted Global Note to be reduced accordingly pursuant to Section 2.06(g) hereof, and the Company will execute and the Trustee will authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(3) will be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest requests through instructions to the Registrar from or through the Depositary and the Participant or Indirect Participant. The Trustee will deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(3) will not bear the Private Placement Legend.

(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.

(1) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes. If any Holder of a Restricted Definitive Note of a series proposes to exchange such Note for a beneficial interest in a Restricted Global Note of such series or to transfer such Restricted Definitive Notes of such series to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note of such series, then, upon receipt by the Registrar of the following documentation:

(A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;

(B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;

(C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;

(D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;

(E) if such Restricted Definitive Note is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable; (F) if such Restricted Definitive Note is being transferred to one or both Issuers or any of their Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or
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(G) if such Restricted Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,

the Trustee will cancel the Restricted Definitive Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global Note, in the case of clause (C) above, the Regulation S Global Note, and in all other cases, the IAI Global Note.

(2) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of a Restricted Definitive Note of a series may exchange such Note for a beneficial interest in an Unrestricted Global Note of such series or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note of such series only if the Registrar receives the following:

(i) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or

(ii) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (2), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(2), the Trustee will cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note.

(3) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note of a series may exchange such Note for a beneficial interest in an Unrestricted Global Note of such series or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note of such series at any time. Upon receipt of a request for such an exchange or transfer, the Trustee will cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes.

If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraphs (2) or (3) above at a time when an Unrestricted Global Note has not yet been issued, the Issuers will issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee will authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred.

(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder’s compliance with the provisions of this Section 2.06(e), the Registrar will register the transfer or exchange of such Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder must present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder must provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e).
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(1) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive Note of a series may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note of such series if the Registrar receives the following:

(A) if the transfer will be made pursuant to Rule 144A, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;

(B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and

(C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable.

(2) Restricted Definitive Notes to Unrestricted Definitive Notes. Any Restricted Definitive Note of a series may be exchanged by the Holder thereof for an Unrestricted Definitive Note of such series or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note of such series if the Registrar receives the following:

(i) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or

(ii) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (2), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

(3) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of Unrestricted Definitive Notes of a series may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note of such series. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof

(f) Legends. The following legends will appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture.

(1) Private Placement Legend.

(A) Except as permitted by subparagraph (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form:
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“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS [IN THE CASE OF RULE 144A NOTES: SIX MONTHS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF, THE ORIGINAL ISSUE DATE OF THE ISSUANCE OF ANY ADDITIONAL NOTES AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY),] [IN THE CASE OF REGULATION S NOTES: 40 DAYS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF, THE ORIGINAL ISSUE DATE OF THE ISSUANCE OF ANY ADDITIONAL NOTES AND THE DATE ON WHICH THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) WAS FIRST OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN RULE 902 OF REGULATION S) IN RELIANCE ON REGULATION S], ONLY (A) TO THE PARTNERSHIP OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE PARTNERSHIP’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. [IN THE CASE OF REGULATION S NOTES: BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.]

BY ITS ACQUISITION OF THIS SECURITY (INCLUDING ANY INTEREST HEREIN) THE HOLDER THEREOF WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (1) NO PORTION OF THE ASSETS USED BY SUCH HOLDER TO ACQUIRE OR HOLD THIS SECURITY CONSTITUTES THE ASSETS OF AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OF A PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER ARRANGEMENT THAT IS SUBJECT TO SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) OR PROVISIONS UNDER ANY OTHER FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE SIMILAR TO SUCH PROVISIONS OF ERISA OR THE CODE (“SIMILAR LAWS”), OR OF AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE “PLAN ASSETS” OF ANY SUCH PLAN, ACCOUNT OR ARRANGEMENT, OR (2) THE ACQUISITION AND HOLDING OF THIS SECURITY WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR A SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR LAWS.”
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(B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraphs (b)(4), (c)(3), (d)(2), (d)(3), (e)(2), (e)(3) or (f) of this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) will not bear the Private Placement Legend.

(2) Global Note Legend. Each Global Note will bear a legend in substantially the following form:

“THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF NGL ENERGY OPERATING LLC OR NGL ENERGY FINANCE CORP. (COLLECTIVELY, THE ‘‘ISSUER’’).

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE ISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.”

(g) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note will be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes of such series, the principal amount of Notes of such series represented by such Global Note will be reduced accordingly and an endorsement will be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note of such series, such other Global Note will be increased accordingly and an endorsement will be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.

(h) General Provisions Relating to Transfers and Exchanges.
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(1) To permit registrations of transfers and exchanges, the Issuers will execute and the Trustee will authenticate Global Notes and Definitive Notes upon receipt of an Authentication Order in accordance with Section 2.02 hereof or at the Registrar’s request.

(2) No service charge will be made to a Holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Issuers may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Section 2.10, Section 3.06, Section 4.10, Section 4.14 and Section 9.05 hereof).

(3) The Registrar will not be required to register the transfer of or exchange of any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.

(4) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes of such series will be the valid obligations of the Issuers, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.

(5) Neither the Registrar nor the Issuers will be required:

(A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 10 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection;

(B) to register the transfer of or to exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part; or

(C) to register the transfer of or to exchange a Note between a record date and the next succeeding interest payment date.

(6) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Issuers may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Issuers shall be affected by notice to the contrary.

(7) The Trustee will authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02 hereof.

(8) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by electronic transmission.

Section 2.07    Replacement Notes.

If any mutilated Note is surrendered to the Trustee or the Issuers and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Issuers will issue and the Trustee, upon receipt of an Authentication Order, will authenticate a replacement Note of such series if the Trustee’s requirements are met. If required by the Trustee or the Issuers, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Issuers to protect the Issuers, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Issuers may charge for their expenses in replacing a Note.
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Every replacement Note is an additional obligation of the Issuers and will be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.

Section 2.08    Outstanding Notes.

The Notes of a series outstanding at any time are all the Notes of such series authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section 2.08 as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Issuers or an Affiliate of either Issuer holds the Note; provided, however that Notes held by either of the Issuers or a Subsidiary of either Issuer shall be deemed to be not outstanding for purposes of Section 3.07(a) and Section 3.08(a) hereof.

If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser.

If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.

If the Paying Agent (other than an Issuer, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes of such series payable on that date, then on and after that date such Notes will be deemed to be no longer outstanding and will cease to accrue interest.

Section 2.09    Treasury Notes.

In determining whether the Holders of the required principal amount of Notes of each series have concurred in any direction, waiver or consent, Notes owned by any Issuer or Guarantor, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with any Issuer or Guarantor, will be considered as though not outstanding, except that for the purposes of determining whether the Trustee will be protected in relying on any such direction, waiver or consent, only Notes that a Responsible Officer of the Trustee actually knows are so owned will be so disregarded.

Section 2.10    Temporary Notes.

Until certificates representing Notes are ready for delivery, the Issuers may prepare and the Trustee, upon receipt of an Authentication Order, will authenticate temporary Notes. Temporary Notes will be substantially in the form of certificated Notes but may have variations that the Issuers consider appropriate for temporary Notes and as may be reasonably acceptable to the Trustee. Without unreasonable delay, the Issuers will prepare and the Trustee will authenticate definitive Notes in exchange for temporary Notes. Holders of temporary Notes will be entitled to all of the benefits of this Indenture.

Section 2.11    Cancellation.

The Issuers at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent will forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else will cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and will destroy canceled Notes (subject to the record retention requirements of the Exchange Act). Certification of the destruction of all canceled Notes will be delivered to the Issuers upon written request. The Issuers may not issue new Notes to replace Notes that they have paid or that have been delivered to the Trustee for cancellation.

Section 2.12    Defaulted Interest.

If the Issuers default in a payment of interest on the Notes of a series, they will pay the defaulted interest with respect to such series in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes of such series and in Section 4.01 hereof.
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The Issuers will notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Issuers will fix or cause to be fixed each such special record date and payment date, provided that no such special record date may be less than 10 days prior to the related payment date for such defaulted interest. At least 10 days before the special record date, the Issuers (or, upon the written request of the Issuers, the Trustee in the name and at the expense of the Issuers) will send or cause to be sent to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid.

Section 2.13    CUSIP and ISIN Numbers.

The Issuers in issuing the Notes may use “CUSIP” and “ISIN” numbers, and, if they do so, the Trustee shall use the CUSIP and/or ISIN number in notices of redemption, repurchase or exchange as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness or accuracy of such numbers printed in the notice or on the Notes and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption or exchange shall not be affected by any defect in or omission of such numbers. The Issuers shall promptly notify the Trustee in writing of any change in the CUSIP number and ISIN number.

ARTICLE III
REDEMPTION

Section 3.01    Notices to Trustee.

If Operating LLC elects to redeem Notes of any series pursuant to the optional redemption provisions of Section 3.07 or Section 3.08 hereof, it must furnish to the Trustee, at least 10 days (unless a shorter notice period shall be satisfactory to the Trustee) but not more than 60 days before a redemption date, an Officers’ Certificate setting forth:

(1) the clause of this Indenture pursuant to which the redemption shall occur;

(2) the redemption date;

(3) the principal amount of Notes of such series to be redeemed; and

(4) the redemption price or the method by which it is to be determined.

Section 3.02    Selection of Notes to Be Redeemed.

If less than all of the Notes of any series are to be redeemed at any time, the Trustee will select Notes of such series for redemption on a pro rata basis (or, in the case of Notes issued in global form pursuant to Article II hereof, based on the method of the Depositary that most nearly approximates a pro rata selection), unless otherwise required by law or applicable stock exchange or depository requirements.

In the event of partial redemption, the particular series of Notes to be redeemed will be selected, unless otherwise provided herein, not less than 10 nor more than 60 days prior to the redemption date by the Trustee from the outstanding Notes of such series not previously called for redemption.

The Trustee will promptly notify the Issuers in writing of the Notes of such series selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed. Notes and portions of Notes selected will be in amounts of $2,000 or whole multiples of $1,000 in excess thereof; except that if all of the Notes of a Holder are to be redeemed, the entire outstanding amount of Notes held by such Holder, even if not a multiple of $1,000, shall be redeemed. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption.
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Section 3.03    Notice of Redemption.

At least 10 days but not more than 60 days before a redemption date, Operating LLC will mail or cause to be mailed, by first class mail (or, in the case of Notes in global form, pursuant to the Applicable Procedures of the Depositary), a notice of redemption to each Holder whose Notes of a series are to be redeemed at its registered address, except that redemption notices may be sent more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of this Indenture pursuant to Article VIII or Article XI hereof.

The notice will identify the series of Notes to be redeemed and will state with respect to such series of Notes:

(1) the redemption date;

(2) the redemption price;

(3) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion will be issued upon cancellation of the original Note;

(4) the name and address of the Paying Agent;

(5) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;

(6) that, unless the Company defaults in making such redemption payment, or a condition precedent with respect to such redemption has not be satisfied, interest on Notes called for redemption ceases to accrue on and after the redemption date;

(7) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed;

(8) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes and

(9) if such redemption or notice is subject to satisfaction of one or more conditions precedent, (i) a description of such condition or conditions precedent and (ii) that, in the Issuers’ discretion, the redemption date may be delayed until such time as any or all such conditions shall be satisfied, or such redemption may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied by the redemption date, or by the redemption date so delayed.

At the Issuers’ request, the Trustee will give the notice of redemption in the Issuers’ names and at their expense; provided, however, that the Issuers have delivered to the Trustee, at least 45 days prior to the redemption date (unless a shorter time is acceptable to the Trustee), an Officers’ Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph.

Notwithstanding any provision hereof to the contrary, the notice of redemption with respect to a redemption pursuant to Section 3.07(b) or Section 3.08(b) need not set forth the 2029 Notes Make-Whole Price or 2032 Notes Make-Whole Price, as applicable, but only the manner of calculation thereof. The Company will notify the Trustee of the 2029 Notes Make-Whole Price or 2032 Notes Make-Whole Price, as applicable, with respect to any redemption promptly after the calculation together with a calculation thereof and the 2029 Notes Treasury Rate or 2032 Notes Treasury Rate, as applicable, in reasonable detail, and the Trustee shall not be responsible for such calculation. The actions and determinations of the Company in determining the 2029 Notes Make-Whole Price or 2032 Notes Make-Whole Price, as applicable, shall be conclusive and binding for all purposes, absent manifest error.
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Section 3.04    Effect of Notice of Redemption.

Once notice of redemption is sent in accordance with Section 3.03 hereof, Notes called for redemption become due and payable on the date fixed for redemption, unless the redemption is subject to a condition precedent that is not satisfied or waived. Any redemption or notice of redemption may, at the Issuers’ discretion, be subject to one or more conditions precedent and, in the case of a redemption pursuant to Section 3.07(a) or Section 3.08(a) hereof, be given prior to and conditioned on the completion of the related Equity Offering.

Section 3.05    Deposit of Redemption Price.

At least one Business Day prior to the redemption date, the Issuers will deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of all Notes to be redeemed on that date. The Trustee or the Paying Agent will promptly return to the Issuers any money deposited with the Trustee or the Paying Agent by the Issuers in excess of the amounts necessary to pay the redemption price of all Notes to be redeemed.

If the Issuers comply with the provisions of the preceding paragraph, on and after the redemption date, interest will cease to accrue on the Notes or the portions of Notes called for redemption. If a Note is redeemed on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption is not so paid upon surrender for redemption because of the failure of the Issuers to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof.

Section 3.06    Notes Redeemed in Part.

Upon surrender of a Note that is redeemed in part, the Issuers will issue and, upon receipt of an Authentication Order, the Trustee will authenticate for the Holder at the expense of the Issuers a new Note equal in principal amount to the unredeemed portion of the Note surrendered.

Section 3.07    Optional Redemption of 2029 Notes.

(a) Prior to February 15, 2026, Operating LLC may, on any one or more occasions, redeem up to 40% of the aggregate principal amount of the 2029 Notes outstanding under this Indenture (which may include Additional Notes) with an amount of cash not greater than the amount equal to the net cash proceeds from one or more Equity Offerings at a redemption price equal to 108.125% of the principal amount thereof, plus accrued and unpaid interest, if any, on the 2029 Notes redeemed to, but excluding, the applicable redemption date (subject to the right of Holders of record on the relevant record date to receive interest, if any, due on the related interest payment date that is on or prior to the redemption date); provided that

(1) at least 50% of the aggregate principal amount of the 2029 Notes issued on the Issue Date (excluding 2029 Notes held by the Company and its Subsidiaries), remains outstanding after each such redemption; and

(2) the redemption occurs within 180 days after the closing of such Equity Offering.

(b) At any time or from time to time prior to February 15, 2026 (the “2029 Notes Step-Down Date”), Operating LLC may redeem all or a part of the 2029 Notes, at a redemption price equal to the 2029 Notes Make-Whole Price, subject to the rights of Holders of 2029 Notes on the relevant record date to receive interest, if any, due on the related payment date that is on or prior to the redemption date.

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(c) In the event that Holders of not less than 90% in aggregate principal amount of the outstanding 2029 Notes accept a Change of Control Offer or Alternate Offer and the Company (or any third party making such Change of Control Offer in lieu of the Company as described in Section 4.14(c) hereof) purchases all of the 2029 Notes held by such Holders, the Company will have the right, upon not less than 10 nor more than 60 days’ prior notice, given not more than 30 days following the purchase pursuant to any Change of Control Offer or Alternate Offer described in Section 4.14 hereof, to redeem all of the 2029 Notes that remain outstanding following such purchase at a redemption price equal to the Change of Control Payment plus, to the extent not included in the Change of Control Payment, accrued and unpaid interest, if any, on the 2029 Notes that remain outstanding, to, but excluding, the date of redemption (subject to the right of Holders of record on the relevant record date to receive interest, if any, due on the related interest payment date that is on or prior to the redemption date).

(d) Except as provided in the preceding paragraphs (a), (b) and (c), the Notes will not be redeemable at Operating LLC’s or the Company’s option prior to February 15, 2026.

(e) On and after February 15, 2026, Operating LLC may redeem, on one or more occasions, all or a part of the 2029 Notes, from time to time, at the following redemption prices (expressed as a percentage of principal amount to be redeemed) plus accrued and unpaid interest, if any, on the 2029 Notes to be redeemed to, but excluding, the applicable redemption date (subject to the right of Holders of 2029 Notes on the relevant record date to receive interest, if any, due on the related interest payment date that is on or prior to the redemption date), if redeemed during the twelve-month period beginning on February 15 of the years indicated below:
Year Percentage
2026 104.063%
2027 102.031%
2028 and thereafter 100.000%

(f) Unless Operating LLC defaults in the payment of the redemption price, interest, if any, will cease to accrue on the 2029 Notes or portions thereof called for redemption on the applicable redemption date.

(g) Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Section 3.01 through Section 3.06 hereof.

Section 3.08    Optional Redemption of 2032 Notes.

(a) Prior to February 15, 2027, Operating LLC may, on any one or more occasions, redeem up to 40% of the aggregate principal amount of the 2032 Notes outstanding under this Indenture (which may include Additional Notes) with an amount of cash not greater than the amount equal to the net cash proceeds from one or more Equity Offerings at a redemption price equal to 108.375% of the principal amount thereof, plus accrued and unpaid interest, if any, on the 2032 Notes to be redeemed to, but excluding, the applicable redemption date (subject to the right of Holders of record on the relevant record date to receive interest, if any, due on the related interest payment date that is on or prior to the redemption date); provided that

(1) at least 50% of the aggregate principal amount of the 2032 Notes issued on the Issue Date (excluding 2032 Notes held by the Company and its Subsidiaries), remains outstanding after each such redemption; and

(2) the redemption occurs within 180 days after the closing of such Equity Offering.

(b) At any time or from time to time prior to February 15, 2027 (the “2032 Notes Step-Down Date”), Operating LLC may redeem all or a part of the 2032 Notes, at a redemption price equal to the 2032 Notes Make-Whole Price, subject to the rights of Holders of 2032 Notes on the relevant record date to receive interest, if any, due on the related payment date that is on or prior to the redemption date.

(c) In the event that Holders of not less than 90% in aggregate principal amount of the outstanding 2032 Notes accept a Change of Control Offer or Alternate Offer and the Company (or any third party making such Change of Control Offer in lieu of the Company as described in Section 4.14(c) hereof) purchases all of the 2032 Notes held by such Holders, the Company will have the right, upon not less than 10 nor more than 60 days’ prior notice, given not more than 30 days following the purchase pursuant to any Change of Control Offer or Alternate Offer described in Section 4.14 hereof, to redeem all of the 2032 Notes that remain outstanding following such purchase at a redemption price equal to the Change of Control Payment plus, to the extent not included in the Change of Control Payment, accrued and unpaid interest, if any, on the 2032 Notes that remain outstanding, to, but excluding, the date of redemption (subject to the right of Holders of record on the relevant record date to receive interest, if any, due on the related interest payment date that is on or prior to the redemption date).
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(d) Except as provided in the preceding paragraphs (a), (b) and (c), the Notes will not be redeemable at Operating LLC’s or the Company’s option prior to February 15, 2027.

(e) On and after February 15, 2027, Operating LLC may redeem, on one or more occasions, all or a part of the 2032 Notes, from time to time, at the following redemption prices (expressed as a percentage of principal amount to be redeemed) plus accrued and unpaid interest, if any, on the 2032 Notes to be redeemed to, but excluding, the applicable redemption date (subject to the right of Holders of 2032 Notes on the relevant record date to receive interest, if any, due on the related interest payment date that is on or prior to the redemption date), if redeemed during the twelve-month period beginning on February 15 of the years indicated below:
Year Percentage
2027 104.188%
2028 102.094%
2029 and thereafter 100.000%

(f) Unless Operating LLC defaults in the payment of the redemption price, interest, if any, will cease to accrue on the 2032 Notes or portions thereof called for redemption on the applicable redemption date.

(g) Any redemption pursuant to this Section 3.08 shall be made pursuant to the provisions of Section 3.01 through Section 3.06 hereof.

ARTICLE IV
COVENANTS

Section 4.01    Payment of Notes.

The Issuers will pay or cause to be paid the principal of, premium, if any, on, or interest, if any, on, the Notes of a series on the dates and in the manner provided in the Notes of such series. Principal, premium, if any, interest, if any, will be considered paid on the date due if the Paying Agent, if other than the Issuers or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by the Issuers in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest, if any, then due.

The Issuers will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the then applicable interest rate on the Notes to the extent lawful. The Issuers will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest, if any (without regard to any applicable grace period) at the same rate to the extent lawful.

Section 4.02    Maintenance of Office or Agency.

The Issuers will maintain in the Borough of Manhattan, The City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Issuers will give prompt written notice to the Trustee of any change in the location of such office or agency. If at any time the Issuers fail to maintain any such required office or agency or fails to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee.

The Issuers may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission will in any manner relieve the Issuers of their obligation to maintain an office or agency in the Borough of Manhattan, The City of New York for such purposes.
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The Issuers will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

The Issuers hereby designate the Corporate Trust Office of the Trustee as one such office or agency of the Issuers in accordance with Section 2.03 hereof.

Section 4.03    Reports.

(a) Regardless of whether required by the rules and regulations of the SEC, so long as the Notes of any series are outstanding (unless defeased or discharged), the Company will file with the SEC (unless the SEC will not accept such a filing) within ten days after the time periods specified in the SEC’s rules and regulations, and upon request, the Company will furnish (without exhibits) to the Trustee for delivery to the Holders of Notes:

(1) all quarterly and annual reports that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company were required to file such forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and, with respect to the annual information only, a report thereon by the Company’s certified independent accountants; and

(2) all current reports that would be required to be filed with the SEC on Form 8-K if the Company were required to file such reports.

(b) The Company will be deemed to have furnished such reports and information described above in Section 4.03(a) to the Holders of Notes (and the Trustee shall be deemed to have delivered such reports and information to the Holders of Notes) if the Company has filed such reports or information, respectively, with the SEC using the EDGAR filing system (or any successor filing system of the SEC) or, if the SEC will not accept such reports or information, if the Company has posted such reports or information, respectively, on its website, and such reports or information, respectively, are available to Holders of Notes through internet access.

(c) For the avoidance of doubt, (i) such information will not be required to contain the separate financial information for Guarantors as contemplated by Rule 3-10, Rule 3-16, Rule 13-01 or Rule 13-02 of Regulation S-X or any financial statements of unconsolidated subsidiaries or 50% or less owned Persons as contemplated by Rule 3-09 of Regulation S-X or any schedules required by Regulation S-X, or in each case any successor provisions, and (ii) such information shall not be required to comply with Regulation G under the Exchange Act or Item 10(e) of Regulation S-K with respect to any non-GAAP financial measures contained therein.

(d) Except as provided above, all such reports will be prepared in all material respects in accordance with all of the rules and regulations applicable to such reports.

(e) If the Company has designated any of its Subsidiaries as Unrestricted Subsidiaries, then, to the extent material, the quarterly and annual financial information required by Section 4.03(a) above will include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in Management’s Discussion and Analysis of Financial Condition and Results of Operations, of the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of its Unrestricted Subsidiaries.

(f) Any and all Defaults or Events of Default arising from a failure to furnish in a timely manner any financial information required by this Section 4.03 shall be deemed cured (and the Company shall be deemed to be in compliance with this Section 4.03) upon furnishing such financial information as contemplated by this Section 4.03 (but without regard to the date on which such financial statement or report is so furnished); provided that such cure shall not otherwise affect the rights of the Holders under the provisions of Article VI hereof if the principal of, premium, if any, on, and interest, if any, on, the Notes of any series have been accelerated in accordance with the terms of this Indenture and such acceleration has not been rescinded or cancelled prior to such cure.
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(g) In addition, the Company will hold and participate in annual conference calls with the Holders of Notes, Beneficial Owners of Notes, bona fide prospective investors, securities analysts and market makers to discuss the financial information required to be furnished pursuant to clause (1) of Section 4.03(a) hereof no later than ten Business Days after distribution of such financial information. The Company shall be permitted to combine this conference call with any other conference call for other debt or equity holders or lenders.

(h) The Company and the Guarantors agree that, for so long as the Notes of any series remain outstanding, if at any time they are not required to file with the SEC the reports required by Section 4.03(a), the Company and the Guarantors will furnish to the Holders of Notes and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

(i) Delivery of reports, information and documents to the Trustee pursuant to this Section 4.03 is for informational purposes only, and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on an Officers’ Certificate).

It is understood that the Trustee shall have no obligation to determine whether or not the reports and information described above have been filed with the SEC or are available on the Company’s website and are available to Holders through internet access. The delivery of such reports and information to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Issuers’ compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

Section 4.04    Compliance Certificate.

(a) The Issuers and each Guarantor shall deliver to the Trustee, within 90 days after the end of each fiscal year, an Officers’ Certificate stating that a review of the activities of each Issuer and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Issuers have kept, observed, performed and fulfilled their obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Issuers have kept, observed, performed and fulfilled each and every covenant contained in this Indenture and are not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default has occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Issuers are taking or propose to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of, or premium, if any, or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what action the Issuers are taking or propose to take with respect thereto.

(b) So long as any of the Notes of either series are outstanding, the Issuers will deliver to the Trustee and the Collateral Agent, within five Business Days of any Officer becoming aware of any Default or Event of Default, an Officers’ Certificate specifying such Default or Event of Default and what action the Issuers are taking or propose to take with respect thereto.

Section 4.05    Taxes.

The Company will pay, and will cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of Notes.
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Section 4.06    Stay, Extension and Usury Laws.

Each of the Issuers and each of the Guarantors covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force that may affect the covenants or the performance of this Indenture; and each of the Issuers and each of the Guarantors (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law has been enacted.

Section 4.07    Restricted Payments.

(a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

(1) declare or pay any dividend or make any other payment or distribution on account of the Company’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger, amalgamation or consolidation involving the Company or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Company’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends, distributions or payments payable in Equity Interests (other than Disqualified Stock) of the Company and other than dividends, distributions or payments payable to the Company or a Restricted Subsidiary);

(2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger, amalgamation or consolidation involving the Company) any Equity Interests of the Company or any direct or indirect parent of the Company;

(3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value, any Subordinated Debt (other than intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries), except a payment of interest or principal within one year of the Stated Maturity thereof; or

(4) make any Restricted Investment

(all such payments and other actions set forth in clauses (1) through (4) of this Section 4.07(a) being collectively referred to as “Restricted Payments”), unless, at the time of and after giving effect to the proposed Restricted Payment:

(1) at the time of and after giving effect to such Restricted Payment, no Default (except a Reporting Default) or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment;

(2) the Total Leverage Ratio for the Company’s Trailing Four Quarters at the time of such Restricted Payment is not greater than 4.75 to 1.00, and

(3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries during the fiscal quarter in which such Restricted Payment is made (excluding Restricted Payments permitted by clauses (2), (3), (4), (5), (6), (7), (8), (9), (10), (13) and (14) of Section 4.07(b)), is less than the sum, without duplication, of:

(A) Operating Surplus with respect to the Company attributable to the period beginning on the first day of the fiscal quarter in which the Issue Date occurs to and including the last day of the Trailing Four Quarter Period (minus the amount of any Equity Distributions made during such period pursuant to item (b) below; provided that the amount of Operating Surplus pursuant to this item (A) shall not be less than $0 for any fiscal quarter as a result of any such deduction) plus $400.0 million; plus
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(B) $200.0 million, less the amount of all prior Equity Distributions made by the Company and its Restricted Subsidiaries pursuant to this item (b) since the Issue Date; provided that the only Restricted Payments permitted to be made pursuant to this item (b) are distributions and payments on the Company’s units, including Permitted Preferred Payments, plus the related distributions on the General Partner’s general partner interest and any distributions with respect to incentive distribution rights (such distributions and payments being referred to as “Equity Distributions”); plus

(C) 100% of the aggregate net cash proceeds, and the Fair Market Value of any Capital Stock of Persons engaged primarily in a Permitted Business or other long-term assets that are used or useful in a Permitted Business, in each case received by the Company since the Issue Date from (x) a contribution to the common equity capital of the Company from any Person (other than a Restricted Subsidiary) or (y) the issuance and sale (other than to a Restricted Subsidiary) of Equity Interests (other than Disqualified Stock) of the Company or from the issuance or sale (other than to a Restricted Subsidiary) of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of the Company that have been converted into or exchanged for such Equity Interests (other than Disqualified Stock); plus

(D) to the extent that any Restricted Investment that was made after the Issue Date is sold for cash or Cash Equivalents or otherwise liquidated or repaid for cash or Cash Equivalents, the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any); plus

(E) the amount equal to the net reduction in Restricted Investments since the Issue Date resulting from (i) dividends, distributions, repayments of loans or advances, or other transfers of assets, in each case, to the Company or any of its Restricted Subsidiaries from any Person (including, without limitation, any Unrestricted Subsidiary) or (ii) the redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries, in each case, to the extent such amounts have not been included in Operating Surplus for any period commencing on or after the Issue Date (items (C), (D) above and this item (E) being referred to as “Incremental Funds”); minus

(F) the aggregate amount of Incremental Funds previously expended pursuant to this clause (3).

(b) The provisions of Section 4.07(a) hereof will not prohibit:

(1) the payment of any dividend or distribution or the consummation of any irrevocable redemption within 60 days after the date of declaration of the dividend or distribution or giving of the redemption notice, as the case may be, if at the date of declaration or notice, the dividend, distribution or redemption payment would have complied with the provisions of this Indenture;

(2) the making of any Restricted Payment in exchange for, or out of the net cash proceeds of the substantially concurrent (a) contribution (other than from a Restricted Subsidiary) to the equity capital of the Company or (b) sale (other than to a Restricted Subsidiary) of Equity Interests of the Company (other than Disqualified Stock), with a sale being deemed substantially concurrent if such purchase, redemption, defeasance or other acquisition or retirement for value occurs not more than 120 days after such sale; provided, however, that the amount of any such net cash proceeds that are utilized for any such purchase, redemption, defeasance or other acquisition or retirement for value will be excluded (or deducted, if included) from the calculation of Operating Surplus and Incremental Funds; (3) the purchase, redemption, defeasance or other acquisition or retirement for value of Indebtedness with the net cash proceeds from an incurrence of, or in exchange for, Permitted Refinancing Indebtedness;
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(4) the payment of any dividend or distribution by a Restricted Subsidiary to the holders of its Equity Interests on a pro rata basis;

(5) as long as no Default has occurred and is continuing or would be caused thereby, the purchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company or any Restricted Subsidiary held by any of current or former directors or employees of the General Partner, the Company or of any Restricted Subsidiary; provided, however, that the aggregate price paid for all such purchased, redeemed, acquired or retired Equity Interests may not exceed $20.0 million in any fiscal year (with any portion of such $20.0 million amount that is unused in any fiscal year to be carried forward to successive fiscal years and added to such amount) plus, to the extent not previously applied or included, (a) the cash proceeds received by the Company or any of its Restricted Subsidiaries from sales of Equity Interests of the Company to employees or directors of the General Partner, the Company or its Affiliates that occur after the Issue Date (to the extent the cash proceeds from the sale of such Equity Interests have not otherwise been applied to the payment of Restricted Payments by virtue of Section 4.07(a) hereof) and (b) the cash proceeds of key man life insurance policies received by the Company or any of its Restricted Subsidiaries after the Issue Date;

(6) the purchase, redemption or other acquisition or retirement for value of Equity Interests deemed to occur upon the exercise of unit options, warrants, incentives, rights to acquire Equity Interests or other convertible securities if such Equity Interests represent a portion of the exercise or exchange price thereof, and any purchase, redemption or other acquisition or retirement for value of Equity Interests made in lieu of withholding taxes in connection with any exercise or exchange of unit options, warrants, incentives or rights to acquire Equity Interests;

(7) payments of cash, dividends, distributions, advances or other Restricted Payments, in each case, made in lieu of the issuance of fractional shares or units in connection with the exercise of warrants, options or other securities convertible or exchangeable for Equity Interests or in connection with the payment of a dividend or distribution to the holders of Equity Interests of the Company in the form of Equity Interests (other than Disqualified Stock) of the Company;

(8) the purchase, redemption or other acquisition or retirement for value of Equity Interests of the Company or any Restricted Subsidiary representing fractional units of such Equity Interests in connection with a merger, amalgamation or consolidation involving the Company or such Restricted Subsidiary or any other transaction permitted by this Indenture;

(9) payments to the General Partner constituting reimbursements for expenses in accordance with the Partnership Agreement as in effect on the Issue Date and as it may be amended or replaced thereafter, provided that any such amendment or replacement is not materially less favorable to the Company in any material respect than the agreement prior to such amendment or replacement;

(10) in connection with an acquisition by the Company or any of its Restricted Subsidiaries, the return to the Company or any of its Restricted Subsidiaries of Equity Interests of the Company or its Restricted Subsidiaries constituting a portion of the purchase consideration in settlement of indemnification claims or purchase price adjustments;

(11) the purchase, redemption, defeasance or other acquisition or retirement for value of any Subordinated Debt (a) at a purchase price not greater than 101% of the principal amount of such Subordinated Debt plus accrued interest in accordance with provisions similar to Section 4.14 hereof or (b) at a purchase price not greater than 100% of the principal amount thereof plus accrued interest in accordance with provisions similar to Section 4.10 hereof; provided that, prior to or simultaneously with such purchase, redemption, defeasance or other acquisition or retirement for value, the Company shall have complied with the provisions of Section 4.14 or Section 4.10 hereof, as the case may be, and repurchased all Notes of any series validly tendered for payment in connection with any Change of Control Offer, Collateral Disposition Offer, Net Proceeds Offer or Alternate Offer, as the case may be;
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(12) the purchase, defeasance, redemption, repurchase, repayment or other acquisition or retirement of any Indebtedness made by exchange for Equity Interests of the Parent (other than Disqualified Stock);

(13) so long as no Default or Event of Default has occurred and is continuing or would be caused thereby, any Permitted Preferred Payments pursuant to Section 4.10(c) hereof.

(14) Restricted Payments made as part of or to consummate the Transactions.

(c) The amount of all Restricted Payments (other than cash) will be the Fair Market Value, determined as of the date of the Restricted Payment, of the Restricted Investment proposed to be made or the asset(s) or securities proposed to be transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment, except that the Fair Market Value of any non-cash dividend or distribution paid within 60 days after the date of its declaration shall be determined as of such date of declaration. The Fair Market Value of any Restricted Investment, assets or securities that are required to be valued by this Section 4.07 will be determined in accordance with the definition of the term “Fair Market Value.” For purposes of determining compliance with this Section 4.07, (x) in the event that a Restricted Payment meets the criteria of more than one of the categories of Restricted Payments described in clauses (1) through (14) of Section 4.07(b) hereof, or is permitted pursuant to Section 4.07(a) hereof, the Company will be permitted to classify (or later classify or reclassify in whole or in part in its sole discretion) such Restricted Payment (or portion thereof) on the date made or later reclassify such Restricted Payment (or portion thereof) in any manner that complies with this Section 4.07; provided that any Restricted Payments made pursuant to the preceding clauses (13) and (14) in whole or in part shall not be reclassified; and (y) in the event a Restricted Payment is made pursuant to Section 4.07(a) hereof, the Company will be permitted to classify whether all or any portion thereof is being (and in the absence of such classification shall be deemed to have classified the minimum amount possible as having been) made with Incremental Funds.

Section 4.08    Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries.

(a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:

(1) pay dividends or make any other distributions on its Capital Stock to the Company or any of its Restricted Subsidiaries, or pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries; provided that the priority that any series of preferred stock of a Restricted Subsidiary has in receiving dividends or liquidating or other distributions before dividends or liquidating or other distributions are paid in respect of common stock of such Restricted Subsidiary shall not constitute a restriction on the ability to make dividends or distributions on Capital Stock for purposes of this Section 4.08(a);

(2) make loans or advances to the Company or any of its Restricted Subsidiaries (it being understood that the subordination of loans or advances made to the Company or any such Restricted Subsidiary to other Indebtedness incurred by the Company or any such Restricted Subsidiary shall not be deemed a restriction on the ability to make loans or advances); or

(3) sell, lease or transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries.

(b) The restrictions in Section 4.08(a) hereof will not apply to encumbrances or restrictions existing under or by reason of:
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(1) agreements governing any Credit Facility (including the ABL Credit Agreement and the Term Loan Credit Agreement), any Existing Indebtedness or any other agreements or instruments, in each case as in effect on the Issue Date and any amendments, restatements, modifications, renewals, extensions, increases, supplements, refundings, replacements or refinancings of those agreements or the Indebtedness to which they relate; provided that the encumbrances or restrictions contained in the amendments, restatements, modifications, renewals, extensions, increases, supplements, refundings, replacements or refinancings are, in the reasonable good faith judgment of the Chief Financial Officer of the General Partner, not materially more restrictive, taken as a whole, with respect to such dividend, distribution and other payment restrictions than those contained in those agreements on the Issue Date;

(2) this Indenture, the Notes and the Note Guarantees;

(3) agreements governing other Indebtedness permitted to be incurred under Section 4.09 hereof and any amendments, restatements, modifications, renewals, supplements, refundings, replacements or refinancings of those agreements; provided that the encumbrances or restrictions therein are, in the reasonable good faith judgment of the Chief Financial Officer of the General Partner, not materially more restrictive, taken as a whole, than the provisions contained in the ABL Credit Agreement, the Term Loan Credit Agreement and in this Indenture as in effect on the Issue Date;

(4) the issuance of preferred stock by a Restricted Subsidiary or the payment of dividends and distributions thereon in accordance with the terms thereof; provided that issuance of such preferred stock is permitted pursuant to Section 4.09 hereof and the terms of such preferred stock do not expressly restrict the ability of a Restricted Subsidiary to pay dividends and distributions or make any other distributions on its Capital Stock (other than requirements to pay dividends and distributions or liquidation preferences on such preferred stock prior to paying any dividends or making any other distributions on such other Capital Stock);

(5) applicable law, rule, regulation, order, approval, license, permit or similar restriction;

(6) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness or Capital Stock was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired and any amendments, restatements, modifications, renewals, extensions, increases, supplements, refundings, replacements or refinancings thereof; provided that, the encumbrances or restrictions contained in any such amendments, restatements, modifications, renewals, extensions, increases, supplements, refundings, replacements or refinancings are, in the reasonable good faith judgment of the Chief Financial Officer of the General Partner, not materially more restrictive, taken as a whole, than those in effect on the date of the acquisition; provided, further, that, in the case of Indebtedness, such Indebtedness was permitted by the terms of this Indenture to be incurred;

(7) customary non-assignment provisions in contracts or licenses, easements or leases, in each case, entered into in the ordinary course of business;

(8) purchase money obligations, security agreements or mortgage financings for property acquired in the ordinary course of business and Capital Lease Obligations that impose restrictions on the property purchased or leased of the nature described in clause (3) of Section 4.08(a) hereof;

(9) any agreement for the sale or other disposition of the Equity Interests in, or all or substantially all of the properties or assets of, a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending the sale or other disposition; (10) Permitted Refinancing Indebtedness; provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced;
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(11) Liens permitted to be incurred under the provisions of Section 4.12 hereof that limit the right of the debtor to dispose of the assets subject to such Liens;

(12) provisions limiting the disposition or distribution of assets or property in joint venture agreements, asset sale agreements, sale-leaseback agreements, stock sale agreements and other similar agreements (including agreements entered into in connection with a Restricted Investment) entered into with the approval of the Company’s Board of Directors, which limitation is applicable only to the assets that are the subject of such agreements;

(13) any instrument governing Indebtedness of a FERC Subsidiary; provided that such Indebtedness was otherwise permitted by the terms of this Indenture to be incurred;

(14) encumbrances or restrictions on cash, Cash Equivalents or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business;

(15) any agreement or instrument relating to any property or assets acquired after the Issue Date, so long as such encumbrance or restriction relates only to the property or assets so acquired and is not and was not created in anticipation of such acquisition;

(16) Hedging Obligations permitted from time to time under this Indenture; and

(17) Indebtedness incurred or Capital Stock issued by any Restricted Subsidiary; provided that the restrictions contained in the agreements or instruments governing such Indebtedness or Capital Stock (a) apply only in the event of a payment default or a default with respect to a financial covenant in such agreement or instrument or (b) will not materially affect the Company’s ability to make principal, interest and premium, if any, on the Notes of any series, as determined in the reasonable good faith judgment of the Chief Executive Officer and the Chief Financial Officer of the General Partner.

Section 4.09    Incurrence of Indebtedness and Issuance of Preferred Stock.

(a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, Guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”; with “incurrence” having a correlative meaning) any Indebtedness (including Acquired Debt), and the Company will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company may incur Indebtedness (including Acquired Debt) and issue Disqualified Stock, and its Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) and issue preferred stock, (x) for so long as any Class D Preferred Units are outstanding, if the Total Leverage Ratio is no more than 4.75 to 1.0 determined on a pro forma basis (including a pro forma application of the net proceeds therefrom) and (y) thereafter, if the Fixed Charge Coverage Ratio for the Company’s Trailing Four Quarters immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been at least 2.0 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such Trailing Four Quarter Period; provided, further, that the aggregate principal amount of Indebtedness of non-Guarantor Subsidiaries outstanding pursuant to this Section 4.09(a) shall not exceed $50.0 million.

(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness or issuances of Disqualified Stock or preferred stock, as applicable (collectively, “Permitted Debt”):
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(1) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness and letters of credit under Credit Facilities (including the ABL Facility, the Term Loan Facility and the Notes and the related Note Guarantees issued on the Issue Date) in an aggregate principal amount at any one time outstanding under this clause (1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder) not to exceed the sum of (I) ABL Obligations and Pari Passu ABL Obligations in an aggregate principal amount not to exceed the greater of (x) $600.0 million and (y) the amount of the Borrowing Base determined at the time of incurrence, plus (II) other Indebtedness not to exceed the sum of (A) an aggregate principal amount not to exceed the greater of (x) $2.95 billion and (y) 40% of the Total Assets of the Company, plus (B) at the time of such incurrence, an amount equal to the maximum principal amount that could be incurred such that after giving pro forma effect thereto, the First Lien Leverage Ratio would be no greater than 4.50 to 1.00; provided that for purposes of determining the amount that may be incurred under clause (1)(II)(B), all unsecured Indebtedness and Junior Lien Indebtedness incurred under this clause (1) shall be deemed to be included in clause (i) of the definition of “First Lien Leverage Ratio”.

