Large master limited partnership NGL Energy Partners (NGL) released their earnings–or in this case, their losses, for the quarter ending 12/31/2021.
The company is a crude oil pipeline and storage company as well as a marketer of crude oil and related products.
Being in the energy business is always dicey and it becomes much dicier when you transact business with one of the very weak companies that operate in this sector. In this case the company depended upon Extraction Oil and Gas (XOG) for a large chunk of their pipeline revenue. XOG filed Chapter 11 in June and last month has emerged from bankruptcy. The company rejected contracts with NGL and the bankruptcy courts allowed the rejection–bottom line is that NGL took a $384 million non cash write down of goodwill and related intangibles.
The company has suspended their payment of common and preferred stock dividends and shares are now trading in the $10-$11 range. They are cumulative dividends so they will continue to accrue until they are paid or the company is bankrupt. The suspension was caused by new financing which requires the suspension until leverage is reduced.
Below is a chart of the 9% cumulative preferred over the course of the last 9 months or so. The 2 outstanding fixed to floating rate preferreds can be seen here.
Will the company restart dividends down the road? There is a good review on Seeking Alpha here which shares thoughts on the possibility.