Please ensure Javascript is enabled for purposes of website accessibility

Why NGL Energy Partners Rocketed 34% This Morning

By Reuben Gregg Brewer - Jan 21, 2021 at 10:57AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's been a busy few days for the midstream energy company.

What happened

Shares of midstream master limited partnership NGL Energy Partners (NGL -1.80%) rose a dramatic 22% out of the gate on Thursday. They then pulled back a bit before bursting higher again, reaching an incredible 34% gain by roughly 10:30 a.m. EST. Company news has been coming out at a rapid clip over the last few days.

So what

On Tuesday, NGL announced that it had come to an agreement with a customer that had declared bankruptcy: fossil fuel producer Extraction Oil & Gas. Although the new agreement required NGL to make concessions to the customer, which will result in one-time charges, it cleared up a notable uncertainty. At the same time, the partnership also reinstated its fiscal 2021 guidance and provided an outlook for fiscal 2022 that included a forecast of 15% adjusted EBITDA growth.   

An energy pipeline with a man welding.

Image source: Getty Images.

On Wednesday, the partnership announced the next dividend payout for its preferred shares -- not huge news, but not bad news, either. And then Thursday, NGL announced that it was issuing $2.05 billion worth of bonds in a private placement transaction. This move will push out some of its debt maturities and, perhaps equally important, it should provide ample liquidity for the partnership to continue investing in the future of its business. In other words, in just a few days time, NGL Energy Partners' outlook has become a lot easier to handicap.  

Now what

Although NGL's units rallied strongly Thursday morning, they remain down by around 70% from where they traded 12 months ago. So management still has a lot to prove here. But over the last few days, they have given investors a lot of important information about where this energy industry player is heading. And, at least for now, that seems to be in a more promising direction than it has been for a little while.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

NGL Energy Partners LP Stock Quote
NGL Energy Partners LP
NGL
$1.92 (-1.80%) $0.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
331%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/20/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.