(2) the incurrence by the Company or its Restricted Subsidiaries of Existing Indebtedness and Class D Preferred Units;

(3) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement of property, plant or equipment used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to extend, retire, redeem, repay, renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (3) at any time; provided that, immediately after giving effect to any such incurrence, the principal amount of all Indebtedness incurred pursuant to this clause (3) and then outstanding does not exceed the greater of (a) $200.0 million and (b) 3.75% of the Total Assets of the Company;

(4) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to extend, redeem, repay, renew, refund, refinance, replace, defease, discharge or otherwise retire for value, any Indebtedness (other than intercompany Indebtedness) or Disqualified Stock of the Company, or Indebtedness (other than intercompany Indebtedness) or preferred stock of any Restricted Subsidiary, in each case that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clause (2), (3) or (11) of this Section 4.09(b) or this clause (4);

(5) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that:

(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be unsecured and expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and

(B) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary and (ii) any sale or other transfer of any such Indebtedness to a Person that is neither the Company nor a Restricted Subsidiary,

will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (5);

(6) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:
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(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary; and

(B) any sale or other transfer of any such preferred stock to a Person that is neither the Company nor a Restricted Subsidiary,

will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (6);

(7) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business and not for speculative purposes;

(8) the Guarantee by the Company or any of its Restricted Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes or the applicable Note Guarantee, then the Guarantee must be subordinated or pari passu, as applicable, to the same extent as the Indebtedness Guaranteed;
(9) the incurrence by the Company or any Restricted Subsidiary of Indebtedness consisting of the financing of insurance premiums in customary amounts consistent with the operations and business of the Company and its Restricted Subsidiaries;

(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness constituting reimbursement obligations with respect to letters of credit; provided that, upon the drawing of such letters of credit, such obligations are reimbursed within 30 days following such drawing;

(11) the incurrence by the Company or any of its Restricted Subsidiaries of liability in respect of the Indebtedness of any Unrestricted Subsidiary or any Joint Venture but only to the extent that such liability is the result of the Company’s or any such Restricted Subsidiary’s being a general partner or member of, or owner of an Equity Interest in, such Unrestricted Subsidiary or Joint Venture and not as guarantor of such Indebtedness; provided that, immediately after giving effect to any such incurrence, the principal amount of all Indebtedness incurred pursuant to this clause (11) and then outstanding does not exceed $50.0 million;

(12) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Acquisition Indebtedness; and

(13) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness and the issuance by the Company of any Disqualified Stock, provided that, immediately after giving effect to any such incurrence or issuance, the amount of all such Indebtedness and Disqualified Stock incurred or issued pursuant to this clause (13) and then outstanding (including all Indebtedness and Disqualified Stock incurred or issued to Refinance any Indebtedness or Disqualified Stock incurred or issued pursuant to this clause (13)) does not exceed the greater of (a) $150.0 million and (b) 3.00% of the Total Assets of the Company determined on the date of such incurrence.

(c) Subject to Section 4.09(d) below, the Company will not incur, and will not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes or the applicable Note Guarantee on substantially identical terms. No Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company or any Guarantor solely by virtue of being unsecured or by virtue of being secured on a junior priority basis.

(d) For purposes of determining compliance with this Section 4.09, in the event that an item of Indebtedness (including Acquired Debt) meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (13) of Section 4.09(b) hereof, or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted in its sole discretion to divide, redivide, classify or reclassify such item of Indebtedness on the date of its incurrence, and later divide, redivide, classify or reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09.
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Indebtedness under Credit Facilities (including the ABL Facility and the Term Loan Facility) outstanding on the Issue Date and the Notes and the related Note Guarantees issued on the Issue Date will initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt. The accrual of interest or preferred stock distributions, dividends or other amounts, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of any obligation of the Company or any Restricted Subsidiary as Indebtedness due to a change in accounting principles, and the payment of distributions, dividends or other amounts on preferred stock or Disqualified Stock in the form of additional shares of the same class of preferred stock or Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of preferred stock or Disqualified Stock for purposes of this Section 4.09; provided that, in each such case, the amount thereof is included in Fixed Charges of the Company as accrued to the extent required by the definition of such term.

(e) For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be utilized, calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable U.S. dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The principal amount of any Permitted Refinancing Indebtedness incurred to refinance other Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such Permitted Refinancing Indebtedness is denominated that is in effect on the date of such refinancing.

Section 4.10    Asset Sales.

(a) The Company will not, and will not permit any of its Restricted Subsidiaries to, make any Asset Sale of Collateral unless:

(1) The Company or such Restricted Subsidiary receives consideration (including by way of relief from, or by way of any other Person assuming responsibility for, any liabilities, contingent or otherwise) at or prior to the time of the Asset Sale at least equal to the Fair Market Value (measured as of date of the definitive agreement with respect to such Asset Sale) of the Collateral subject to such Asset Sale;

(2) at least 75% of the consideration from such Asset Sale received by the Company or such Restricted Subsidiary, as the case may be, is in the form of (A) cash, (B) Cash Equivalents, (C) Additional Assets of a type which would constitute (x) Notes-TLB Priority Collateral, in the case of an Asset Sale of Notes-TLB Priority Collateral, or (y) ABL Priority Collateral, in the case of an Asset Sale of ABL Priority Collateral (which in both cases are thereupon with their acquisition added to the Collateral securing the Notes-TLB Obligations), or (D) any combination of the foregoing; and

(3) to the extent that any consideration from such Asset Sales received by the Company or such Restricted Subsidiary, as the case may be, constitutes securities or other assets that are of a type or class that constitute Collateral, such securities or other assets, including the assets of any Person that becomes a Guarantor as a result of such transaction, are concurrently with their acquisition added to the Collateral securing the Notes-TLB Obligations (as Notes-TLB Priority Collateral or ABL Priority Collateral, as applicable) in the manner provided for herein or in any of the Security Documents.
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In the case of any Asset Sale of Collateral pursuant to a condemnation, seizure, appropriation or similar taking, including by deed in lieu of condemnation, or any actual or constructive total loss or an agreed or compromised total loss, such Asset Sale shall not be required to satisfy the requirements of clause (1) or (2) above.

If at any time any non-cash consideration received by the Company or any Restricted Subsidiary, as the case may be, in connection with any Asset Sale of Collateral is repaid or converted into or sold or otherwise disposed of for cash (other than interest received with respect to any such non-cash consideration), then the date of such repayment, conversion or disposition shall be deemed to constitute the date of an Asset Sale hereunder and the Net Proceeds thereof shall be applied in accordance with this covenant.

Subject to the terms of the Intercreditor Agreements, within 365 days following the receipt of any Net Proceeds from such Asset Sale of Collateral, the Company or any Restricted Subsidiary, as the case may be, may (1) use any Net Proceeds received from Asset Sales of ABL Priority Collateral to repay, redeem, retire, defease, replace, refinance, discharge or repurchase any ABL Obligations, provided any excess Net Proceeds may be used to repay, redeem, retire, defease, replace, refinance, discharge or repurchase any Notes-TLB Obligations, (2) use any Net Proceeds received from Asset Sales of Notes-TLB Priority Collateral to repay, redeem, retire, defease, replace, refinance, discharge or repurchase Notes-TLB Obligations (including Additional Notes); provided that if the Company or a Restricted Subsidiary repays, redeems or repurchases any Notes-TLB Obligations other than the Notes of each series on a pro rata basis, the Company or such Restricted Subsidiary must equally and ratably redeem, discharge, defease or repurchase (or offer to repurchase) the Notes of each series, at the Company’s option, as provided for under Section 3.07 and Section 3.08, as applicable, through open market purchases, tender offer, negotiated transactions or otherwise (to the extent such purchases are at a purchase price at or above 100% of the principal amount thereof plus accrued and unpaid interest, if any, to but excluding the redemption or repurchase date) or by making an offer to all Holders of each series to purchase their Notes at 100% of the principal amount thereof, plus accrued and unpaid interest, if any, on the amount of Notes repurchased to (but excluding) the purchase date(and such offer shall be deemed for purposes of this covenant to be a use of proceeds from an Asset Sale equal to the aggregate amount of Net Proceeds offered to the Holders of such Notes, whether or not the offer is accepted by any or all Holders of such Notes), or (3) invest any Net Proceeds received from Asset Sales of Collateral in Additional Assets that would constitute (x) Notes-TLB Priority Collateral, in the case of an Asset Sale of Notes-TLB Priority Collateral, and (y) ABL Priority Collateral or Notes-TLB Priority Collateral, in the case of an Asset Sale of ABL Priority Collateral, which Additional Assets are thereupon with their acquisition added to the Collateral securing the Notes-TLB Obligations; provided that the Additional Assets shall not include the Equity Interests of Foreign Subsidiaries for purposes of the requirement unless the relevant Asset Sale consisted of the sale of Equity Interests of a Foreign Subsidiary.

Any Net Proceeds from Asset Sales of Collateral that are not applied or invested as provided in this subsection (A) will be deemed to constitute “Excess Collateral Proceeds.” Within 10 Business Days after the aggregate amount of Excess Collateral Proceeds exceeds $50.0 million, the Issuers will be required to make an offer (a “Collateral Disposition Offer”) to all Holders of Notes of each series to purchase the maximum principal amount of the Notes of each series (on a pro rata basis) and, if required by the terms of any other Pari Passu Notes-TLB Obligations, to the holders of such Pari Passu Notes-TLB Obligations (on a pro rata basis), to which the Collateral Disposition Offer applies that may be purchased out of the Excess Collateral Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount of the applicable series of Notes and such other Pari Passu Notes-TLB Obligations, plus accrued and unpaid interest, if any, to, but excluding, the date of purchase, in accordance with the procedures set forth in this Indenture in a principal amount of $2,000 or an integral multiple of $1,000 in excess thereof with respect to the applicable series of Notes. To the extent that the aggregate amount of Notes so validly tendered and not properly withdrawn pursuant to a Collateral Disposition Offer (together with, if required by the terms of any other Pari Passu Notes-TLB Obligations, the amount of Pari Passu Notes-TLB Obligations tendered pursuant to any similar requirement), is less than the Excess Collateral Proceeds, the Issuers may use any remaining Excess Collateral Proceeds for any purpose not otherwise prohibited by this Indenture . If the aggregate principal amount of Notes surrendered by Holders and, if required by the holders of Pari Passu Notes-TLB Obligations, holders of any Pari Passu Notes-TLB Obligations exceeds the amount of Excess Collateral Proceeds, the Notes of each series and Pari Passu Notes-TLB Obligations to be purchased shall be selected by the Trustee on a pro rata basis on the basis of the aggregate principal amount of tendered Notes and Pari Passu Notes-TLB Obligations. Upon completion of such Collateral Disposition Offer, the amount of Excess Collateral Proceeds shall be reset at zero. The Issuers may make a Collateral Disposition Offer if Excess Collateral Proceeds are less than $50.0 million and prior to 365 days after an Asset Sale of Collateral.
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Notwithstanding the foregoing, to the extent that any Net Proceeds or Excess Collateral Proceeds are required to be applied to prepay Indebtedness under the ABL Credit Agreement, the Term Loan Credit Agreement or other Pari Passu ABL Obligations, the Issuers may make a prepayment with respect to such Indebtedness out of such Net Proceeds or Excess Collateral Proceeds, at a price in cash in an amount equal to 100% of the principal amount of such Indebtedness, plus accrued and unpaid interest, if any, to, but excluding, the date of prepayment.

Pending the final application of any such Net Proceeds in accordance with the fourth and fifth paragraphs of this Section 4.10(a), the Company and its Restricted Subsidiaries may temporarily reduce Indebtedness or otherwise invest such Net Proceeds in any manner not prohibited by this Indenture.

(b) The Company will not, and will not permit any Restricted Subsidiary to, make any Asset Sale (other than Asset Sales of Collateral, which shall be treated in the manner set forth in Section 4.10(a) above) unless:

(1) The Company or such Restricted Subsidiary receives consideration (including by way of relief from, or by way of any other Person assuming responsibility for, any liabilities, contingent or otherwise) at or prior to the time of the Asset Sale at least equal to the Fair Market Value (measured as of date of the definitive agreement with respect to such Asset Sale) of the assets subject to such Asset Sale;

(2) at least 75% of the consideration from such Asset Sale received by the Company or such Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents or a combination thereof;

(A) in the case of any Asset Sale pursuant to a condemnation, seizure, appropriation or similar taking, including by deed in lieu of condemnation, or any actual or constructive total loss or an agreed or compromised total loss, such Asset Sale shall not be required to satisfy the requirements of clause (b)(1) or (b)(2) above;

(B) if at any time any non-cash consideration received by the Company or any Restricted Subsidiary, as the case may be, in connection with any Asset Sale is repaid or converted into or sold or otherwise disposed of for cash (other than interest received with respect to any such non-cash consideration), then the date of such repayment, conversion or disposition shall be deemed to constitute the date of an Asset Sale hereunder and the Net Proceeds thereof shall be applied in accordance with this covenant; and

(3) within 365 days following the receipt of any Net Proceeds from such Asset Sale, an amount equal to 100% of the Net Proceeds from such Asset Sale is applied by the Company or such Restricted Subsidiary, as the case may be, as follows (it being understood that actions under clause (B), (C) or (D) may occur prior to actions under clause (A) during such 365-day period):

(A) to the extent the Company or such Restricted Subsidiary elects (or is required by the terms of any Indebtedness), to prepay, repay, redeem, retire, defease, replace, refinance, discharge, purchase or repurchase Indebtedness (other than Disqualified Stock, Pari Passu Second Lien Obligations, Junior Lien Obligations or Subordinated Debt) (in each case other than Indebtedness owed to the Company or an Affiliate of the Company, unless such Affiliate only sells its pro rata portion of any Notes acquired by the Issuers in any open market purchases or pursuant to any offer to purchase Notes) within 365 days after the date of such Asset Sale;

(B) to the extent the Company or such Restricted Subsidiary elects, to acquire Additional Assets within 365 days from the date of such Asset Sale (provided that any assets (other than Excluded Assets (as defined in the Security Documents)) so acquired will become part of the Collateral to the extent required by this Indenture, the Security Documents and the Intercreditor Agreements as (x) Notes-TLB Priority Collateral to the extent such assets are of the type that would constitute Notes-TLB Priority Collateral or (y) ABL Priority Collateral to the extent such assets are of the type that would constitute ABL Priority Collateral securing the Notes-TLB Obligations);
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(C) to the extent the Company or such Restricted Subsidiary elects to make an investment in a capital expenditure used or useful in a Permitted Business within 365 days after the date of such Asset Sale; provided that to the extent such investment is an asset (other than an Excluded Asset) which would constitute Collateral, such investment is thereupon added to the Collateral to the extent required by this Indenture, the Security Documents and the Intercreditor Agreements as (x) Notes-TLB Priority Collateral to the extent such investments is of the type that would constitute Notes-TLB Priority Collateral or (y) ABL Priority Collateral to the extent such investment is of the type that would constitute ABL Priority Collateral securing the Notes-TLB Obligations;

(D) to make an offer to purchase the Notes and any Pari Passu Indebtedness with similar asset sale provisions, pro rata at 100% of the tendered principal amount thereof (or 100% of the accreted value of such other Pari Passu Indebtedness so tendered, if such Pari Passu Indebtedness was offered at a discount) plus accrued and unpaid interest, if any, to, but excluding, the purchase date; and

(E) to the extent of the balance of such Net Proceeds after application in accordance with clauses (A), (B), (C) and (D) above to the extent consistent with any other applicable provision of this Indenture, to fund any corporate purpose; provided, however, that in connection with any prepayment, repayment, redemption, retirement, defeasance, replacement, refinancing, discharge, purchase or repurchase of Indebtedness pursuant to clause (A) or (D) above, the Company or such Restricted Subsidiary will retire such Indebtedness; provided, further, that pending the final application of any such Net Proceeds in accordance with this clause (3), the Company and its Restricted Subsidiaries may temporarily reduce Indebtedness or otherwise invest such Net Proceeds in any manner not prohibited by this Indenture.

(c) Notwithstanding the provisions of the fourth paragraph of the preceding subsection (a) and clause (3) of the preceding subsection (b), within 365 days following the receipt of any Net Proceeds from any Asset Sale, so long as (1) no Default or Event of Default has occurred and is continuing and (2) the First Lien Leverage Ratio shall be no greater than 4.50 to 1.00, determined on a pro forma basis for such Asset Sale (including a pro forma application of the net proceeds therefrom), as if such Asset Sale and the use of proceeds therefrom had occurred at the beginning of the applicable Trailing Four Quarter Period, the Company or any Restricted Subsidiary, as the case may be, may instead of applying such proceeds pursuant to the fourth paragraph of the preceding subsection (A) and/or clause (3) of the preceding subsection (B), use such proceeds to make Permitted Preferred Payments in an amount not to exceed:

(I) $200.0 million; provided that the assets and/or businesses comprising such Asset Sales with respect to this clause (C)(I) do not account for or produce more than 5.0% of Consolidated Cash Flow for such Trailing Four Quarter Period; plus

(II) $75.0 million; provided that, with respect to this clause (C)(II), such assets (1) are real estate assets (or the Equity Interests of any Subsidiary whose assets are comprised of real estate assets) sold no later than March 31, 2024 having an aggregate sales price up to $75.0 million and (2) such assets do not account for or produce more than 2.5% of Consolidated Cash Flow for such Trailing Four Quarter Period.

In the case of the fourth paragraph of Section 4.10(a) or clause (3)(B) of the preceding Section 4.10(b), if, during the 365-day period following the date of the Asset Sale, the Company or such Restricted Subsidiary enters into a written agreement committing it to apply such Net Proceeds in accordance with the requirements of the fourth paragraph of Section 4.10(a) or clause (3)(B) of the preceding Section 4.10(b) after such 365-day period, then such 365-day period will be extended with respect to the amount of Net Proceeds so committed for a period not to exceed 180 days, until such Net Proceeds are required to be applied in accordance with such agreement (or, if earlier, until termination of such agreement) or has been applied, as the case may be.
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In the event of an Asset Sale that requires the purchase of Notes or in which the Issuers elect to purchase Notes pursuant to clause (3)(D) of Section 4.10(b), the Issuers will be required to apply such Excess Proceeds (as defined below) to the repayment of the Notes and any other Pari Passu Indebtedness outstanding with similar provisions requiring the Issuers to make an offer to purchase such Indebtedness with the proceeds from any Asset Sale as follows:

(1) the Issuers will make an offer to purchase (a “Net Proceeds Offer”) within ten Business Days of such time from all Holders of Notes of each series in accordance with the procedures set forth herein in the maximum principal amount of Notes of each series (on a pro rata basis) that may be purchased out of an amount (the “Note Amount”) equal to the product of such Excess Proceeds multiplied by a fraction, the numerator of which is the outstanding principal amount of the applicable series of Notes and the denominator of which is the sum of the outstanding principal amount of the applicable series of Notes and such Pari Passu Indebtedness; and

(2) to the extent required by such Pari Passu Indebtedness to permanently reduce the principal amount of such Pari Passu Indebtedness, the Issuers will make an offer to purchase or otherwise repurchase or redeem such Pari Passu Indebtedness (a “Pari Passu Offer”) in an amount equal to the excess of the Excess Proceeds over the Note Amount at a purchase price of 100% of their principal amount (or 100% of the accreted value of such Pari Passu Indebtedness, if such Pari Passu Indebtedness was offered at a discount) plus accrued and unpaid interest, if any, to, but excluding, to the purchase date in accordance with the procedures (including prorating in the event of oversubscription) set forth herein with respect to the Net Proceeds Offer and in the documentation governing such Pari Passu Indebtedness with respect to the Pari Passu Offer. If the aggregate purchase price of the Notes and Pari Passu Indebtedness tendered pursuant to the Net Proceeds Offer and Pari Passu Offer is less than the Excess Proceeds, the remaining Excess Proceeds will be available to the Issuers for use in accordance with clause (3)(E) of Section 4.10(b). The Issuers shall only be required to make an Net Proceeds Offer for Notes pursuant to this covenant if the Net Proceeds available therefor (after application of the proceeds as provided in clauses (3)(A), (3)(B) and (3)(C) of Section 4.10(b)) (the “Excess Proceeds”) exceeds $50.0 million (and any lesser amounts shall be carried forward for purposes of determining whether a Net Proceeds Offer is required with respect to the Net Proceeds from any subsequent Asset Sale). Upon completion of any such Net Proceeds Offer, the amount of Excess Proceeds shall be reset at zero. The Issuers may make a Net Proceeds Offer if Excess Proceeds are less than $50.0 million and prior to 365 days after an Asset Sale.

The Collateral Disposition Offer or Net Proceeds Offer will remain open for a period of 20 Business Days following its commencement, except to the extent that a longer period is required by applicable law (the “Net Proceeds Offer Period”). No later than five Business Days after the termination of the Net Proceeds Offer Period (the “Net Proceeds Purchase Date”), the Issuers will purchase the principal amount of Notes, Pari Passu Notes-TLB Obligations and Pari Passu Indebtedness, as applicable, required to be purchased pursuant to this covenant (the “Net Proceeds Offer Amount”) or, if less than the Net Proceeds Offer Amount has been so validly tendered and not properly withdrawn, all Notes, Pari Passu Notes-TLB Obligations and Pari Passu Indebtedness, if applicable, validly tendered and not properly withdrawn in response to the Collateral Disposition Offer or Net Proceeds Offer, as applicable.

If the Net Proceeds Purchase Date is on or after an interest record date and on or before the related interest payment date, then with respect to Holders who have tendered their Notes for purchase pursuant to a Collateral Disposition Offer or Net Proceeds Offer, any accrued and unpaid interest will be paid on such Net Proceeds Purchase Date to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest will be payable to Holders who tender Notes pursuant to the Collateral Disposition Offer or Net Proceeds Offer.

On or before the Net Proceeds Purchase Date, the Issuers will, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Net Proceeds Offer Amount of Notes, Pari Passu Notes-TLB Obligations and Pari Passu Indebtedness, as applicable, or portions of Notes, Pari Passu Notes-TLB Obligations and Pari Passu Indebtedness, as applicable, so validly tendered and not properly withdrawn pursuant to the Collateral Disposition Offer or Net Proceeds Offer, or if less than the Net Proceeds Offer Amount has been validly tendered and not properly withdrawn, all Notes, Pari Passu Notes-TLB Obligations and Pari Passu Indebtedness, as applicable, so validly tendered and not properly withdrawn, in a principal amount of $2,000 or an integral multiple of $1,000 in excess thereof in the case of the Notes.
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The Issuers or the applicable tender agent, as the case may be, will promptly (but in any case not later than five Business Days after termination of the Net Proceeds Offer Period) mail or deliver to each tendering Holder of Notes or holder or lender of Pari Passu Notes-TLB Obligations or Pari Passu Indebtedness, as the case may be, an amount equal to the purchase price of the Notes, Pari Passu Notes-TLB Obligations or Pari Passu Indebtedness so validly tendered and not properly withdrawn by such holder or lender, as the case may be, and accepted by the Issuers for purchase, and, in the case of Notes in non-global form, the Issuers will promptly issue a new Note, and the Trustee, upon delivery of an authentication order from the Issuers, will authenticate and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered; provided that each such new Note will be in a minimum principal amount of $2,000 or an integral multiple of $1,000 in excess thereof. Any Note not so accepted will be promptly mailed or delivered by the Issuer to the Holder thereof. The Issuers will publicly announce the results of the Collateral Disposition Offer or Net Proceeds Offer, as the case may be, on the Net Proceeds Purchase Date.

(d) For purposes of Sections 4.10(a)(2) and 4.10(b)(2) above and for no other purpose, each of the following shall be deemed to be cash:

(1) the amount (without duplication) of any liabilities (as shown on the Company’s or such Restricted Subsidiary’s most recent balance sheet, or in the footnotes thereto) (other than Subordinated Debt, intercompany Indebtedness or Indebtedness for borrowed money (other than Indebtedness secured primarily by the assets subject to such Asset Sale)) of the Company or such Restricted Subsidiary that is expressly assumed by the transferee of any such assets pursuant to a written agreement that releases the Company or such Restricted Subsidiary from further liability therefor;

(2) the amount of any securities, notes or other obligations received from such transferee that are within 90 days after such Asset Sale converted by the Company or such Restricted Subsidiary into cash (to the extent of the cash actually so received); and

(3) any assets or Equity Interests of the kind referred to in Sections 4.10(b)(3)(B) and 4.10(b)(3)(C).

Notwithstanding the foregoing, the sale, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries, taken as a whole, will be governed by Section 4.14 and/or Section 5.01 and not by this Section 4.10.

The Issuers shall reasonably determine in their sole discretion in good faith whether, and to what extent, the Net Proceeds of an Asset Sale is attributable to Notes-TLB Priority Collateral or ABL Priority Collateral or is invested in Notes-TLB Priority Collateral or ABL Priority Collateral, taking into account all relevant factors. In the event that ABL Priority Collateral and Notes-TLB Priority Collateral (and/or other assets not constituting Collateral) is disposed of in a single transaction or series of related transactions in which the aggregate sales price or purchase price is not allocated between the ABL Priority Collateral and Notes-TLB Priority Collateral (and/or other assets not constituting Collateral), including in connection with the sale of a Guarantor which owns assets constituting both ABL Priority Collateral and Notes-TLB Priority Collateral (and/or other assets not constituting Collateral), then, solely for purposes of this Indenture, the portion of the aggregate sales price deemed to be Net Proceeds from the ABL Priority Collateral, on the one hand, and Notes-TLB Priority Collateral, on the other hand (and/or proceeds of other assets not constituting Collateral), or the portion of the purchase price deemed to be invested in ABL Priority Collateral or Notes-TLB Priority Collateral, as the case may be (and/or other assets not constituting Collateral), shall be reasonably allocated by the Issuers in their sole discretion in good faith, taking into account all relevant factors.

The Issuers will comply with, the requirements of Rule 14e-1 under the Exchange Act and any other applicable securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the purchase of Notes pursuant to a Collateral Disposition Offer or a Net Proceeds Offer. To the extent that the provisions of any applicable securities laws or regulations conflict with this Section 4.10, the Issuers shall comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section 4.10 by virtue of such compliance.
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Section 4.11    Transactions with Affiliates.

(a) The Company will not, and will not permit any of its Restricted Subsidiaries to, make any payment to or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Company (each, an “Affiliate Transaction”) involving aggregate payments or consideration to or from the Company or a Restricted Subsidiary in excess of $15.0 million with respect to any single transaction or series of related transactions, unless:

(1) the Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person or, if in the good faith judgment of the Board of Directors of the Company, no comparable transaction is available with which to compare such Affiliate Transaction, such Affiliate Transaction is otherwise fair to the Company or the relevant Restricted Subsidiary from a financial point of view; and

(2) the Company delivers to the Trustee:

(A) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $45.0 million but less than or equal to $75.0 million, an Officers’ Certificate certifying that such Affiliate Transaction or series of related Affiliate Transactions complies with this Section 4.11; and

(B) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $75.0 million, a resolution of the Board of Directors of the Company set forth in an Officers’ Certificate certifying that such Affiliate Transaction or series of related Affiliate Transactions complies with this Section 4.11 and that such Affiliate Transaction or series of related Affiliate Transactions has been approved by either the Conflicts Committee of the Board of Directors of the Company (so long as the members of the Conflicts Committee approving the Affiliate Transaction or series of related Affiliate Transactions are disinterested) or a majority of the disinterested members of the Board of Directors of the Company, if any.

(b) The following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of Section 4.11(a) hereof:

(1) any employment, consulting or similar agreement or arrangement, employee benefit plan, equity award, equity option, equity appreciation, officer or director indemnification agreement, restricted unit agreement, severance agreement or other compensation plan or arrangement entered into by the General Partner, the Company or any of its Restricted Subsidiaries in the ordinary course of business and payments, awards, grants or issuances of securities made pursuant thereto;

(2) transactions between or among the Company and/or its Restricted Subsidiaries;

(3) transactions with a Person (other than an Unrestricted Subsidiary) that is an Affiliate of the Company solely because the Company owns, directly or through a Subsidiary, an Equity Interest in, or controls, such Person;

(4) payment of reasonable fees and reimbursements of expenses (pursuant to indemnity arrangements or otherwise) of, and compensation paid to, and indemnity or insurance provided on behalf of, officers, directors, employees or consultants of the General Partner, the Company or any of its Restricted Subsidiaries, including, but not limited to, reimbursement or advancement of out-of-pocket expenses and provisions of officers’ and directors’ liability insurance; (5) any issuance of Equity Interests (other than Disqualified Stock) to, or receipt of capital contributions from, Affiliates of the Company;
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(6) Restricted Payments that do not violate the provisions of Section 4.07 hereof or any Permitted Investments;

(7) payments to the General Partner with respect to reimbursement for expenses in accordance with the Partnership Agreement as in effect on the Issue Date and as it may be amended, provided that any such amendment is not less favorable to the Company in any material respect than the agreement prior to such amendment;

(8) transactions between the Company or any of its Restricted Subsidiaries and any other Person, a director of which is also on the Board of Directors of the Company, and such common director is the sole cause for such other Person to be deemed an Affiliate of the Company or any of its Restricted Subsidiaries; provided, however, that such director abstains from voting as a member of the Board of Directors of the Company on any transaction with such other Person;

(9) (a) guarantees by the Company or any of its Restricted Subsidiaries of performance of obligations of Unrestricted Subsidiaries in the ordinary course of business, except for guarantees of Indebtedness in respect of borrowed money, and (b) pledges by the Company or any of its Restricted Subsidiaries of Equity Interests in Unrestricted Subsidiaries for the benefit of lenders or other creditors of Unrestricted Subsidiaries;

(10) payments to an Affiliate in respect of the Notes or the Note Guarantees or any other Indebtedness of the Company or any Restricted Subsidiary on the same basis as concurrent payments made or offered to be made in respect thereof to non-Affiliates;

(11) payment of loans or advances to employees not to exceed $5.0 million in the aggregate at any one time outstanding;

(12) any Affiliate Transaction with a Person in its capacity as a holder of Indebtedness or Capital Stock of the Company or any Restricted Subsidiary if such Person is treated no more favorably than the other holders of Indebtedness or Capital Stock of the Company or such Restricted Subsidiary;

(13) transactions with Unrestricted Subsidiaries, customers, clients, suppliers or purchasers or sellers of goods or services, or lessors or lessees of property, in each case in the ordinary course of business and otherwise in compliance with the terms of this Indenture which are, in the aggregate (taking into account all the costs and benefits associated with such transactions), not materially less favorable to the Company and its Restricted Subsidiaries than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated person, in the good faith determination of the Company’s Board of Directors or any Officer of the Company involved in or otherwise familiar with such transaction, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party;

(14) any transaction in which the Company or any of its Restricted Subsidiaries, as the case may be, delivers to the Trustee a letter from an accounting, appraisal, advisory or investment banking firm of national standing stating that such transaction is fair to the Company or such Restricted Subsidiary from a financial point of view or that such transaction meets the requirements of clause (1) of Section 4.11(a) hereof; and

(15) in the case of contracts for gathering, transporting, treating, processing, marketing, distributing, storing or otherwise handling Hydrocarbons, or activities or services reasonably related or ancillary thereto, or other operational contracts, any such contracts that are entered into in the ordinary course of business on terms substantially similar to those contained in similar contracts entered into by the Company or any of its Restricted Subsidiaries and third parties, or if neither the Company nor any of its Restricted Subsidiaries has entered into a similar contract with a third party, then the terms of which are no less favorable than those available from third parties on an arm’s-length basis.
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Section 4.12    Liens.

(a) The Company will not, and will not permit any of its Restricted Subsidiaries to, create, incur, assume or otherwise cause or permit to exist or become effective any Lien of any kind (other than Permitted Liens) securing Indebtedness upon any of their property or assets, now owned or hereafter acquired.

(b) If any Issuer or any Guarantor, directly or indirectly, shall create, incur, assume or permit or permit to exist any Lien of any kind upon any of their property or assets (including Equity Interests of any Subsidiary), whether owned at the Issue Date or thereafter acquired, (x) in the case of Liens securing any of the ABL Obligations, Notes-TLB Obligations, Pari Passu ABL Obligations, or Pari Passu Notes-TLB Obligations, such Issuer or such Guarantor, as the case may be, shall, contemporaneously with the incurrence of such Lien, grant at least a first- or second-priority Lien consistent with the relative Lien priority set forth in the ABL Intercreditor Agreement, subject to Permitted Liens, upon such property or asset as security for the Notes and the Guarantees pursuant to the ABL Intercreditor Agreement and any other applicable intercreditor agreement, (y) in the case of Liens securing Pari Passu Second Lien Obligations, such Issuer or such Guarantor, as the case may be, shall, contemporaneously with the incurrence of such Lien, grant at least a first- or second-priority Lien consistent with the relative Lien priority set forth in the Pari Passu Second Lien Intercreditor Agreement, subject to Permitted Liens, upon such property or asset as security for the Notes and the Guarantees pursuant to the Pari Passu Second Lien Intercreditor Agreement and any other applicable intercreditor agreement and (z) in the case of Liens securing Junior Lien Obligations, such Issuer or such Guarantor, as the case may be, shall, contemporaneously with the incurrence of such Lien, grant a priority Lien relative to such Junior Lien Obligations, subject to Permitted Liens, upon such property or asset as security for the Notes and the Guarantees pursuant to the Junior Lien Intercreditor Agreement or other applicable intercreditor agreement.

(c) Any such Lien granted to secure the Notes pursuant to clause (b) above on property or assets (which property or assets would not otherwise constitute Collateral other than as required by clause (b) above) shall provide by its terms that such Lien shall be automatically and unconditionally released and discharged in all respects upon (i) the release and discharge of the other Lien to which it relates (except a release and discharge upon payment of the obligation secured by such Lien during the pendency of any Default or Event of Default, in which case such Liens shall only be discharged and released upon payment of the Notes or cessation of such Default or Event of Default) or (ii) in the case of any such Lien in favor of any Guarantee, upon the termination and discharge of such Guarantee in accordance with this Indenture.

Section 4.13    Business Activities of Finance Corp.

Finance Corp. will not hold any material assets, become liable for any material obligations, engage in any trade or business, or conduct any business activity, other than the issuance of capital stock to the Company, the incurrence of Indebtedness as a co-issuer, co-obligor or guarantor of Indebtedness incurred by the Company (including, without limitation, the Notes) that is permitted to be incurred by the Company under Section 4.09 hereof, and activities incidental thereto.

Section 4.14    Offer to Repurchase Upon Change of Control.

(a) Except as set forth in Section 4.14(c) below, if a Change of Control occurs, each Holder of a series of Notes will have the right, except as provided below, to require the Company to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of that Holder’s Notes of such series pursuant to an offer in respect of such series of Notes (“Change of Control Offer”) on the terms set forth in this Indenture. In any Change of Control Offer, the Company will offer to make a cash payment (a “Change of Control Payment”) equal to 101% of the aggregate principal amount of Notes of such series to be repurchased plus accrued and unpaid interest, if any, on the Notes of such series repurchased to, but excluding, the date of purchase (the “Change of Control Purchase Date”), subject to the rights of Holders of such series of Notes on the relevant record date to receive interest due on the related interest payment date. Within 30 days following any Change of Control for which a Change of Control Offer is required to be made for a series of Notes, the Company will send a notice to each Holder of such series of Notes describing the transaction or transactions that constitute the Change of Control and stating:
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(1) that the Change of Control Offer is being made pursuant to this Section 4.14 and that all Notes of such series tendered, and not withdrawn, will be accepted for payment;

(2) the purchase price and the Change of Control Purchase Date, which shall be no earlier than 30 days and no later than 60 days from the date such notice is sent;

(3) that any Note of a series not tendered will continue to accrue interest;

(4) that, unless the Issuers default in the payment of the Change of Control Payment, all Notes of such series accepted for payment pursuant to such Change of Control Offer will cease to accrue interest after the Change of Control Purchase Date;

(5) that Holders electing to have any Notes of such series purchased pursuant to a Change of Control Offer will be required to surrender the Notes of such series, with the form entitled “Option of Holder to Elect Purchase” attached to the Notes completed, or transfer by book-entry transfer, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Purchase Date;

(6) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Purchase Date, a letter or electronic transmission setting forth the name of the Holder, the principal amount of Notes of such series delivered for purchase, and a statement that such Holder is withdrawing his election to have the Notes of such series purchased; and

(7) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes of such series surrendered, which unpurchased portion must be equal to $2,000 in principal amount or an integral multiple of $1,000 in excess thereof.

The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes of such series as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 4.14, or compliance with the provisions of this Section 4.14 would constitute a violation of any such laws or regulations, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section 4.14 by virtue of such compliance.

(b) Promptly following the expiration of any Change of Control Offer for a series of Notes, the Company will, to the extent lawful, accept for payment all Notes or portions of Notes of such series properly tendered, and not withdrawn, pursuant to such Change of Control Offer, subject to the consummation of such Change of Control if such Change of Control Offer was made in advance of such Change of Control. Promptly after such acceptance, the Company will, on the Change of Control Purchase Date:

(1) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes of such series properly tendered and not withdrawn and accepted for payment; and

(2) deliver or cause to be delivered to the Trustee the Notes of such series properly accepted for payment together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes of such series being purchased by the Company.
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The Paying Agent will promptly mail or wire transfer to each Holder of Notes of such series so accepted for payment, the Change of Control Payment for such Notes (or, if all the Notes of such series are then in global form, make such payment through the facilities of the Depositary), and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes of such series surrendered, if any; provided that each such new Note will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess of $2,000. Any Note so accepted for payment will cease to accrue interest on and after the Change of Control Purchase Date, unless the Company defaults in making the Change of Control Payment. The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Purchase Date.

(c) Notwithstanding any provision to the contrary, the Company will not be required to make a Change of Control Offer upon a Change of Control, if (1) a third party makes a Change of Control Offer in the manner, at the time and otherwise in compliance with the requirements set forth in Section 4.14(a) hereof applicable to a Change of Control Offer made by the Company and purchases all Notes of such series properly tendered and not withdrawn under such Change of Control Offer, (2) notice of redemption of all outstanding Notes of such series has been given pursuant to Section 3.07 and Section 3.08 hereof, as applicable, unless and until there is a default in payment of the applicable redemption price or (3) in connection with or in contemplation of any Change of Control, the Company has made an offer to purchase (an “Alternate Offer”) any and all of such series of Notes validly tendered and not withdrawn at a cash price equal to or higher than the Change of Control Payment and has purchased all Notes of such series properly tendered, and not withdrawn, in accordance with the terms of the Alternate Offer. Notwithstanding anything to the contrary contained herein, a Change of Control Offer or Alternate Offer may be made in advance of a Change of Control, conditioned upon the consummation of such Change of Control, if a definitive agreement is in place for the Change of Control at the time such Change of Control Offer or Alternate Offer is made.

(d) In the event that Holders of not less than 90% in aggregate principal amount of the outstanding Notes of any series accept a Change of Control Offer or Alternate Offer and the Company (or any third party making such Change of Control Offer in lieu of the Company as described in Section 4.14(c) hereof) purchases all of the Notes of such series held by such Holders, the Company will have the right set forth in Section 3.07(c) or Section 3.08(c), as applicable, to redeem all of the Notes of such series that remain outstanding.

Section 4.15    Additional Note Guarantees.

If, on any date after the Issue Date, (i) any Restricted Subsidiary that is not already a Subsidiary Guarantor, Guarantees (or otherwise becomes liable for) any Obligations under any Credit Facility (including the ABL Facility and Term Loan Facility), or (ii) any Domestic Subsidiary that is not already a Subsidiary Guarantor, Guarantees (or otherwise becomes liable for) any other Indebtedness for borrowed money in a principal amount in excess of $50.0 million, then, within 20 Business Days after such date, such Subsidiary will provide a Note Guarantee and concurrently become a Subsidiary Guarantor by executing a supplemental indenture in substantially the form specified in Exhibit E hereto. Each Note Guarantee and the Liens on the Collateral securing a Note Guarantee of a Subsidiary Guarantor will be released automatically at such time as such Subsidiary Guarantor is discharged or otherwise released from all its Obligations in respect of its Guarantee of (or other liability for) any Obligations under any Credit Facility (including the ABL Facility and the Term Loan Facility) or any other Indebtedness for borrowed money in a principal amount in excess of $50.0 million; provided that such discharge or other release did not result directly from payment by such Subsidiary Guarantor in satisfaction of (a) its liability as a guarantor pursuant to such Guarantee, or (b) its primary liability for such Obligations (after demand or default under such Credit Facility). Furthermore, each Note Guarantee of a Subsidiary Guarantor shall be subject to release as provided in Section 10.05 hereof.

Each Domestic Subsidiary that becomes a Subsidiary Guarantor on or after the Issue Date shall, at the time it becomes a Subsidiary Guarantor in accordance with the provisions of the immediately preceding paragraph, become a party to the applicable Security Documents, the Intercreditor Agreements and, to the extent required by this Indenture and the Security Documents, shall as promptly as practicable (or within the time periods set forth in Article XIII hereof, as applicable), execute and deliver such security instruments, financing statements, certificates, Officers’ Certificates and Opinions of Counsel (to the extent, and substantially in the form, delivered on the Issue Date) as may be necessary to vest in the Collateral Agent a perfected first- or second-priority security interest, as the case may be (subject to Permitted Liens), in properties and assets that constitute Collateral as security for the Notes or the Note Guarantees and as may be necessary to have such property or asset added to the applicable Collateral as required under the Security Documents and this Indenture, subject to the terms of the Intercreditor Agreements, and thereupon all provisions of this Indenture relating to the Collateral shall be deemed to relate to such properties and assets to the same extent and with the same force and effect.
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Section 4.16    Designation of Restricted and Unrestricted Subsidiaries.

