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NGL Energy Soars As Oaktree Announces $200 Million Investment

NGL Energy Soars As Oaktree Announces $200 Million Investment

Shares of NGL Energy Partners LP (NYSE: NGL) soared higher by more than 35 percent on Friday after the vertically-integrated crude oil logistics company announced several strategic actions, including receipt of a $200 million investment.

NGL Energy Partners announced a $200 million private placement of 10.75 percent Class A Convertible Preferred Units with Oaktree Capital Management. The investment is part of a broader strategic relationship in which Oaktree will receive representation on the board of directors and the two entities will explore future opportunities within the Partnership's current business segment.

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NGL Energy said it will use the proceeds to repay borrowings outstanding on its revolving credit facility.

The company also announced a temporary reduction in its quarterly cash distribution to $0.39 per common unit, which will generate an additional $170 million in coverage over the next year.

An analyst and investor call to discuss the strategic update is scheduled for Friday, April 22, at 11:00 AM EST.

Companies' Responses

"I believe this is a very positive transaction for NGL and I look forward to having Oaktree as a partner and represented on our Board. The investment by Oaktree is a strong endorsement of our business model, strategy and future growth projects. We plan to jointly pursue certain attractive assets together that Oaktree will assist in financing/structuring and NGL will operate," stated Mike Krimbill, CEO of NGL.

"Over the past several months, NGL has taken what I believe to be the necessary actions to position the Partnership for success, regardless of this low commodity price environment. In only five months since our joint ownership arrangement regarding the Saddlehorn pipeline, we have significantly enhanced liquidity, strengthened the balance sheet and aligned with a strategic investor which we expect will provide us with the capital to selectively pursue organic growth projects and strategic acquisitions at accretive multiples."

"Oaktree is pleased to make an investment in NGL. The Partnership's strong management team, diversified asset base, attractive growth prospects and improved balance sheet, make it an exciting investment opportunity. We look forward to partnering with the NGL team to continue to implement the Partnership's strategy and capitalize on growth opportunities in the future," said managing director and co-portfolio manager of Oaktree's infrastructure investing strategy Chris Beall.

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