- The situation for NGL Energy Partners and their very high 20% distribution yield may appear quite worrying on the surface.
- Whilst risks exist, when digging deeper they are likely not as severe as many might fear.
- The impact from the Extraction Oil & Gas bankruptcy is not overly large and thus does not derail their ability to cover their distributions nor deleverage.
- Given the support from central bank policy and their prospects to generate free cash flow, they should be able to simply refinance their credit facility maturity in October 2021.
- Since their unit price has sunk lower since my original rating, I believe that upgrading my rating to neutral is appropriate.
For further details see:
NGL Energy Partners: The Situation Is Not As Bad As It Seems