The Board of Directors of the Company may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by the Company and its Restricted Subsidiaries in the Subsidiary designated as an Unrestricted Subsidiary will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under Section 4.07 hereof or under one or more clauses of the definition of Permitted Investments, as determined by the Company. That designation will only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Board of Directors of the Company may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if that redesignation would not cause a Default. References herein to a Person becoming a Restricted Subsidiary or comparable language shall include such Person becoming a Restricted Subsidiary by redesignation of such Person from an Unrestricted Subsidiary to a Restricted Subsidiary.

Any designation of a Subsidiary of the Company as an Unrestricted Subsidiary will be evidenced to the Trustee by filing with the Trustee a certified copy of a resolution of the Board of Directors of the Company giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the preceding conditions and was permitted by Section 4.07 hereof. If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary as of such date and, if such Indebtedness is not permitted to be incurred as of such date under Section 4.09 hereof, the Company will be in default of Section 4.09 hereof.

The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of any outstanding Indebtedness of such Unrestricted Subsidiary, and such designation will only be permitted if: (1) such Indebtedness is permitted under Section 4.09 hereof, calculated on a pro forma basis as if such designation had occurred at the beginning of the applicable reference period; and (2) no Default or Event of Default would be in existence following such designation.

Section 4.17    Covenant Suspension.

With respect to a series of Notes, following the first day (such date, a “Suspension Date”) on which:

(a) an Investment Grade Rating Event with respect to such series of Notes occurs; and

(b) no Default or Event of Default with respect to such series of Notes has occurred and is continuing, the Company and its Restricted Subsidiaries will not be subject to the following provisions of this Indenture with respect to such series of Notes (collectively with respect to such series of Notes, the “Suspended Covenants”):

(i) Section 5.01(a)(4);

(ii) Section 4.10(b);

(iii) Section 4.07;

(iv) Section 4.08;
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(v) Section 4.09;

(vi) Section 4.11;

(vii) Section 4.15 (but only with respect to any Domestic Subsidiary that is required to become a Subsidiary Guarantor after the date of the commencement of the applicable Suspension Date); and

(viii) Section 4.16.

If at any time after a Suspension Date, a credit rating assigned to such series of Notes is downgraded from an Investment Grade Rating by any Rating Agency or if a Default or Event of Default with respect to such series of Notes occurs and is continuing, then the Suspended Covenants with respect to such series of Notes will thereafter be reinstated as if such covenants had never been suspended (the “Reinstatement Date”) and be applicable under this Indenture (including in connection with performing any calculation or assessment to determine compliance with the terms of this Indenture), unless and until the Notes of such series subsequently attain an Investment Grade Rating from both Rating Agencies and no Default or Event of Default with respect to such series of Notes is in existence (in which event the Suspended Covenants shall no longer be in effect for such time that the Notes of such series maintain an Investment Grade Rating from both Rating Agencies and no Default or Event of Default with respect to such series of Notes is in existence); provided, however, that no Default, Event of Default or breach of any kind with respect to such series of notes shall be deemed to exist under this Indenture, the Notes or the Note Guarantees of such series of notes with respect to such Suspended Covenants based on, and none of the Company or any of its Subsidiaries shall bear any liability for, any actions taken or events occurring during the Suspension Period (as defined below) with respect to such series of Notes, regardless of whether such actions or events would have been permitted if the applicable Suspended Covenants remained in effect during such period. The period of time between the Suspension Date and the Reinstatement Date with respect to a series of Notes is referred to as the “Suspension Period.”

On the Reinstatement Date for an applicable series of Notes, and solely with respect to such series of Notes, (i) all Indebtedness incurred during the applicable Suspension Period will be deemed to have been outstanding on the Issue Date, so that it is classified under clause (2) of the definition of Permitted Debt and (ii) any Investment made after the applicable Suspension Date will be deemed to have been made on the Issue Date, so that it is classified under clause (15) of the definition of Permitted Investments. Calculations made after the applicable Reinstatement Date of the amount available to be made as Restricted Payments under Section 4.07 will be made as though Section 4.07 had been in effect since the Issue Date and throughout the Suspension Period. Accordingly, Restricted Payments made during the Suspension Period will reduce the amount available to be made as Restricted Payments under Section 4.07(a).

During any period when the Suspended Covenants with respect to a series of Notes are suspended, the Board of Directors of the Company may not designate any of the Company’s Subsidiaries as Unrestricted Subsidiaries.

Promptly following the occurrence of any Suspension Date or Reinstatement Date with respect to a series of Notes, the Company will provide an Officers’ Certificate to the Trustee regarding such occurrence. The Trustee shall have no obligation to monitor or independently determine or verify if a Suspension Date or Reinstatement Date has occurred or notify the Holders of the Notes of the applicable series of any Suspension Date or Reinstatement Date. The Trustee may provide a copy of such Officers’ Certificate to any Holder of the Notes of the applicable series upon request.

Section 4.18    Layering.

None of the Company, the Issuers or the Subsidiary Guarantors will, directly or indirectly, incur:

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(1) any Secured Indebtedness (other than Capital Lease Obligations) if such Secured Indebtedness is or purports to be by its terms (or by the terms of any agreement governing such Secured Indebtedness) (i) secured by Liens that, with respect to any ABL Priority Collateral, are junior in priority to any Liens securing ABL Obligations and/or any Pari Passu ABL Obligations and senior in priority to the Notes-TLB Obligations and/or any Pari Passu Notes-TLB Obligations or (ii) secured by Liens that, with respect to any Notes-TLB Priority Collateral, are junior in priority to any Liens securing the Notes-TLB Obligations and/or any Pari Passu Notes-TLB Obligations and senior in priority to ABL Obligations and/or any Pari Passu ABL Obligations; or

(2) any Indebtedness in an aggregate principal amount in excess of $25.0 million that is subordinate in right of payment (including via any “first-out” collateral proceeds waterfall or similar structure) to (i) the ABL Obligations and/or any Pari Passu ABL Obligations unless such Indebtedness is also subordinated in right of payment to the obligations under the Notes-TLB Obligations and/or any Pari Passu Notes-TLB Obligations or (ii) the Notes-TLB Obligations and/or any Pari Passu Notes-TLB Obligations unless such Indebtedness is also subordinated in right of payment to the ABL Obligations and/or any Pari Passu ABL Obligations.

Section 4.19    Limitation on activities of the Company.

The Company will not conduct, transfer or otherwise engage in any business or operations other than (1) its direct or indirect ownership of all of the Equity Interests in, and its management of, the Issuers and its other Restricted Subsidiaries, (2) action required to maintain its existence and the performance of obligations under and compliance with its organizational documents and any requirements of any law, regulation, rule, order, judgment, decree or permit (including rules and regulations applicable to companies with equity or debt securities held by the public), (3) performance of its obligations under the ABL Credit Agreement, the Term Loan Credit Agreement and this Indenture and other agreements contemplated hereby, (4) any public offering of its Equity Interests, including the payment of any costs, fees and expenses related thereto, (5) activities incidental to guaranteeing payment and performance obligations of its Subsidiaries in the ordinary course of business, (6) incurring fees, costs and expenses relating to overhead and general operating including professional fees and paying taxes, (7) providing indemnification for its and the General Partner’s current and former officers, directors, members of management, managers, employees and advisors and consultants, (8) other activities to the extent not prohibited by, and in compliance with, the ABL Credit Agreement, the Term Loan Credit Agreement and this Indenture and (9) activities incidental to its maintenance and continuance and to any of the foregoing activities.

Section 4.20    Limited Condition Transactions.

In connection with determining whether any Limited Condition Transaction and any actions or transactions related thereto (including the incurrence, issuance or assumption of Indebtedness and the use of proceeds thereof, the incurrence or creation of Liens and the making of Restricted Payments and Investments) is permitted hereunder, for which determination requires the calculation of any financial ratio, test or basket, each calculated on a pro forma basis, at the option of Operating LLC (Operating LLC’s election to exercise such option in connection with any Limited Condition Transaction, an “LCT Election”), the date of determination shall be deemed to be the date the definitive agreement for such Limited Condition Transaction is entered into (the “LCT Test Date”), and if, after giving pro forma effect to the Limited Condition Transaction, such Limited Condition Transaction would have been permitted on the relevant LCT Test Date in compliance with such provision. For the avoidance of doubt, if Operating LLC has made an LCT Election, (1) if any of the ratios, tests or baskets for which compliance was determined or tested as of the LCT Test Date would at any time after the LCT Test Date have been exceeded or otherwise failed to have been complied with as a result of fluctuations in any such ratio, test or basket, including due to fluctuations in Consolidated Cash Flow of the Company, such baskets, tests or ratios will not be deemed to have been exceeded or failed to have been complied with as a result of such fluctuations (and no Default or Event of Default shall be deemed to have occurred due to such failure to comply), and (2) in calculating the availability under any ratio, test or basket in connection with any action or transaction unrelated to such Limited Conditional Transaction following the relevant LCT Test Date and prior to the earlier of the date on which such Limited Condition Transaction is consummated and the date that the definitive agreement or date for redemption, repurchase, defeasance, satisfaction and discharge or repayment specified in an irrevocable notice for such Limited Condition Transaction is terminated, expires or passes, as applicable, without consummation of such Limited Condition Transaction, any such ratio, test or basket shall be determined or tested giving pro forma effect to such Limited Condition Transaction.
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ARTICLE V
SUCCESSORS

Section 5.01    Merger, Consolidation, or Sale of Assets.

(a) The Company shall not (x) consolidate, amalgamate or merge with or into another Person (regardless of whether the Company is the surviving entity), or (y) sell, assign, transfer, convey, lease or otherwise dispose of all or substantially all of its properties or assets, in one or more related transactions, to another Person, unless:

(1) either:

(A) the Company is the surviving entity; or

(B) the Person formed by or surviving any such consolidation, amalgamation or merger (if other than the Company) or to which such sale, assignment, transfer, conveyance or other disposition has been made is a Person organized or existing under the laws of the United States, any state of the United States or the District of Columbia;

(2) the Person formed by or surviving any such consolidation, amalgamation or merger (if other than the Company) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all the obligations of the Company under its Note Guarantee, this Indenture, the Intercreditor Agreements and the Security Documents pursuant to a supplemental indenture;

(3) immediately after such transaction, no Default or Event of Default exists;

(4) immediately after giving effect to such transaction and any related financing transaction on a pro forma basis as if the same had occurred at the beginning of the Trailing Four Quarter Period, either (a) the Company or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than the Company), or to which such sale, assignment, transfer, conveyance, lease or other disposition has been made, would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) hereof or (b) the Fixed Charge Coverage Ratio of the Company or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than the Company), or to which such sale, assignment, transfer, conveyance, lease or other disposition has been made, is equal to or greater than the Fixed Charge Coverage Ratio of the Company immediately prior to such transaction; and

(5) the Company delivers, or causes to be delivered, to the Trustee, an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, amalgamation, merger or disposition and, such supplemental indenture, comply with the requirements of this Indenture; and

(6) to the extent any assets of the Person which is merged, amalgamated or consolidated with or into the Company are assets of the type which would constitute Collateral under the Security Documents, the Company or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than the Company) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made, as applicable, will take such action, if any, as may be reasonably necessary to cause such property and assets to be made subject to the Lien of the applicable Security Documents in the manner and to the extent required pursuant to Section 4.15, the Intercreditor Agreements and the applicable Security Documents and shall take all reasonably necessary action so that such Lien is perfected to the extent required by this Indenture, the Intercreditor Agreements and the applicable Security Documents.

(b) Notwithstanding the restrictions set forth in clause (4) of Section 5.01(a) hereof, any Restricted Subsidiary (other than the Issuers) may consolidate with, amalgamate with or merge into or dispose of all or part of its properties or assets to the Company without complying with such clause (4) in connection with any such consolidation, amalgamation, merger or disposition.
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(c) Notwithstanding Section 5.01(a) hereof, the Company is permitted to reorganize as any other form of entity, provided that:

(1) the reorganization involves the conversion (by merger, sale, contribution or exchange of assets or otherwise) of the Company into a form of entity other than a limited partnership formed under Delaware law;

(2) the entity so formed by or resulting from such reorganization is an entity organized or existing under the laws of the United States, any state thereof or the District of Columbia;

(3) the entity so formed by or resulting from such reorganization assumes all the obligations of the Company under the Notes, this Indenture, the Intercreditor Agreements and the Security Documents;

(4) immediately after such reorganization no Default or Event of Default exists;

(5) to the extent any assets of the Person which is merged, amalgamated or consolidated with or into the Company are assets of the type which would constitute Collateral under the Security Documents, the Company or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than such Issuer) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made, as applicable, will take such action, if any, as may be reasonably necessary to cause such property and assets to be made subject to the Lien of the applicable Security Documents in the manner and to the extent required in this Indenture, the Intercreditor Agreements and the applicable Security Documents and shall take all reasonably necessary action so that such Lien is perfected to the extent required by this Indenture, the Intercreditor Agreements and the applicable Security Documents;

(6) such reorganization is not materially adverse to the Holders or Beneficial Owners of the Notes (for purposes of this clause (6), a reorganization will not be considered materially adverse to the Holders or Beneficial Owners of the Notes solely because the successor or survivor of such reorganization (a) is subject to federal or state income taxation as an entity or (b) is considered to be an “includible corporation” of an affiliated group of corporations within the meaning of Section 1504(b) of the Internal Revenue Code or any similar state or local law); and

(7) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such reorganization, and, if a supplemental indenture or other agreement is required, such supplemental indenture or other agreement, comply with this Indenture.

(d) For purposes of this Section 5.01, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Restricted Subsidiaries, which properties or assets, if held by the Company instead of such Restricted Subsidiaries, would constitute all or substantially all of the properties or assets of the Company on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties or assets of the Company.

(e) Neither of the Issuers will (1) consolidate, amalgamate or merge with or into another Person (regardless of whether such Issuer is the surviving entity), or (2) sell, assign, transfer, convey, lease or otherwise dispose of all or substantially all of its properties or assets, in one or more related transactions, to another Person, unless:

(1) either: (a) such Issuer is the surviving entity; or (b) the Person formed by or surviving any such consolidation, amalgamation or merger (if other than such Issuer) or to which such sale, assignment, transfer, conveyance or other disposition has been made is a Person organized or existing under the laws of the United States, any state of the United States or the District of Columbia; provided, however, that Finance Corp.
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may not consolidate, amalgamate or merge with or into any Person other than a corporation satisfying such requirement so long as Operating LLC is not a corporation;

(2) the Person formed by or surviving any such consolidation, amalgamation or merger (if other than such Issuer) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all the obligations of such Issuer under the Notes, this Indenture, the Intercreditor Agreements and the Security Documents pursuant to a supplemental indenture;

(3) immediately after such transaction, no Default or Event of Default exists;

(4) the Company delivers, or causes to be delivered, to the Trustee, an Officers’ Certificate and an opinion of counsel, each stating that such consolidation, amalgamation, merger or disposition and such supplemental indenture comply with the requirements of this Indenture; and

(5) to the extent any assets of the Person which is merged, amalgamated or consolidated with or into such Issuer are assets of the type which would constitute Collateral under the Security Documents, such Issuer or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than such Issuer) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made, as applicable, will take such action, if any, as may be reasonably necessary to cause such property and assets to be made subject to the Lien of the applicable Security Documents in the manner and to the extent required by Section 4.15, the Intercreditor Agreements and the applicable Security Documents and shall take all reasonably necessary action so that such Lien is perfected to the extent required by this Indenture, the Intercreditor Agreements and the applicable Security Documents.

(f) Notwithstanding anything herein to the contrary, in the event that Operating LLC becomes corporation or Operating LLC or the Person formed by or surviving any consolidation, amalgamation or merger permitted hereunder is a corporation, Finance Corp. may be merged into Operating LLC or it may be dissolved and cease to be an Issuer.

(g) A Subsidiary Guarantor will not sell or otherwise dispose of, in one or more related transactions, all or substantially all of its properties or assets to, or consolidate with or amalgamate with or merge with or into (regardless of whether such Subsidiary Guarantor is the surviving Person), another Person, other than the Company, an Issuer or another Subsidiary Guarantor, unless either:

(1) (a) immediately after giving effect to such transaction or series of related transactions, no Default or Event of Default exists and (b) either (i) such Subsidiary Guarantor is the surviving Person of such consolidation, amalgamation or merger or (ii) the Person acquiring the properties or assets in any such sale or other disposition or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than such Subsidiary Guarantor) unconditionally assumes all the obligations of such Subsidiary Guarantor under its Note Guarantee, this Indenture, the Intercreditor Agreements and the Security Documents pursuant to a supplemental indenture and, to the extent any assets of the Person which is merged, amalgamated or consolidated with or into such Subsidiary Guarantor are assets of the type which would constitute Collateral under the Security Documents, such Subsidiary Guarantor or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than such Subsidiary Guarantor) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made, as applicable, will take such action, if any, as may be reasonably necessary to cause such property and assets to be made subject to the Lien of the applicable Security Documents in the manner and to the extent required by this Indenture, the Intercreditor Agreements and the applicable Security Documents and shall take all reasonably necessary action so that such Lien is perfected to the extent required by this Indenture, the Intercreditor Agreements and the applicable Security Documents; or

(2) such transaction or series of transactions does not violate Section 4.10 hereof.
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Section 5.02    Successor Entity Substituted.

Upon any consolidation, amalgamation or merger or any sale, assignment, transfer, conveyance, lease or other disposition of all or substantially all of the properties or assets of an Issuer in accordance with Section 5.01 hereof in which such Issuer is not the surviving entity, the surviving Person formed by such consolidation, amalgamation or merger into or with which such Issuer is merged or to which such sale, assignment, transfer, conveyance, lease or other disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, such Issuer under this Indenture with the same effect as if such surviving Person had been named as such Issuer in this Indenture, and thereafter (except in the case of a lease of all or substantially all of such Issuer’s properties or assets), such Issuer will be relieved of all obligations and covenants under this Indenture and the Notes.

ARTICLE VI
DEFAULTS AND REMEDIES

Section 6.01    Events of Default.

Each of the following is an “Event of Default” with respect to a series of Notes:

(1) default for 30 days in the payment when due of interest on the Notes of such series;

(2) default in the payment when due (at maturity, upon redemption or otherwise) of the principal of, or premium, if any, on, the Notes of such series;

(3) failure by the Company to comply with its obligations under Section 5.01 hereof or to consummate a purchase of Notes of such series when required pursuant to Section 4.10 or Section 4.14 hereof;

(4) failure by the Company or any of its Restricted Subsidiaries for 30 days after written notice from the Trustee or the Holders of at least 30% in aggregate principal amount of the then outstanding Notes of such series to comply with the provisions of Section 4.07 or Section 4.09 hereof or to comply with the provisions of Section 4.10 or Section 4.14 hereof to the extent not described in clause (3) of this Section 6.01;

(5) (a) except as addressed in subclause (b) of this clause (5), failure by the Company or any of its Restricted Subsidiaries for 60 days after written notice from the Trustee or the Holders of at least 30% in aggregate principal amount of the then outstanding Notes of the applicable series to comply with any of the other agreements in this Indenture or the Notes of such series (other than the Other Specified Collateral Requirements) or (b) failure by the Company for 180 days after notice from the Trustee or the Holders of at least 30% in aggregate principal amount of the then outstanding Notes of the applicable series to comply with Section 4.03 hereof;

(6) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or Guarantee now exists, or is created after the Issue Date, if that default:

(A) is caused by a failure to pay principal of, premium, if any, on, or interest, if any, on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a “Payment Default”); or

(B) results in the acceleration of such Indebtedness prior to its Stated Maturity,

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and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness for which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $100.0 million or more; provided that if, prior to any acceleration of the Notes of such series, (i) any such default is cured or waived, (ii) any such acceleration of such Indebtedness is rescinded, or (iii) such Indebtedness is repaid, within a period of 10 Business Days from the continuation of such default beyond the applicable grace period or the occurrence of such acceleration, as the case may be, any Default or Event of Default (but not any acceleration of the Notes of such series) shall be automatically rescinded, so long as such rescission does not conflict with any judgment or decree;

(7) failure by the Company or any Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary to pay final, non-appealable judgments (entered by a court or courts of competent jurisdiction) aggregating in excess of $100.0 million (net of any amounts that a reputable and creditworthy insurance company has acknowledged liability for in writing), which judgments are not paid, discharged or stayed for a period of 60 days;

(8) except as permitted by this Indenture, any Note Guarantee is held in any judicial proceeding to be unenforceable or invalid or ceases for any reason to be in full force and effect, or any Guarantor, or any Person acting on behalf of any Guarantor, denies or disaffirms its obligations under its Note Guarantee, except, in each case, by reason of the release of such Note Guarantee in accordance with this Indenture;

(9) an Issuer or any of the Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law:

(A) commences a voluntary case or proceeding;

(B) consents to the entry of an order for relief against it in an involuntary case or proceeding;

(C) consents to the appointment of a custodian, receiver or monitor of it or for all or substantially all of its property;

(D) makes a general assignment for the benefit of its creditors; or

(E) generally is not paying its debts as they become due; or

(10) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

(A) is for relief against any Issuer or any of the Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary in an involuntary case or proceeding;

(B) appoints a custodian, receiver or monitor of any Issuer or any of the Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary or for all or substantially all of the property of an Issuer or any of the Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary; or

(C) orders the liquidation of an Issuer or any of the Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary;

and the order or decree remains unstayed and in effect for 60 consecutive days.
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(11) (i) the Liens created by any Security Document shall at any time not constitute a valid and perfected Lien on any Collateral intended to be covered thereby with a Fair Market Value, individually or in the aggregate, in excess of $50.0 million other than (A) in accordance with the terms of the relevant Security Documents and this Indenture, (B) the satisfaction in full of all Obligations under this Indenture or (C) any loss of perfection that results from the failure of the Collateral Agent to maintain possession of certificates delivered to it representing securities pledged under the Security Documents, and which default continues for 30 days; (ii) the repudiation by any Issuer or any Guarantor in any pleading in any court of competent jurisdiction of any of its material obligations under the Security Documents or to file UCC continuation statements or PPSA financing change statements; or

(12) any Issuer or any Guarantor shall assert, in any pleading in any court of competent jurisdiction, that any security interest in any Security Document is invalid or unenforceable other than by reason of the termination of this Indenture or the release of any such Collateral in accordance with this Indenture.

Notwithstanding the foregoing, the failure of the Company or its Restricted Subsidiaries to satisfy the Other Specified Collateral Requirements shall not be an “Event of Default” under this Indenture; provided, that, upon the failure of the Company and its Restricted Subsidiaries to deliver all Other Specified Collateral Deliverables for all Other Specified Properties within the time periods and to the extent required by this Indenture (whether or not the Company and its Restricted Subsidiaries shall have used their commercially reasonable efforts (to the extent required in the Other Specified Collateral Requirements) to deliver such Other Specified Collateral Deliverables for such Other Specified Properties within such time periods, provided further that if the aggregate Designated Value of all Other Specified Properties with respect to which the applicable Other Specified Collateral Deliverables have not been satisfied exceeds the threshold set forth in 2(b) of the definition of “Material Real Property Asset” by less than 10%, such applicable time period shall be extended by 90 days) interest on the Notes shall accrue at a rate equal to 2.00% plus the interest rate otherwise applicable to the Notes until such time as such Other Specified Collateral Deliverables are satisfied. For the avoidance of doubt, for purposes of the proviso in the foregoing sentence, compliance with this paragraph shall be determined with respect to those Material Real Property Assets calculated without giving any effect to the penultimate paragraph under Section 13.05. In the event the 90 day time extension described in the second proviso of the second preceding sentence applies, and such collateral deficiency is not cured by the end of such 90 day period, the additional interest shall accrue as if such 90 day extension period had not applied.

Section 6.02    Acceleration.

In the case of an Event of Default specified in clause (9) or (10) of Section 6.01 hereof, with respect to either Issuer or any of the Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary, all principal of, and accrued but unpaid interest on, all outstanding Notes of such series will become due and payable immediately without further action or notice (subject to applicable law). If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 30% in aggregate principal amount of the then outstanding Notes of such series may declare all principal of, and accrued but unpaid interest, if any, on, all the outstanding Notes of such series to be due and payable immediately, by notice in writing to the Company and, in the case of a notice by such Holders, also to the Trustee specifying the respective Event of Default and that it is a notice of acceleration.

Upon any such declaration, the Notes of such series shall become due and payable immediately.

The Holders of a majority in aggregate principal amount of the then outstanding Notes of a series by written notice to the Trustee may, on behalf of the Holders of all of the Notes of such series, rescind an acceleration and its consequences if the rescission would not violate any judgment or decree and if all existing Events of Default (except nonpayment of principal, interest or premium, if any, that has become due solely because of the acceleration) have been cured or waived.
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Section 6.03    Other Remedies.

If an Event of Default occurs and is continuing, subject to the terms of the Intercreditor Agreements, the Trustee may pursue any available remedy to collect the payment of principal of, premium, if any, on, or interest, if any, on, the Notes of a series or to enforce the performance of any provision of the Notes of such series or this Indenture.

The Trustee may maintain a proceeding even if it does not possess any of the Notes of such series or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law.

Section 6.04    Waiver of Past Defaults.

Holders of a majority in aggregate principal amount of the then outstanding Notes of a series by written notice to the Trustee and the Collateral Agent may, on behalf of the Holders of all of the Notes of such series, waive any existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium, if any, on, or interest, if any, on, the Notes of such series; provided, however, that the Holders of a majority in aggregate principal amount of the then outstanding Notes of such series may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

Section 6.05    Control by Majority.

Holders of a majority in aggregate principal amount of the then outstanding Notes of a series may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or the Collateral Agent or exercising any trust or power conferred on it, in each case with respect to such series of Notes. However, the Trustee or the Collateral Agent may refuse to follow any direction that conflicts with law or this Indenture that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee or the Collateral Agent in personal liability.

Section 6.06    Limitation on Suits.

Subject to the provisions of Section 7.01 hereof, in case an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under this Indenture at the request or direction of any Holders of Notes of the applicable series of Notes unless such Holders have offered to the Trustee indemnity or security reasonably satisfactory to it against any loss, liability or expense. Except to enforce the right with respect to a series of Notes to receive payment of principal, premium, if any, or interest, when due, no Holder of a Note of either series of Notes may pursue any remedy with respect to this Indenture or the Notes of such series unless:

(1) such Holder has previously given the Trustee written notice that an Event of Default is continuing;

(2) Holders of at least 30% in aggregate principal amount of the then outstanding Notes of such series make a written request to the Trustee to pursue the remedy;

(3) such Holder or Holders offer and provide to the Trustee security or indemnity reasonably satisfactory to the Trustee against any loss, liability or expense;

(4) the Trustee does not comply with such request within 60 days after receipt of the request and the offer of security or indemnity; and (5) during such 60-day period, Holders of a majority in aggregate principal amount of the then outstanding Notes of such series do not give the Trustee a direction inconsistent with such request.
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A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note.

Section 6.07    Rights of Holders of Notes to Receive Payment.

Notwithstanding any other provision of this Indenture, but subject to the terms of the Intercreditor Agreements, the right of any Holder of a Note to receive payment of principal of, and premium, if any, and interest, if any, on, the Note, on or after the respective due dates expressed in the Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be amended without the consent of such Holder.

Section 6.08    Collection Suit by Trustee.

If an Event of Default specified in clause (1) or (2) of Section 6.01 hereof occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Issuers for the whole amount of the principal, premium, if any, or interest, if any, remaining unpaid on the Notes and interest on overdue principal and premium, if any, and to the extent lawful, interest, if any, and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, the Collateral Agent, its agents and counsel.

Section 6.09    Trustee May File Proofs of Claim.

The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Collateral Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, the Collateral Agent, its agents and counsel) and the Holders of Notes allowed in any judicial proceedings relative to the Issuers (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, the Collateral Agent, its agents and counsel, and any other amounts due the Trustee or the Collateral Agent under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, the Collateral Agent, its agents and counsel, and any other amounts due the Trustee or the Collateral Agent under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

Section 6.10    Priorities.

If the Trustee collects any money pursuant to this Article VI, it shall pay out the money in the following order:

First: to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expenses and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection; Second: to Holders of Notes of a series for amounts due and unpaid on the Notes on such series for principal, premium, if any, and interest, if any, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest, if any, respectively; and
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Third: to the Issuers or to such party as a court of competent jurisdiction shall direct.

The Trustee may fix a record date and payment date for any payment to Holders of Notes of such series pursuant to this Section 6.10.

Section 6.11    Undertaking for Costs.

In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in aggregate principal amount of the then outstanding Notes of a series.

ARTICLE VII
TRUSTEE

Section 7.01    Duties of Trustee.

(a) If an Event of Default has occurred and is continuing with respect to a series of Notes, the Trustee will be required, in the exercise of its power vested in it by this Indenture, to use the degree of care of a prudent man in the conduct of his own affairs.

(b) Except during the continuance of an Event of Default:

(1) the duties of the Trustee will be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth (or incorporated by reference) in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee will examine the certificates and opinions to determine whether they conform to the requirements of this Indenture, but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein.

(c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

(1) this paragraph does not limit the effect of paragraph (b) of this Section 7.01;

(2) the Trustee will not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and

(3) the Trustee will not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof.

(d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.
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(e) The Trustee will not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

(f) The Trustee shall have no obligation to (i) independently determine or verify whether the conditions for the termination of covenants as provided in Section 4.17 have been satisfied or (ii) notify the Holders of the occurrence of such termination of covenants.

Section 7.02    Rights of Trustee.

(a) The Trustee may conclusively rely upon any document believed by it in good faith to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document.

(b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel or both. The Trustee will not be liable for any action it takes or omits to take in good faith in reliance on such Officers’ Certificate or Opinion of Counsel. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel will be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

(c) The Trustee may act through its attorneys and agents and will not be responsible for the misconduct or negligence of any agent appointed with due care.

(d) The Trustee will not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture.

(e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Issuers will be sufficient if signed by an Officer of each of the Company and Finance Corp.

(f) No provision of this Indenture will require the Trustee to expend or risk its own funds or incur any liability. The Trustee will be under no obligation to exercise any of its rights or powers under this Indenture at the request of any Holders, unless such Holder has offered to the Trustee indemnity or security reasonably satisfactory to it against any loss, liability or expense that might be incurred by it in connection with its compliance with such request.

(g) The Trustee shall not be bound to ascertain or inquire as to the performance or observance of any covenants, conditions, or agreements on the part of the Company, except as otherwise set forth herein
.
(h) The permissive right of Trustee to do things enumerated in this Indenture shall not be construed as a duty.

(i) In no event shall the Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

(j) The Trustee shall not be responsible or liable for any action taken or omitted by it in good faith at the direction of the Holders of a series of Notes of not less than a majority in principal amount of the Notes of such series outstanding as to the time, method and place of conducting any proceedings for any remedy available to the Trustee or the exercising of any power conferred by this Indenture.

(k) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.

(l) Any action taken, or omitted to be taken, by the Trustee in good faith pursuant to this Indenture upon the request or authority or consent of any Person who, at the time of making such request or giving such authority or consent, is a Holder of the Notes shall be conclusive and binding upon all future Holders of such Notes and upon Notes executed and delivered in exchange therefor or in place thereof.
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Section 7.03    Individual Rights of Trustee.

The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuers or any Affiliate of the Issuers with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest, it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee (if this Indenture has been qualified under the TIA) or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Section 7.10 hereof.

Section 7.04    Trustee’s Disclaimer.

The Trustee will not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Issuers’ use of the proceeds from the Notes or any money paid to the Issuers or upon the Issuers’ direction under any provision of this Indenture, it will not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it will not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.

Section 7.05    Notice of Defaults.

If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee will send to the Holders of Notes of such series a notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest, if any, on, any Note, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of Notes of such series.

The Trustee will not be deemed to have notice of any Default or Event of Default, except Events of Default under clause (1) or (2) of Section 6.01 hereof, unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event that is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Notes of such series affected and this Indenture.

Section 7.06    [Reserved].

Section 7.07    Compensation and Indemnity.

(a) The Issuers will pay to the Trustee from time to time reasonable compensation for its acceptance of this Indenture and services provided hereunder. The Trustee’s compensation will not be limited by any law on compensation of a trustee of an express trust. The Issuers will reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses will include the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel.

(b) The Issuers and the Guarantors will indemnify the Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Issuers and the Guarantors (including this Section 7.07) and defending itself against any claim (whether asserted by the Issuers, the Guarantors, any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense is found by a court of competent jurisdiction to have been caused by its own negligence, bad faith or willful misconduct. The Trustee will notify the Issuers and the Guarantors promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Issuers and the Guarantors will not relieve the Issuers or any of the Guarantors of their obligations hereunder unless the failure to notify the Issuers or the Guarantors impairs any Issuer’s or Guarantor’s respective ability to defend such claim.
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Such Issuer or such Guarantor will defend the claim and the Trustee will cooperate in the defense. The Trustee may have separate counsel and the Issuers will pay the reasonable fees and expenses of such counsel. Neither Issuer nor any Guarantor need pay for any settlement made without its consent, which consent will not be unreasonably withheld.

(c) The obligations of the Issuers and the Guarantors under this Section 7.07 will survive the satisfaction and discharge of this Indenture, and the resignation or removal of the Trustee.

(d) To secure the Issuers’ and the Guarantors’ payment obligations in this Section 7.07, the Trustee will have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal of and interest, if any, on, particular Notes. Such Lien will survive the satisfaction and discharge of this Indenture.

(e) When the Trustee incurs expenses or renders services after an Event of Default specified in clause (9) or (10) of Section 6.01 hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.

Section 7.08    Replacement of Trustee.

(a) A resignation or removal of the Trustee and appointment of a successor Trustee will become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section 7.08.

(b) The Trustee may resign in writing at any time and be discharged from the trust hereby created only upon the successor Trustee’s acceptance of appointment as provided in this Section 7.08. The Holders of a majority in aggregate principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Issuers in writing. The Issuers may remove the Trustee if:

(1) the Trustee fails to comply with Section 7.10 hereof;

(2) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;

(3) a custodian or public officer takes charge of the Trustee or its property; or

(4) the Trustee becomes incapable of acting.

(c) If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Issuers will promptly appoint a successor Trustee. Within one year after such successor Trustee takes office, the Holders of a majority in aggregate principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Issuers.

(d) If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee (at the expense of the Issuers), the Issuers, or the Holders of at least 10% in aggregate principal amount of the then outstanding Notes of such series may petition any court of competent jurisdiction for the appointment of a successor Trustee.

(e) If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.10 hereof, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

(f) A successor Trustee will deliver a written acceptance of its appointment to the retiring Trustee and to the Issuers. Thereupon, the resignation or removal of the retiring Trustee will become effective, and the successor Trustee will have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee will send a notice of its succession to Holders. The retiring Trustee will promptly transfer all property held by it as Trustee to the successor Trustee; provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof.
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Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Issuers’ obligations under Section 7.07 hereof will continue for the benefit of the retiring Trustee.

Section 7.09    Successor Trustee by Merger, etc.

If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another Person, the successor Person without any further act will be the successor Trustee.

Section 7.10    Eligibility; Disqualification.

There will at all times be a Trustee hereunder that is a corporation or banking association organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $50.0 million as set forth in its most recent published annual report of condition.

This Indenture shall always have a Trustee who satisfies the requirements of TIA §§ 310(a)(1), (2) and (5). If this Indenture becomes qualified under the TIA, the Trustee shall be subject to TIA § 310(b) including the provision in Section § 310(b)(1); provided that there shall be excluded from the operation of TIA § 310(b)(1) any indenture or indentures under which other securities, or certificates of interest or participation in other securities, of the Issuer or the Guarantors are outstanding if the requirements for exclusion set forth in TIA § 310(b)(1) are met.

ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01    Option to Effect Legal Defeasance or Covenant Defeasance.

The Issuers may at any time, at the option of their respective Board of Directors evidenced by a resolution set forth in an Officers’ Certificate, elect to have either Section 8.02 or Section 8.03 hereof be applied to all outstanding Notes of a series upon compliance with the conditions set forth below in this Article VIII.

Section 8.02    Legal Defeasance and Discharge.

Upon the Issuers’ exercise under Section 8.01 hereof of the option applicable to this Section 8.02, each Issuer and each of the Guarantors will, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from their obligations with respect to all outstanding Notes of a series (including the Note Guarantees) on the date the conditions set forth below are satisfied (hereinafter, “Legal Defeasance”). For this purpose, Legal Defeasance means that the Issuers and the Guarantors will be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes of such series (including the Note Guarantees), which will thereafter be deemed to be “outstanding” only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in clauses (1) and (2) below, and to have satisfied all their other obligations under such Notes, the Note Guarantees and this Indenture (and the Trustee, on demand of and at the expense of the Issuers, shall execute proper instruments acknowledging the same), except for the following provisions which will survive until otherwise terminated or discharged hereunder:

(1) the rights of Holders of outstanding Notes of such series to receive payments in respect of the principal of, or interest or premium, if any, on the Notes of such series when such payments are due from the trust referred to in Section 8.04 hereof;

(2) the Issuers’ obligations with respect to the Notes of such series under Section 2.04, Section 2.06, Section 2.07, Section 2.10 and Section 4.02 hereof;

(3) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Issuers’ and the Guarantors’ obligations in connection therewith; and (4) the Legal Defeasance provisions of this Article VIII.
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Subject to compliance with this Article VIII, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof.

Section 8.03    Covenant Defeasance.

Upon the Issuers’ exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Issuers and each of the Guarantors will, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from each of their obligations under Section 4.03, Section 4.07, Section 4.08, Section 4.09, Section 4.10, Section 4.11, Section 4.12, Section 4.13, Section 4.14, Section 4.15, Section 4.16, Section 4.18 and Section 4.19 and Section 5.01(a)(4) hereof with respect to the outstanding Notes of such series on and after the date the conditions set forth in Section 8.04 hereof are satisfied (such release and termination hereinafter referred to as “Covenant Defeasance”), and such Notes will thereafter be deemed not “outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but will continue to be deemed “outstanding” for all other purposes hereunder (it being understood that such Notes will not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes and Note Guarantees with respect to such series, the Issuers and the Guarantors may omit to comply with and will have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply will not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes and Note Guarantees will be unaffected thereby. In addition, upon the Issuers’ exercise under Section 8.01 hereof of the option applicable to this Section 8.03, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, clauses (3) through (8) and clauses (11) and (12) of Section 6.01 hereof and, only with respect to Subsidiaries of the Company (other than any Issuer), clauses (9) and (10) of Section 6.01 hereof will not constitute Events of Default.

Section 8.04    Conditions to Legal or Covenant Defeasance.

In order to exercise either Legal Defeasance under Section 8.02 hereof or Covenant Defeasance under Section 8.03 hereof:

(1) the Issuers must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of Notes of such series, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in amounts as will be sufficient, based on the written report or certificate or opinion of a nationally recognized investment bank, or an appraisal firm, valuation firm or firm of independent public accountants, to pay the principal of, or interest and premium, if any, on the outstanding Notes of such series on the stated date for payment thereof or on the applicable redemption date, as the case may be, and the Issuers must specify whether the Notes of such series are being defeased to such stated date for payment or to a particular redemption date;

(2) in the case of an election under Section 8.02 hereof, the Issuers must deliver to the Trustee an Opinion of Counsel confirming that

(A) the Issuers have received from, or there has been published by, the Internal Revenue Service a ruling; or

(B) since the Issue Date, there has been a change in the applicable federal income tax law,

in either case to the effect that, and based thereon such Opinion of Counsel will confirm that, the Holders and beneficial owners of the outstanding Notes of such series will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;
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(3) in the case of an election under Section 8.03 hereof, the Issuers must deliver to the Trustee an Opinion of Counsel confirming that the Holders and beneficial owners of the outstanding Notes of such series will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

(4) no Default or Event of Default with respect to such series of Notes has occurred and is continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit (and any similar concurrent deposit relating to other Indebtedness), and the granting of Liens to secure such borrowings);

(5) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture and the agreements governing any other Indebtedness being defeased, discharged or replaced) to which the Issuers or any of the Guarantors is a party or by which the Issuers or any of the Guarantors is bound;

(6) the Issuers must deliver to the Trustee an Officers’ Certificate stating that the deposit was not made by the Issuers with the intent of preferring the Holders of Notes of such series over the other creditors of the Issuers with the intent of defeating, hindering, delaying or defrauding any creditors of the Issuers or others;

(7) the Company must deliver to the Trustee an Officers’ Certificate, stating that all conditions precedent set forth in clauses (1) through (6) of this Section 8.04 have been complied with; and

(8) the Company must deliver to the Trustee an Opinion of Counsel (which Opinion of Counsel may be subject to customary assumptions, qualifications and exclusions), stating that all conditions precedent set forth in clauses (2), (3) and (5) of this Section 8.04 have been complied with; provided that the Opinion of Counsel with respect to clause (5) of this Section 8.04 may be to the knowledge of such counsel.

Section 8.05    Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions.

Subject to Section 8.06 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee pursuant to Section 8.04 hereof in respect of the outstanding Notes will be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including an Issuer acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, if any, but such money need not be segregated from other funds except to the extent required by law.

The Issuers will pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes.

Notwithstanding anything in this Article VIII to the contrary, the Trustee will deliver or pay to the Issuers from time to time, upon the request of the Issuers any money or non-callable Government Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under clause (1) of Section 8.04 hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
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Section 8.06    Repayment to Company.

Any money deposited with the Trustee or any Paying Agent, or then held by the Issuers, in trust for the payment of the principal of, premium, if any, or interest, if any, on, any Note and remaining unclaimed for two years after such principal, premium, if any, or interest, if any, has become due and payable shall be paid to the Company on its request or (if then held by the Issuers) will be discharged from such trust; and the Holder of such Note will thereafter be permitted to look only to the Issuers for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of each such Issuer as trustee thereof, will thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, shall, at the written request and at the expense of the Issuers, cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which will not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company.

