$1.50
$9.60
bear $1.50
base $7.00
bull $9.60
margin of safety $3.00
market price* $15.20
NGL Energy Partners is a publicly traded partnership (fiscal year ends March 31). Its filing describes the largest integrated produced water pipeline, disposal and water handling network in the Northern Delaware Basin, supported by long-term, fee-based producer contracts, with further operations in the DJ and Eagle Ford basins. Water processed in the Delaware Basin averaged about 2.56 million barrels a day in fiscal 2026, versus 2.30 million in fiscal 2025 and 2.12 million in fiscal 2024. What sits ahead of the common units. Preferred units rank ahead of common holders. At March 31, 2026 there were 12,585,642 Class B, 1,800,000 Class C and 315,489 Class D preferred units. Distributions were suspended in 2021 and the arrears were fully paid by April 25, 2024. During fiscal 2026 the company repurchased Class D units for $422.5 million in cash. Class D holders can require redemption on or after the eighth anniversary of the July 2, 2019 closing date, on a date at least 180 days later, at a formula price; recent repurchases were priced at roughly 1.4 to 1.5 times the $1,037.98 unit price, so the remaining Class D units could cost roughly $0.5 billion. Because common owners only receive what is left after these preferred claims, we deduct preferred distributions from the earnings we value. How we measure earnings. We start from operating cash flow (which is already after cash interest; interest paid was $244.2 million in fiscal 2026), remove the swing in working capital, subtract equity-based compensation, subtract all capital spending, and subtract preferred distributions. We treat all capital spending as upkeep, because revenue here moves with commodity prices and cannot be used to separate growth spending; this is conservative and may understate earnings. Impairments and other non-cash charges are added back automatically. Per common unit, this gave $0.05 (fiscal 2021), $0.75 (2022), $1.31 (2023), $0.29 (2024), $0.32 (2025) and $0.72 (2026). Fiscal 2024 to 2026 cash flow includes small discontinued-operations amounts ($14.3 million, $40.6 million, $15.6 million) that will not recur, so we exclude them. Starting level. We measure from fiscal 2024 onward, because the company sold assets and businesses in each of those three years (asset-sale and divestiture proceeds appear in each year's cash flow), so earlier years describe a different business. Continuing-operations earnings before preferred distributions were about $163 million (2024), $121 million (2025) and $189 million (2026); the median is $163 million. From that we deduct about $75 million a year of preferred distributions at the current rate (Class B about $35 million, Class C about $5 million, Class D about $35 million, annualized from the latest quarterly payments), and our own allowance of $20 million for extra interest on borrowings used to fund the preferred repurchases. That leaves about $68 million, or roughly $0.55 per unit on about 124 million units outstanding at March 31, 2026. This is above the $0.32 median of the historical per-unit figures, because the preferred burden and unit count have fallen; the $20 million interest allowance is our estimate and could not be confirmed from the filing. Growth. Earnings per unit rose from $0.32 to $0.72 in fiscal 2026 (about 120%); we assume 0% growth in year one and beyond, and do not carry that jump forward. We credit no growth: rising water volumes depend on producers' drilling and we found no contracted volume commitments quantified in the filing. Losses on disposal or impairment of assets were $256.3 million in fiscal 2026, $31.4 million in 2025 and $115.9 million in 2024, a record of write-offs that we weigh in the bear case. The cases. Base ($7.00 per unit): $0.55 a year for 25 years, then nothing, on the view that the pipelines and disposal assets keep earning while their upkeep is fully charged; nothing beyond 25 years has a named source of earnings. Bear ($1.50): earnings fall to about $0.20 a year (the fiscal 2025 level after preferred and the interest allowance) for 10 years, then nothing, reflecting the repeated impairments and the Class D redemption exposure. Bull ($9.60): about $0.75 a year (the fiscal 2026 level after the same deductions) for 25 years, then nothing. No debt is subtracted separately, since interest is already in the cash flow; the value is not zero in any case. Class D distributions are kept in the base and bull cases indefinitely; a debt-funded redemption would swap that cost for interest and is not modelled separately. What would make this wrong. Lower drilling and water volumes, a forced Class D redemption on tighter financing, or upkeep spending above our estimate would push value toward the bear case. If much of the capital spending is actually discretionary growth, earnings are understated. The filing's cash-flow reconciliation for fiscal 2026 ties to reported continuing operating cash flow of $350.3 million.