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Price Forecast:

Bullish Case: NGL Energy Partners could capitalize on improving water solutions and logistics, coupled with strategic growth initiatives. Historical data suggests positive performance increases over 2+ year holding periods, indicating potential for significant upside.

Bearish Case: Weak commodity prices and regulatory scrutiny pose threats to NGL's performance, potentially leading to weaker EBITDA and lower investor confidence. Historical patterns reveal substantial downside risks in shorter holding windows, particularly as operational challenges loom.

Potential Outcomes:

1. Improved Water Solutions EBITDA (+10%) - 70%;

2. Regulatory headwinds leading to operational restrictions - 40%;

3. Market recovery boosts crude logistics - 60%;

4. Continued price weakness in commodities - 50%.

Trading Oracle: Consider a bull call spread, buying NGL 01/17/2025 5.00 C and selling NGL 7.50 C. This strategy limits capital exposure while targeting growth based on potential market recoveries. Aiming for a 6-12 month horizon for execution could yield high reward-to-risk.

August 22, 2024