Section 8.07    Reinstatement.

If the Trustee or Paying Agent is unable to apply any United States dollars or non-callable Government Securities in accordance with Section 8.02 or Section 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Issuers’ and the Guarantors’ obligations under this Indenture and the Notes and the Note Guarantees with respect to such series will be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or Section 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or Section 8.03 hereof, as the case may be; provided, however, that, if the Issuers make any payment of principal of, premium, if any, or interest, if any, on, any Note following the reinstatement of its obligations, the Issuers will be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent.

ARTICLE IX
AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01    Without Consent of Holders of Notes.

Notwithstanding Section 9.02 hereof, without the consent of any Holder of Notes, the Issuers, the Guarantors and the Trustee and Collateral Agent (if applicable) may amend or supplement this Indenture, the Notes of any series and the related Note Guarantees, the Intercreditor Agreements or the Security Documents (subject to compliance with the Intercreditor Agreements):

(1) to cure any ambiguity, defect, mistake or inconsistency;

(2) to provide for uncertificated Notes of such series in addition to or in place of certificated Notes;

(3) to provide for the assumption of an Issuer’s or a Guarantor’s obligations to Holders of Notes of such series and Note Guarantees and under the Security Documents in the case of a merger, amalgamation or consolidation or sale of all or substantially all of such Issuer’s or Guarantor’s properties or assets, as applicable;

(4) to make any change that would provide any additional rights or benefits to the Holders of Notes of such series or that does not adversely affect the legal rights under this Indenture of any such Holder of such series;

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(5) at the Issuers’ election, to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA, if such qualification is required; (6) to conform the text of this Indenture, the Note Guarantees, the Notes of any series, the Security Documents or the Intercreditor Agreements (as evidenced by an Officers’ Certificate) to any provision of the “Description of the notes” section of the Offering Memorandum to the extent that such provision in that “Description of the notes” was intended to be a verbatim recitation of a provision of this Indenture, the Notes of such series, the Security Documents, the Intercreditor Agreements or the Note Guarantees;

(7) to provide for the issuance of Additional Notes of any series in accordance with the limitations set forth in this Indenture as of the Issue Date;

(8) to make, complete or confirm any grant of Collateral permitted or required by this Indenture or the Security Documents or any release, termination or discharge of Collateral that becomes effective as set forth in this Indenture or any of the Security Documents;

(9) to add any additional Guarantor or to evidence the release of any Guarantor from its Note Guarantee and the termination of such Note Guarantee, all in accordance with the provisions of this Indenture governing such release and termination;

(10) to evidence or provide for the acceptance of appointment under this Indenture of a successor Trustee or a successor Collateral Agent;

(11) grant any Lien for the benefit of the holders of any future Pari Passu Notes-TLB Obligations, Pari Passu ABL Obligations, Pari Passu Second Lien Obligations or Junior Lien Obligations in accordance with and as permitted by the terms of this Indenture, and the Intercreditor Agreements (and, with respect to Pari Passu Second Lien Obligations or Junior Lien Obligations, any Pari Passu Second Lien Intercreditor Agreement or Junior Lien Intercreditor Agreement, as applicable);

(12) add additional secured parties to the Intercreditor Agreements to the extent Liens securing obligations held by such parties are permitted under this Indenture;

(13) mortgage, pledge, hypothecate or grant a security interest in favor of the Collateral Agent for the benefit of the Trustee and the Holders of the Notes as additional security for the payment and performance of the Issuers’ and any Guarantor’s obligations under this Indenture, in any property, or assets, including any of which are required to be mortgaged, pledged or hypothecated, or in which a security interest is required to be granted to the Trustee or the Collateral Agent in accordance with the terms of this Indenture or otherwise; or

(14) provide for the succession of any parties to the Security Documents (and other amendments that are administrative or ministerial in nature) and the Intercreditor Agreements in connection with an amendment, renewal, extension, substitution, refinancing, restructuring, replacement, supplementing or other modification from time to time of any agreement in accordance with the terms of this Indenture, the Intercreditor Agreements and the relevant Security Documents.

In addition, the Holders of the Notes will be deemed to have consented for purposes of the Security Documents and the Intercreditor Agreements to any of the following amendments, waivers and other modifications to the Security Documents and the Intercreditor Agreements:

(1) (A) to add other parties (or any authorized agent thereof or trustee therefor) holding Pari Passu Notes-TLB Obligations that are incurred in compliance with the ABL Credit Agreement, the Term Loan Credit Agreement and the Notes Documents and (B) to establish that the Liens on any Collateral securing such Pari Passu Notes-TLB Obligations shall be equal in right of payment with the Liens on such Collateral securing the Notes-TLB Obligations;

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(2) (A) to add other parties (or any authorized agent thereof or trustee therefor) holding Pari Passu ABL Obligations that is incurred in compliance with the ABL Credit Agreement, the Term Loan Credit Agreement and the Notes Documents, (B) to establish that the Liens on any Collateral securing such Pari Passu ABL Obligations shall be equal in right of payment with the Liens on such Collateral securing the ABL Obligations and senior to the Liens on such ABL Priority Collateral securing any Notes-TLB Obligations, all on the terms provided for in the Intercreditor Agreements in effect immediately prior to such amendment, (C) to establish that the Liens on any Notes-TLB Priority Collateral securing such Pari Passu ABL Obligations shall be junior and subordinated to the Liens on such Notes-TLB Priority Collateral securing any Notes-TLB Obligations, all on the terms provided for in the Intercreditor Agreements in effect immediately prior to such amendment;

(3) to establish that the Liens on any ABL Priority Collateral securing any Indebtedness replacing the ABL Credit Agreement permitted to be incurred under clause (1) of the definition of Permitted Debt shall be senior to the Liens on such ABL Priority Collateral securing any obligations under any Notes-TLB Obligations, and that any Notes-TLB Obligations shall continue to be secured on a first-priority basis by the Notes-TLB Priority Collateral and on a second-priority basis on the ABL Priority Collateral; and

(4) upon any cancellation or termination of the ABL Credit Agreement without a replacement thereof, to establish that the ABL Priority Collateral shall become Notes-TLB Priority Collateral.

Any such additional party, the ABL Collateral Agent, the Term Loan Collateral Agent, the Trustee and the Collateral Agent shall be entitled to rely upon an Officers’ Certificate certifying that such Pari Passu Notes-TLB Obligations or Pari Passu ABL Obligations, as the case may be, was issued or borrowed in compliance with the ABL Credit Agreement, the Term Loan Credit Agreement and the Notes Documents, and no Opinion of Counsel shall be required in connection therewith.

The Holders also will be deemed to have consented for purposes of this Indenture, the Security Documents and the Intercreditor Agreements to the execution and delivery by the Trustee and Collateral Agent of a Pari Passu Second Lien Intercreditor Agreement or a Junior Lien Intercreditor Agreement to the extent it is approved by the ABL Collateral Agent or, if the ABL Credit Agreement has been replaced, any other agent for the holders of ABL Obligations.

Upon the request of the Issuers accompanied by resolutions of their respective Boards of Directors authorizing the execution of any such amended or supplemental indenture, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee will join with the Issuers and the Guarantors in the execution of any amended or supplemental indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee will not be obligated to enter into such amended or supplemental indenture that affects its own rights, duties or immunities under this Indenture or otherwise.

Section 9.02    With Consent of Holders of Notes.

Except as provided below in this Section 9.02, the Issuers, the Guarantors and the Trustee may amend or supplement this Indenture (including, without limitation, Section 4.10 and Section 4.14 hereof), the Notes of each series, the Note Guarantees or the Security Documents (subject to compliance with the Intercreditor Agreements) with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Notes of each series affected by such amendment or supplement (including, without limitation, Additional Notes of each such series, if any) voting as a single class (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes of such series), and, subject to Section 6.04 and Section 6.07 hereof, any existing Default or Event of Default as it relates to such Notes or compliance with any provision of this Indenture, the Notes of each series or the Note Guarantees may be waived with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Notes of each series affected by such waiver (including, without limitation, Additional Notes of each such series, if any), voting as a single class (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes of such series).
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Upon the request of the Issuers accompanied by resolutions of their respective Boards of Directors authorizing the execution of any such amended or supplemental indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee will join with the Issuers and the Guarantors in the execution of such amended or supplemental indenture unless such amended or supplemental indenture directly affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but will not be obligated to, enter into such amended or supplemental indenture.

It is not necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment, supplement or waiver, but it is sufficient if such consent approves the substance of the proposed amendment, supplement or waiver.

After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Company will send to the Holders of Notes of each series affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to send such notice, or any defect therein, will not, however, in any way amend the validity of any such amendment, supplement or waiver. Subject to Section 6.04 and Section 6.07 hereof, the Holders of a majority in aggregate principal amount of the then outstanding Notes of such series, voting as a single class, may waive compliance in a particular instance by the Company with any provision of this Indenture, the Notes or the Note Guarantees. However, without the consent of each Holder affected, an amendment or waiver under this Section 9.02 may not (with respect to any Notes of such series held by a non-consenting Holder):

(1) reduce the principal amount of such series of Notes whose Holders must consent to an amendment, supplement or waiver;

(2) reduce the principal of or change the fixed maturity of any Note of such series or alter or waive any of the provisions with respect to the redemption of such Notes; provided, however, that any provision with respect to any purchase or repurchase of such Notes, including pursuant to Section 4.10 and Section 4.14 hereof, shall not be deemed a provision with respect to any redemption of such Notes; and provided, further, that any amendment to the minimum notice requirement may be made with the consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding;

(3) reduce the rate of or change the time for payment of interest, including default interest, on any Note of such series;

(4) waive a Default or Event of Default in the payment of principal of, premium, if any, or interest, if any, on, the Notes of such series (except a rescission of acceleration of the Notes by the Holders of a majority in aggregate principal amount of the then outstanding Notes of such series and a waiver of the payment default that resulted from such acceleration);

(5) make any Note of such series payable in money other than that stated in such Notes;

(6) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of the applicable series of Notes to receive payments of principal of, premium, if any, or interest, if any, on, the Notes of such series;

(7) waive a redemption payment with respect to any Note of such series; provided, however, that any purchase or repurchase of Notes of such series, including pursuant to Section 4.10 and Section 4.14 hereof, shall not be deemed a redemption of the Notes of such series;

(8) release any Guarantor from any of its obligations under its Note Guarantee with respect to such series of Notes or this Indenture, except in accordance with the terms of this Indenture; or

(9) make any change in the preceding amendment, supplement and waiver provisions.
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In addition, with respect to a series of Notes, without the consent of the Holders of at least 662/3% of the principal amount of such Notes then outstanding (including, without limitation, consents obtained in connected with a purchase of, or tender offer or exchanged offer for, such Notes), no amendment, supplement or waiver may amend any of the Security Documents or this Indenture with respect to such Series of Notes if such amendment, supplement or waiver has the effect of releasing all or substantially all of the Collateral from the Liens under this Indenture or any Security Documents with respect to such series of Notes.

Section 9.03    [Reserved].

Section 9.04    Revocation and Effect of Consents.

Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the amendment, supplement or waiver becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder.

The Issuers may fix a record date for determining which Holders must consent to such amendment, supplement or waiver. If the Issuers fix a record date, the record date shall be fixed at (i) the later of 30 days prior to the first solicitation of such consent or the date of the most recent list of Holders furnished to the Trustee prior to such solicitation pursuant to Section 2.05 hereof, or (ii) such other date as the Issuers shall designate.

Section 9.05    Notation on or Exchange of Notes.

The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Issuers in exchange for all Notes of a series may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver.

Failure to make the appropriate notation or issue a new Note will not affect the validity and effect of such amendment, supplement or waiver.

Section 9.06    Trustee to Sign Amendments, etc.

The Trustee will sign any amended or supplemental indenture authorized pursuant to this Article IX if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. No Issuer may sign an amended or supplemental indenture until its Board of Directors approves it. In executing any amended or supplemental indenture, the Trustee will be entitled to receive and (subject to Section 7.01 hereof) will be fully protected in relying upon, in addition to the documents required by Section 12.04 hereof, an Officers’ Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture.

ARTICLE X
NOTE GUARANTEES

Section 10.01    Guarantee.

(a) Subject to this Article X, each of the Guarantors hereby, jointly and severally, unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the obligations of the Issuers hereunder or thereunder, that:

(1) the principal of, premium, if any, and interest on, the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of, premium, if any, and interest on, the Notes, if lawful (subject in all cases to any applicable grace period provided herein), and all other obligations of the Issuers to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and
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(2) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise.

Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors will be jointly and severally obligated to pay the same immediately. Each Guarantor agrees that this is a guarantee of payment and not a guarantee of collection.

(b) The Guarantors hereby agree that, to the maximum extent permitted under applicable law, their obligations hereunder are unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against any Issuer, any action to enforce the same or any other circumstance that might otherwise constitute a legal or equitable discharge or defense of a Guarantor. To the extent permitted by applicable law, each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Issuers, any right to require a proceeding first against an Issuer, protest, notice and all demands whatsoever and covenant that the Note Guarantee will not be discharged except by complete performance of the obligations contained in the Notes and this Indenture.

(c) If any Holder or the Trustee is required by any court or otherwise to return to the Issuers, the Guarantors or any custodian, trustee, liquidator, monitor or other similar official acting in relation to either the Issuers or the Guarantors, any amount paid by either to the Trustee or such Holder, the Note Guarantee, to the extent theretofore discharged, will be reinstated in full force and effect.

(d) Each Guarantor agrees that it will not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Guarantor further agrees that, to the extent permitted by applicable law, as between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (1) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article VI hereof for the purposes of the Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (2) in the event of any declaration of acceleration of such obligations as provided in Article VI hereof, such obligations (regardless of whether due and payable) will forthwith become due and payable by the Guarantors for the purpose of the Note Guarantee. The Guarantors will have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not amend the rights of the Holders under the Note Guarantee.

Section 10.02    Limitation on Guarantor Liability.

Each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Note Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal, state, provincial or territorial law to the extent applicable to any Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree that the obligations of such Guarantor will be limited to the maximum amount that will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Article X, result in the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent transfer or conveyance.
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Section 10.03    Execution and Delivery of Note Guarantee.

To evidence its Note Guarantee set forth in Section 10.01 hereof, each Guarantor hereby agrees that this Indenture or a supplemental indenture in substantially the form attached hereto as Exhibit E hereto will be executed by an Officer of such Guarantor on behalf of such Guarantor by manual or facsimile signature.

Each Guarantor hereby agrees that its Note Guarantee set forth in Section 10.01 hereof will remain in full force and effect notwithstanding the absence of an endorsement on each Note a notation of such Note Guarantee.

If an Officer whose signature is on this Indenture or supplemental indenture, as applicable, no longer holds that office at the time the Trustee authenticates the Note, the Note Guarantee will be valid nevertheless.

The delivery of any Note by the Trustee, after the authentication thereof hereunder, will constitute due delivery of the Note Guarantee set forth in this Indenture on behalf of the Guarantors.

In the event that either Issuer or any of its Restricted Subsidiaries creates or acquires any Domestic Restricted Subsidiary after the Issue Date, if required by Section 4.15 hereof, the Company will cause such Domestic Restricted Subsidiary to comply with the provisions of Section 4.15 hereof and this Article X, to the extent applicable.

Section 10.04    Guarantors May Consolidate, etc., on Certain Terms.

Except as otherwise provided in Section 10.05 hereof, no Guarantor may sell or otherwise dispose of, in one or more related transactions, all or substantially all of its properties or assets to, or consolidate with or amalgamate with or merge with or into (regardless of whether such Guarantor is the surviving Person), another Person, other than the Company or another Guarantor, unless:

(1) immediately after giving effect to such transaction or series of related transactions, no Default or Event of Default exists; and

(2) either:

(A) (i) such Guarantor is the surviving Person of such consolidation, amalgamation or merger or (ii) the Person acquiring the properties or assets in any such sale or other disposition or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than such Guarantor) unconditionally assumes all the obligations of such Guarantor under this Indenture (including its Note Guarantee) pursuant to a supplemental indenture satisfactory to the Trustee; or

(B) such transaction or series of transactions does not violate the provisions of Section 4.10 hereof.

In case of any such consolidation, amalgamation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the Note Guarantee and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Guarantor, such successor Person will succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor.

Except as set forth in Article IV and Article V hereof, and notwithstanding clauses (A) and (B) immediately above, nothing contained in this Indenture or in any of the Notes will prevent any consolidation, amalgamation or merger of a Guarantor with or into the Company or another Guarantor, or will prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Company or another Guarantor.
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Section 10.05    Releases.

The Note Guarantee of a Guarantor with respect to a series of Notes will be released and discharged automatically and unconditionally:

(1) in connection with any sale or other disposition of all or substantially all of the properties or assets of such Guarantor, by way of merger, consolidation, amalgamation or otherwise, to a Person that is not (either before or after giving effect to such transaction) the Company or a Restricted Subsidiary; provided that the sale or other disposition does not violate Section 4.10 hereof;

(2) in connection with any sale or other disposition of the Capital Stock of such Guarantor (by way of merger, consolidation, amalgamation or otherwise) to a Person that is not (either before or after giving effect to such transaction) the Company or a Restricted Subsidiary; provided that the sale or other disposition does not violate Section 4.10 hereof and the Guarantor ceases to be a Restricted Subsidiary as a result of the sale or other disposition;

(3) if the Company designates such Guarantor to be an Unrestricted Subsidiary in accordance with the applicable provisions of this Indenture;

(4) upon Legal Defeasance or Covenant Defeasance in accordance with Article VIII hereof or satisfaction and discharge of this Indenture with respect to such series of Notes in accordance with Article XI hereof;

(5) upon the liquidation or dissolution of such Guarantor, provided that no Default or Event of Default occurs as a result thereof or has occurred or is continuing;

(6) upon such Guarantor consolidating with, amalgamating with, merging into or transferring all of its properties or assets to the Company or another Guarantor, and as a result of, or in connection with, such transaction such Guarantor dissolves or otherwise ceases to exist;

(7) at such time as such Guarantor is no longer required to be a Guarantor pursuant to the provisions of Section 4.15 hereof; or

(8) the release of such Subsidiary Guarantor from its guarantee of the ABL Obligations and the Term Loan Obligations, so long as such Subsidiary Guarantor would not then otherwise be required to guarantee the Notes pursuant to Section 4.15.

Any Guarantor not released from its obligations under its Note Guarantee as provided in this Section 10.05 will remain liable for the full amount of principal of, premium, if any, and interest on, the Notes and for the other obligations of any Guarantor under this Indenture as provided in this Article X.

ARTICLE XI
SATISFACTION AND DISCHARGE

Section 11.01    Satisfaction and Discharge.

This Indenture will be satisfied and discharged and will cease to be of further effect as to all Notes of a series issued hereunder, including, without limitation, having all of the Issuers’ Obligations discharged with respect to the Notes of such series, all Obligations of the Guarantors discharged with respect to the Note Guarantees of such series and all Liens on the Collateral securing the Notes and the Note Guarantees of such series released (except as to surviving rights of registration of transfer or exchange of the Notes of such series and as otherwise specified in this Indenture), when:

(1) either:
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(A) all Notes of such series that have been authenticated, except lost, stolen or destroyed Notes of such series that have been replaced or paid and Notes of such series for whose payment money has been deposited in trust and thereafter repaid to the Issuers, have been delivered to the Trustee for cancellation; or

(B) all Notes of such series that have not been delivered to the Trustee for cancellation have become due and payable by reason of the sending of a notice of redemption or otherwise or will become due and payable within one year and either an Issuer or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in amounts as will be sufficient, without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness on the Notes of such series not delivered to the Trustee for cancellation for principal of, or interest and premium, if any, on the Notes of such series to the date of maturity or redemption;

(2) in respect of clause (B) of Section 11.01(1), no Default or Event of Default with respect to such series of Notes has occurred and is continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit and any similar deposit relating to other Indebtedness and, in each case, the granting of Liens to secure such borrowings) and the deposit will not result in a breach or violation of, or constitute a default under, any other material instrument to which either Issuer or any Guarantor is a party or by which either Issuer or any Guarantor is bound (other than with respect to the borrowing of funds to be applied concurrently to make the deposit required to effect such satisfaction and discharge and any similar concurrent deposit relating to other Indebtedness, and, in each case, the granting of Liens to secure such borrowings);

(3) the Issuers have, or any Guarantor has, paid or caused to be paid all sums payable by them under this Indenture with respect to such series of Notes; and

(4) the Issuers have delivered irrevocable instructions to the Trustee under this Indenture to apply the deposited money toward the payment of the Notes of such series at maturity or the redemption date, as the case may be.

In addition, the Issuers must deliver to the Trustee (a) an Officers’ Certificate, stating that all conditions precedent set forth in clauses (1) through (4) of this Section 11.01 have been satisfied and (b) an Opinion of Counsel (which Opinion of Counsel may be subject to customary assumptions and qualifications), stating that the condition precedent set forth in clause (4) of this Section 11.01 has been satisfied.

Upon discharge in accordance with the provisions above with respect to such series of Notes, the Trustee and the Collateral Agent, at the request and expense of the Issuers, shall execute such instruments reasonably requested by the Issuers acknowledging discharge of this Indenture with respect to such series of Notes.

Notwithstanding the satisfaction and discharge of this Indenture, if money has been deposited with the Trustee pursuant to clause (B) of Section 11.01(1) hereof, the provisions of Section 11.02 and Section 8.06 hereof will survive. In addition, nothing in this Section 11.01 will be deemed to discharge those provisions of Section 7.07 hereof that, by their terms, survive the satisfaction and discharge of this Indenture.

Section 11.02    Application of Trust Money.

Subject to the provisions of Section 8.06 hereof, all money deposited with the Trustee pursuant to Section 11.01 hereof shall be held in trust and applied by the Trustee, in accordance with the provisions of the Notes of each series and this Indenture, to the payment, either directly or through any Paying Agent (including an Issuer acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest, if any, for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law.
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If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with Section 11.01 hereof by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Issuers’ and any Guarantor’s obligations under this Indenture and the Notes of such series shall be revived and reinstated as though no deposit had occurred pursuant to Section 11.01 hereof; provided that if the Issuers have made any payment of principal of, premium, if any, or interest, if any, on, any Notes of such series because of the reinstatement of its obligations, the Issuers shall be subrogated to the rights of the Holders of such series of Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent.

ARTICLE XII
MISCELLANEOUS

Section 12.01    Concerning the Trust Indenture Act.

The TIA shall not be applicable to, and shall not govern, this Indenture, the Notes or the Note Guarantees.

Section 12.02    Notices.

Any notice or communication by the Issuers, any Guarantor, the Trustee or the Collateral Agent to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), facsimile or electronic transmission or overnight air courier guaranteeing next day delivery, to the others’ address:

If to the Issuers and/or any Guarantor

NGL Energy Partners LP
6120 South Yale Avenue, Suite 805
Tulsa, Oklahoma 74136
Facsimile No.: (918) 481-5896
Email: Brad.Cooper@nglep.com
Attention: Chief Financial Officer

With a copy, which shall not constitute notice, to:

Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue
Suite 3400
Los Angeles, California 90071
Email: Michelle.Gasaway@skadden.com
Attention: P. Michelle Gasaway

If to the Trustee or the Collateral Agent:

U.S. Bank Trust Company, National Association
13737 Noel Road, Suite 800
Dallas, TX 75240
Facsimile No.: (972) 581-1660
Email: Michael.herberger@usbank.com
Attention: Global Corporate Trust Services

The Issuers, any Guarantor or the Trustee, by notice to the others, may designate additional or different addresses for subsequent notices or communications.

All notices and communications (other than those sent to Holders) will be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back , if electronically transmitted; when receipt acknowledged, if transmitted by facsimile; or the next Business Day after timely delivery to a courier, if sent by overnight air courier guaranteeing next day delivery.
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Any notice or communication to a Holder, when the Notes are in the form of Definitive Notes, will be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication to a Holder, when the Notes are in the form of Global Notes, will be sent pursuant to Applicable Procedures. Failure to send a notice or communication to a Holder or any defect in it will not affect its sufficiency with respect to other Holders.

If a notice or communication is mailed or otherwise sent in the manner provided above within the time prescribed, it is duly given, regardless of whether the addressee receives it (other than with respect to notices or communications by facsimile or electronic transmission, which will be deemed to be duly given when receipt is acknowledged or when answered back, respectively).

Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver will be the equivalent of such notice. Waivers of notice by Holders will be filed with the Trustee, but such filing will not be a condition precedent to the validity of any action taken in reliance on such waiver.

If the Issuers send a notice or communication to Holders, they will send a copy to the Trustee and each Agent at the same time.

Section 12.03    [Reserved].

Section 12.04    Certificate and Opinion as to Conditions Precedent.

Upon any request or application by the Issuers to the Trustee to take any action under this Indenture, the Issuers shall furnish to the Trustee:

(1) an Officers’ Certificate in form and substance reasonably satisfactory to the Trustee (which must include the statements set forth in Section 12.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied or waived; provided that no such Officers’ Certificate shall be delivered on the Issue Date in connection with the original issuance of the initial Global Notes; and

(2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which must include the statements set forth in Section 12.05 hereof) stating that, in the opinion of such counsel (who may rely upon an Officers’ Certificate as to matters of fact), all such conditions precedent and covenants have been satisfied or waived; provided that no such Opinion of Counsel shall be delivered on the Issue Date in connection with the original issuance of the initial Global Notes.

Section 12.05    Statements Required in Certificate or Opinion.

Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture must include:

(1) a statement that the Person making such certificate or opinion has read such covenant or condition;

(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether such covenant or condition has been satisfied; and
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(4) a statement as to whether, in the opinion of such Person, such condition or covenant has been satisfied.

Section 12.06    Rules by Trustee and Agents.

The Trustee may make reasonable rules for action taken by, or meetings or consent of, Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.

Section 12.07    No Personal Liability of Directors, Officers, Employees and Unitholders.

None of the General Partner or any director, officer, partner, employee, incorporator, manager, unitholder or other owner of Capital Stock of the General Partner, the Issuers or any Guarantor, as such, will have any liability for any obligations of the Issuers or the Guarantors under the Notes, this Indenture, the Note Guarantees, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes of the applicable series and the Note Guarantees. The waiver may not be effective to waive liabilities under the federal securities laws.

Section 12.08    Governing Law.

THE LAWS OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES, THE NOTE GUARANTEES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 12.09    No Adverse Interpretation of Other Agreements.

This Indenture may not be used to interpret any other indenture, loan or debt agreement of either Issuer or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.

Section 12.10    Successors.

All agreements of each Issuer in this Indenture and the Notes will bind its successors. All agreements of the Trustee in this Indenture will bind its successors. All agreements of each Guarantor in this Indenture will bind its successors, except as otherwise provided in Section 10.05 hereof.

Section 12.11    Severability.

In case any provision in this Indenture or in the Notes is invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be amended thereby.

Section 12.12    Counterpart Originals; Electronic Signatures.

The parties may sign any number of copies of this Indenture. Each signed copy will be an original, but all of them together represent the same agreement. The exchange of signed copies of this Indenture by facsimile transmission or emailed portable document format (pdf) shall constitute effective execution and delivery of this Indenture as to the parties hereto and such copies may be used in lieu of the original Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or portable document format (pdf) shall be deemed to be their original signatures for all purposes other than authentication of Notes by the Trustee.
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Except with respect to authentication of the Notes by the Trustee or an authenticating agent, the words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Indenture or any document to be signed in connection with this Indenture shall be deemed to include electronic signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, and the parties hereto consent to conduct the transactions contemplated hereunder by electronic means.

Section 12.13    Table of Contents, Headings, etc.

The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and will in no way modify or restrict any of the terms or provisions hereof.

Section 12.14 Judgment Currency.

If for the purpose of obtaining judgment in any court it is necessary to convert an amount due hereunder in the currency in which it is due (the “Original Currency”) into another currency (the “Second Currency”), the rate of exchange applied shall be that at which, in accordance with normal banking procedures, the Collateral Agent or the Trustee could purchase in the New York foreign exchange market, the Original Currency with the Second Currency on the date two (2) Business Days preceding that on which judgment is given. Each Issuer and Guarantor agrees that its obligation in respect of any Original Currency due from it hereunder shall, notwithstanding any judgment or payment in such other currency, be discharged only to the extent that, on the Business Day following the date the Collateral Agent or Trustee receives payment of any sum so adjudged to be due hereunder in the Second Currency, the Collateral Agent may, in accordance with normal banking procedures, purchase, in the New York foreign exchange market, the Original Currency with the amount of the Second Currency so paid; and if the amount of the Original Currency so purchased or could have been so purchased is less than the amount originally due in the Original Currency, the Issuer and the Guarantors as a separate obligation and notwithstanding any such payment or judgment to indemnify the Collateral Agent or Trustee against such loss.

ARTICLE XIII
COLLATERAL

Section 13.01    The Collateral.

(a) Each Holder, by its acceptance of any Notes and the Guarantees thereof, irrevocably consents and agrees to the appointment of U.S. Bank Trust Company, National Association to act as Collateral Agent and the Real Property Collateral Agent. The Collateral Agent and the Real Property Collateral Agent shall have the privileges, powers and immunities as set forth in this Indenture and the Security Documents. Notwithstanding any provision to the contrary contained elsewhere in this Indenture or the Security Documents, the duties of the Collateral Agent and the Real Property Collateral Agent shall be ministerial and administrative in nature, and the Collateral Agent and the Real Property Collateral Agent shall not have any duties or responsibilities, except those expressly set forth herein and in the Security Documents to which the Collateral Agent and the Real Property Collateral Agent are parties, nor shall the Collateral Agent or the Real Property Collateral Agent have or be deemed to have any trust or other fiduciary relationship with the Trustee, any Holder, the Issuers or any Guarantor, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Indenture or the Security Documents or otherwise exist against the Collateral Agent or the Real Property Collateral Agent. Without limiting the generality of the foregoing sentence, the use of the term “agent” in this Indenture with reference to the Collateral Agent or the Real Property Collateral Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. The due and punctual payment of the principal of, premium, if any, and interest on the Notes and the Guarantees thereof when and as the same shall be due and payable, whether on an interest payment date, at maturity, by acceleration, repurchase, redemption or otherwise, interest on the overdue principal of and interest (to the extent permitted by law), if any, on the Notes and the Guarantees thereof and performance of all other obligations under this Indenture shall be secured by Liens and security interests on the Collateral to the extent provided by the Security Documents and subject to the Intercreditor Agreements, any Pari Passu Second Lien Intercreditor Agreement and any Junior Lien Intercreditor Agreement.
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The Issuers and the Guarantors hereby agree that the Collateral Agent and the Real Property Collateral Agent shall hold the applicable Collateral on behalf of and for the benefit of all of the Holders, the Trustee and the Collateral Agent and Real Property Collateral Agent, in each case pursuant to the terms of the Security Documents, and the Collateral Agent, Real Property Collateral Agent and the Trustee are hereby directed and authorized by the Holders to execute and deliver the Security Documents.

(b) Each Holder, by its acceptance of any Notes and the Guarantees thereof, irrevocably consents and agrees to the terms of the Security Documents (including, without limitation, the provisions providing for foreclosure and release of Collateral) as the same may be in effect or may be amended from time to time in accordance with their terms, agrees to the appointment of the Collateral Agent and the Real Property Collateral Agent and authorizes and directs the Collateral Agent and the Real Property Collateral Agent (i) to enter into the Security Documents (including, without limitation, the Intercreditor Agreements), and perform its obligations and exercise its rights, powers and discretions under the Security Documents in accordance therewith, (ii) make the representations of the Holders set forth in the Security Documents (including, without limitation, the Intercreditor Agreements), and (iii) bind the Holders on the terms as set forth in the Security Documents (including, without limitation, the Intercreditor Agreements).

(c) The Trustee, the Collateral Agent and each Holder, by accepting the Notes and the Guarantees thereof acknowledges that, as more fully set forth in the Security Documents, the Collateral as now or hereafter constituted shall be held for the benefit of all the Holders, the Collateral Agent, the Real Property Collateral Agent and the Trustee, and that the Lien of this Indenture and the Security Documents in respect of the Trustee, the Collateral Agent, the Real Property Collateral Agent and the Holders is subject to and qualified and limited in all respects by the Security Documents and actions that may be taken thereunder.

Section 13.02    Maintenance of Collateral; Further Assurances.

(a) The Issuers and the Guarantors shall maintain the Collateral that is material to the conduct of their respective businesses in good, safe and insurable operating order, condition and repair. The Issuers and the Guarantors shall pay all real estate and other taxes (except such as are contested in good faith and by appropriate negotiations or proceedings) owed by them, and maintain in full force and effect all their material permits and insurance in amounts that insures against such losses and risks as are reasonable for the type and size of the business of the Issuers and the Guarantors, except, in each case, where the failure to effect such payment or maintain such permits or insurance coverages is not adverse in any material respect to the Holders.

(b) To the extent required under this Indenture or any of the Security Documents, the Issuers and the Guarantors shall, at their sole expense, execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions which may be necessary, including those the Collateral Agent may from time to time reasonably request, to create, better assure, preserve, protect, defend and perfect the security interest and the rights and remedies created under the Security Documents for the benefit of the Trustee, the Collateral Agent and the Holders (subject to Permitted Liens). The Issuers agree to provide evidence to the Trustee as to the perfection (to the extent required by this Indenture and the Security Documents) and priority status of each such security interest and Lien.

Section 13.03    After-Acquired Property.

From and after the Issue Date, if either Issuer or any Guarantor acquires any property or asset constituting Collateral (other than Material Real Property Assets), it must within 60 days after the acquisition thereof or such later date as may be agreed to by the Term Loan Collateral Agent or the ABL Collateral Agent, as applicable, execute and deliver such mortgages, deeds of trust, deeds to secured debt, deed of hypothec, surveys, opinions, title insurance policies, certificates, security instruments, financing statements and other documents as are required under this Indenture, the Intercreditor Agreements and the Security Documents to vest in the Collateral Agent a perfected security interest with the priority set forth in the Intercreditor Agreements and this Indenture upon such property or asset as security for the Notes and the Guarantees and as may be necessary to have such property or asset added to the Collateral and thereupon all provisions of this Indenture relating to the Collateral shall be deemed to relate to such after-acquired Collateral to the same extent and with the same force and effect.

Section 13.04    Amendment of Security Interest.

The Issuers shall not, and the Issuers shall not permit any Restricted Subsidiaries to, (i) take or omit to take any action which would materially adversely amend the Liens in favor of the Collateral Agent and the Holders of the Notes of each series with respect to the Collateral or (ii) grant any Person, or permit any Person to retain (other than the ABL Collateral Agent and the representatives of each series of Notes-TLB Obligations), any Liens on the Collateral (other than Liens not prohibited by this Indenture, the Notes, the Guarantees, the Security Documents and the Intercreditor Agreements).
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The Issuers and each Guarantor will, at its sole cost and expense, execute and deliver all such agreements and instruments as are necessary, or as the Trustee or the Collateral Agent reasonably requests, to more fully or accurately describe the assets and property intended to be Collateral or the obligations intended to be secured by the Security Documents.

Section 13.05    Real Estate Mortgages and Filings.

(a) With respect to (i) any fee owned Material Real Property Assets and (ii) any part of the Grand Mesa Pipeline or the Delaware Pipeline that is a Material Real Property Asset of the type described in the preceding clause (i) in each case,(a) owned by any Issuer or a Guarantor on the Issue Date, such Issuer or Guarantor, as the case may be, with respect thereto shall, within 270 days of the date of the Issue Date or such later date as may be agreed to by the Term Loan Collateral Agent or ABL Collateral Agent, as applicable,(and in any event within 365 days of the Issue Date or (b) acquired by any Issuer or a Guarantor after the Issue Date, such Issuer or such Guarantor, as the case may be, shall, within 120 days of the acquisition thereof or such later date as may be agreed to by the Term Loan Collateral Agent or ABL Collateral Agent, as applicable (and in any event within 365 days of the acquisition thereof), deliver to the Real Property Collateral Agent for the ratable benefit of the Real Property Collateral Agent, the Holders of Notes-TLB Obligations and the Trustee the following:

(1) a fully executed counterpart of a first-priority mortgage, deed of hypothec, leasehold mortgage, deed of trust, leasehold deed of trust, deed to secure debt or leasehold deed to secure debt in favor of the Real Property Collateral Agent covering such Material Real Property Asset, in accordance with the requirements of this Indenture, duly executed by such Issuer or such Guarantor, together with satisfactory evidence of the completion (or satisfactory arrangements for the completion) of all recordings and filings of such mortgage, leasehold mortgage, deed of hypothec, deed of trust, leasehold deed of trust, deed to secure debt or leasehold deed to secure debt (and payment of any taxes or fees in connection therewith), together with any necessary fixture filings, as may be necessary to create a valid, perfected first-priority lien, subject to Permitted Liens, against the properties purported to be covered thereby;

(2) if such Material Real Property Asset has a Designated Value of $20.0 million or more, a policy or policies or marked-up unconditional binder of title insurance (or binding commitments thereof), as applicable, in favor of the Real Property Collateral Agent and its successors and/or assigns, in an amount not less than the Designated Value of such Material Real Property Asset and in the form necessary, paid for by the such Issuer or such Guarantor, issued by a nationally recognized title insurance company insuring fee simple title to each such Material Real Property Asset and insuring the Lien of such mortgage, deed of trust, deed of hypothec or deed to secure debt as a valid first priority Lien (subject to Permitted Liens) on the applicable real property described therein, together with such endorsements, title policy modifications, coinsurance and reinsurance as shall be reasonably required;

(3) if such Material Real Property Asset has a Designated Value of $20.0 million or more, such surveys (or any updates, affidavits or such other information or documents that the title insurance company may reasonably require in connection with the issuance of the title insurance policies), which are sufficient for the title insurance company to remove the standard survey exception and issue customary survey-related endorsements or title policy modifications;

(4) if such Material Real Property Asset has a Designated Value of $20.0 million or more, local counsel opinions (i) as to the due authorization, execution and delivery by such Issuer or such Guarantor of such mortgage, leasehold mortgage, deed of trust, leasehold deed of trust, deed of hypothec, deed to secure debt or leasehold deed to secure debt and such other customary matters that are incidental thereto and (ii) in jurisdictions where such Material Real Property Asset is located covering the enforceability of each mortgage, leasehold mortgage, deed of trust, leasehold deed of trust, deed of hypothec, deed to secure debt or leasehold deed to secure debt and such other customary matters as are incidental thereto;
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(5) if such Material Real Property Asset has a Designated Value of $20.0 million or more, with respect to such Material Real Property Asset, evidence from within the past five (5) years that such Material Real Property Asset, and the uses of such Material Real Property Asset, are in compliance in all material respects with all applicable zoning laws (the evidence submitted as to which should include the zoning designation made for such Material Real Property Asset, the permitted uses of each such Material Real Property Asset under such zoning designation and, if available, zoning requirements as to parking, lot size, ingress, egress and building setbacks); and

(6) such affidavits, certificates, instruments of indemnification and other items as shall be reasonably required to comply with the required deliverables set forth in paragraphs (2) - (5) above, and evidence of payment by the Issuer or Guarantor, as applicable, of all search and examination charges, mortgage recording taxes, fees, charges, costs and expenses required for the recording of the mortgages, leasehold mortgages, deeds of trust, leasehold deeds of trust, and deeds to secure debt, leasehold deeds to secure debt and the issuance of the title insurance policies, in each case to the extent required pursuant to the foregoing.

provided that, notwithstanding the foregoing the requirements of paragraphs (2), (3), (5) and (6) of this paragraph will not be required with respect to any such Material Real Property Asset, to the extent the cost of providing such items would exceed 1% of the then Designated Value of such Material Real Property Asset.

The Issuers and each Guarantor will not, and each Issuer will not permit any of its Restricted Subsidiaries to, grant any Lien on any Material Real Property Assets to which the foregoing paragraph is applicable with respect to which such Issuer or such Restricted Subsidiary has not satisfied the applicable requirements of paragraph (1) of the preceding paragraph, as security or otherwise, subject to Permitted Liens and customary exceptions for statutory or other similar Liens. Within 270 days of the Issue Date (or such later date as may be agreed by the Term Loan Collateral Agent or the ABL Collateral Agent, as applicable), the Issuers and the Guarantors shall provide the Controlling Collateral Agent reasonably satisfactory evidence of the release or termination of any mortgage, leasehold mortgage, deed of trust, leasehold deed of trust, deed to secure debt, leasehold deed or any other real property security instrument in respect of the 2026 Senior Secured Notes.

(b) With respect to any Material Real Property Asset consisting of Leasehold Property, easements or rights of-way, including Material Real Property Assets that are Leasehold Property, easements or rights-of-way constituting part of the Grand Mesa Pipeline or the Delaware Pipeline (in each case other than any fee owned Material Real Property Asset) (such Material Real Property Assets, “Other Specified Property”), (a) held by any Issuer or a Guarantor on the Issue Date or (b) acquired by any Issuer or a Guarantor after the Issue Date, such Issuer or such Guarantor, as the case may be, shall use commercially reasonable efforts (which, for the avoidance of doubt shall not require cash payments or other consideration aside from the payment or reimbursement of reasonable fees and expenses in connection with the preparation and recording of the documentation related to such Other Specified Collateral Deliverables) to deliver, within 270 days of the Issue Date or 120 days of the date of acquisition thereof or such later date as may be agreed to by the Term Loan Collateral Agent or ABL Collateral Agent, as applicable (provided that such deadline may not be extended to a date later than 365 days after the Issue Date or the acquisition date, as applicable), to the Real Property Collateral Agent for the ratable benefit of the Real Property Collateral Agent, the Holders of Notes-TLB Obligations and the Trustee, the following:

(1) a fully executed counterpart of a first-priority leasehold mortgage, leasehold deed of trust or leasehold deed to secure debt, duly executed by the Issuer or Guarantor that is the lessee, owner or holder of such Other Specified Property, satisfactory evidence of the completion (or satisfactory arrangements for the completion) of all recordings and necessary filings of such leasehold mortgage, leasehold deed of trust or leasehold deed to secure debt (and payment of any taxes or fees in connection therewith), together with any necessary consents, memoranda of lease and fixture filings, as may be necessary to create a valid, perfected first-priority lien, subject to Permitted Liens, against the properties purported to be covered thereby; (2) if such Other Specified Property has a Designated Value of $20.0 million or more and is not an easement or right-of-way, policy or policies or marked-up unconditional binder of title insurance (or binding commitments thereof), as applicable, in favor of the Real Property Collateral Agent and its successors and/or assigns, in an amount not less than the Designated Value of such Other Specified Property and in the form necessary, paid for by the such Issuer or such Guarantor, issued by a nationally recognized title insurance company insuring leasehold title to such Other Specified Property and insuring the Lien of such leasehold mortgage, leasehold deed of trust or leasehold deed to secure debt as a valid first priority Lien (subject to Permitted Liens) on the applicable real property described therein, together with such endorsements, title policy modification, coinsurance and reinsurance as shall be reasonably required;
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(3) if such Other Specified Property has a Designated Value of $20.0 million or more and is not an easement or right-of-way, such surveys (or any updates, affidavits or such other information or documents that the title insurance company may reasonably require in connection with the issuance of the title insurance policies), which are sufficient for the title insurance company to remove or modify the standard survey exception and issue customary survey-related endorsements or title policy modifications;

(4) if such Material Real Property Asset has a Designated Value of $20.0 million and is not an easement or right-of-way, local counsel opinions (i) as to the due authorization, execution and delivery by such Issuer or such Guarantor of such mortgage, deed of trust or deed to secure debt and such other customary matters that are incidental thereto and (ii) in jurisdictions where such Other Specified Property is located covering the enforceability of each mortgage, deed of trust or deed to secure debt and such other customary matters as are incidental thereto;

(5) if such Other Specified Property has a Designated Value of $20.0 million or more and is not an easement or right-of-way, with respect to such Other Specified Property, evidence from within the past five (5) years that such Other Specified Property, and the uses of such Other Specified Property, are in compliance in all material respects with all applicable zoning laws (the evidence submitted as to which should include the zoning designation made for such Other Specified Property, the permitted uses of each such Other Specified Property under such zoning designation and, if available, zoning requirements as to parking, lot size, ingress, egress and building setbacks); and

(6) such affidavits, certificates, instruments of indemnification and other items as shall be reasonably required to comply with the required deliverables set forth in paragraphs (2) - (5) above and evidence of payment by the Issuer or Guarantor, as applicable, of all search and examination charges, mortgage recording taxes, fees, charges, costs and expenses required for the recording of the mortgages, leasehold mortgages, deeds of trust, leasehold deeds of trust, and deeds to secure debt, leasehold deeds to secure debt and the issuance of the title insurance policies, in each case to the extent required pursuant to the foregoing;

provided that, notwithstanding the foregoing, the requirements of paragraphs (2), (3), (5) and (6) of this paragraph will not be required with respect to (i) any such Other Specified Property, to the extent the cost of providing such items would exceed 1% of the Designated Value of such Other Specified Property or (ii) any such Other Specified Property that is comprised solely of easements or rights-of way. Notwithstanding anything herein to the contrary, for purposes of the determination of Designated Value pursuant to the preceding proviso, the penultimate paragraph of this covenant shall not apply.

The requirements of the foregoing paragraph with respect to the Other Specified Property shall be referred to as the “Other Specified Collateral Requirements”, and the items described in items (1) through (6) of the foregoing paragraph shall be referred to as the “Other Specified Collateral Deliverables”.

Solely for purposes of determining the Designated Value of any Real Property Assets with respect to which an Issuer or Guarantor must use commercially reasonable efforts to provide the Other Specified Collateral Requirements, if any Real Property Asset constitutes, with one or more Real Property Assets, any pipeline, facility, terminal, injection well or disposal well of the Issuers and their Restricted Subsidiaries, the Designated Value of such Real Property Asset shall be deemed to be the sum of the Designated Values of all such Real Property Assets forming such pipeline, facility, terminal, injection well or disposal well.
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For the avoidance of doubt, the foregoing sentence shall have no effect with respect to the assessment of additional interest pursuant to Section 6.01.

The Issuers and each Guarantor will not, and each Issuer will not permit any of its Restricted Subsidiaries to, grant any Lien on any Other Specified Property with respect to which such Issuer or such Restricted Subsidiary has not satisfied the applicable requirements of paragraph (1) of this Section 13.05(b), as security or otherwise, subject to Permitted Liens and customary exceptions for statutory or other similar Liens.

Section 13.06    Release of Liens on the Collateral.

(a) The Liens on the Collateral securing the Notes will automatically and without the need for any further action by any Person be released:

(1) in whole, upon payment in full of the principal of, accrued and unpaid interest and premium, if any, on the Notes of such series;

(2) in whole upon:

(A) a Legal Defeasance or Covenant Defeasance of such series of Notes as set forth in Article VIII hereof; or

(B) the satisfaction and discharge of this Indenture with respect to such series of Notes as set forth in Section 11.01; or

(C) upon the occurrence of a Suspension Date with respect to such series of Notes (provided that the applicable Investment Grade Ratings give effect to the proposed release of the Collateral).

(3) in part, as to any property constituting Collateral that (a) is sold, transferred or otherwise disposed of by any Issuer or any Guarantor (other than to any Issuer or another Guarantor) in a transaction not prohibited by this Indenture or the Security Documents at the time of such sale, transfer or disposition or (b) is owned or at any time acquired by a Guarantor that has been released from its Guarantee in accordance with this Indenture, concurrently with the release of such Guarantee (including in connection with the designation of a Guarantor as an Unrestricted Subsidiary);

(4) in whole or in part, as applicable, in accordance with the provisions in Article IX;

(5) in part, in accordance with the applicable provisions of the Security Documents and the Intercreditor Agreements (including, without limitation, any property or asset of an Issuer or a Guarantor that becomes and Excluded Asset); or

(6) in whole or in part, as applicable, as to all or any part of the Collateral that has been taken by eminent domain, condemnation or other similar circumstances,

provided that, in the case of any release in whole pursuant to clauses (1), (2) and (4) above, all amounts owing to the Trustee and the Collateral Agent under this Indenture, the Notes, the Guarantees, the Security Documents and the Intercreditor Agreements with respect to such series of Notes have been paid in full.

Notwithstanding clause (2)(C) above, upon the occurrence of a Reinstatement Date with respect to such series of Notes, the Issuers and the Guarantors shall use commercially reasonable efforts to take all actions reasonably necessary to provide to the Collateral Agent for its benefit and the benefit of the Holders of such series and the Trustee valid, perfected, security interests (subject to Permitted Liens) in the Collateral (which in accordance with the Intercreditor Agreements shall be first-priority Liens, in the case of any Notes-TLB Priority Collateral, and second-priority Liens, in the case of any ABL Priority Collateral) within 60 days after such Reinstatement Date or, with respect to any Material Real Property Asset, with 270 days after such Reinstatement Date, in each case or such later date as may be agreed to by the Term Loan Collateral Agent or the ABL Collateral Agent, as applicable.
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(b) To the extent a proposed release of Collateral is not automatic and requires action by the Trustee or the Collateral Agent, the Issuers and each Guarantor will furnish to the Trustee and the Collateral Agent, prior to each proposed release of such Collateral pursuant to the Security Documents and this Indenture, an Officer’s Certificate and an Opinion of Counsel that all conditions precedent provided for in this Indenture and the Security Documents relating to such release have been complied with.

(c) Upon compliance by the Issuers or the Guarantors, as the case may be, with the conditions precedent set forth above, the Trustee or the Collateral Agent shall promptly cause to be released and reconveyed (at the expense of the Issuers or the Guarantors) to the Issuers or the Guarantors, as the case may be, the released Collateral.

Section 13.07    Authorization of Actions to be Taken by the Trustee or the Collateral Agent Under the Security Documents.

(a) Subject to the provisions of the Security Documents, each of the Trustee, the Collateral Agent or the Real Property Collateral Agent may (but shall not be obligated to), in its sole discretion and without the consent of the Holders, on behalf of the Holders, take all actions it deems necessary or appropriate in order to (1) enforce any of its rights or any of the rights of the Holders under the Security Documents and (2) collect and receive any and all amounts payable in respect of the Collateral in respect of the obligations of the Issuers and the Guarantors hereunder and thereunder. Subject to the provisions of the Security Documents, the Trustee, the Collateral Agent or the Real Property Collateral Agent shall have the power to institute and to maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Collateral by any acts that may be unlawful or in violation of the Security Documents or this Indenture, and such suits and proceedings as the Trustee, the Collateral Agent or the Real Property Collateral Agent may deem expedient to preserve or protect its interest and the interests of the Holders in the Collateral (including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the security interest hereunder or be prejudicial to the interests of the Holders or the Trustee).

(b) Except as otherwise expressly set forth in Section 3 of the Security Agreement, none of the Trustee, the Collateral Agent or the Real Property Collateral Agent shall be responsible for, nor do they make any representation regarding, the existence, genuineness or value of any of the Collateral or for the validity, perfection, priority or enforceability of the Liens in any of the Collateral, whether impaired by operation of law or by reason of any action or omission to act on its part hereunder, for the validity or sufficiency of the Collateral or any agreement or assignment contained therein, for the validity of the title of the Issuers to the Collateral, for insuring the Collateral or for the payment of taxes, charges, assessments or Liens upon the Collateral or otherwise as to the maintenance of the Collateral. None of the Trustee, the Collateral Agent or the Real Property Collateral Agent shall have any responsibility for recording, filing, re-recording or re-filing any financing statement, continuation statement, financing change statement, document, instrument or other notice in any public office at any time or times or to otherwise take any action to perfect or maintain the perfection of any security interest granted to it under the Security Documents or otherwise.

(c) Where any provision of this Indenture requires that additional property or assets be added to the Collateral and a security interest with respect to such property or assets would not be created or perfected without preparation and execution of additional documentation, the Issuers and each Guarantor shall deliver to the Trustee, the Collateral Agent or the Real Property Collateral Agent the following:

(1) a request from the Issuers that such Collateral be added;

(2) the form of instrument adding such Collateral, which, based on the type and location of the property subject thereto, shall be in substantially the form of the applicable Security Documents previously entered into, with such changes thereto as the Issuers shall consider appropriate, or in such other form as the Issuers shall deem proper; provided that any such changes or such form are administratively satisfactory to the Trustee, the Collateral Agent and the Real Property Collateral Agent; and
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(3) such financing statements, if any, as the Issuers shall deem necessary to perfect the Collateral Agent’s security interest in such Collateral.

(d) The Trustee, the Collateral Agent and the Real Property Collateral Agent, in giving any consent or approval under the Security Documents or in executing any Security Documents, shall be entitled to receive, as a condition to such consent or approval or to executing such document in the case of a request to execute a Security Document, a request of the Issuers and, in all cases, an Officer’s Certificate and an Opinion of Counsel to the effect that all conditions precedent specified in this Indenture with respect to the action or omission for which consent or approval is to be given have been satisfied or that such action or omission for which consent or approval is not being given does not violate this Indenture, and the Trustee, the Collateral Agent and the Real Property Collateral Agent shall be fully protected in giving such consent or approval on the basis of such Officer’s Certificate and Opinion of Counsel.

(e) Notwithstanding anything else to the contrary herein, whenever reference is made in this Indenture or any Security Document to any discretionary action by, consent, designation, specification, requirement or approval of, notice, request or other communication from, or other direction given or action to be undertaken or to be (or not to be) suffered or omitted by the Collateral Agent or the Real Property Collateral Agent or to any election, decision, opinion, acceptance, use of judgment, expression of satisfaction or other exercise of discretion, rights or remedies to be made (or not to be made) by the Collateral Agent or the Real Property Collateral Agent, it is understood that in all cases the Collateral Agent or the Real Property Collateral Agent shall be fully justified in failing or refusing to take any such action under this Indenture if it shall not have received such written instruction, advice or concurrence of the Trustee (acting at the direction of the Holders and otherwise in accordance with this Indenture, Intercreditor Agreements and other Security Documents), and such indemnity from the Holders as it deems appropriate. This provision is intended solely for the benefit of the Collateral Agent and the Real Property Collateral Agent and its successors and permitted assigns and is not intended to and will not entitle the other parties hereto to any defense, claim or counterclaim, or confer any rights or benefits on any party hereto.

Section 13.08    Information Regarding Collateral.

(a) The Issuers shall furnish to the Collateral Agent, with respect to either Issuer, or any Guarantor, promptly (and in any event within 60 days of such change) written notice of any change in such Person’s (i) corporate or organization name, (ii) jurisdiction of organization or formation, (iii) identity or corporate structure or (iv) organizational identification number. The Issuers and the Guarantors agree not to effect or permit any change referred to in the preceding sentence unless all filings have been made, or will have been made within any applicable statutory period, under UCC, the PPSA and any other applicable laws that are required in the Security Documents in order for the Collateral to be made subject to the Lien of the Collateral Agent under such Security Documents in the manner and to the extent required by this Indenture or any of the Security Documents and will take all necessary action so that the Lien in favor of the Collateral Agent pursuant to this Indenture and/or the Security Documents is perfected with the same priority as immediately prior to such change to the extent required by this Indenture and/or the Security Documents. The Issuers shall also promptly notify the Collateral Agent if any material portion of the Collateral is damaged, destroyed or condemned. If at any time after the Issue Date, the Issuers deliver to an agent or representative of the holders of other Pari Passu Notes-TLB Obligations an update to the perfection certificate previously delivered to any such agent or representative, then the Issuers shall promptly deliver such update to the Trustee and the Collateral Agent.

Section 13.09    Negative Pledge.

The Issuers and each Guarantor shall not, and the Issuers shall not permit any of its Restricted Subsidiaries to, further pledge the Collateral as security or otherwise, subject to Permitted Liens.
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Section 13.10    Regarding the Collateral Agent.

(a) The Collateral Agent is authorized and empowered to appoint one or more subagents or co-collateral agents as it deems necessary or appropriate (it being understood that the Real Property Collateral Agent is executing its duties as a subagent for the Collateral Agent).

(b) Except as otherwise expressly set forth in Section 3 of the Security Agreement, none of the Trustee, the Collateral Agent or the Real Property Collateral Agent shall have any obligation whatsoever to the Trustee or any of the Holders to assure that the Collateral exists or is owned by any Grantor or is cared for, protected, or insured or has been encumbered, or that the Collateral Agent’s Liens have been properly or sufficiently or lawfully created, perfected, protected, maintained or enforced or are entitled to any particular priority, or to determine whether all of the Issuers’ or any Guarantor’s property constituting collateral intended to be subject to the Lien and security interest of the Security Documents has been properly and completely listed or delivered, as the case may be, or the genuineness, validity, marketability or sufficiency thereof or title thereto, or to exercise at all or in any particular manner or under any duty of care, disclosure, or fidelity, or to continue exercising, any of the rights, authorities, and powers granted or available to the Collateral Agent and the Real Property Collateral Agent pursuant to this Indenture or any Security Document other than pursuant to the instructions of the Trustee or the Holders of a majority in aggregate principal amount of the Notes of a series with respect to such series of Notes or as otherwise provided in the Security Documents and/or the Intercreditor Agreements.

(c) Notwithstanding anything to the contrary contained in this Indenture or the Security Documents, in the event the Collateral Agent or the Real Property Collateral Agent is entitled or required to commence an action to foreclose or otherwise exercise its remedies to acquire control or possession of the Collateral, the Collateral Agent or the Real Property Collateral Agent, as the case may be, shall not be required to commence any such action or exercise any remedy or to inspect or conduct any studies of any property under the mortgages or take any such other action if the Collateral Agent or the Real Property Collateral Agent has determined that the Collateral Agent or the Real Property Collateral Agent may incur personal liability as a result of the presence at, or release on or from, the Collateral or such property, of any hazardous substances. The Collateral Agent and the Real Property Collateral Agent shall at any time be entitled to cease taking any action described in this clause if it no longer reasonably deems any indemnity, security or undertaking from the Issuers or the Holders to be sufficient.

(d) The Collateral Agent and the Real Property Collateral Agent shall not be liable for (i) any action taken or omitted to be taken by it in connection with this Indenture and the Security Documents or instrument referred to herein or therein, except to the extent that any of the foregoing are found by a final, non-appealable judgment of a court of competent jurisdiction to have resulted from its own gross negligence or willful misconduct, and (ii) interest on any money received by it except as the Collateral Agent or the Real Property Collateral Agent may agree in writing with the Issuers (and money held in trust by the Collateral Agent or the Real Property Collateral Agent shall be segregated from other funds except to the extent required by law).

(e) The Collateral Agent and the Real Property Collateral Agent shall exercise reasonable care in the custody of any Collateral in its possession or control or in the possession or control of any agent or bailee or any income thereon. The Collateral Agent and the Real Property Collateral Agent shall be deemed to have exercised reasonable care in the custody of Collateral in its possession if the Collateral is accorded treatment substantially equal to that which it accords similar property held for its own benefit and shall not be liable or responsible for any loss or diminution in value of any of the Collateral, including, without limitation, by reason of the act or omission of any carrier, forwarding agency or other agent or bailee selected by the Collateral Agent or the Real Property Collateral Agent in good faith.

(f) The parties hereto and the Holders hereby agree and acknowledge that none of the Collateral Agent, the Trustee or the Real Property Collateral Agent shall assume, be responsible for or otherwise be obligated for any liabilities, claims, causes of action, suits, losses, allegations, requests, demands, penalties, fines, settlements, damages (including foreseeable and unforeseeable), judgments, expenses and costs (including but not limited to, any remediation, corrective action, response, removal or remedial action, or investigation, operations and maintenance or monitoring costs, for personal injury or property damages, real or personal) of any kind whatsoever, pursuant to any environmental law as a result of this Indenture, the Security Documents or any actions taken pursuant hereto or thereto.
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Further, the parties hereto and the Holders hereby agree and acknowledge that in the exercise of its rights under this Indenture and the Security Documents, the Collateral Agent, the Trustee or the Real Property Collateral Agent may hold or obtain indicia of ownership primarily to protect the security interest of the Collateral Agent, the Trustee or the Real Property Collateral Agent in the Collateral and that any such actions taken by the Collateral Agent, the Trustee or the Real Property Collateral Agent shall not be construed as or otherwise constitute any participation in the management of such Collateral. In the event that the Collateral Agent, the Trustee or the Real Property Collateral Agent is required to acquire title to an asset for any reason, or take any managerial action of any kind in regard thereto, which in the Collateral Agent’s, Real Property Collateral Agent’s or the Trustee’s sole discretion may cause the Collateral Agent, Real Property Collateral Agent or the Trustee to be considered an “owner or operator” under the provisions of the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C. §9601, et seq., or otherwise cause the Collateral Agent, the Trustee or the Real Property Collateral Agent to incur liability under CERCLA or any other federal, state or local law, the Collateral Agent, the Trustee and the Real Property Collateral Agent reserves the right, instead of taking such action, to either resign as the Collateral Agent, the Trustee or the Real Property Collateral Agent or arrange for the transfer of the title or control of the asset to a court-appointed receiver or monitor. None of the Collateral Agent, the Trustee or the Real Property Collateral Agent shall be liable to the Issuers, the Guarantors or any other Person for any environmental claims or contribution actions under any federal, state or local law, rule or regulation by reason of the Collateral Agent’s, the Real Property Collateral Agent’s or the Trustee’s actions and conduct as authorized, empowered and directed hereunder or relating to the discharge, release or threatened release of hazardous materials into the environment. If at any time it is necessary or advisable for property to be possessed, owned, operated or managed by any Person (including the Collateral Agent, the Real Property Collateral Agent or the Trustee) other than the Issuers or the Guarantors, subject to the terms of the Security Documents and the Intercreditor Agreements, a majority in interest of Holders of Notes of a series shall direct the Collateral Agent, the Real Property Collateral Agent or the Trustee with respect to such series of Notes to appoint an appropriately qualified Person (excluding the Collateral Agent, the Real Property Collateral Agent or the Trustee) whom it shall designate to possess, own, operate or manage, as the case may be, such property.

(g) For the avoidance of doubt, the rights, privileges, protections, immunities and benefits given to the Collateral Agent and the Real Property Collateral Agent hereunder, including, without limitation, its right to be indemnified prior to taking action, shall survive the satisfaction, discharge or termination of this Indenture or earlier termination, resignation or removal of the Trustee, in such capacity, with respect to the holders of the ABL Priority Collateral or the Other Pari Passu Lien Obligations, as applicable, to the extent the Security Documents remain in force thereafter.

(h) For the purposes of holding any hypothec granted to the Attorney (as defined below) pursuant to the laws of the Province of Québec to secure the prompt payment and performance of any and all Notes Obligations by any Issuers or Guarantors, each of Holder hereby irrevocably appoints and authorizes the Collateral Agent and, to the extent necessary, ratifies the appointment and authorization of the Collateral Agent, to, as part of its duties as Collateral Agent, act as the hypothecary representative of the creditors as contemplated under Article 2692 of the Civil Code of Québec (in such capacity, the “Attorney”), and to enter into, to take and to hold on their behalf, and for their benefit, any hypothec, and to exercise such powers and duties that are conferred upon the Attorney under any related deed of hypothec. The Attorney shall: (a) have the sole and exclusive right and authority to exercise, except as may be otherwise specifically restricted by the terms hereof, all rights and remedies given to the Attorney pursuant to any such deed of hypothec and applicable law, and (b) benefit from and be subject to all provisions hereof with respect to the Collateral Agent mutatis mutandis, including, without limitation, all such provisions with respect to the liability or responsibility to and indemnification by the Issuer and the Guarantors. Any person who becomes a Holder shall be deemed to have consented to and confirmed the Attorney as the person acting as hypothecary representative holding the aforesaid hypothecs as aforesaid and to have ratified, as of the date it becomes a Holder, all actions taken by the Attorney in such capacity. The substitution of the Collateral Agent pursuant to the provisions of this Article XIII shall also result in the substitution of the Attorney.
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Section 13.11    Conflicts.

The Issuers, the Guarantors, the Trustee, the Collateral Agent and the Real Property Collateral Agent acknowledge and agree to be bound by the provisions of the Security Documents and the Intercreditor Agreements, as applicable.

(Signatures on following pages)
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Indenture as of the date first written above.


ISSUERS:

NGL ENERGY OPERATING LLC

By:    /s/ Brad Cooper
Name:    Brad Cooper
Title:    Executive Vice President and Chief Financial Officer

NGL ENERGY FINANCE CORP.

By:    /s/ Brad Cooper
Name:    Brad Cooper
Title:    Executive Vice President and Chief Financial Officer

GUARANTORS:

Anticline Disposal, LLC
AWR Disposal, LLC
Centennial Energy, LLC
Centennial Gas Liquids ULC
Choya Operating, LLC
Disposals Operating, LLC
GGCOF HEP Blocker, LLC
GGCOF HEP Blocker II, LLC
Grand Mesa Pipeline, LLC
GSR Northeast Terminals LLC
Hillstone Environmental Partners, LLC
NGL Crude Cushing, LLC
NGL Crude Logistics, LLC
NGL Crude Terminals, LLC
NGL Crude Transportation, LLC
NGL Delaware Basin Holdings, LLC
NGL Energy GP LLC
NGL Liquids, LLC
NGL Marine, LLC
NGL North Ranch, LLC
NGL Recycling Services, LLC
NGL Shared Services, LLC
NGL Supply Terminal Company, LLC
NGL Supply Wholesale, LLC
NGL Water Pipelines, LLC
NGL Water Solutions, LLC
NGL Water Solutions DJ, LLC
NGL Water Solutions Eagle Ford, LLC
NGL Water Solutions - ORLA SWD, LLC
NGL Water Solutions Permian, LLC
NGL Water Solutions Product Services, LLC





By:    /s/ Brad Cooper
Name:    Brad Cooper
Title:    Executive Vice President and Chief Financial Officer

GUARANTORS (CONTINUED)

NGL SHARED SERVICES HOLDINGS, INC.

By:    /s/ Brad Cooper
Name:    Brad Cooper
Title:    Executive Vice President and Chief Financial Officer

NGL SOUTH RANCH, INC.

By:    /s/ Brad Cooper
Name:    Brad Cooper
Title:    Executive Vice President and Chief Financial Officer





TRUSTEE AND COLLATERAL AGENT:

U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Trustee and Collateral Agent

By:    /s/ Michael K. Herberger
Name:    Michael K. Herberger
Title:    Vice President


EXHIBIT A-1

[Face of Note]

CUSIP/ISIN1

8.125% Senior Secured Note due 2029

No. ___________                                         $_____________

NGL ENERGY OPERATING LLC
NGL ENERGY FINANCE CORP.

jointly and severally promise to pay to                    [if a Global Note, insert — CEDE & CO., as nominee for The Depository Trust Company] or its registered assigns, the principal sum of                DOLLARS [if a Global Note, insert — , or such other principal amount as shall be set forth on the “Schedule of Exchanges of Interests in the Global Note” attached hereto,] on February 15, 2029.

Interest Payment Dates: February 15, May 15, August 15 and November 15

Record Dates: February 1, May 1, August 1 and November 1

Dated:        , 20
1 For ease of reference: 62922LAC2 (144A); U6536LAB6 (Reg S)
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NGL ENERGY OPERATING LLC

By:                                 
Name:
Title:

NGL ENERGY FINANCE CORP.

By:                                 
Name:
Title:

This is one of the Notes referred to in the within-
mentioned Indenture:

U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Trustee

By:                        
Authorized Signatory
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[Back of Note]
8.125% Senior Secured Note due 2029

[Insert the Global Note Legend, if applicable pursuant to the provisions of the Indenture]

[Insert the Private Placement Legend, if applicable pursuant to the provisions of the Indenture]

Capitalized terms used herein have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. As used in this Note, references to “Notes” shall only refer to the 2029 Notes, unless otherwise indicated or the context otherwise requires.

(1)    INTEREST. NGL Energy Operating LLC, a Delaware limited liability company (the “Operating LLC”), and NGL Energy Finance Corp., a Delaware corporation (together with Operating LLC, the “Issuers”), each a wholly owned subsidiary of NGL Energy Partners LP, a Delaware limited partnership (the “Company”), jointly and severally promise to pay interest on the principal amount of this Note at 8.125% per annum until maturity. The Issuers will pay interest, if any, quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an “Interest Payment Date”); provided that the first Interest Payment Date shall be [ ]. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date. The Issuers will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate equal to the then applicable interest rate on the Notes; they will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest, if any (without regard to any applicable grace periods), from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months.

(2)    METHOD OF PAYMENT. The Issuers will pay interest on the Notes (except defaulted interest), if any, to the Persons who are registered Holders of Notes at the close of business on the February 1, May 1, August 1 and November 1 next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium, if any, and interest, if any, at the office or agency of the Issuers maintained for such purpose within or without the City and State of New York, or, at the option of the Issuers, payment of interest, if any, may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds will be required with respect to principal of, premium, if any, and interest, if any, on, all Global Notes and all other Notes the Holders of which will have provided to the Issuers or the Paying Agent wire transfer instructions to an account in the United States of America. Such payment will be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

(3)    PAYING AGENT AND REGISTRAR. Initially, U.S. Bank Trust Company, National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Issuers may change any Paying Agent or Registrar without notice to any Holder; provided, however, that the Issuers shall at all times maintain a Paying Agent in the Borough of Manhattan, The City of New York. Either Issuer or any Subsidiary may act in any such capacity.
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(4)    INDENTURE. The Issuers issued the Notes under an Indenture dated as of February 2, 2024 (the “Indenture”) among the Issuers, the Guarantors and the Trustee. The Notes are subject to all such terms, and Holders are referred to the Indenture for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are secured obligations of the Issuers. The Indenture does not limit the aggregate principal amount of Notes that may be issued thereunder.

(5)    OPTIONAL REDEMPTION.

(a)    At any time prior to February 15, 2026, Operating LLC may on any one or more occasions redeem up to 40% of the aggregate principal amount of the Notes outstanding under the Indenture (which may include Additional Notes) with an amount of cash not greater than the amount equal to the net cash proceeds from one or more Equity Offerings at a redemption price equal to 108.125% of the principal amount thereof, plus accrued and unpaid interest, if any, on the Notes to be redeemed to, but excluding, the applicable redemption date (subject to the right of Holders of record on the relevant record date to receive interest, if any, due on the related Interest Payment Date that is on or prior to the redemption date); provided that (i) at least 50% of the aggregate principal amount of the Notes issued on the Issue Date (excluding Notes held by the Company and its Subsidiaries) remains outstanding after each such redemption and (ii) the redemption occurs within 180 days after the closing of such Equity Offering.

(b)    At any time or from time to time prior to February 15, 2026, (the “2029 Notes Step-Down Date”) Operating LLC may redeem, on one or more occasions, all or a part of the Notes, at a redemption price equal to the 2029 Notes Make-Whole Price, subject to the rights of Holders of Notes on the relevant record date to receive interest, if any, due on the related Interest Payment Date that is on or prior to the redemption date.

(c)    In the event that Holders of not less than 90% in aggregate principal amount of the outstanding Notes accept a Change of Control Offer or Alternate Offer and the Company (or any third party making such Change of Control Offer in lieu of the Company as described in Section 4.14(c) of the Indenture) purchases all of the Notes held by such Holders, the Company will have the right, upon not less than 10 nor more than 60 days’ prior notice, given not more than 30 days following the purchase pursuant to any Change of Control Offer or Alternate Offer described in Section 4.14 of the Indenture, to redeem all of the Notes that remain outstanding following such purchase at a redemption price equal to the Change of Control Payment plus, to the extent not included in the Change of Control Payment, accrued and unpaid interest, if any, on the Notes that remain outstanding, to, but excluding, the date of redemption (subject to the right of Holders of record on the relevant record date to receive interest, if any, due on the related Interest Payment Date that is on or prior to the redemption date).

(d)    Except as provided in the immediately preceding paragraphs (a), (b) and (c), the Notes will not be redeemable at Operating LLC’s or the Company’s option prior to February 15, 2026.

(e On and after February 15, 2026, Operating LLC may redeem, on one or more occasions, all or a part of the Notes, from time to time at the following redemption prices (expressed as a percentage of principal amount to be redeemed) plus accrued and unpaid interest, if any, on the Notes to be redeemed to, but excluding, the applicable redemption date (subject to the rights of Holders on the relevant record date to receive interest, if any, due on the related Interest Payment Date that is on or prior to the redemption date), if redeemed during the twelve-month period beginning on February 15 of the years indicated below:
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Year Percentage
2026 104.063%
2027 102.031%
2028 and thereafter 100.000%

(f)    Unless the Issuers default in the payment of the redemption price, interest will cease to accrue on the Notes or portions thereof called for redemption on the applicable redemption date.

(6)    REPURCHASE AT THE OPTION OF HOLDER.

(a)    If there is a Change of Control, each Holder will have the right, except as provided below and in the Indenture, to require the Company to make an offer (a “Change of Control Offer”) to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess of $2,000) of each Holder’s Notes at a purchase price equal to 101% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest, if any, on the Notes repurchased to the date of purchase, subject to the rights of Holders on the relevant record date to receive interest, if any, due on the relevant Interest Payment Date (the “Change of Control Payment”). Within 30 days following any Change of Control, the Company will send a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture. The Company will not be required to make a Change of Control Offer upon a Change of Control, if (i) a third party makes a Change of Control Offer in the manner, at the time and otherwise in compliance with the requirements set forth in Section 4.14(a) of the Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes properly tendered and not withdrawn under such Change of Control Offer, (ii) notice of redemption of all outstanding Notes has been given pursuant to the Indenture unless and until there is a default in payment of the applicable redemption price, or (iii) in connection with or in contemplation of any Change of Control, the Company has made an offer to purchase (an “Alternate Offer”) any and all Notes validly tendered and not withdrawn at a cash price equal to or higher than the Change of Control Payment and has purchased all Notes properly tendered and not withdrawn in accordance with the terms of the Alternate Offer.

(b) If the Company or a Restricted Subsidiary consummates any Asset Sales of Collateral, within 10 Business Days after the aggregate amount of Excess Collateral Proceeds exceeds $50.0 million, the Issuers will be required to make an offer (a “Collateral Disposition Offer”) to all Holders of Notes to purchase the maximum principal amount of the Notes (on a pro rata basis) and, if required by the terms of any other Pari Passu Notes-TLB Obligations, to the holders of such Pari Passu Notes-TLB Obligations (on a pro rata basis), to which the Collateral Disposition Offer applies that may be purchased out of the Excess Collateral Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount of the of the Notes and such other Pari Passu Obligations, plus accrued and unpaid interest, if any, to, but excluding, the date of purchase, in accordance with the procedures set forth in the Indenture in a principal amount of $2,000 or an integral multiple of $1,000 in excess thereof with respect to the Notes. To the extent that the aggregate amount of Notes so validly tendered and not properly withdrawn pursuant to a Collateral Disposition Offer (together with, if required by the terms of any other Pari Passu Notes-TLB Obligations, the amount of Pari Passu Notes-TLB Obligations tendered pursuant to any similar requirement), is less than the Excess Collateral Proceeds, the Issuers may use any remaining Excess Collateral Proceeds for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes surrendered by Holders and, if required by the holders of Pari Passu Notes-TLB Obligations, holders of any Pari Passu Notes-TLB Obligations exceeds the amount of Excess Collateral Proceeds, the Notes and Pari Passu Notes-TLB Obligations to be purchased shall be selected by the Trustee on a pro rata basis on the basis of the aggregate principal amount of tendered Notes and Pari Passu Notes-TLB Obligations. Holders of Notes that are the subject of an offer to purchase will receive notice of a Collateral Disposition Offer from the Company prior to any related purchase, prepayment or redemption date and may elect to have such Notes purchased by completing the form entitled “Option of Holder to Elect Purchase” attached to the Notes.
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(7)    NOTICE OF OPTIONAL REDEMPTION. Notices of optional redemption will be mailed by first-class mail (or in the case of Notes in the form of Global Notes, pursuant to the applicable procedures of DTC) at least 10 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address, except that redemption notices may be sent more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction or discharge of the Indenture with respect to the Notes. The notice of redemption with respect to a redemption pursuant to Section 3.07(b) of the Indenture and paragraph 5(b) herein need not set forth the 2029 Notes Make-Whole Price but only the manner of calculation thereof. Operating LLC will notify the Trustee of the 2029 Notes Make-Whole Price with respect to any redemption promptly after the calculation, and the Trustee shall not be responsible for such calculation. The actions taken by Operating LLC in calculating the 2029 Make-Whole price shall be conclusive absent manifest error. Notes in denominations larger than $2,000 may be redeemed in part but only in whole multiples of $1,000 in excess thereof, unless all of the Notes held by a Holder are to be redeemed.

(8)    DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $2,000 or an integral multiple of $1,000 in excess thereof. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Issuers may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Issuers need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Issuers need not exchange or register the transfer of any Notes for a period of 10 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date.

(9)    PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes.

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(10) AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture, the Notes, the Note Guarantees or the Security Documents (subject to compliance with the Intercreditor Agreements) may be amended or supplemented with the consent of the Holders of a majority in principal amount of the then outstanding Notes and Additional Notes of each series affected by such amendment or supplement, if any, voting as a single class, and any existing Default or Event of Default or compliance with any provision of the Indenture, the Notes or the Note Guarantees may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes and Additional Notes of each series affected by such waiver, if any, voting as a single class. Without the consent of any Holder of a Note, the Indenture, the Notes or the Note Guarantees may be amended or supplemented to: (i) cure any ambiguity, defect, mistake or inconsistency; (ii) provide for uncertificated Notes in addition to or in place of certificated Notes; (iii) provide for the assumption of an Issuer’s or a Guarantor’s obligations to Holders of Notes of and Note Guarantees and under the Security Documents in the case of a merger, amalgamation or consolidation or sale of all or substantially all of such Issuer’s or Guarantor’s properties or assets, as applicable; (iv) make any change that would provide any additional rights or benefits to the Holders of Notes or that does not adversely affect the legal rights under the Indenture of any Holder; (v) at the Issuers’ election, comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA, if such qualification is required; (vi) conform the text of the Indenture, the Note Guarantees, the Notes or the Security Documents or the Intercreditor Agreements (as evidenced by an Officers’ Certificate) to any provision of the “Description of the notes” section of the Issuers’ Offering Memorandum dated January 25, 2024, to the extent that such provision in that “Description of the notes” was intended to be a verbatim recitation of a provision of the Indenture, the Notes, the Security Documents, the Intercreditor Agreements or the Note Guarantees; (vii) provide for the issuance of Additional Notes in accordance with the limitations set forth in the Indenture as of the Issue Date; (viii) make, complete or confirm any grant of Collateral permitted or required by the Indenture or the Security Documents or any release, termination or discharge of Collateral that becomes effective as set forth in the Indenture or any of the Security Documents; (ix) add any additional Guarantor or to evidence the release of any Guarantor from its Note Guarantee, in each case as provided in the Indenture; (x) evidence or provide for the acceptance of appointment under the Indenture of a successor Trustee or a successor Collateral Agent; (xi) grant any Lien for the benefit of the holders of any future Pari Passu Notes-TLB Obligations, Pari Passu ABL Obligations, Pari Passu Second Lien Obligations or Junior Lien Obligations in accordance with and as permitted by the terms of the Indenture and the ABL Intercreditor Agreement (and, with respect to Pari Passu Second Lien Indebtedness or Junior Lien Indebtedness, any Pari Passu Second Lien Intercreditor Agreement or Junior Lien Intercreditor Agreement, as applicable); (xii) add additional secured parties to the Intercreditor Agreements to the extent Liens securing obligations held by such parties are permitted under the Indenture; (xiii) mortgage, pledge, hypothecate or grant a security interest in favor of the Collateral Agent for the benefit of the Trustee and the Holders of the Notes as additional security for the payment and performance of the Issuers’ and any Guarantor’s obligations under the Indenture, in any property, or assets, including any of which are required to be mortgaged, pledged or hypothecated, or in which a security interest is required to be granted to the Trustee or the Collateral Agent in accordance with the terms of the Indenture or otherwise; or (xiv) provide for the succession of any parties to the Security Documents (and other amendments that are administrative or ministerial in nature) and the Intercreditor Agreements in connection with an amendment, renewal, extension, substitution, refinancing, restructuring, replacement, supplementing or other modification from time to time of any agreement in accordance with the terms of the Indenture, the ABL Intercreditor Agreement and the relevant Security Documents.

(11)    DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest, if any, on the Notes; (ii) default in the payment when due (at maturity, upon redemption or otherwise) of the principal of, or premium, if any, on, the Notes; (iii) failure by the Company to comply with its obligations under Section 5.01 of the Indenture or to consummate a purchase of Notes when required pursuant to Sections 4.10 or 4.14 of the Indenture; (iv) failure by the Company or any of its Restricted Subsidiaries for 30 days after written notice from the Trustee or the Holders of at least 30% in aggregate principal amount of the then outstanding Notes to comply with the provisions of Section 4.07 or Section 4.09 of the Indenture or to comply with the provisions of Section 4.10 or Section 4.14 of the Indenture to the extent not described in
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the immediately preceding clause (iii); (v) (a) except as addressed in subclause (b) of this clause (v), failure by the Company or any of its Restricted Subsidiaries for 60 days after written notice from the Trustee or the Holders of at least 30% in aggregate principal amount of the then outstanding Notes to comply with any of the other agreements in the Indenture or this Note or (b) failure by the Company for 180 days after notice from the Trustee or the Holders of at least 30% in aggregate principal amount of the then outstanding Notes of the applicable series to comply with Section 4.03 of the Indenture; (vi) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or Guarantee now exists, or is created after the Issue Date, if that default: (a) is caused by a failure to pay principal of, premium, if any, on, or interest, if any, on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a “Payment Default”); or (b) results in the acceleration of such Indebtedness prior to its Stated Maturity, and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $100.0 million or more; provided that if, prior to any acceleration of the Notes, (1) any such default is cured or waived, (2) any such acceleration of such Indebtedness is rescinded, or (3) such Indebtedness is repaid, within a period of 10 Business Days from the continuation of such default beyond the applicable grace period or the occurrence of such acceleration, as the case may be, any Default or Event of Default (but not any acceleration of the Notes ) shall be automatically rescinded, so long as such rescission does not conflict with any judgment or decree; (vii) failure by the Company or any Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary to pay final, non-appealable judgments (entered by a court or courts of competent jurisdiction) aggregating in excess of $100.0 million (net of any amounts that a reputable and creditworthy insurance company has acknowledged liability for in writing), which judgments are not paid, discharged or stayed for a period of 60 days; (viii) except as permitted by the Indenture, any Note Guarantee is held in any judicial proceeding to be unenforceable or invalid or ceases for any reason to be in full force and effect, or any Guarantor, or any Person acting on behalf of any Guarantor, denies or disaffirms its obligations under its Note Guarantee, except, in each case, by reason of the release of such Note Guarantee in accordance with the Indenture; (ix) an Issuer or any of the Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law (a) commences a voluntary case, (b) consents to the entry of an order for relief against it in an involuntary case, (c) consents to the appointment of a custodian of it or for all or substantially all of its property, (d) makes a general assignment for the benefit of its creditors, or (e) generally is not paying its debts as they become due; (x) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (a) is for relief against any Issuer or any of the Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary in an involuntary case, (b) appoints a custodian of any Issuer or any of the Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary or for all or substantially all of the property of an Issuer or any of the Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary; or (c) orders the liquidation of an Issuer or any of the Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary, and the order or decree remains unstayed and in effect for 60 consecutive days.
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In the case of an Event of Default specified in the immediately preceding clause (ix) or clause (x), with respect to either Issuer or any of the Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary, all then outstanding Notes will become due and payable immediately without further action or notice (subject to applicable law); (xi)(i) the Liens created by any Security Document shall at any time not constitute a valid and perfected Lien on any Collateral intended to be covered thereby with a Fair Market Value, individually or in the aggregate, in excess of $50.0 million other than (A) in accordance with the terms of the relevant Security Documents and the Indenture, (B) the satisfaction in full of all Obligations under the Indenture or (C) any loss of perfection that results from the failure of the Collateral Agent to maintain possession of certificates delivered to it representing securities pledged under the Security Documents, and which default continues for 30 days; (ii) the repudiation by any Issuer or any Guarantor in any pleading in any court of competent jurisdiction of any of its material obligations under the Security Documents or to file UCC continuation statements or PPSA financing change statements; or (xii) any Issuer or any Guarantor shall assert, in any pleading in any court of competent jurisdiction, that any security interest in any Security Document is invalid or unenforceable other than by reason of the termination of the Indenture or the release of any such Collateral in accordance with the Indenture. If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 30% in aggregate principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately by notice in writing to the Company and, in the case of a notice by Holders, also to the Trustee specifying the respective Event of Default and that it is a notice of acceleration. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal of, premium, if any, or interest, if any, on, any Note) if it in good faith determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the then outstanding of Notes by written notice to the Trustee may, on behalf of the Holders of all of the Notes , rescind an acceleration and its consequences if the rescission would not violate any judgment or decree and if all existing Events of Default (except nonpayment of principal, interest or premium, if any, that has become due solely because of the acceleration) have been cured or waived. The Issuers are required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Issuers are required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default.

(12)    TRUSTEE DEALINGS WITH THE ISSUERS. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for any Issuer or its Affiliates, and may otherwise deal with any Issuer or its Affiliates, as if it were not the Trustee.

(13)    NO RECOURSE AGAINST OTHERS. None of the General Partner or any director, officer, partner, employee, incorporator, manager, unitholder or other owner of Capital Stock of the General Partner, the Issuers or any Guarantor, as such, will have any liability for any obligations of the Issuers or such Guarantor under the Notes, the Note Guarantees or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes.

(14)    AUTHENTICATION. This Note will not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.
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(15)    ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

(16)    CUSIP AND ISIN NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuers have caused CUSIP and ISIN numbers to be printed on the Notes and the Trustee may use CUSIP and ISIN numbers in notices of redemption or repurchase as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption or repurchase and reliance may be placed only on the other identification numbers placed thereon.

(17)    GOVERNING LAW. THE LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THIS NOTE AND THE NOTE GUARANTEES.

The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to:

NGL Energy Partners LP
6120 South Yale Avenue, Suite 1300
Tulsa, Oklahoma 74136
Telecopier No.: (918) 481-5896
Attention: Chief Financial Officer
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ASSIGNMENT FORM

To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to:                                (Insert assignee’s legal name)

                                                        
(Insert assignee’s soc. sec. or tax I.D. no.)

                                                        

                                                        

                                                        
(Print or type assignee’s name, address and zip code)

and irrevocably appoint ________________________________________________________________________        
to transfer this Note on the books of the Issuers. The agent may substitute another to act for him.

Date:                        

Your Signature:                         
(Sign exactly as your name appears on the face of this Note)


Signature Guarantee*:                

*    Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).
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OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or Section 4.14 of the Indenture, check the appropriate box below:

☐ Section 4.10        ☐ Section 4.14

If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the amount you elect to have purchased:

$

Date:                         

Your Signature:                     
(Sign exactly as your name appears on the face of this Note)


Tax Identification No.:                 


Signature Guarantee*:                

*    Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).
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SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*

The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

Date of Exchange Amount of
decrease in
Principal
Amount of this
Global Note		 Amount of
increase in
Principal
Amount of this
Global Note		 Principal
Amount of this
Global Note
following such
decrease (or
increase)		 Signature of
authorized
officer of
Trustee or
Custodian

* This schedule should be included only if the Note is issued in global form.

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[Face of Note]

CUSIP/ISIN2

8.375% Senior Secured Note due 2032

No. ___________                                         $_____________

NGL ENERGY OPERATING LLC
NGL ENERGY FINANCE CORP.

jointly and severally promise to pay to                    [if a Global Note, insert — CEDE & CO., as nominee for The Depository Trust Company] or its registered assigns, the principal sum of                DOLLARS [if a Global Note, insert — , or such other principal amount as shall be set forth on the “Schedule of Exchanges of Interests in the Global Note” attached hereto,] on February 15, 2032.

Interest Payment Dates: February 15, May 15, August 15 and November 15

Record Dates: February 1, May 1, August 1 and November 1

Dated:        , 20
2 For ease of reference: 62922LAD0 (144A); U6536LAC4 (Reg S)
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NGL ENERGY OPERATING LLC

By:                                 
Name:
Title:

NGL ENERGY FINANCE CORP.

By:                                 
Name:
Title:

This is one of the Notes referred to in the within-
mentioned Indenture:

U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Trustee

By:                        
Authorized Signatory
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[Back of Note]
8.375% Senior Secured Note due 2032

[Insert the Global Note Legend, if applicable pursuant to the provisions of the Indenture]

[Insert the Private Placement Legend, if applicable pursuant to the provisions of the Indenture]

Capitalized terms used herein have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. As used in this Note, references to “Notes” shall only refer to the 2032 Notes, unless otherwise indicated or the context otherwise requires.

(1)    INTEREST. NGL Energy Operating LLC, a Delaware limited liability company (the “Operating LLC”), and NGL Energy Finance Corp., a Delaware corporation (together with Operating LLC, the “Issuers”), each a wholly owned subsidiary of NGL Energy Partners LP, a Delaware limited partnership (the “Company”), jointly and severally promise to pay interest on the principal amount of this Note at 8.375% per annum until maturity. The Issuers will pay interest, if any, quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an “Interest Payment Date”); provided that the first Interest Payment Date shall be [ ]. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date. The Issuers will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate equal to the then applicable interest rate on the Notes; they will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest, if any (without regard to any applicable grace periods), from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months.

(2)    METHOD OF PAYMENT. The Issuers will pay interest on the Notes (except defaulted interest), if any, to the Persons who are registered Holders of Notes at the close of business on the February 1, May 1, August 1 and November 1 next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium, if any, and interest, if any, at the office or agency of the Issuers maintained for such purpose within or without the City and State of New York, or, at the option of the Issuers, payment of interest, if any, may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds will be required with respect to principal of, premium, if any, and interest, if any, on, all Global Notes and all other Notes the Holders of which will have provided to the Issuers or the Paying Agent wire transfer instructions to an account in the United States of America. Such payment will be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

(3) PAYING AGENT AND REGISTRAR. Initially, U.S. Bank Trust Company, National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Issuers may change any Paying Agent or Registrar without notice to any Holder; provided, however, that the Issuers shall at all times maintain a Paying Agent in the Borough of Manhattan, The City of New York. Either Issuer or any Subsidiary may act in any such capacity.
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(4)    INDENTURE. The Issuers issued the Notes under an Indenture dated as of February 2, 2024 (the “Indenture”) among the Issuers, the Guarantors and the Trustee. The Notes are subject to all such terms, and Holders are referred to the Indenture for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are secured obligations of the Issuers. The Indenture does not limit the aggregate principal amount of Notes that may be issued thereunder.

(5)    OPTIONAL REDEMPTION.

(a)    At any time prior to February 15, 2027, Operating LLC may on any one or more occasions redeem up to 40% of the aggregate principal amount of the Notes outstanding under the Indenture (which may include Additional Notes) with an amount of cash not greater than the amount equal to the net cash proceeds from one or more Equity Offerings at a redemption price equal to 108.375% of the principal amount thereof, plus accrued and unpaid interest, if any, on the Notes to be redeemed to, but excluding, the applicable redemption date (subject to the right of Holders of record on the relevant record date to receive interest, if any, due on the related Interest Payment Date that is on or prior to the redemption date); provided that (i) at least 50% of the aggregate principal amount of the Notes issued on the Issue Date (excluding Notes held by the Company and its Subsidiaries) remains outstanding after each such redemption and (ii) the redemption occurs within 180 days after the closing of such Equity Offering.

(b)    At any time or from time to time prior to February 15, 2027 (the “2032 Notes Step-Down Date”) Operating LLC may redeem, on one or more occasions, all or a part of the Notes, at a redemption price equal to the 2032 Notes Make-Whole Price, subject to the rights of Holders of Notes on the relevant record date to receive interest, if any, due on the related Interest Payment Date that is on or prior to the redemption date.

(c)    In the event that Holders of not less than 90% in aggregate principal amount of the outstanding Notes accept a Change of Control Offer or Alternate Offer and the Company (or any third party making such Change of Control Offer in lieu of the Company as described in Section 4.14(c) of the Indenture) purchases all of the Notes held by such Holders, the Company will have the right, upon not less than 10 nor more than 60 days’ prior notice, given not more than 30 days following the purchase pursuant to any Change of Control Offer or Alternate Offer described in Section 4.14 of the Indenture, to redeem all of the Notes that remain outstanding following such purchase at a redemption price equal to the Change of Control Payment plus, to the extent not included in the Change of Control Payment, accrued and unpaid interest, if any, on the Notes that remain outstanding, to, but excluding, the date of redemption (subject to the right of Holders of record on the relevant record date to receive interest, if any, due on the related Interest Payment Date that is on or prior to the redemption date).

(d)    Except as provided in the immediately preceding paragraphs (a), (b) and (c), the Notes will not be redeemable at Operating LLC’s or the Company’s option prior to February 15, 2027.

(e)    On and after February 15, 2027 Operating LLC may redeem, on one or more occasions, all or a part of the Notes, from time to time at the following redemption prices (expressed as a percentage of principal amount to be
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redeemed) plus accrued and unpaid interest, if any, on the Notes to be redeemed to, but excluding, the applicable redemption date (subject to the rights of Holders on the relevant record date to receive interest, if any, due on the related Interest Payment Date that is on or prior to the redemption date), if redeemed during the twelve-month period beginning on February 15 of the years indicated below:
Year Percentage
2027 104.188%
2028 102.094%
2029 and thereafter 100.000%

(f)    Unless the Issuers default in the payment of the redemption price, interest will cease to accrue on the Notes or portions thereof called for redemption on the applicable redemption date.

(6)    REPURCHASE AT THE OPTION OF HOLDER.

(a)    If there is a Change of Control, each Holder will have the right, except as provided below and in the Indenture, to require the Company to make an offer (a “Change of Control Offer”) to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess of $2,000) of each Holder’s Notes at a purchase price equal to 101% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest, if any, on the Notes repurchased to the date of purchase, subject to the rights of Holders on the relevant record date to receive interest, if any, due on the relevant Interest Payment Date (the “Change of Control Payment”). Within 30 days following any Change of Control, the Company will send a notice to each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture. The Company will not be required to make a Change of Control Offer upon a Change of Control, if (i) a third party makes a Change of Control Offer in the manner, at the time and otherwise in compliance with the requirements set forth in Section 4.14(a) of the Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes properly tendered and not withdrawn under such Change of Control Offer, (ii) notice of redemption of all outstanding Notes has been given pursuant to the Indenture unless and until there is a default in payment of the applicable redemption price, or (iii) in connection with or in contemplation of any Change of Control, the Company has made an offer to purchase (an “Alternate Offer”) any and all Notes validly tendered and not withdrawn at a cash price equal to or higher than the Change of Control Payment and has purchased all Notes properly tendered and not withdrawn in accordance with the terms of the Alternate Offer.

(b)    If the Company or a Restricted Subsidiary consummates any Asset Sales of Collateral, within 10 Business Days after the aggregate amount of Excess Collateral Proceeds exceeds $50.0 million, the Issuers will be required to make an offer (a “Collateral Disposition Offer”) to all Holders of Notes to purchase the maximum principal amount of the Notes (on a pro rata basis) and, if required by the terms of any other Pari Passu Notes-TLB Obligations, to the holders of such Pari Passu Notes-TLB Obligations (on a pro rata basis), to which the Collateral Disposition Offer applies that may be purchased out of the Excess Collateral Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount of the Notes and such other Pari Passu Obligations, plus accrued and unpaid interest, if any, to, but excluding, the date of purchase, in accordance with the procedures set forth in the Indenture in a principal amount of $2,000 or an integral multiple of $1,000 in excess thereof with respect to the
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Notes. To the extent that the aggregate amount of Notes so validly tendered and not properly withdrawn pursuant to a Collateral Disposition Offer (together with, if required by the terms of any other Pari Passu Notes-TLB Obligations, the amount of Pari Passu Notes-TLB Obligations tendered pursuant to any similar requirement), is less than the Excess Collateral Proceeds, the Issuers may use any remaining Excess Collateral Proceeds for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes surrendered by Holders and, if required by the holders of Pari Passu Notes-TLB Obligations, holders of any Pari Passu Notes-TLB Obligations exceeds the amount of Excess Collateral Proceeds, the Notes and Pari Passu Notes-TLB Obligations to be purchased shall be selected by the Trustee on a pro rata basis on the basis of the aggregate principal amount of tendered Notes and Pari Passu Notes-TLB Obligations. Holders of Notes that are the subject of an offer to purchase will receive notice of a Collateral Disposition Offer from the Company prior to any related purchase, prepayment or redemption date and may elect to have such Notes purchased by completing the form entitled “Option of Holder to Elect Purchase” attached to the Notes.

(7    NOTICE OF OPTIONAL REDEMPTION. Notices of optional redemption will be mailed by first-class mail (or in the case of Notes in the form of Global Notes, pursuant to the applicable procedures of DTC) at least 10 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address, except that redemption notices may be sent more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction or discharge of the Indenture with respect to the Notes. The notice of redemption with respect to a redemption pursuant to Section 3.08(b) of the Indenture and paragraph 5(b) herein need not set forth the 2032 Notes Make-Whole Price but only the manner of calculation thereof. Operating LLC will notify the Trustee of the 2032 Notes Make-Whole Price with respect to any redemption promptly after the calculation, and the Trustee shall not be responsible for such calculation. The actions taken by Operating LLC in calculating the 2032 Make-Whole price shall be conclusive absent manifest error. Notes in denominations larger than $2,000 may be redeemed in part but only in whole multiples of $1,000 in excess thereof, unless all of the Notes held by a Holder are to be redeemed.

(8)    DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $2,000 or an integral multiple of $1,000 in excess thereof. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Issuers may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Issuers need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Issuers need not exchange or register the transfer of any Notes for a period of 10 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date.

(9)    PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes.

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(10) AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture, the Notes, the Note Guarantees or the Security Documents (subject to compliance with the Intercreditor Agreements) may be amended or supplemented with the consent of the Holders of a majority in principal amount of the then outstanding Notes and Additional Notes of each series affected by such amendment or supplement, if any, voting as a single class, and any existing Default or Event of Default or compliance with any provision of the Indenture, the Notes or the Note Guarantees may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes and Additional Notes of each series affected by such waiver, if any, voting as a single class. Without the consent of any Holder of a Note, the Indenture, the Notes or the Note Guarantees may be amended or supplemented to: (i) cure any ambiguity, defect, mistake or inconsistency; (ii) provide for uncertificated Notes in addition to or in place of certificated Notes; (iii) provide for the assumption of an Issuer’s or a Guarantor’s obligations to Holders of Notes and Note Guarantees and under the Security Documents in the case of a merger, amalgamation or consolidation or sale of all or substantially all of such Issuer’s or Guarantor’s properties or assets, as applicable; (iv) make any change that would provide any additional rights or benefits to the Holders of Notes or that does not adversely affect the legal rights under the Indenture of any Holder; (v) at the Issuers’ election, comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA, if such qualification is required; (vi) conform the text of the Indenture, the Note Guarantees, the Notes or the Security Documents or the Intercreditor Agreements (as evidenced by an Officers’ Certificate) to any provision of the “Description of the notes” section of the Issuers’ Offering Memorandum dated January 25, 2024, to the extent that such provision in that “Description of the notes” was intended to be a verbatim recitation of a provision of the Indenture, the Notes, the Security Documents, the Intercreditor Agreements or the Note Guarantees; (vii) provide for the issuance of Additional Notes in accordance with the limitations set forth in the Indenture as of the Issue Date; (viii) make, complete or confirm any grant of Collateral permitted or required by the Indenture or the Security Documents or any release, termination or discharge of Collateral that becomes effective as set forth in the Indenture or any of the Security Documents; (ix) add any additional Guarantor or to evidence the release of any Guarantor from its Note Guarantee, in each case as provided in the Indenture; (x) evidence or provide for the acceptance of appointment under the Indenture of a successor Trustee or a successor Collateral Agent; (xi) grant any Lien for the benefit of the holders of any future Pari Passu Notes-TLB Obligations, Pari Passu ABL Obligations, Pari Passu Second Lien Obligations or Junior Lien Obligations in accordance with and as permitted by the terms of the Indenture and the ABL Intercreditor Agreement (and, with respect to Pari Passu Second Lien Indebtedness or Junior Lien Indebtedness, any Pari Passu Second Lien Intercreditor Agreement or Junior Lien Intercreditor Agreement, as applicable); (xii) add additional secured parties to the Intercreditor Agreements to the extent Liens securing obligations held by such parties are permitted under the Indenture; (xiii) mortgage, pledge, hypothecate or grant a security interest in favor of the Collateral Agent for the benefit of the Trustee and the Holders of the Notes as additional security for the payment and performance of the Issuers’ and any Guarantor’s obligations under the Indenture, in any property, or assets, including any of which are required to be mortgaged, pledged or hypothecated, or in which a security interest is required to be granted to the Trustee or the Collateral Agent in accordance with the terms of the Indenture or otherwise; or (xiv) provide for the succession of any parties to the Security Documents (and other amendments that are administrative or ministerial in nature) and the Intercreditor Agreements in connection with an amendment, renewal, extension, substitution, refinancing, restructuring, replacement, supplementing or other modification from time to time of any agreement in accordance with the terms of the Indenture, the ABL Intercreditor Agreement and the relevant Security Documents.

(11)    DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest, if any, on the Notes; (ii) default in the payment when due (at maturity, upon redemption or otherwise) of the principal of, or premium, if any, on, the Notes; (iii) failure by the Company to comply with its obligations under Section 5.01 of the Indenture or to consummate a purchase of Notes when required pursuant to Sections 4.10 or 4.14 of the Indenture; (iv) failure by the Company or any of its Restricted Subsidiaries for 30 days after written notice from the Trustee or the Holders of
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at least 30% in aggregate principal amount of the then outstanding Notes to comply with the provisions of Section 4.07 or Section 4.09 of the Indenture or to comply with the provisions of Section 4.10 or Section 4.14 of the Indenture to the extent not described in the immediately preceding clause (iii); (v) (a) except as addressed in subclause (b) of this clause (v), failure by the Company or any of its Restricted Subsidiaries for 60 days after written notice from the Trustee or the Holders of at least 30% in aggregate principal amount of the then outstanding Notes to comply with any of the other agreements in the Indenture or this Note or (b) failure by the Company for 180 days after notice from the Trustee or the Holders of at least 30% in aggregate principal amount of the then outstanding Notes of the applicable series to comply with Section 4.03 of the Indenture; (vi) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or Guarantee now exists, or is created after the Issue Date, if that default: (a) is caused by a failure to pay principal of, premium, if any, on, or interest, if any, on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a “Payment Default”); or (b) results in the acceleration of such Indebtedness prior to its Stated Maturity, and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $100.0 million or more; provided that if, prior to any acceleration of the Notes, (1) any such default is cured or waived, (2) any such acceleration of such Indebtedness is rescinded, or (3) such Indebtedness is repaid, within a period of 10 Business Days from the continuation of such default beyond the applicable grace period or the occurrence of such acceleration, as the case may be, any Default or Event of Default (but not any acceleration of the Notes) shall be automatically rescinded, so long as such rescission does not conflict with any judgment or decree; (vii) failure by the Company or any Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary to pay final, non-appealable judgments (entered by a court or courts of competent jurisdiction) aggregating in excess of $100.0 million (net of any amounts that a reputable and creditworthy insurance company has acknowledged liability for in writing), which judgments are not paid, discharged or stayed for a period of 60 days; (viii) except as permitted by the Indenture, any Note Guarantee is held in any judicial proceeding to be unenforceable or invalid or ceases for any reason to be in full force and effect, or any Guarantor, or any Person acting on behalf of any Guarantor, denies or disaffirms its obligations under its Note Guarantee, except, in each case, by reason of the release of such Note Guarantee in accordance with the Indenture; (ix) an Issuer or any of the Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law (a) commences a voluntary case, (b) consents to the entry of an order for relief against it in an involuntary case, (c) consents to the appointment of a custodian of it or for all or substantially all of its property, (d) makes a general assignment for the benefit of its creditors, or (e) generally is not paying its debts as they become due; (x) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (a) is for relief against any Issuer or any of the Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary in an involuntary case, (b) appoints a custodian of any Issuer or any of the Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary or for all or substantially all of the property of an Issuer or any of the Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary; or (c) orders the liquidation of an Issuer or any of the Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary, and the order or decree remains unstayed and in effect for 60 consecutive days.
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In the case of an Event of Default specified in the immediately preceding clause (ix) or clause (x), with respect to either Issuer or any of the Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary, all then outstanding Notes will become due and payable immediately without further action or notice (subject to applicable law); (xi)(i) the Liens created by any Security Document shall at any time not constitute a valid and perfected Lien on any Collateral intended to be covered thereby with a Fair Market Value, individually or in the aggregate, in excess of $50.0 million other than (A) in accordance with the terms of the relevant Security Documents and the Indenture, (B) the satisfaction in full of all Obligations under the Indenture or (C) any loss of perfection that results from the failure of the Collateral Agent to maintain possession of certificates delivered to it representing securities pledged under the Security Documents, and which default continues for 30 days; (ii) the repudiation by any Issuer or any Guarantor in any pleading in any court of competent jurisdiction of any of its material obligations under the Security Documents or to file UCC continuation statements or PPSA financing change statements; or (xii) any Issuer or any Guarantor shall assert, in any pleading in any court of competent jurisdiction, that any security interest in any Security Document is invalid or unenforceable other than by reason of the termination of the Indenture or the release of any such Collateral in accordance with the Indenture. If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 30% in aggregate principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately by notice in writing to the Company and, in the case of a notice by Holders, also to the Trustee specifying the respective Event of Default and that it is a notice of acceleration. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal of, premium, if any, or interest, if any, on, any Note) if it in good faith determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may, on behalf of the Holders of all of the Notes , rescind an acceleration and its consequences if the rescission would not violate any judgment or decree and if all existing Events of Default (except nonpayment of principal, interest or premium, if any, that has become due solely because of the acceleration) have been cured or waived. The Issuers are required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Issuers are required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default.

(12)    TRUSTEE DEALINGS WITH THE ISSUERS. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for any Issuer or its Affiliates, and may otherwise deal with any Issuer or its Affiliates, as if it were not the Trustee.

(13)     NO RECOURSE AGAINST OTHERS. None of the General Partner or any director, officer, partner, employee, incorporator, manager, unitholder or other owner of Capital Stock of the General Partner, the Issuers or any Guarantor, as such, will have any liability for any obligations of the Issuers or such Guarantor under the Notes, the Note Guarantees or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes.

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(14)    AUTHENTICATION. This Note will not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

(15    ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

(16)    CUSIP AND ISIN NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuers have caused CUSIP and ISIN numbers to be printed on the Notes and the Trustee may use CUSIP and ISIN numbers in notices of redemption or repurchase as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption or repurchase and reliance may be placed only on the other identification numbers placed thereon.

(17)    GOVERNING LAW. THE LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THIS NOTE AND THE NOTE GUARANTEES.

The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to:

NGL Energy Partners LP
6120 South Yale Avenue, Suite 1300
Tulsa, Oklahoma 74136
Telecopier No.: (918) 481-5896
Attention: Chief Financial Officer
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ASSIGNMENT FORM

To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to:                                (Insert assignee’s legal name)

                                                        
(Insert assignee’s soc. sec. or tax I.D. no.)

                                                        

                                                        

                                                        
(Print or type assignee’s name, address and zip code)

and irrevocably appoint ________________________________________________________________________        
to transfer this Note on the books of the Issuers. The agent may substitute another to act for him.

Date:                        

Your Signature:                         
(Sign exactly as your name appears on the face of this Note)


Signature Guarantee*:                

*    Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).
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OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or Section 4.14 of the Indenture, check the appropriate box below:

☐ Section 4.10        ☐ Section 4.14

If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the amount you elect to have purchased:

$
Date:                         

Your Signature:                     
(Sign exactly as your name appears on the face of this Note)


Tax Identification No.:                 


Signature Guarantee*:                

*    Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).
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SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*

The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

Date of Exchange Amount of
decrease in
Principal
Amount of this
Global Note		 Amount of
increase in
Principal
Amount of this
Global Note		 Principal
Amount of this
Global Note
following such
decrease (or
increase)		 Signature of
authorized
officer of
Trustee or
Custodian

* This schedule should be included only if the Note is issued in global form.

A-13

EXHIBIT B

FORM OF CERTIFICATE OF TRANSFER

NGL Energy Partners LP
6120 South Yale Avenue, Suite 1300
Tulsa, Oklahoma 74136

U.S. Bank Trust Company, National Association
13737 Noel Road, Suite 800
Dallas, TX 75240
Attention: Global Corporate Trust Services

Re: [8.125% Senior Secured Notes due 2029][8.375% Senior Secured Notes due 2032]

Reference is hereby made to the Indenture, dated as of February 2, 2024 (the “Indenture”), among NGL Energy Operating LLC and NGL Energy Finance Corp., as issuers (the “Issuers”), the Guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee and collateral agent. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

, (the “Transferor”) owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $ in such Note[s] or interests (the “Transfer”), to (the “Transferee”), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that:

[CHECK ALL THAT APPLY]

1. Check if Transferee will take delivery of a beneficial interest in the 144A Global Note or a Restricted Definitive Note pursuant to Rule 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A, and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Restricted Definitive Note and in the Indenture and the Securities Act.

2. Check if Transferee will take delivery of a beneficial interest in the Regulation S Global Note or a Restricted Definitive Note pursuant to Regulation S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a Person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, (x) the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person and (y) the interest transferred will be held immediately thereafter through Euroclear or Clearstream. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Note and/or the Restricted Definitive Note and in the Indenture and the Securities Act.
B-1


3. Check and complete if Transferee will take delivery of a beneficial interest in the IAI Global Note or a Restricted Definitive Note pursuant to any provision of the Securities Act other than Rule 144A or Regulation S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):

(a) such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act;
or

(b) such Transfer is being effected to an Issuer or a subsidiary thereof;
or

(c) such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act;
or

(d) such Transfer is being effected to an Institutional Accredited Investor and pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144, Rule 903 or Rule 904, and the Transferor hereby further certifies that it has not engaged in any general solicitation within the meaning of Regulation D under the Securities Act and the Transfer complies with the transfer restrictions applicable to beneficial interests in a Restricted Global Note or Restricted Definitive Notes and the requirements of the exemption claimed, which certification is supported by (1) a certificate executed by the Transferee in the form of Exhibit D to the Indenture and (2) if such Transfer is in respect of a principal amount of Notes at the time of transfer of less than $250,000, an Opinion of Counsel provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that such Transfer is in compliance with the Securities Act. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the IAI Global Note and/or the Restricted Definitive Notes and in the Indenture and the Securities Act.

(4) Check if Transferee will take delivery of a beneficial interest in an Unrestricted Global Note or of an Unrestricted Definitive Note.

(a) Check if Transfer is pursuant to Rule 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

(b) Check if Transfer is Pursuant to Regulation S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.
B-2


(c) Check if Transfer is Pursuant to Other Exemption. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.

This certificate and the statements contained herein are made for your benefit and the benefit of the Issuers.

                                
[Insert Name of Transferor]


By:                                 
Name:
Title:


Dated:                         
B-3


ANNEX A TO CERTIFICATE OF TRANSFER

1. The Transferor owns and proposes to transfer the following:

[CHECK ONE OF (a) OR (b)]

(a) a beneficial interest in the:

(i) 144A Global Note (CUSIP [●]), or

(ii) Regulation S Global Note (CUSIP [●]), or

(b) a Restricted Definitive Note.

2. After the Transfer the Transferee will hold:

[CHECK ONE]

(a) a beneficial interest in the:

(i) 144A Global Note (CUSIP [●]), or

(ii) Regulation S Global Note (CUSIP [●]), or

(iii) IAI Global Note (CUSIP [●]), or

(iv) Unrestricted Global Note (CUSIP [●]), or

(b) a Restricted Definitive Note; or

(c) a Restricted Definitive Note,

in accordance with the terms of the Indenture.

B-4

EXHIBIT C

FORM OF CERTIFICATE OF EXCHANGE

NGL Energy Partners LP
6120 South Yale Avenue, Suite 1300
Tulsa, Oklahoma 74136

U.S. Bank Trust Company, National Association
13737 Noel Road, Suite 800
Dallas, TX 75240
Attention: Global Corporate Trust Services

Re: [8.125% Senior Secured Notes due 2029 CUSIP: ][8.375% Senior Secured Notes due 2032 CUSIP: ]

Reference is hereby made to the Indenture, dated as of February 2, 2024 (the “Indenture”), among NGL Energy Operating LLC and NGL Energy Finance Corp., as issuers (the “Issuers”), the Guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee and collateral agent. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

, (the “Owner”) owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $ in such Note[s] or interests (the “Exchange”). In connection with the Exchange, the Owner hereby certifies that:

1. Exchange of Restricted Definitive Notes or Beneficial Interests in a Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests in an Unrestricted Global Note

(a) Check if Exchange is from beneficial interest in a Restricted Global Note to beneficial interest in an Unrestricted Global Note. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the Securities Act of 1933, as amended (the “Securities Act”), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(b) Check if Exchange is from beneficial interest in a Restricted Global Note to Unrestricted Definitive Note. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(c) Check if Exchange is from Restricted Definitive Note to beneficial interest in an Unrestricted Global Note. In connection with the Owner’s Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
C-1


(d) Check if Exchange is from Restricted Definitive Note to Unrestricted Definitive Note. In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes

(a) Check if Exchange is from beneficial interest in a Restricted Global Note to Restricted Definitive Note. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.

(b) Check if Exchange is from Restricted Definitive Note to beneficial interest in a Restricted Global Note. In connection with the Exchange of the Owner’s Restricted Definitive Note for a beneficial interest in the [CHECK ONE] 144A Global Note, Regulation S Global Note, IAI Global Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.

This certificate and the statements contained herein are made for your benefit and the benefit of the Issuers.

                                
[Insert Name of Transferor]


By:                                
Name:
Title:


Dated                         
C-2

EXHIBIT D

FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

NGL Energy Partners LP
6120 South Yale Avenue, Suite 1300
Tulsa, Oklahoma 74136

U.S. Bank Trust Company, National Association
13737 Noel Road, Suite 800
Dallas, TX 75240
Attention: Global Corporate Trust Services

Re: [8.125% Senior Secured Notes due 2029][8.375% Senior Secured Notes due 2032]

Reference is hereby made to the Indenture, dated as of February 2, 2024 (the “Indenture”), among NGL Energy Operating LLC and NGL Energy Finance Corp., as issuers (the “Issuers”), the Guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee and collateral agent. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

In connection with our proposed purchase of $ aggregate principal amount of:

(a) a beneficial interest in a Global Note, or

(b) a Definitive Note,

we confirm that:

1. We understand that any subsequent transfer of the Notes or any interest therein is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the “Securities Act”).

2. We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes and any interest therein may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell the Notes or any interest therein, we will do so only (A) to an Issuer or any subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to a “qualified institutional buyer” (as defined therein), (C) to an institutional “accredited investor” (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Issuers a signed letter substantially in the form of this letter and, if such transfer is in respect of a principal amount of Notes, at the time of transfer of less than $250,000, an Opinion of Counsel in form reasonably acceptable to the Issuers to the effect that such transfer is in compliance with the Securities Act, (D) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, or (E) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any Person purchasing the Definitive Note or beneficial interest in a Global Note from us in a transaction meeting the requirements of clauses (A) through (D) of this paragraph a notice advising such purchaser that resales thereof are restricted as stated herein.

3. We understand that, on any proposed resale of the Notes or beneficial interest therein, we will be required to furnish to you and the Issuers such certifications, legal opinions and other information as you and the Issuers may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us will bear a legend to the foregoing effect.
D-1

4. We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment.

5. We are acquiring the Notes or beneficial interest therein purchased by us for our own account or for one or more accounts (each of which is an institutional “accredited investor”) as to each of which we exercise sole investment discretion.

You and the Issuers are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby.

                                
[Insert Name of Accredited Investor]


By:                                
Name:
Title:


Dated:                         
D-2

EXHIBIT E

FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS

SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of , 20 , among (the “Guaranteeing Subsidiary”), a subsidiary (or a permitted successor thereof) of NGL Energy Operating LLC (“NGL LP”), a Delaware limited liability company, or NGL Energy Finance Corp. (“Finance Corp.,” and, together with NGL LP, the “Issuers”), a Delaware corporation, the Issuers, the other Guarantors (as defined in the Indenture referred to herein) and U.S. Bank Trust Company, National Association, as trustee and collateral agent under the Indenture referred to below (the “Trustee”).

W I T N E S S E T H

WHEREAS, the Issuers have heretofore executed and delivered to the Trustee an indenture (the “Indenture”), dated as of February 2, 2024 providing for the issuance of 8.125% Senior Secured Notes due 2029 (the “2029 Notes”) and 8.375% Senior Secured Notes due 2032 (the “2032 Notes,” together with the 2029 Notes, the “Notes”);

WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuers’ Obligations under the Notes of each series and the Indenture on the terms and conditions set forth herein (the “Note Guarantee”); and

WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of Notes of each series as follows:

1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees to provide an unconditional Guarantee on the terms and subject to the conditions set forth in the Note Guarantee and in the Indenture including but not limited to Article X thereof.

3. EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary agrees that the Note Guarantees shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Note Guarantee.

4. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, partner, employee, incorporator, organizer, manager, unitholder or other owner of Capital Stock (as defined in the Indenture) of the Guaranteeing Subsidiary or agent thereof, as such, shall have any liability for any obligations of the Issuers, the Guarantors, the Guaranteeing Subsidiary or any other Subsidiary of an Issuer providing a Note Guarantee under the Notes, any Note Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes of each series by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy.

5. NEW YORK LAW TO GOVERN. THE LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE.
E-1

6. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

7. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof.

8. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Issuers.
E-2



IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written.

Dated: , 20

[GUARANTEEING SUBSIDIARY]


By:                                
Name:
Title:


NGL ENERGY OPERATING LLC


By                                 
Name:
Title:


NGL ENERGY FINANCE CORP.


By:                                
Name:
Title:


[EXISTING GUARANTORS]


By:                                
Name:
Title:


U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as
Trustee and Collateral Agent


By                                 
Authorized Signatory
E-3
EX-4.16 3 ex41603312510k.htm EX-4.16 Document

Exhibit 4.16

SECOND SUPPLEMENTAL INDENTURE
8.125% Senior Secured Notes due 2029
8.375% Senior Secured Notes due 2032

SECOND SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of May 21, 2025, among NGL Crude Assets and Marketing, LLC, a Delaware limited liability company (the “Guaranteeing Subsidiary”), a subsidiary (or a permitted successor thereof) of NGL Energy Operating LLC (“NGL LP”), a Delaware limited liability company, or NGL Energy Finance Corp. (“Finance Corp.,” and, together with NGL LP, the “Issuers”), a Delaware corporation, the Issuers, the other Guarantors (as defined in the Indenture referred to herein) and U.S. Bank Trust Company, National Association, as trustee and collateral agent under the Indenture referred to below (the “Trustee”).
W I T N E S S E T H
WHEREAS, the Issuers have heretofore executed and delivered to the Trustee an indenture, dated as of February 2, 2024, as amended by the Supplemental Indenture, dated as of April 29, 2024 (collectively, the “Indenture”), providing for the issuance of 8.125% Senior Secured Notes due 2029 (the “2029 Notes”) and 8.375% Senior Secured Notes due 2032 (the “2032 Notes,” together with the 2029 Notes, the “Notes”);

WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuers’ Obligations under the Notes of each series and the Indenture on the terms and conditions set forth herein (the “Note Guarantee”);

WHEREAS, Section 9.01(9) of the Indenture provides in part that the Indenture may be amended or supplemented without the consent of any Holder of Notes to add any additional Guarantor;

WHEREAS, pursuant to Section 9.01 of the Indenture the Issuers have requested the Trustee to join the Issuers and the Guarantors in the execution and delivery of this Supplemental Indenture in order to amend the Indenture as permitted by Section 9.01(9) of the Indenture; and

WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of Notes of each series as follows:

1.CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

2.AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees to provide an unconditional Guarantee on the terms and subject to the conditions set forth in the Note Guarantee and in the Indenture including but not limited to Article X thereof.

3.EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary agrees that the Note Guarantees shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Note Guarantee.

4.NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, partner, employee, incorporator, organizer, manager, unitholder or other owner of Capital Stock (as defined in the Indenture) of the Guaranteeing Subsidiary or agent thereof, as such, shall have any liability for any obligations of the Issuers, the Guarantors, the Guaranteeing Subsidiary or any other Subsidiary of an Issuer providing a Note Guarantee under the Notes, any Note Guarantees, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes of each series by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy.

1


5.NEW YORK LAW TO GOVERN. THE LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE

6.COUNTERPARTS. Each signed copy will be an original, but all of them together represent the same agreement. The exchange of signed copies of this Supplemental Indenture by facsimile transmission or emailed portable document format (pdf) shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and such copies may be used in lieu of the original Indenture for all purposes.

7.EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof.

8.THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Issuers.

2

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written.

Dated: May 21, 2025

NGL CRUDE ASSETS AND MARKETING, LLC


By:    /s/ Brad Cooper
Name:    Brad Cooper
Title:    Executive Vice President and Chief Financial Officer


NGL ENERGY OPERATING LLC


By:    /s/ Brad Cooper
Name:    Brad Cooper
Title:    Executive Vice President and Chief Financial Officer


NGL ENERGY FINANCE CORP.


By:    /s/ Brad Cooper
Name:    Brad Cooper
Title:    Executive Vice President and Chief Financial Officer
[Signature Page to Second Supplemental Indenture]


GUARANTORS:

ANTICLINE DISPOSAL, LLC
AWR DISPOSAL, LLC
CENTENNIAL ENERGY, LLC
CENTENNIAL GAS LIQUIDS ULC
CHOYA OPERATING, LLC
DISPOSALS OPERATING, LLC
GGCOF HEP BLOCKER, LLC
GGCOF HEP BLOCKER II, LLC
GRAND MESA PIPELINE, LLC
GSR NORTHEAST TERMINALS LLC
HILLSTONE ENVIRONMENTAL PARTNERS, LLC
NGL CRUDE CUSHING, LLC
NGL CRUDE TERMINALS, LLC
NGL CRUDE TRANSPORTATION, LLC
NGL DELAWARE BASIN HOLDINGS, LLC
NGL ENERGY GP LLC
NGL LIQUIDS, LLC
NGL MARINE, LLC
NGL RECYCLING SERVICES, LLC
NGL SHARED SERVICES HOLDINGS, INC.
NGL SHARED SERVICES, LLC
NGL SUPPLY TERMINAL COMPANY, LLC
NGL SUPPLY WHOLESALE, LLC
NGL WATER PIPELINES, LLC
NGL WATER SOLUTIONS, LLC
NGL WATER SOLUTIONS DJ, LLC
NGL WATER SOLUTIONS EAGLE FORD, LLC
NGL WATER SOLUTIONS - ORLA SWD, LLC
NGL WATER SOLUTIONS PERMIAN, LLC
NGL WATER SOLUTIONS PRODUCT SERVICES, LLC


By:    /s/ Brad Cooper
Name:    Brad Cooper
Title:    Executive Vice President and Chief Financial Officer
[Signature Page to Second Supplemental Indenture]




U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee and Collateral Agent


By:    /s/ Michael K. Herberger
Name:    Michael K. Herberger
Title:    Vice President

[Signature Page to Second Supplemental Indenture]
EX-4.20 4 ex42003312510k.htm EX-4.20 Document

Exhibit 4.20

DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934

NGL Energy Partners LP (“NGL”), a limited partnership, has three classes of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), each of which is listed on the New York Stock Exchange (“NYSE”), as set forth in the table below:
Title of Class Trading Symbol Exchange
Common Units (“Common Units”) NGL NYSE
Class B fixed-to-floating rate cumulative redeemable perpetual preferred units (“Class B Preferred Units”) NGL-PB NYSE
Class C fixed-to-floating rate cumulative redeemable perpetual preferred units (“Class C Preferred Units”) NGL-PC NYSE

The following summary of the material terms of our Common Units, Class B Preferred Units and Class C Preferred Units is based upon our Seventh Amended and Restated Limited Partnership, dated October 31, 2019, as may be amended or amended and restated from time to time (the “Partnership Agreement”) relating to our outstanding classes of partnership interests. The summary is not complete and is qualified by reference to our Partnership Agreement, which we have incorporated by reference as an exhibit to this Annual Report on Form 10-K of which this exhibit is a part.

Description of Common Units

The Common Units represent limited partner interests that entitle the holders to participate in NGL’s partnership distributions and exercise the rights or privileges available to limited partners under our Partnership Agreement.

Listing

Our Common Units are traded on the NYSE under the symbol “NGL.” Any additional Common Units that we issue also will be traded on the NYSE.

Voting Rights

Each holder of Common Units is entitled to one vote for each unit on all matters submitted to a vote of the Common Unitholders, subject to any limitations contained in the Partnership Agreement. See “The Partnership Agreement—Voting Rights” below.

Cash Distributions

Our Partnership Agreement provides for a minimum quarterly distribution of $0.3375 per Common Unit per complete quarter, or $1.35 per unit on an annualized basis, subject to adjustments. Quarterly distributions, if any, will be paid within 45 days after the end of each quarter. Our ability to make cash distributions equal to the minimum quarterly distribution will be subject to various factors, including those described under “Risk Factors” in our annual and quarterly filings with the Securities and Exchange Commission (“SEC”). See “Our Cash Distribution Policy” below.

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Transfer Agent and Registrar

Duties. Equiniti Trust Company (formerly Wells Fargo Bank, National Association) serves as the registrar and transfer agent for the Common Units. We will pay all fees charged by the transfer agent for transfers of Common Units, except the following that must be paid by unitholders:

• surety bond premiums to replace lost or stolen certificates, taxes and other governmental charges in connection therewith;

• special charges for services requested by a common unitholder; and

• other similar fees or charges.

There will be no charge to our unitholders for disbursements of our cash distributions. We will indemnify the transfer agent, its agents and each of their stockholders, directors, officers and employees against all claims and losses that may arise out of acts performed or omitted for its activities in that capacity, except for any liability due to any gross negligence or intentional misconduct of the indemnified person or entity.

Resignation or Removal. The transfer agent may resign, by notice to us, or be removed by us. The resignation or removal of the transfer agent will become effective upon our appointment of a successor transfer agent and registrar and its acceptance of the appointment. If no successor is appointed, our general partner may act as the transfer agent and registrar until a successor is appointed.

Transfer of Common Units

By transfer of Common Units in accordance with our Partnership Agreement, each transferee of Common Units shall be admitted as a limited partner with respect to the Common Units transferred when such transfer and admission are reflected in our books and records. Each transferee:

• automatically becomes bound by the terms and conditions of, and is deemed to have executed, our Partnership Agreement;

• represents that the transferee has the capacity, power and authority to become bound by our Partnership Agreement; and

• gives the consents, waivers and approvals contained in our Partnership Agreement.

Our general partner, NGL Energy Holdings LLC, will cause any transfers to be recorded on our books and records from time to time as necessary to accurately reflect the transfers.

We may, at our discretion, treat the nominee holder of a Common Unit as the absolute owner. In that case, the beneficial holder’s rights are limited solely to those that it has against the nominee holder as a result of any agreement between the beneficial owner and the nominee holder.

Common Units are securities, and any transfers are subject to the laws governing the transfer of securities. In addition to other rights acquired upon transfer, the transferor gives the transferee the right to become a substituted limited partner in our partnership for the transferred Common Units.

Until a Common Unit has been transferred on our books, we and the transfer agent may treat the record holder of the unit as the absolute owner for all purposes, except as otherwise required by law or stock exchange regulations.

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DESCRIPTION OF PREFERRED UNITS

The Class B Preferred Units and Class C Preferred Units represent limited partner interests that entitle the holders to receive cash distributions and to exercise rights and privileges set forth in the Partnership Agreement. Please read “The Partnership Agreement” below. 

Class B Preferred Units

On June 13, 2017, we issued 8,400,000 of our 9.00% Class B Preferred Units, liquidation preference $25.00 per Class B Preferred Unit, representing limited partner interests in us. On July 2, 2019, we issued 4,185,642 Class B Preferred Units in a private placement transaction pursuant to the terms of that certain Asset Purchase and Sale Agreement, dated as of May 13, 2019, by and among our wholly owned subsidiary, Mesquite Disposals Unlimited, LLC and Mesquite SWD, Inc.

Distributions. Distributions on the Class B Preferred Units are cumulative from date of issuance and will be payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year, when, as and if declared by our general partner out of legally available funds for such purpose. Distributions on the Class B Preferred Units are paid on an equal priority basis with distributions on outstanding parity securities, if any. Distributions are paid to holders of record as of the opening of business on the January 1, April 1, July 1 or October 1 next preceding the distribution payment date. The initial distribution rate for the Class B Preferred Units from and including the date of issuance to, but not including, July 1, 2022, will be 9.00% per annum of the $25.00 liquidation preference per unit (equal to $2.25 per Class B Preferred Unit per annum). On and after July 1, 2022, distributions on the Class B Preferred Units will accumulate for each quarterly distribution period at a percentage of the $25.00 liquidation preference equal to the applicable Class B Three-Month LIBOR (as defined in our Partnership Agreement) plus a spread of 721.3 basis points.

No distribution may be declared or paid or set apart for payment on any junior securities (other than a distribution payable solely in junior securities), unless full cumulative distributions have been or contemporaneously are being paid or provided for on all outstanding Class B Preferred Units and any parity securities through the most recent respective distribution payment dates.

Redemption. At any time on or after July 1, 2022, we will have the right to redeem, in whole or in part, the Class B Preferred Units at a redemption price in cash of $25.00 per Class B Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but not including, the date of redemption, regardless of whether declared. We must provide not less than 30 days’ and not more than 60 days’ advance written notice of any such redemption.

Change of Control. Upon the occurrence of a Class B Change of Control (as defined in our Partnership Agreement), we will have the right, at our option, to redeem the Class B Preferred Units, in whole or in part, within 120 days after the first date on which such Class B Change of Control occurred, by paying $25.00 per Class B Preferred Unit, plus all accumulated and unpaid distributions to, but not including, the date of redemption, regardless of whether declared. If, prior to the Class B Change of Control Conversion Date (as defined in our Partnership Agreement), we exercise our redemption rights relating to Class B Preferred Units, holders of the Class B Preferred Units that we elected to redeem will not have the conversion right related to a Class B Change of Control.

Upon the occurrence of a Class B Change of Control, each holder of Class B Preferred Units will have the right (unless, prior to the Class B Change of Control Conversion Date, we provide notice of our election to redeem the Class B Preferred Units) to convert some or all of the Class B Preferred Units held by such holder on the Change of Class B Change of Control Conversion Date into a number of common units per Class B Preferred Unit to be converted equal to the lesser of (a) the quotient obtained by dividing (i) the sum of the $25.00 liquidation preference plus the amount of any accumulated and unpaid distributions to, but not including, the Class B Change of Control Conversion Date (unless the Class B Change of Control Conversion Date is after a record date for a Class B Preferred Unit distribution payment and prior to the corresponding Class B Distribution Payment Date, in which case no additional amount for such accumulated and unpaid distribution will be included in this sum) by (ii) the common unit price, and (b) 3.63636, subject, in each case, to certain exceptions and adjustments.
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Voting. The Class B Preferred Units will have no voting rights, except as set forth below or as otherwise provided by Delaware law. Unless we have received the affirmative vote or consent of the holders of at least two-thirds of the outstanding Class B Preferred Units, voting as a separate class, we cannot adopt any amendment to our Partnership Agreement that has a material adverse effect on the terms of the Class B Preferred Units. In addition, unless we have received the affirmative vote or consent of the holders of at least two-thirds of the outstanding Class B Preferred Units, voting as a single class with holders of any future parity securities upon which like voting rights have been conferred and are exercisable, we may not (a) create or issue any additional parity securities if the cumulative distributions payable on the then-outstanding Class B Preferred Units or parity securities are in arrears or (b) create or issue any senior securities. On any matter described above on which the holders of the Class B Preferred Units are entitled to vote as a class, such holders will be entitled to one vote per Class B Preferred Unit.

Liquidation. Any amounts distributed by us upon a liquidation will be made to our partners in accordance with their respective positive capital account balances. The holders of outstanding Class B Preferred Units will be specially allocated items of our gross income and gain in a manner designed to achieve, in the event of any liquidation, dissolution or winding up of the Partnership’s affairs, whether voluntary or involuntary, a capital account balance equal to the liquidation preference of $25.00 per Class B Preferred Unit (subject to adjustment for any splits, combinations or similar adjustment to the Class B Preferred Units). However, if the amount of the our gross income and gain available to be specially allocated to the Class B Preferred Units is not sufficient to cause the capital account of a Class B Preferred Unit to equal the liquidation preference of a Class B Preferred Unit, then the amount that a holder of Class B Preferred Units would receive upon liquidation may be less than the Class B Preferred Unit liquidation preference. Any accumulated and unpaid distributions on the Class B Preferred Units will be paid prior to any distributions in liquidation made in accordance with capital accounts.

Class C Preferred Units

On April 2, 2019, we issued 1,800,000 of our 9.625% Class C Preferred Units, liquidation preference $25.00 per Class C Preferred Unit, representing limited partner interests in us.

Distributions. Distributions on the Class C Preferred Units are cumulative from date of issuance and will be payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year, when, as and if declared by our general partner out of legally available funds for such purpose. Distributions on the Class C Preferred Units are paid on an equal priority basis with distributions on outstanding parity securities, if any. Distributions are paid to holders of record as of the opening of business on the January 1, April 1, July 1 or October 1 next preceding the distribution payment date. The initial distribution rate for the Class C Preferred Units from and including the date of issuance to, but not including, April 15, 2024, will be 9.625% per annum of the $25.00 liquidation preference per Class C Preferred Unit (equal to $2.40625 per Class C Preferred Unit per annum). On and after April 15, 2024, distributions on the Class C Preferred Units will accumulate for each quarterly distribution period at a percentage of the $25.00 liquidation preference equal to the applicable Class C Three-Month LIBOR (as defined in our Partnership Agreement) plus a spread of 738.4 basis points.

No distribution may be declared or paid or set apart for payment on any junior securities (other than a distribution payable solely in junior securities), unless full cumulative distributions have been or contemporaneously are being paid or provided for on all outstanding Class C Preferred Units and any parity securities through the most recent respective distribution payment dates.

Redemption. At any time on or after April 15, 2024, we will have the right to redeem, in whole or in part, the Class C Preferred Units at a redemption price in cash of $25.00 per Class C Preferred Unit plus an amount equal to all accumulated and unpaid distributions thereon to, but not including, the date of redemption, regardless of whether declared. We must provide not less than 30 days’ and not more than 60 days’ advance written notice of any such redemption.

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Change of Control. Upon the occurrence of a Class C Change of Control (as defined in our Partnership Agreement), we will have the right, at our option, to redeem the Class C Preferred Units, in whole or in part, within 120 days after the first date on which such Class C Change of Control occurred, by paying $25.00 per Class C Preferred Unit, plus all accumulated and unpaid distributions to, but not including, the date of redemption, regardless of whether declared. If, prior to the Class C Change of Control Conversion Date (as defined in our Partnership Agreement), we exercise our redemption rights relating to Class C Preferred Units, holders of the Class C Preferred Units that we elected to redeem will not have the conversion right related to a Class C Change of Control.

Upon the occurrence of a Class C Change of Control, each holder of Class C Preferred Units will have the right (unless, prior to the Class C Change of Control Conversion Date, we provide notice of our election to redeem the Class C Preferred Units) to convert some or all of the Class C Preferred Units held by such holder on the Change of Class C Change of Control Conversion Date into a number of Common Units per Class C Preferred Unit to be converted equal to the lesser of (a) the quotient obtained by dividing (i) the sum of the $25.00 liquidation preference plus the amount of any accumulated and unpaid distributions to, but not including, the Class C Change of Control Conversion Date (unless the Class C Change of Control Conversion Date is after a record date for a Class C Preferred Unit distribution payment and prior to the corresponding Class C Distribution Payment Date, in which case no additional amount for such accumulated and unpaid distribution will be included in this sum) by (ii) the Common Unit price, and (b) 3.5791, subject, in each case, to certain exceptions and adjustments.

Voting. The Class C Preferred Units will have no voting rights, except as set forth below or as otherwise provided by Delaware law. Unless we have received the affirmative vote or consent of the holders of at least two-thirds of the outstanding Class C Preferred Units, voting as a separate class, we cannot adopt any amendment to our Partnership Agreement that has a material adverse effect on the terms of the Class C Preferred Units. In addition, unless we have received the affirmative vote or consent of the holders of at least two-thirds of the outstanding Class C Preferred Units, voting as a single class with holders of any future parity securities upon which like voting rights have been conferred and are exercisable, we may not (a) create or issue any additional parity securities if the cumulative distributions payable on the then-outstanding Class C Preferred Units or parity securities are in arrears or (b) create or issue any senior securities. On any matter described above on which the holders of the Class C Preferred Units are entitled to vote as a class, such holders will be entitled to one vote per Class C Preferred Unit.

Liquidation. Any amounts distributed by us upon a liquidation will be made to our partners in accordance with their respective positive capital account balances. The holders of outstanding Class C Preferred Units will be specially allocated items of our gross income and gain in a manner designed to achieve, in the event of any liquidation, dissolution or winding up of the Partnership's affairs, whether voluntary or involuntary, a capital account balance equal to the liquidation preference of $25.00 per Class C Preferred Unit (subject to adjustment for any splits, combinations or similar adjustment to the Class C Preferred Units). However, if the amount of the our gross income and gain available to be specially allocated to the Class C Preferred Units is not sufficient to cause the capital account of a Class C Preferred Unit to equal the liquidation preference of a Class C Preferred Unit, then the amount that a holder of Class C Preferred Units would receive upon liquidation may be less than the Class C Preferred Unit liquidation preference. Any accumulated and unpaid distributions on the Class C Preferred Units will be paid prior to any distributions in liquidation made in accordance with capital accounts.



OUR CASH DISTRIBUTION POLICY
General

We have summarized below selected provisions of our Partnership Agreement. However, because this summary is not complete it is subject to and is qualified in its entirety by reference to our Partnership Agreement. We suggest that you read the complete text of our Partnership Agreement, which we have incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this exhibit is a part.

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Our Minimum Quarterly Distribution

Our Partnership Agreement provides for a minimum quarterly distribution of $0.3375 per Common Unit per complete quarter, or $1.35 per unit on an annualized basis, subject to adjustments. Quarterly distributions, if any, will be paid within 45 days after the end of each quarter. Our ability to make cash distributions equal to the minimum quarterly distribution will be subject to various factors, including those described under “Risk Factors” in our annual and quarterly filings with the SEC.

Our general partner currently is entitled to 0.1% of all distributions that we make prior to our liquidation. In the future, our general partner’s initial 0.1% general partner interest in these distributions may be reduced if we issue additional units and our general partner does not contribute a proportionate amount of capital to us to maintain its initial 0.1% general partner interest. Our general partner will also hold the incentive distribution rights, which entitle the holder to increasing percentages, up to a maximum of 48.0%, of the cash we distribute in excess of $0.388125 per unit per quarter.

We do not have a legal obligation to pay distributions on our Common Units at our minimum quarterly distribution rate or at any other rate except as provided in our Partnership Agreement. Our Partnership Agreement requires that we distribute all of our available cash quarterly. Under our Partnership Agreement, available cash is generally defined to mean, for each quarter, cash generated from our business in excess of the amount of cash reserves established by our general partner to provide for the conduct of our business, to comply with applicable law, any of our debt instruments or other agreements or to provide for future distributions to our unitholders and our general partner for any one or more of the next four quarters. Our available cash may also include, if our general partner so determines, all or any portion of the cash on hand on the date of determination of available cash for the quarter resulting from working capital borrowings made after the end of the quarter.

If we do not pay the minimum quarterly distribution on our Common Units, our unitholders will not be entitled to receive such payments in the future.

Although our unitholders may pursue judicial action to enforce provisions of our Partnership Agreement, including those related to requirements to make cash distributions as described above, our Partnership Agreement provides that any determination made by our general partner in its capacity as our general partner must be made in good faith and that any such determination will not be subject to any other standard imposed by the Delaware Revised Uniform Limited Partnership Act (the “Delaware LP Act”) or any other law, rule or regulation or at equity. Our Partnership Agreement provides that, in order for a determination by our general partner to be made in “good faith,” our general partner must believe that the determination is in, or not opposed to, our best interest.

Our cash distribution policy, as expressed in our Partnership Agreement, may not be modified or repealed without amending our Partnership Agreement. However, the actual amount of our cash distributions for any quarter is subject to fluctuations based on the amount of cash we generate from our business and the amount of reserves our general partner establishes in accordance with our Partnership Agreement as described above.

We will pay our distributions on the 14th or 15th of each February, May, August and November to holders of record on or about the 1st of each such month. If the distribution date does not fall on a business day, we will make the distribution on the business day immediately preceding the indicated distribution date. Our general partner, through its board of directors, may suspend distributions in accordance with the Partnership Agreement.

Distributions of Available Cash

General. Our Partnership Agreement requires that, within 45 days after the end of each quarter, we distribute all of our available cash to unitholders of record on the applicable record date.

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Definition of Available Cash. Available cash, for any quarter, consists of all cash on hand at the end of that quarter:

• less, the amount of cash reserves established by our general partner at the date of determination of available cash for the quarter to:

• provide for the proper conduct of our business;

• comply with applicable law, any of our debt instruments or other agreements; and

• provide funds for distributions to our unitholders and to our general partner for any one or more of the next four quarters (unless our general partner determines that the establishment of cash reserves for such purpose will prevent us from distributing the minimum quarterly distribution on all common units for the next four quarters);

• plus, if our general partner so determines, all or a portion of cash on hand on the date of determination of available cash for the quarter.

The purpose and effect of the last bullet point above is to allow our general partner, if it so decides, to use cash on hand after the end of the quarter but on or before the date of determination of available cash for that quarter to pay distributions to unitholders.

Intent to Distribute the Minimum Quarterly Distribution. We intend to distribute to our common unitholders on a quarterly basis at least the minimum quarterly distribution of $0.3375 per unit, or $1.35 on an annualized basis, to the extent we have sufficient cash from our operations after payment of distributions on our preferred units, establishment of cash reserves and payment of fees and expenses, including payments to our general partner and its affiliates. However, there is no guarantee that we will pay the minimum quarterly distribution or any amount on our Common Units in any quarter. Even if our cash distribution policy is not modified or revoked, the amount of distributions paid under our policy and the decision to make any distribution is determined by our general partner, taking into consideration the terms of our Partnership Agreement.

General Partner Interest and Incentive Distribution Rights. Our general partner currently is entitled to 0.1% of all quarterly distributions that we make prior to our liquidation. Our general partner has the right, but not the obligation, to contribute a proportionate amount of capital to us to maintain its current general partner interest. Our general partner’s initial 0.1% interest in our distributions may be reduced if we issue additional limited partner interests in the future (other than the issuance of common units upon a reset of the incentive distribution rights) and our general partner does not contribute a proportionate amount of capital to us to maintain its 0.1% general partner interest.

Our general partner also currently holds incentive distribution rights, which represent a potentially material variable interest in our distributions. Incentive distribution rights entitle our general partner to receive increasing percentages, up to a maximum of 48.1%, of the cash we distribute from operating surplus (as defined below) in excess of $0.388125 per unit per quarter. The maximum distribution of 48.1% includes distributions paid to our general partner on its 0.1% general partner interest and assumes that our general partner maintains its general partner interest at 0.1%. The maximum distribution of 48.1% does not include any distributions that our general partner may receive on common units that it owns. See “—General Partner Interest and Incentive Distribution Rights” for additional information.

Operating Surplus and Capital Surplus

General. All cash distributed will be characterized as either being paid from “operating surplus” or “capital surplus.” Our Partnership Agreement requires that we distribute available cash from operating surplus differently than available cash from capital surplus.

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Operating Surplus. Operating surplus for any period consists of:

• $20.0 million; plus

• all of our cash receipts, excluding cash from interim capital transactions, which include the following:

• borrowings, refinancing or refundings (including sales of debt securities) that are not working capital borrowings;

• sales of equity interests;

• sales or other dispositions of assets outside the ordinary course of business; and

• capital contributions received;

• provided that cash receipts from the termination of commodity hedges or interest rate hedges prior to their specified termination date shall be included in operating surplus in equal quarterly installments over the remaining scheduled life of such commodity hedge or interest rate hedge; plus

• working capital borrowings made after the end of the period but on or before the date of determination of operating surplus for the period; plus

• cash distributions paid on equity issued (including incremental distributions on incentive distribution rights), other than equity issued in our initial public offering, to finance all or a portion of the construction, acquisition or improvement of a capital improvement or replacement of a capital asset (such as equipment or facilities) and paid in respect of the period beginning on the date that we enter into a binding obligation to commence the construction, acquisition or improvement of a capital improvement or replacement of a capital asset and ending on the earlier to occur of the date the capital improvement or replacement capital asset commences commercial service and the date that it is abandoned or disposed of; plus

• cash distributions paid on equity issued (including incremental distributions on incentive distribution rights) to pay the construction period interest on debt incurred, or to pay construction period distributions on equity issued, to finance the capital improvements or capital assets referred to above; less

• all of our operating expenditures (as defined below); less

• the amount of cash reserves established by our general partner to provide funds for future operating expenditures; less

• all working capital borrowings not repaid within twelve months after having been incurred or repaid within such twelve-month period with the proceeds from additional working capital borrowings; less

• any loss realized in disposition of an investment capital expenditure.

Under our Partnership Agreement, working capital borrowings are borrowings that are made under a credit facility, commercial paper facility or similar financing arrangement, and in all cases are used solely for working capital purposes or to pay distributions to partners and with the intent of the borrower to repay such borrowings within twelve months from sources other than additional working capital borrowings.

As described above, operating surplus does not reflect actual cash on hand that is available for distribution to our unitholders and is not limited to cash generated by our operations. In addition, the effect of including, as described above, certain cash distributions on equity interests in operating surplus will be to increase operating surplus by the amount of any such cash distributions and to permit the distribution as operating surplus of additional amounts of cash that we receive from non-operating sources.
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The proceeds of working capital borrowings increase operating surplus and repayments of working capital borrowings are generally operating expenditures, as described below, and thus reduce operating surplus when made. However, if a working capital borrowing is not repaid during the twelve-month period following the borrowing, it will be deemed repaid at the end of such period, thus decreasing operating surplus at such time.

When such working capital borrowing is in fact repaid, it will be excluded from operating expenditures because operating surplus will have been previously reduced by the deemed repayment.

We define operating expenditures as all of our cash expenditures, including, but not limited to, taxes, reimbursement of expenses to our general partner and its affiliates, payments made in the ordinary course of business under interest rate hedge agreements or commodity hedge contracts (provided that (i) with respect to amounts paid in connection with the initial purchase of an interest rate hedge contract or a commodity hedge contract, such amounts will be amortized over the life of the applicable interest rate hedge contract or commodity hedge contract and (ii) payments made in connection with the termination of any interest rate hedge contract or commodity hedge contract prior to the expiration of its stipulated settlement or termination date will be included in operating expenditures in equal quarterly installments over the remaining scheduled life of such interest rate hedge contract or commodity hedge contract), officer and other employee compensation, repayment of working capital borrowings, debt service payments and maintenance capital expenditures (as discussed in further detail below), provided that operating expenditures will not include:

• repayment of working capital borrowings deducted from operating surplus pursuant to the next to the last bullet point of the definition of operating surplus above when such repayment actually occurs;

• payments (including prepayments and prepayment penalties) of principal of and premium on indebtedness, other than working capital borrowings;

• expansion capital expenditures;

• investment capital expenditures;

• payment of transaction expenses (including taxes) relating to interim capital transactions;

• distributions to our partners (including distributions in respect of our incentive distribution rights); or

• repurchases of partnership interests except to fund obligations under employee benefit plans.

Capital Surplus. We define capital surplus as any distribution of available cash in excess of our cumulative operating surplus. A distribution from capital surplus would potentially be generated by a distribution of cash from:

• borrowings other than working capital borrowings;

• issuances of our equity and debt securities; and

• sales or other dispositions of assets for cash, other than inventory, accounts receivable and other assets sold in the ordinary course of business or as part of normal retirement or replacement of assets.

Characterization of Cash Distributions. Our Partnership Agreement requires that we treat all available cash distributed as coming from operating surplus until the sum of all available cash distributed since the completion of our initial public offering equals the operating surplus from the completion of our initial public offering through the end of the quarter immediately preceding that distribution. Our Partnership Agreement requires that we treat any amount distributed in excess of operating surplus, regardless of its source, as capital surplus.
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We do not anticipate that we will make any distributions from capital surplus.

Capital Expenditures

Maintenance capital expenditures are cash expenditures (including expenditures for the addition or improvement to, or the replacement of, our capital assets or for the acquisition of existing, or the construction or development of new, capital assets) made to maintain, including over the long term, our operating capacity or operating income. Our Partnership Agreement provides that maintenance capital expenditures will also include interest (and related fees) on debt incurred and distributions on equity issued (including incremental distributions on incentive distribution rights) to finance all or any portion of the construction or development of a replacement asset that is paid in respect of the period that begins when we enter into a binding obligation to commence constructing or developing a replacement asset and ending on the earlier to occur of the date that any such replacement asset commences commercial service and the date that it is abandoned or disposed of.

Expansion capital expenditures are cash expenditures incurred for acquisitions or capital improvements and do not include maintenance capital expenditures or investment capital expenditures. Expansion capital expenditures are those capital expenditures that we expect will increase our operating capacity or operating income over the long term. Our Partnership Agreement provides that expansion capital expenditures will also include interest payments (and related fees) on debt incurred and distributions on equity issued (including incremental incentive distribution rights in respect of newly issued equity) to finance all or any portion of the construction of a capital improvement in respect of the period that commences when we enter into a binding obligation to commence construction of the capital improvement and ending on the earlier to occur of the date any such capital improvement commences commercial service and the date that it is abandoned or disposed of.

Investment capital expenditures are those capital expenditures that are neither maintenance capital expenditures nor expansion capital expenditures. Investment capital expenditures largely will consist of capital expenditures made for investment purposes. Examples of investment capital expenditures include traditional capital expenditures for investment purposes, such as purchases of securities, as well as other capital expenditures that might be made in lieu of such traditional investment capital expenditures, such as the acquisition of a capital asset for investment purposes or development of facilities that are in excess of the maintenance of our existing operating capacity or operating income, but which are not expected to expand, for more than the short term, our operating capacity or operating income.

Neither investment capital expenditures nor expansion capital expenditures will be included in operating expenditures, and thus will not reduce operating surplus. Because expansion capital expenditures include interest payments (and related fees) on debt incurred to finance all or a portion of the construction, replacement or improvement of a capital asset in respect of the period that begins when we enter into a binding obligation to commence construction of the capital asset and ending on the earlier to occur of the date the capital asset commences commercial service or the date that it is abandoned or disposed of, such interest payments are also not subtracted from operating surplus. Losses on disposition of an investment capital expenditure will reduce operating surplus when realized and cash receipts from an investment capital expenditure will be treated as a cash receipt for purposes of calculating operating surplus only to the extent the cash receipt is a return on principal.

Capital expenditures that are made in part for maintenance capital purposes, investment capital purposes and/or expansion capital purposes will be allocated as maintenance capital expenditures, investment capital expenditures or expansion capital expenditure by our general partner.

Distributions of Available Cash from Operating Surplus

Our Partnership Agreement requires that we make distributions of available cash from operating surplus in the following manner, after payment of distributions on our preferred units:

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• first, 99.9% to all unitholders (other than holders of preferred units), pro rata, and 0.1% to our general partner, until we distribute for each outstanding unit an amount equal to the minimum quarterly distribution for that quarter; and

• thereafter, in the manner described in “—General Partner Interest and Incentive Distribution Rights” below.

The preceding discussion assumes that our general partner maintains its 0.1% general partner interest and that we do not issue additional classes of equity interests.

General Partner Interest and Incentive Distribution Rights

Our Partnership Agreement provides that our general partner initially was entitled to 0.1% of all distributions that we make prior to our liquidation.

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 if we issue additional units. Our general partner’s 0.1% general partner interest, and the percentage of our cash distributions to which it is entitled from its general partner interest, will be proportionately reduced if we issue additional units in the future (other than the issuance of Common Units upon a reset of the incentive distribution rights) and our general partner does not contribute a proportionate amount of capital to us in order to maintain its 0.1% general partner interest. Our Partnership Agreement does not require that the general partner fund its capital contribution with cash and our general partner may fund its capital contribution by the contribution to us of Common Units or other property.

Incentive distribution rights represent a potentially material variable interest in our distributions. The holder of the incentive distribution rights has the right to receive an increasing percentage (13.0%, 23.0% and 48.0%) of quarterly distributions of available cash from operating surplus after the minimum quarterly distribution and the target distribution levels have been achieved. Our general partner currently holds the incentive distribution rights, and may transfer these rights separately from its general partner interest.

The following discussion assumes that our general partner maintains its 0.1% general partner interest and that our general partner continues to own all of the incentive distribution rights.

If, for any quarter, we have distributed available cash from operating surplus to the common unitholders in an amount equal to the minimum quarterly distribution, then our Partnership Agreement requires that we distribute any additional available cash from operating surplus for that quarter among the unitholders and the general partner in the following manner:

• first, 99.9% to all unitholders (other than holders of preferred units), pro rata, and 0.1% to our general partner, until each unitholder receives a total of $0.388125 per unit for that quarter (the “first target distribution”);

• second, 86.9% to all unitholders (other than holders of preferred units), pro rata, and 13.1% to our general partner, until each unitholder receives a total of $0.421875 per unit for that quarter (the “second target distribution”);

• third, 76.9% to all unitholders (other than holders of preferred units), pro rata, and 23.1% to our general partner, until each unitholder receives a total of $0.506250 per unit for that quarter (the “third target distribution”); and

• thereafter, 51.9% to all unitholders (other than holders of preferred units), pro rata, and 48.1% to our general partner.

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Percentage Allocations of Available Cash from Operating Surplus

The following table illustrates the percentage allocations of available cash from operating surplus between the unitholders (other than holders of preferred units) and our general partner based on the specified target distribution levels. The amounts set forth under “Marginal Percentage Interest in Distributions” are the percentage interests of our general partner and the unitholders (other than holders of preferred units) in any available cash from operating surplus we distribute, after payment of distributions on our preferred units, up to and including the corresponding amount in the column “Total Quarterly Distribution per Unit.” The percentage interests shown for the minimum quarterly distribution are also applicable to quarterly distribution amounts that are less than the minimum quarterly distribution. The percentage interests set forth below for our general partner include its 0.1% general partner interest, assume our general partner has contributed any additional capital necessary to maintain its 0.1% general partner interest and has not transferred its incentive distribution rights.
Marginal Percentage Interest
in Distributions
Total Quarterly Distribution per Unit
 Limited Partner Unitholders General Partner
Minimum Quarterly Distribution $ 0.337500  99.9  % 0.1  %
First target distribution above $ 0.337500  up to $ 0.388125  99.9  % 0.1  %
Second target distribution above $ 0.388125  up to $ 0.421875  86.9  % 13.1  %
Third target distribution above $ 0.421875  up to $ 0.506250  76.9  % 23.1  %
Thereafter above $ 0.506250  51.9  % 48.1  %

General Partner’s Right to Reset Incentive Distribution Levels

Our general partner, as the initial holder of our incentive distribution rights, has the right under our Partnership Agreement to elect to relinquish the right to receive incentive distribution payments based on the initial target distribution levels and to reset, at higher levels, the minimum quarterly distribution amount and target distribution levels upon which the incentive distribution payments to our general partner would be set. If our general partner transfers all or a portion of our incentive distribution rights in the future, then the holder or holders of a majority of our incentive distribution rights will be entitled to exercise this right. The following discussion assumes that our general partner holds all of the incentive distribution rights at the time that a reset election is made. Our general partner’s right to reset the minimum quarterly distribution amount and the target distribution levels upon which the incentive distributions payable to our general partner are based may be exercised, without approval of our unitholders or our conflicts committee, at any time when we have made cash distributions to the holders of the incentive distribution rights at the highest level of incentive distribution for each of the prior four consecutive fiscal quarters. The reset minimum quarterly distribution amount and target distribution levels will be higher than the minimum quarterly distribution amount and the target distribution levels prior to the reset such there will be no incentive distributions paid under the reset target distribution levels until cash distributions per unit following this event increase as described below. We anticipate that our general partner would exercise this reset right in order to facilitate acquisitions or internal growth projects that would otherwise not be sufficiently accretive to cash distributions per common unit, taking into account the existing levels of incentive distribution payments being made to our general partner.

In connection with the resetting of the minimum quarterly distribution amount and the target distribution levels and the corresponding relinquishment by our general partner of incentive distribution payments based on the target distribution levels prior to the reset, our general partner will be entitled to receive a number of newly issued common units based on a predetermined formula described below that takes into account the “cash parity” value of the average cash distributions related to the incentive distribution rights received by our general partner for the two quarters prior to the reset event as compared to the average cash distributions per Common Unit during this period. Our general partner’s general partner interest in us (currently 0.1%) will be maintained at the percentage interest immediately prior to the reset election.

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The number of Common Units that our general partner would be entitled to receive from us in connection with a resetting of the minimum quarterly distribution amount and the target distribution levels then in effect would be equal to the quotient determined by dividing (x) the average aggregate amount of cash distributions received by our general partner in respect of its incentive distribution rights during the two consecutive fiscal quarters ended immediately prior to the date of such reset election by (y) the average of the amount of cash distributed per Common Unit during each of these two quarters.

Following a reset election, the minimum quarterly distribution amount will be reset to an amount equal to the average cash distribution amount per unit for the two fiscal quarters immediately preceding the reset election (which amount we refer to as the "reset minimum quarterly distribution") and the target distribution levels will be reset to be correspondingly higher such that we would thereafter distribute all of our available cash from operating surplus for each quarter, after payment of distributions on our preferred units, as follows:

• first, 99.9% to all unitholders (other than holders of preferred units), pro rata, and 0.1% to our general partner, until each unitholder receives an amount per unit equal to 115.0% of the reset minimum quarterly distribution for that quarter;

• second, 86.9% to all unitholders (other than holders of preferred units), pro rata, and 13.1% to our general partner, until each unitholder receives an amount per unit equal to 125.0% of the reset minimum quarterly distribution for the quarter;

• third, 76.9% to all unitholders (other than holders of preferred units), pro rata, and 23.1% to our general partner, until each unitholder receives an amount per unit equal to 150.0% of the reset minimum quarterly distribution for the quarter; and

• thereafter, 51.9% to all unitholders (other than holders of preferred units), pro rata, and 48.1% to our general partner.

Our general partner will be entitled to cause the minimum quarterly distribution amount and the target distribution levels to be reset on more than one occasion, provided that it may not make a reset election except at a time when it has received incentive distributions for the prior four consecutive fiscal quarters based on the highest level of incentive distributions that it is entitled to receive under our Partnership Agreement.

Distributions from Capital Surplus

How Distributions from Capital Surplus Will Be Made. Our Partnership Agreement requires that we make distributions of available cash from capital surplus, if any, in the following manner, after payment of distributions on our preferred units:

• first, 99.9% to all unitholders (other than holders of preferred units), pro rata, and 0.1% to our general partner, until we distribute for each Common Unit that was issued in our initial public offering, an amount of available cash from capital surplus equal to the initial public offering price in our initial public offering; and

• thereafter, as if they were from operating surplus.

The preceding paragraph assumes that our general partner maintains its 0.1% general partner interest and that we do not issue additional classes of equity interests.

Effect of a Distribution from Capital Surplus. Our Partnership Agreement treats a distribution of capital surplus as the repayment of the initial unit price from our initial public offering, which is a return of capital. The initial public offering price less any distributions of capital surplus per unit is referred to as the “unrecovered initial unit price.” Each time a distribution of capital surplus is made, the minimum quarterly distribution and the target distribution levels will be reduced in the same proportion as the corresponding reduction in the unrecovered initial unit price.
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Because distributions of capital surplus will reduce the minimum quarterly distribution and target distribution levels after any of these distributions are made, it may be easier for our general partner to receive incentive distributions.

However, any distribution of capital surplus before the unrecovered initial unit price is reduced to zero cannot be applied to the payment of the minimum quarterly distribution.

Once we distribute capital surplus on a common unit issued in our initial public offering in an amount equal to the initial unit price, we will reduce the minimum quarterly distribution and the target distribution levels to zero. We will then make all future distributions from operating surplus, after payment of distributions on our preferred units, with 51.9% being paid to the unitholders (other than holders of preferred units), pro rata, and 48.1% to our general partner. The percentage interests shown for our general partner include its 0.1% general partner interest and assume our general partner has not transferred the incentive distribution rights.

Adjustment to the Minimum Quarterly Distribution and Target Distribution Levels

In addition to adjusting the minimum quarterly distribution and target distribution levels to reflect a distribution of capital surplus, if we combine our units into fewer units or subdivide our units into a greater number of units, our Partnership Agreement specifies that the following items will be proportionately adjusted:

• the minimum quarterly distribution;

• the target distribution levels; and

• the unrecovered initial unit price as described below.

For example, if a two-for-one split of the units should occur, the minimum quarterly distribution, the target distribution levels and the unrecovered initial unit price would each be reduced to 50.0% of its initial level. Our Partnership Agreement provides that we do not make any adjustment by reason of the issuance of additional units for cash or property.

In addition, if as a result of a change in law or interpretation thereof, we or any of our subsidiaries is treated as an association taxable as a corporation or is otherwise subject to additional taxation as an entity for U.S. federal, state, local or non-U.S. income or withholding tax purposes, our general partner may, in its sole discretion, reduce the minimum quarterly distribution and the target distribution levels for each quarter by multiplying the minimum quarterly distribution and each target distribution level by a fraction, the numerator of which is available cash for that quarter (after deducting our general partner’s estimate of our additional aggregate liability for the quarter for such income and withholdings taxes payable by reason of such change in law or interpretation thereof) and the denominator of which is the sum of (i) available cash for that quarter, plus (ii) our general partner’s estimate of our additional aggregate liability for the quarter for such income and withholding taxes payable by reason of such change in law or interpretation thereof. To the extent that the actual tax liability differs from the estimated tax liability for any quarter, the difference will be accounted for in distributions with respect to subsequent quarters.

Distributions of Cash Upon Liquidation

General. If we dissolve in accordance with our Partnership Agreement, we will sell or otherwise dispose of our assets in a process called liquidation.

We will first apply the proceeds of liquidation to the payment of our creditors. We will distribute any remaining proceeds to the unitholders and our general partner, in accordance with capital account balances, including any capital account balance attributable to the preferred unit liquidation preference, as adjusted to reflect any gain or loss upon the sale or other disposition of our assets in liquidation. For additional information concerning the preferred unit liquidation preference, see “Description of Preferred Units.”

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Manner of Adjustments for Gain. The manner of the adjustment for gain is set forth in our Partnership Agreement. Upon our liquidation, we will allocate any gain to our partners in the following manner:

• first, to our general partner to the extent of any negative balance in its capital account;

• second, 99.9% to the common unitholders, pro rata, and 0.1% to our general partner, until the capital account for each common unit is equal to the sum of:

• the unrecovered initial unit price;

• the amount of the minimum quarterly distribution for the quarter during which our liquidation occurs;

• third, 99.9% to all unitholders (other than holders of preferred units), pro rata, and 0.1% to our general partner, until we allocate under this paragraph an amount per unit equal to:

• the sum of the excess of the first target distribution per unit over the minimum quarterly distribution per unit for each quarter of our existence; less

• the cumulative amount per unit of any distributions of available cash from operating surplus in excess of the minimum quarterly distribution per unit that we distributed 99.9% to the unitholders, pro rata, and 0.1% to our general partner, for each quarter of our existence;

• fourth, 86.9% to all unitholders (other than holders of preferred units), pro rata, and 13.1% to our general partner, until we allocate under this paragraph an amount per unit equal to:

• the sum of the excess of the second target distribution per unit over the first target distribution per unit for each quarter of our existence; less

• the cumulative amount per unit of any distributions of available cash from operating surplus in excess of the first target distribution per unit that we distributed 86.9% to the unitholders, pro rata, and 13.1% to our general partner for each quarter of our existence;

• fifth, 76.9% to all unitholders (other than holders of preferred units), pro rata, and 23.1% to our general partner, until we allocate under this paragraph an amount per unit equal to:

• the sum of the excess of the third target distribution per unit over the second target distribution per unit for each quarter of our existence; less

• the cumulative amount per unit of any distributions of available cash from operating surplus in excess of the second target distribution per unit that we distributed 76.9% to the unitholders, pro rata, and 23.1% to our general partner for each quarter of our existence; and

• thereafter, 51.9% to all unitholders (other than holders of preferred units), pro rata, and 48.1% to our general partner.

The percentages set forth above for our general partner include its 0.1% general partner interest and assume our general partner has not transferred the incentive distribution rights and that we have not issued additional classes of equity interests.

Manner of Adjustments for Losses. Upon our liquidation, after making allocations of loss to the general partner and the unitholders in a manner intended to offset in reverse order the allocations of gains that have previously been allocated, we will generally allocate any loss to our partners in the following manner:

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• first, 99.9% to the holders of common units in proportion to the positive balances in their capital accounts and 0.1% to our general partner, until the capital accounts of the common unitholders have been reduced to zero;

• second, to the holders of preferred units in proportion to the positive balances on their capital accounts, until the capital accounts of the holders of preferred units have been reduced to zero; and

• thereafter, 100.0% to our general partner.

Adjustments to Capital Accounts

Our Partnership Agreement requires that we make adjustments to capital accounts upon the issuance of additional units. In this regard, our Partnership Agreement specifies that we allocate any unrealized and, for tax purposes, unrecognized gain resulting from the adjustments to the unitholders and the general partner in the same manner as we allocate gain upon liquidation. If we make positive adjustments to the capital accounts upon the issuance of additional units as a result of such gain, our Partnership Agreement requires that we generally allocate any negative adjustments to the capital accounts resulting from the issuance of additional units or upon our liquidation in a manner that results, to the extent possible, in the partners’ capital account balances equaling the amount that they would have been if no earlier positive adjustments to the capital accounts had been made. By contrast to the allocations of gain, and except as provided above, we generally will allocate any unrealized and unrecognized loss resulting from the adjustments to capital accounts upon the issuance of additional units to the unitholders and our general partner based on their respective percentage ownership of us. In the event we make negative adjustments to the capital accounts as a result of such loss, future positive adjustments resulting from the issuance of additional units will be allocated in a manner designed to reverse the prior negative adjustments, and special allocations will be made upon liquidation in a manner designed to result, to the extent possible, in our unitholders’ capital account balances equaling the amounts they would have been if no earlier adjustments for loss had been made.
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OUR PARTNERSHIP AGREEMENT
 
We have summarized below selected provisions of our Partnership Agreement. However, because this summary is not complete it is subject to and is qualified in its entirety by reference to our Partnership Agreement. We suggest that you read the complete text of our Partnership Agreement, which we have incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this exhibit is a part. The following provisions of our Partnership Agreement are summarized elsewhere in this exhibit: distributions of our available cash are described under “Cash Distribution Policy;” and rights of holders of Common Units and Preferred Units are described under “Description of Common Units” and “Description of Preferred Units.”

Organization and Duration

Our partnership was organized in September 2010 and will have a perpetual existence.

Purpose

Our purpose, as set forth in our Partnership Agreement, is limited to any business activity that is approved by our general partner and that lawfully may be conducted by a limited partnership organized under Delaware law; provided, that our general partner shall not cause us to engage, directly or indirectly, in any business activity that the general partner determines would be reasonably likely to cause us to be treated as an association taxable as a corporation or otherwise taxable as an entity for federal income tax purposes.

Although our general partner has the ability to cause us and our subsidiaries to engage in activities other than the businesses that we currently conduct, our general partner has no obligation to do so and may decline to do so free of any fiduciary duty or obligation whatsoever to us or the limited partners, including any duty to act in good faith or in the best interests of us or the limited partners. Our general partner is generally authorized to perform all acts it determines to be necessary or appropriate to carry out our purposes and to conduct our business.

Cash Distributions

Our Partnership Agreement specifies the manner in which we will make cash distributions to holders of our Common Units, Preferred Units and other partnership securities as well as to our general partner in respect of its general partner interest and its incentive distribution rights. For a description of these cash distribution provisions, see “Our Cash Distribution Policy.”

Capital Contributions

Unitholders are not obligated to make additional capital contributions, except as described below under “—Limited Liability.”

For a discussion of our general partner’s right to contribute capital to maintain its 0.1% general partner interest if we issue additional units, please read “—Issuance of Additional Partnership Interests.”

Voting Rights

The following is a summary of the unitholder vote required for approval of the matters specified below. Matters that require the approval of a “Common Unit majority” require the approval of a majority of the Common Units, and matters that require the approval of either the Class B Preferred Units or Class C Preferred Units require the approval of two thirds of the applicable class of preferred units, voting separately as a class, with one vote per Class B or Class C Preferred Unit, as applicable.

In voting their Common Units, our general partner and its affiliates will have no fiduciary duty or obligation whatsoever to us or the limited partners, including any duty to act in good faith or in the best interests of us or the limited partners.
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Action Voting Right
Issuance of additional units No approval right in respect of Common Unit issuances.

Approval of at least two thirds of each of the outstanding Class B Preferred Units and Class C Preferred Units, voting as a single class, and the consent of the Class D Preferred Unit Representative (defined below) is required for issuance of any senior securities. Approval of at least two thirds of each of the outstanding Class B Preferred Units and Class C Preferred Units, voting as a single class, is required for any issuance of parity securities if cumulative distributions payable on our then-outstanding parity securities are in arrears.
Amendment of our Partnership Agreement Certain amendments may be made by our general partner without the approval of the unitholders. Other amendments generally require the approval of a Common Unit majority and/or two thirds of each of our outstanding Class B Preferred Units and Class C Preferred Units and/or the Class D Preferred Unit Representative (defined below). See “-Amendment of our Partnership Agreement.”
Merger of our partnership or the sale of all or substantially all of our assets Common Unit majority in certain circumstances. See “-Merger, Consolidation, Conversion, Sale or Other Disposition of Assets.”
Dissolution of our partnership Common Unit majority. Please read “-Dissolution.”
Continuation of our business upon dissolution Common Unit majority. Please read “-Dissolution.”
Withdrawal of our general partner Prior to the first day of the first quarter beginning after May 17, 2021 (tenth anniversary of the closing date of our initial public offering), the approval of a Common Unit majority, excluding Common Units held by our general partner and its affiliates, is generally required for the withdrawal of our general partner. See “-Withdrawal or Removal of Our General Partner.”
Removal of our general partner Not less than 66 2/3% of the outstanding units, including units held by our general partner and its affiliates. See “-Withdrawal or Removal of Our General Partner.”
Transfer of our general partner interest Our general partner may transfer all, but not less than all, of its general partner interest in us without a vote of our unitholders to an affiliate or another person in connection with its merger or consolidation with or into, or sale of all or substantially all of its assets to, such person. The approval of a Common Unit majority, excluding Common Units held by our general partner and its affiliates, is required in other circumstances for a transfer of the general partner interest to a third party prior to the first day of the first quarter beginning after May 17, 2021 (tenth anniversary of the closing date of our initial public offering). See “-Transfer of General Partner Interest.”
Transfer of incentive distribution rights No approval required.
Transfer of ownership interests in our general partner No approval required at any time. See “-Transfer of Ownership Interests in the General Partner.”

If any person or group other than our general partner and its affiliates acquires beneficial ownership of 20% or more of any class of units, that person or group loses voting rights on all of its units.
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This loss of voting rights does not apply to: (i) any person or group that acquired the units from our general partner or its affiliates; (ii) any person or group that acquired the units directly or indirectly from our general partner of its affiliates, provided that our general partner notifies such transferees that the limitation does not apply; (iii) any person or group that acquired 20% or more of any class of units with the prior approval of the general partner; or (iv) any holder of preferred units in connection with any vote, consent or approval of the holders of the preferred units as a separate class or together with any parity securities as a single class.

Applicable Law; Forum, Venue and Jurisdiction

Our Partnership Agreement is governed by Delaware law. Our Partnership Agreement requires that any claims, suits, actions or proceedings:

• arising out of or relating in any way to our Partnership Agreement (including any claims, suits or actions to interpret, apply or enforce the provisions of our Partnership Agreement or the duties, obligations or liabilities among limited partners or of limited partners, or the rights or powers of, or restrictions on, the limited partners or us);

• brought in a derivative manner on our behalf;

• asserting a claim of breach of a fiduciary duty owed by any director, officer, or other employee of us or our general partner, or owed by our general partner, to us or the limited partners;

• asserting a claim arising pursuant to any provision of the Delaware LP Act; and

• asserting a claim governed by the internal affairs doctrine shall be exclusively brought in the Court of Chancery of the State of Delaware, in each case regardless of whether such claims, suits, actions or proceedings sound in contract, tort, fraud or otherwise, are based on common law, statutory, equitable, legal or other grounds, or are derivative or direct claims.

By purchasing a Common Unit, a limited partner is irrevocably consenting to these limitations and provisions regarding claims, suits, actions or proceedings and submitting to the exclusive jurisdiction of the Court of Chancery of the State of Delaware in connection with any such claims, suits, actions or proceedings.

We believe these forum selection provisions will benefit us by providing increased consistency in the application of Delaware law for the specified types of actions and proceedings. However, such provisions may have the effect of discouraging lawsuits against our directors, officers, employees and agents.

In light of prior legal challenges of similar forum selection provisions in other companies’ governing documents, a court could find that the forum selection provisions contained in our Partnership Agreement are inapplicable or unenforceable with respect to some particular claims, including with respect to claims arising under the federal securities laws. We believe that our limited partners will not be deemed, by operation of these forum selection provisions alone, to have waived, beyond what is legally permissible, any rights arising under the federal securities laws and the rules and regulations thereunder. However, we anticipate that these forum selection provisions should apply to the fullest extent permitted by applicable law to the types of actions and proceedings specified in those provisions, including, to the extent permitted by the federal securities laws, to lawsuits asserting both the above-specified claims and federal securities claims. The limitations imposed by applicable law would include those set forth in Section 27 of the Exchange Act, which provides: “The district courts of the United States ... shall have exclusive jurisdiction of violations of the Exchange Act or the rules and regulations thereunder, and of all suits in equity and actions at law brought to enforce any liability or duty created by the Exchange Act or the rules and regulations thereunder.” Consequently, we anticipate that the forum selection provisions would not apply to actions arising under the Exchange Act or the rules and regulations thereunder. However, Section 22 of the Securities Act provides for concurrent federal and state court jurisdiction over actions under the Securities Act and the rules and regulations thereunder, subject to a limited exception for certain “covered class actions” as defined in Section 16 of the Securities Act and interpreted by the courts. Accordingly, we believe that the forum selection provisions would apply to actions arising under the Securities Act or the rules and regulations thereunder, except to the extent a particular action fell within the exception for covered class actions.
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Limited Liability

Assuming that a limited partner does not participate in the control of our business within the meaning of the Delaware LP Act and that it otherwise acts in conformity with the provisions of our Partnership Agreement, the limited partner’s liability under the Delaware LP Act will be limited, subject to possible exceptions, to the amount of capital such limited partner is obligated to contribute to us for its common units plus its share of any undistributed profits and assets. However, if it were determined that the right, or exercise of the right, by the limited partners as a group:
• to remove or replace our general partner;

• to approve some amendments to our Partnership Agreement; or

• to take other action under our Partnership Agreement;

constituted “participation in the control” of our business for the purposes of the Delaware LP Act, then the limited partners could be held personally liable for our obligations under the laws of Delaware, to the same extent as our general partner. This liability would extend to persons who transact business with us under the reasonable belief that the limited partner is a general partner. Neither our Partnership Agreement nor the Delaware LP Act specifically provides for legal recourse against our general partner if a limited partner were to lose limited liability through any fault of our general partner. While this does not mean that a limited partner could not seek legal recourse, we know of no precedent for this type of a claim in Delaware case law.

Under the Delaware LP Act, a limited partnership may not make a distribution to a partner if, after the distribution, all liabilities of the limited partnership, other than liabilities to partners on account of their partnership interests and liabilities for which the recourse of creditors is limited to specific property of the partnership, would exceed the fair value of the assets of the limited partnership. Neither liabilities to partners on account of their partnership interests nor liabilities that are nonrecourse to the partnership are counted for purposes of determining whether a distribution is permitted. For the purpose of determining the fair value of the assets of a limited partnership, the Delaware LP Act provides that the fair value of property subject to liability for which recourse of creditors is limited shall be included in the assets of the limited partnership only to the extent that the fair value of that property exceeds the nonrecourse liability. The Delaware LP Act provides that a limited partner who receives a distribution and knew at the time of the distribution that the distribution was in violation of the Delaware LP Act shall be liable to the limited partnership for the amount of the distribution for three years. Under the Delaware LP Act, a substituted limited partner of a limited partnership is liable for the obligations of its assignor to make contributions to the partnership, except that such person is not obligated for liabilities unknown to it at the time it became a limited partner and that could not be ascertained from our Partnership Agreement.

Our subsidiaries conduct business in numerous states and we may have subsidiaries that conduct business in other states in the future. Maintenance of our limited liability as a member of the operating company may require compliance with legal requirements in the jurisdictions in which the operating company conducts business, including qualifying our subsidiaries to do business there.

Limitations on the liability of members or limited partners for the obligations of a limited liability company or limited partnership have not been clearly established in many jurisdictions. If, by virtue of our ownership interest in our operating company or otherwise, it were determined that we were conducting business in any state without compliance with the applicable limited partnership or limited liability company statute, or that the right or exercise of the right by the limited partners as a group to remove or replace our general partner, to approve some amendments to our Partnership Agreement, or to take other action under our Partnership Agreement constituted “participation in the control” of our business for purposes of the statutes of any relevant jurisdiction, then the limited partners could be held personally liable for our obligations under the law of that jurisdiction to the same extent as our general partner under the circumstances.
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We will operate in a manner that our general partner considers reasonable and necessary or appropriate to preserve the limited liability of the limited partners.

Issuance of Additional Partnership Interests

Our Partnership Agreement authorizes us to issue an unlimited number of additional partnership interests and options, rights, warrants and appreciation rights relating to partnership interests for the consideration and on the terms and conditions determined by our general partner without the approval of the unitholders, except as described herein.

We have and may continue to fund acquisitions through the issuance of additional Common Units or other partnership interests. Holders of any additional Common Units we issue will be entitled to share equally with the then-existing holders of Common Units in our distributions of available cash (subject to certain waivers of distributions that parties have or may agree to in the future). In addition, the issuance of additional Common Units or other partnership interests may dilute the value of the interests of the then-existing holders of Common Units in our net assets.

In accordance with Delaware law and the provisions of our Partnership Agreement, we may also issue additional partnership interests that, as determined by our general partner, may have special voting rights to which the Common Units are not entitled or may have other preferences, rights, powers and duties, which may be senior to existing classes and series of partnership interests. In addition, our Partnership Agreement does not prohibit our subsidiaries from issuing equity securities, which may effectively rank senior to the Common Units.

Approval of at least two thirds of each of the outstanding Class B Preferred Units and Class C Preferred Units, voting as a single class, and the consent of the Class D Preferred Unit Representative as defined in our Partnership Agreement, which represents our 600,000 Class D Preferred Units, representing limited partner interest, is required for issuance of any senior securities. Approval of at least two thirds of each of the outstanding Class B Preferred Units and Class C Preferred Units, voting as a single class, is required for any issuance of parity securities if cumulative distributions on our then-outstanding parity securities are in arrears. At all times, the consent of the Class D Preferred Unit Representative is required to issue parity securities unless we use the proceeds from an offering of parity securities to redeem a class or series of outstanding parity securities.

Upon issuance of additional partnership interests (other than the issuance of Common Units upon a reset of the incentive distribution rights) our general partner will be entitled, but not required, to make additional capital contributions to the extent necessary to maintain its 0.1% general partner interest in us. Our general partner’s 0.1% general partner interest in us will be reduced if we issue additional units in the future (other than in those circumstances described above) and our general partner does not contribute a proportionate amount of capital to us to maintain its 0.1% general partner interest. Moreover, our general partner will have the right, which it may from time to time assign in whole or in part to any of its affiliates or the beneficial owners thereof or any of their respective affiliates, to purchase Common Units or other partnership interests whenever, and on the same terms that, we issue those interests to persons other than our general partner and its affiliates and such beneficial owners, to the extent necessary to maintain the percentage interest of our general partner and its affiliates and such beneficial owners or any of their respective affiliates, including such interest represented by Common Units, that existed immediately prior to each issuance.

The holders of Common Units will not have preemptive rights under our Partnership Agreement to acquire additional Common Units or other partnership interests.

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Amendment of the Partnership Agreement

General. Amendments to our Partnership Agreement may be proposed only by or with the consent of our general partner. However, to the full extent permitted by law, our general partner will have no duty or obligation to propose any amendment and may decline to do so free of any fiduciary duty or obligation whatsoever to us or the limited partners, including any duty to act in good faith or in the best interests of us or the limited partners. To adopt a proposed amendment, other than the amendments discussed below, our general partner is required to seek written approval of the holders of the number of units required to approve the amendment or to call a meeting of the limited partners to consider and vote upon the proposed amendment. Except as described below, an amendment must be approved by a unit majority.

Prohibited Amendments. No amendment may be made that would:

• enlarge the obligations of any limited partner without its consent, unless approved by at least a majority of the type or class of limited partner interests so affected; or

• enlarge the obligations of, restrict, change or modify in any way any action by or rights of, or reduce in any way the amounts distributable, reimbursable or otherwise payable by us to our general partner or any of its affiliates without the consent of our general partner, which consent may be given or withheld at its option.

The provision of our Partnership Agreement preventing the amendments having the effects described in the clauses above can be amended upon the approval of the holders of at least 90.0% of the outstanding units (including units owned by our general partner and its affiliates).

Without the consent of (i) at least two thirds of the Class B Preferred Units or Class C Preferred Units, as applicable, or (ii) the Class D Preferred Unit Representative, as applicable, no amendment to our Partnership Agreement may be made that would:

• adversely alter or change the rights, powers, privileges or preferences or duties and obligations of the preferred units; or

• modify the terms of the preferred units.

No Unitholder Approval. Our general partner may generally make amendments to our Partnership Agreement without the approval of any limited partner to reflect:

• a change in our name, the location of our principal place of business, our registered agent or our registered office;

• the admission, substitution, withdrawal or removal of partners in accordance with our Partnership Agreement;

• a change that our general partner determines to be necessary or appropriate to qualify or continue our qualification as a limited partnership or a partnership in which the limited partners have limited liability under the laws of any state or to ensure that neither we nor any of our subsidiaries will be treated as an association taxable as a corporation or otherwise taxed as an entity for federal income tax purposes (to the extent not already so treated);

• an amendment that is necessary, in the opinion of our counsel, to prevent us or our general partner or its directors, officers, agents or trustees from in any manner being subjected to the provisions of the Investment Company Act of 1940, as amended, the Investment Advisers Act of 1940, as amended, or “plan asset” regulations adopted under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), whether or not substantially similar to plan asset regulations currently applied or proposed;
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• an amendment that our general partner determines to be necessary or appropriate in connection with the creation, authorization or issuance of additional partnership interests and options, rights, warrants and appreciation rights relating to the partnership interests;

• any amendment expressly permitted in our Partnership Agreement to be made by our general partner acting alone;

• an amendment effected, necessitated or contemplated by a merger agreement that has been approved under the terms of our Partnership Agreement;

• any amendment that our general partner determines to be necessary or appropriate for the formation by us of, or our investment in, any corporation, partnership, joint venture, limited liability company or other entity, as otherwise permitted by our Partnership Agreement;

• a change in our fiscal year or taxable year and related changes;

• conversions into, mergers with or conveyances to another limited liability entity that is newly formed and has no assets, liabilities or operations at the time of the conversion, merger or conveyance other than those it receives by way of the conversion, merger or conveyance; or

• any other amendments substantially similar to any of the matters described in the clauses above or the following paragraph.

Our general partner may also make amendments to our Partnership Agreement, without the approval of any limited partner, if our general partner determines that those amendments:

• do not adversely affect in any material respect the limited partners (or any particular class of limited partners);

• are necessary or appropriate to satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any federal or state agency or judicial authority or contained in any federal or state statute (including the Delaware LP Act);

• are necessary or appropriate to facilitate the trading of units or to comply with any rule, regulation, guideline or requirement of any securities exchange on which the units are or will be listed for trading;

• are necessary or appropriate for any action taken by our general partner relating to splits or combinations of partnership interests under the provisions of our Partnership Agreement; or

• are required to effect the intent of the provisions of our Partnership Agreement or are otherwise contemplated by our Partnership Agreement.

Opinion of Counsel and Unitholder Approval. Our general partner will not be required to obtain an opinion of counsel that an amendment will not result in a loss of limited liability to the limited partners or result in our being treated as an entity for federal income tax purposes in connection with any of the amendments described above under “—No Unitholder Approval.” No other amendments to our Partnership Agreement will become effective without the approval of holders of at least 90.0% of the outstanding units voting as a single class unless we first obtain an opinion of counsel to the effect that the amendment will not affect the limited liability under applicable law of any of our limited partners.

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In addition to the above restrictions, any amendment that would have a material adverse effect on the rights or preferences of any type or class of outstanding units in relation to other classes of units will require the approval of at least a majority of the type or class of units so affected. Any amendment that reduces the voting percentage required to take any action and any amendment which increases the voting percentage for the removal of our general partner or the calling of a special meeting must be approved by the affirmative vote of limited partners whose aggregate outstanding units constitute not less than the voting requirement sought to be reduced or increased, as applicable.

Merger, Consolidation, Conversion, Sale or Other Disposition of Assets

A merger, consolidation or conversion of us requires the prior consent of our general partner. However, to the fullest extent permitted by law, our general partner will have no duty or obligation to consent to any merger, consolidation or conversion and may decline to do so free of any fiduciary duty or obligation whatsoever to us or the limited partners, including any duty to act in good faith or in the best interest of us or the limited partners.

In addition, our Partnership Agreement generally prohibits our general partner, without the prior approval of a unit majority, from causing us to sell, exchange or otherwise dispose of all or substantially all of our assets in a single transaction or a series of related transactions. Our general partner may, however, in our best interests, mortgage, pledge, hypothecate or grant a security interest in all or substantially all of our assets without such approval. Our general partner may also sell all or substantially all of our assets under a foreclosure or other realization upon those encumbrances without such approval. Finally, our general partner may consummate any merger without the prior approval of our unitholders if we are the surviving entity in the transaction, our general partner has received an opinion of counsel regarding limited liability and tax matters, the transaction would not result in an amendment to our Partnership Agreement (other than an amendment that the general partner could adopt without the consent
of the limited partners), each of our units outstanding immediately prior to the transaction will be a substantially identical unit of our partnership following the transaction and the partnership interests to be issued do not
exceed 20% of our outstanding partnership interests (other than the incentive distribution rights) immediately prior to the transaction.

If the conditions specified in our Partnership Agreement are satisfied, our general partner may convert us or any of our subsidiaries into a new limited liability entity or merge us or any of our subsidiaries into, or convey all of our assets to, a newly formed entity, if the sole purpose of that conversion, merger or conveyance is to effect a mere change in our legal form into another limited liability entity, our general partner has received an opinion of counsel regarding limited liability and tax matters and the governing instruments of the new entity provide the limited partners and our general partner with the same rights and obligations as contained in our Partnership Agreement.

Our unitholders are not entitled to dissenters’ rights of appraisal under our Partnership Agreement or applicable Delaware law in the event of a conversion, merger or consolidation, a sale of substantially all of our assets or any other similar transaction or event.

Dissolution

We will continue as a limited partnership until dissolved under our Partnership Agreement.
We will dissolve upon:

• the election of our general partner to dissolve us, if approved by the holders of common units representing a common unit majority;

• there being no limited partners, unless we are continued without dissolution in accordance with applicable Delaware law;


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• the entry of a decree of judicial dissolution of our partnership; or • the withdrawal or removal of our general partner or any other event specified in our Partnership Agreement that results in its ceasing to be our general partner other than by reason of a transfer of its general partner interest in accordance with our Partnership Agreement or its withdrawal or removal following the approval and admission of a successor.

Upon a dissolution under the last clause above, the holders of a Common Unit majority may also elect, within specific time limitations, to continue our business on the same terms and conditions described in our Partnership Agreement by appointing as a successor general partner an entity approved by the holders of a Common Unit majority, subject to our receipt of an opinion of counsel to the effect that:

• the action would not result in the loss of limited liability under Delaware law of any limited partner; and

• neither our partnership nor any of our subsidiaries would be treated as an association taxable as a corporation or otherwise be taxable as an entity for federal income tax purposes upon the exercise of that right to continue (to the extent not already so treated or taxed).

Liquidation and Distribution of Proceeds

Upon our dissolution, unless our business is continued, the liquidator authorized to wind up our affairs will, acting with all of the powers of our general partner that are necessary or appropriate, liquidate our assets and apply the proceeds of the liquidation as described in the Partnership Agreement. The liquidator may defer liquidation or distribution of our assets for a reasonable period of time or distribute assets to partners in kind if it determines that a sale would be impractical or would cause undue loss to our partners.

Withdrawal or Removal of Our General Partner

Except as described below, our general partner has agreed not to withdraw voluntarily as our general partner prior to 11:59 p.m. Central Time on the first day of the first quarter beginning after May 17, 2021 (the tenth anniversary of the closing date of our initial public offering) without obtaining the approval of a Common Unit majority, excluding Common Units held by our general partner and its affiliates, and furnishing an opinion of counsel regarding limited liability and tax matters. On or after 11:59 p.m. Central Time on the first day of the first quarter beginning after May 17, 2021 (the tenth anniversary of the closing date of our initial public offering), our general partner may withdraw as general partner without first obtaining approval of any unitholder by giving 90 days’ written notice, and that withdrawal will not constitute a violation of our Partnership Agreement.

Notwithstanding the information above, our general partner may withdraw without unitholder approval upon 90 days’ notice to the limited partners if at least 50% of the outstanding Common Units are held or controlled by one person and its affiliates, other than our general partner and its affiliates. In addition, our Partnership Agreement permits our general partner, in some instances, to sell or otherwise transfer all of its general partner interest in us without the approval of the unitholders. See “—Transfer of General Partner Interest” and “—Transfer of Incentive Distribution Rights.”

Upon withdrawal of our general partner under any circumstances, other than as a result of a transfer by our general partner of all or a part of its general partner interest in us, the holders of a unit majority may select a successor to that withdrawing general partner to continue the business of the partnership. If a successor is not elected, or is elected but an opinion of counsel regarding limited liability and tax matters cannot be obtained, we will be dissolved, wound up and liquidated, unless within a specified period after that withdrawal, the holders of a unit majority agree in writing to continue our business and to appoint a successor general partner. Please read “—Dissolution.”

Our general partner may not be removed unless that removal is approved by the vote of the holders of not less than 66 2/3% of the outstanding units, voting together as a single class, including units held by our general partner and its affiliates, and we receive an opinion of counsel regarding limited liability and tax matters. Any removal of our general partner is also subject to the approval of a successor general partner by the vote of a unit majority (including units held by our general partner and its affiliates).
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The ownership of more than 33 1/3% of the outstanding units by our general partner and its affiliates gives them the practical ability to prevent our general partner’s removal.

In the event of the removal of our general partner under circumstances where cause exists or withdrawal of our general partner where that withdrawal violates our Partnership Agreement, a successor general partner will have the option to purchase the general partner interest and incentive distribution rights of the departing general partner for a cash payment equal to the fair market value of those interests. Under all other circumstances where our general partner withdraws or is removed by the limited partners, the departing general partner will have the option to require the successor general partner to purchase the general partner interest and the incentive distribution rights of the departing general partner or its affiliates for fair market value. In each case, this fair market value will be determined by agreement between the departing general partner and the successor general partner. If no agreement is reached, an independent investment banking firm or other independent expert selected by the departing general partner and the successor general partner will determine the fair market value. Or, if the departing general partner and the successor general partner cannot agree upon an expert, then an expert chosen by agreement of the experts selected by each of the departing general partner and the successor general partner will determine the fair market value.

If the option to purchase described above is not exercised by either the departing general partner or the successor general partner, the departing general partner’s general partner interest and all of its or its affiliates’ incentive distribution rights will automatically convert into common units equal to the preceding paragraph.

In addition, we will be required to reimburse the departing general partner for all amounts due the departing general partner, including, without limitation, all employee-related liabilities, including severance liabilities incurred as a result of the termination of any employees employed for our benefit by the departing general partner or its affiliates.

Transfer of General Partner Interest

Prior to the first day of the first quarter beginning after May 17, 2021 (the tenth anniversary of the closing date of our initial public offering), except for transfer by our general partner of all, but not less than all, of its general partner interest to (i) an affiliate of our general partner (other than an individual) or (ii) another entity as part of the merger or consolidation of our general partner with or into another entity or the transfer by our general partner of all or substantially all of its assets to another entity, our general partner may not transfer all or any of its general partner interest to another person without the approval of a common unit majority, excluding common units held by our general partner and its affiliates. On or after the first day of the first quarter beginning after May 17, 2021 (the tenth anniversary of the closing date of our initial public offering), our general partner may transfer all or any part of its general partner interest in us to another person without the approval of the unitholders. As a condition of this transfer, the transferee must, among other things, assume the rights and duties of our general partner, agree to be bound by the provisions of our Partnership Agreement and furnish an opinion of counsel regarding limited liability and tax matters.

Our general partner may, at any time, transfer common units to one or more persons, without unitholder approval.

Transfer of Ownership Interests in the General Partner

At any time, the owners of our general partner may sell or transfer all or part their ownership interests in our general partner to an affiliate or a third party without unitholder approval.

Transfer of Incentive Distribution Rights

The incentive distribution rights may be freely transferred.

Change of Management Provisions

Our Partnership Agreement contains specific provisions that are intended to discourage a person or group from attempting to remove NGL Energy Holdings LLC as our general partner or from otherwise changing our management.
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Please read “—Withdrawal or Removal of Our General Partner” for a discussion of certain consequences of the removal of our general partner. If any person or group, other than our general partner and its affiliates, acquires beneficial ownership of 20% or more of any class of units, that person or group loses voting rights on all of its units. This loss of voting rights does not apply in certain circumstances. Please read “—Meetings; Voting.”

Limited Call Right

If at any time our general partner and its affiliates own more than 80% of the then-issued and outstanding limited partner interests of any class, our general partner will have the right, which it may assign in whole or in part to any of its affiliates or beneficial owners thereof or to us, to acquire for cash all, but not less than all, of the limited partner interests of the class held by unaffiliated persons as of a record date to be selected by our general partner, on at least 10 days’, but not more than 60 days’, notice. The purchase price in the event of this purchase is the greater of:

• the highest price paid by our general partner or any of its affiliates for any limited partner interests of the class purchased within the 90 days preceding the date on which our general partner first mails notice of its election to purchase those limited partner interests; and

• the average of the daily closing prices of the partnership securities of such class over the 20 consecutive trading days preceding the date three days before the date the notice is mailed.

As a result of our general partner’s right to purchase outstanding limited partner interests, a holder of limited partner interests may have its limited partner interests purchased at an undesirable time or a price that may be lower than market prices at various times prior to such purchase or lower than a unitholder may anticipate the market price to be in the future. The tax consequences to a unitholder of the exercise of this call right are the same as a sale by that unitholder of its Common Units in the market.

Non-Citizen Assignees; Redemption

If our general partner, with the advice of counsel, determines we are subject to U.S. federal, state or local laws or regulations that, in the reasonable determination of our general partner, create a substantial risk of cancellation or forfeiture of any property that we have an interest in because of the nationality, citizenship or other related status of any limited partner, then our general partner may adopt such amendments to our Partnership Agreement as it determines necessary or advisable to:

• obtain proof of the nationality, citizenship or other related status of the limited partner or transferees (and their owners, to the extent relevant); and

• permit us to redeem the units held by any person whose nationality, citizenship or other related status creates substantial risk of cancellation or forfeiture of any property or who fails to comply with the procedures instituted by our general partner to obtain proof of the nationality, citizenship or other related status. The redemption price in the case of such a redemption will be the average of the daily closing prices per unit for the 20 consecutive trading days immediately prior to the date set for redemption.

Non-Taxpaying Assignees; Redemption

If our general partner, with the advice of counsel, determines that our not being treated as an association taxable as a corporation or otherwise taxable as an entity for U.S. federal income tax purposes, coupled with the tax status (or lack of proof thereof) of one or more of our limited partners, has, or is reasonably likely to have, a material adverse effect on the maximum applicable rates chargeable to customers by us, then our general partner may adopt such amendments to our Partnership Agreement as it determines necessary or advisable to:

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• obtain proof of the U.S. federal income tax status of the limited partner or transferees (and their owners, to the extent relevant); and

• permit us to redeem the units held by any person whose tax status has or is reasonably likely to have a material adverse effect on the maximum applicable rates or who fails to comply with the procedures instituted by our general partner to obtain proof of the U.S. federal income tax status. The redemption price in the case of such a redemption will be the average of the daily closing prices per unit for the 20 consecutive trading days immediately prior to the date set for redemption.

Meetings; Voting

Except as described below regarding certain persons or groups owning 20% or more of any class of units then outstanding, record holders of units on the record date will be entitled to notice of, and to vote at, meetings of our limited partners and to act upon matters for which approvals may be solicited.

Our general partner does not anticipate that any meeting of our unitholders will be called in the foreseeable future.

Any action that is required or permitted to be taken by the unitholders may be taken either at a meeting of the unitholders or without a meeting, if consents in writing describing the action so taken are signed by holders of the number of units necessary to authorize or take that action at a meeting. Meetings of the unitholders may be called by our general partner or by unitholders owning at least 20% of the outstanding units of the class for which a meeting is proposed.

Unitholders may vote either in person or by proxy at meetings. The holders of a majority of the outstanding units of the class or classes for which a meeting has been called, represented in person or by proxy, will constitute a quorum, unless any action by the unitholders requires approval by holders of a greater percentage of the units, in which case the quorum will be the greater percentage.

Each record holder of a unit has a vote according to its percentage interest in us, although additional limited partner interests having special voting rights could be issued. See “—Issuance of Additional Partnership Interests.”

However, if at any time any person or group, other than those specified in “—Voting Rights,” acquires, in the aggregate, beneficial ownership of 20% or more of any class of units then outstanding, that person or group will lose voting rights on all of its units and the units may not be voted on any matter and will not be considered to be outstanding when sending notices of a meeting of unitholders, calculating required votes, determining the presence of a quorum or for other similar purposes.

Common Units held in nominee or street name account will be voted by the broker or other nominee in accordance with the instruction of the beneficial owner unless the arrangement between the beneficial owner and its nominee provides otherwise.

Any notice, demand, request, report or proxy material required or permitted to be given or made to record holders of Common Units under our Partnership Agreement will be delivered to the record holder by us or by the transfer agent.

Status as Limited Partner

By transfer of common units in accordance with our Partnership Agreement, each transferee of common units shall be admitted as a limited partner with respect to the common units transferred when such transfer and admission are reflected in our books and records. Except as described under “—Limited Liability,” the Common Units will be fully paid, and unitholders will not be required to make additional contributions.



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Indemnification

Under our Partnership Agreement, in most circumstances, we will indemnify the following persons, to the fullest extent permitted by law, from and against all losses, claims, damages or similar events:

• our general partner;

• any departing general partner;

• any person who is or was an affiliate of our general partner or any departing general partner; any person who is or was an officer, director, manager, managing member, fiduciary or trustee of our partnership, our subsidiaries, or any entity described in the three bullet points above or any of their affiliates;

• any person who is or was serving, at the request of our general partner or any departing general partner or any of their respective affiliates, as a director, officer, manager, managing member, fiduciary or trustee of another person owing a fiduciary duty to us or our subsidiaries;

• any person who controls our general partner or any departing general partner; and

• any person designated by our general partner.

However, our Partnership Agreement provides that these persons will not be indemnified if there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that, with respect to the matter for which the person is seeking indemnification, the person acted in bad faith or engaged in fraud, willful misconduct or, in the case of a criminal matter, acted with knowledge that the person’s conduct was unlawful.
Any indemnification under these provisions will only be out of our assets. Our general partner will not be personally liable for, or have any obligation to contribute or lend funds or assets to us to enable us to effectuate, indemnification. We may purchase insurance against liabilities asserted against and expenses incurred by persons for our activities, regardless of whether we would have the power to indemnify the person against liabilities under our Partnership Agreement.

Reimbursement of Expenses

Our Partnership Agreement requires us to reimburse our general partner and its affiliates for all expenses they incur or payments they make on our behalf. These expenses include salary, bonus, incentive compensation and other amounts paid to persons who perform services for us or on our behalf and expenses allocated to our general partner by its affiliates. Our general partner is entitled to determine the expenses that are allocable to us and our subsidiaries.

Books and Reports

Our general partner is required to keep appropriate books of our business at our principal offices. These books will be maintained for both tax and financial reporting purposes on an accrual basis. For tax purposes, our fiscal year is the calendar year. For fiscal reporting purposes, our fiscal year ends March 31st of each year.

We will furnish or make available to record holders of our common units, within 90 days after the close of each fiscal year, an annual report containing audited consolidated financial statements and a report on those consolidated financial statements by our independent public accountants. Except for our fourth quarter, we will also furnish or make available summary financial information within 45 days after the close of each quarter. We will be deemed to have made any such report available if we file such report with the SEC or make the report available on a publicly available website which we maintain.

We will furnish each record holder with information reasonably required for federal and state tax reporting purposes within 90 days after the close of each calendar year. This information is expected to be furnished in summary form so that some complex calculations normally required of partners can be avoided. Our ability to furnish this summary information to our unitholders will depend on their cooperation in supplying us with specific information.
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Every unitholder will receive information to assist it in determining its federal and state tax liability and in filing its federal and state income tax returns, regardless of whether it supplies us with the necessary information.

Right to Inspect Our Books and Records

Our Partnership Agreement provides that a limited partner can, for a purpose reasonably related to its interest as a limited partner, the reasonableness of which having been determined by our general partner, upon reasonable written demand stating the purpose of such demand and at such limited partner's own expense, have furnished to it:

• a current list of the name and last known address of each partner;

• a copy of our tax returns;

• information as to the amount of cash, and a description and statement of the agreed value of any other property or services, contributed or to be contributed by each partner and the date on which each partner became a partner;

• copies of our Partnership Agreement, our certificate of limited partnership and all amendments thereto;

• information regarding the status of our business and our financial condition; and

• any other information regarding our affairs as is just and reasonable.

To the full extent permitted by law, our general partner may, and intends to, keep confidential from the limited partners trade secrets or other information the disclosure of which our general partner believes is not in our best interests or could damage us or our business or that we are required by law or by agreements with third parties to keep confidential.
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EX-21.1 5 ex21103312510k.htm EX-21.1 Document

Exhibit 21.1
 
LIST OF SUBSIDIARIES OF NGL ENERGY PARTNERS LP
Subsidiary   Jurisdiction of Organization
AntiCline Disposal, LLC   Wyoming
AWR Disposal, LLC   Delaware
Centennial Energy, LLC   Colorado
Centennial Gas Liquids ULC   Alberta, Canada
Choya Operating, LLC   Texas
Disposals Operating, LLC Delaware
GGCOF HEP Blocker II, LLC Delaware
GGCOF HEP Blocker, LLC   Delaware
Grand Mesa Pipeline, LLC   Delaware
GSR Northeast Terminals LLC Delaware
Hillstone Environmental Partners, LLC   Delaware
Indigo Injection #3-1, LLC (1)   Delaware
Indigo Power Holdings, LLC Colorado
Indigo Power, LLC Colorado
NGL Aviation DEN, LLC (2) Colorado
NGL Aviation TUL, LLC (3) Oklahoma
NGL Crude Assets and Marketing, LLC Delaware
NGL Crude Cushing, LLC   Oklahoma
NGL Crude Terminals, LLC   Delaware
NGL Crude Transportation, LLC   Colorado
NGL Delaware Basin Holdings, LLC   Delaware
NGL Energy Finance Corp. Delaware
NGL Energy GP LLC   Delaware
NGL Energy Operating LLC   Delaware
NGL Energy Services, LLC (4) Delaware
NGL Liquids, LLC   Delaware
NGL Marine, LLC   Texas
NGL Recycling Services, LLC   Delaware
NGL Shared Services Holdings, Inc. Delaware
NGL Shared Services, LLC Delaware
NGL Supply Terminal Company, LLC   Delaware
NGL Water Pipelines, LLC   Texas
NGL Water Solutions DJ, LLC   Colorado
NGL Water Solutions Eagle Ford, LLC   Delaware
NGL Water Solutions Holdco, LLC Delaware
NGL Water Solutions Orla-SWD, LLC Delaware
NGL Water Solutions Permian, LLC   Texas
NGL Water Solutions Product Services, LLC Delaware
NGL Water Solutions, LLC Colorado
(1)    NGL Energy Partners LP owns a 75% member interest in Indigo Injection #3-1, LLC.
(2)    NGL Energy Partners LP owns a 90% member interest in NGL Aviation DEN, LLC.
(3)    NGL Energy Partners LP owns a 90% member interest in NGL Aviation TUL, LLC.
(4)    NGL Energy Partners LP owns an approximate 51% member interest in NGL Energy Services, LLC.
EX-23.1 6 ex23103312510k.htm EX-23.1 Document

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our reports dated May 29, 2025, with respect to the consolidated financial statements and internal control over financial reporting included in the Annual Report of NGL Energy Partners LP on Form 10-K for the year ended March 31, 2025. We consent to the incorporation by reference of said reports in the Registration Statements of NGL Energy Partners LP on Forms S-3 (File No. 333-194035, File No. 333-214479, and File No. 333-235736) and on Forms S-8 (File No. 333-185068, File No. 333-227201, File No. 333-234153, and File No. 333-255755).

/s/ GRANT THORNTON LLP
 
Tulsa, Oklahoma
May 29, 2025

EX-31.1 7 ex31103312510k.htm EX-31.1 Document

Exhibit 31.1
CERTIFICATION

I, H. Michael Krimbill, certify that:

1.    I have reviewed this Annual Report on Form 10-K of NGL Energy Partners LP;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a.    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: May 29, 2025 /s/ H. Michael Krimbill
H. Michael Krimbill
Chief Executive Officer of NGL Energy Holdings LLC, the general partner of NGL Energy Partners LP


EX-31.2 8 ex31203312510k.htm EX-31.2 Document

Exhibit 31.2
CERTIFICATION

I, Bradley P. Cooper, certify that:

1.    I have reviewed this Annual Report on Form 10-K of NGL Energy Partners LP;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a.    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 29, 2025 /s/ Bradley P. Cooper
Bradley P. Cooper
Chief Financial Officer of NGL Energy Holdings LLC, the general partner of NGL Energy Partners LP
 
EX-32.1 9 ex32103312510k.htm EX-32.1 Document

Exhibit 32.1

CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Annual Report of NGL Energy Partners LP (the “Partnership”) on Form 10-K for the fiscal year ended March 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, H. Michael Krimbill, Chief Executive Officer of NGL Energy Holdings LLC, the general partner of the Partnership, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), that, to my knowledge:

1.    The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

Date: May 29, 2025 /s/ H. Michael Krimbill
H. Michael Krimbill
Chief Executive Officer of NGL Energy Holdings LLC, the general partner of NGL Energy Partners LP

This certification is being furnished solely pursuant to Section 906 and is not being filed as part of the Report or as a separate disclosure document.

A signed original of this written statement required by Section 906 has been provided to the Partnership and will be retained by the Partnership and furnished to the Securities and Exchange Commission or its staff upon request.
EX-32.2 10 ex32203312510k.htm EX-32.2 Document

Exhibit 32.2

CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Annual Report of NGL Energy Partners LP (the “Partnership”) on Form 10-K for the fiscal year ended March 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Bradley P. Cooper, Chief Financial Officer of NGL Energy Holdings LLC, the general partner of the Partnership, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), that, to my knowledge:

1.    The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

Date: May 29, 2025 /s/ Bradley P. Cooper
Bradley P. Cooper
Chief Financial Officer of NGL Energy Holdings LLC, the general partner of NGL Energy Partners LP

This certification is being furnished solely pursuant to Section 906 and is not being filed as part of the Report or as a separate disclosure document.

A signed original of this written statement required by Section 906 has been provided to the Partnership and will be retained by the Partnership and furnished to the Securities and Exchange Commission or its staff upon request.